TransCanada Reports 10% Earnings Increase for 2007
"TransCanada's strong financial performance in the fourth quarter and throughout 2007 is a result of solid contributions from our existing assets and the growing cash flow and earnings from newly acquired and developed assets such as the ANR pipeline system and the Edson gas storage facility in Alberta," said Hal Kvisle, TransCanada president and CEO. "Our strong financial performance in 2007 has enabled our Board of Directors to increase the quarterly dividend on the company's common shares by 6% to $0.36 per share."
TransCanada Corporation (TransCanada or the Company) reported net income for fourth quarter 2007 of $377 million ($0.70 per share) compared to $269 million ($0.55 per share) for fourth quarter 2006.
Comparable earnings were $307 million ($0.57 per share) for fourth quarter 2007 compared to $257 million ($0.53 per share) in fourth quarter 2006. The $50 million ($0.04 per share) increase was due to higher contributions from the Pipelines business reflecting additional income earned from the acquisition of American Natural Resources Company and the ANR Storage Company (collectively, ANR), higher earnings as a result of rate settlements for both the Canadian Mainline and the Gas Transmission Northwest System and lower operating costs on the Alberta System. Comparable earnings were lower in the Energy business primarily due to the impact of lower realized power prices in Alberta and lower contributions from Bruce Power. Comparable earnings in fourth quarter 2007 excluded $56 million of favourable income tax adjustments resulting from changes in Canadian federal income tax legislation and a $14 million gain on sale of land, and in fourth quarter 2006, excluded $12 million of income tax refunds.
Net income and net income from continuing operations (net earnings) was $1.223 billion ($2.31 per share) for the year ended December 31, 2007 compared to net income of $1.079 billion ($2.21 per share), and net earnings of $1.051 billion ($2.15 per share) for 2006.
Comparable earnings for the year ended December 31, 2007 were $1.107 billion ($2.09 per share), compared to $925 million ($1.90 per share) for 2006. The $182 million ($0.19 per share) increase was primarily due to additional income earned from the acquisition of ANR, higher earnings from the Canadian Mainline and the start-up in late 2006 of the Bécancour and Edson facilities. Partially offsetting these increases was a lower contribution from Bruce Power. Comparable earnings for the year ended December 31, 2007 excluded positive income tax adjustments of $102 million and the $14 million gain on sale of land. Comparable earnings for the year ended December 31, 2006, excluded $95 million in favourable income tax adjustments, an $18 million bankruptcy settlement with Mirant Corporation and certain of its subsidiaries, and a $13 million gain on the sale of TransCanada's interest in Northern Border Partners, L.P.
Net cash provided by operations in fourth quarter 2007 was $695 million compared to $493 million for the same period in 2006. Net cash provided by operations for the year ended December 31, 2007 was $2.836 billion compared to $2.075 billion for the same period in 2006. The increase in net cash provided by operations was primarily due to an increase in funds generated from operations and a decrease in operating working capital.
Funds generated from operations were $741 million and $2.621 billion for the quarter and year ended December 31, 2007, an increase of $81 million and $243 million, respectively, when compared to the same periods in 2006.
Notable recent developments in Pipelines, Energy and Corporate include:
On January 11, 2008, TransCanada received the Final Environmental Impact Statement (FEIS) from the U.S. Department of State regarding the Keystone oil pipeline project (Keystone) stating the pipeline would result in limited adverse impacts. A decision is anticipated mid-February 2008 regarding Keystone's application for a Presidential Permit authorizing the construction and operation of the facilities at the U.S./Canada border crossing. Construction and material supply contracts totaling approximately $3.0 billion have been awarded for pipe, tanks, pumps and related materials, and engineering and construction management services. Receipt and stockpiling of line pipe has begun and construction activities are scheduled to commence February 2008.
On January 22, ConocoPhillips and TransCanada announced that ConocoPhillips acquired a 50% ownership interest in the Keystone oil pipeline project. A previously signed Memorandum of Understanding committed ConocoPhillips to ship crude oil on the pipeline and gave the right to acquire up to 50% ownership interest. Affiliates of TransCanada will be responsible for constructing and operating the 3,456-kilometre (2,148-mile) Keystone Pipeline.
On November 30, 2007, TransCanada submitted an application for license to construct the Alaska Pipeline project under the Alaska Gasline Inducement Act (AGIA). On January 4, 2008, the State of Alaska announced that TransCanada had submitted a complete AGIA application and would be advancing to the Public Comment stage. No other applicant met all the AGIA requirements. If approved by the Administration and the Legislature, TransCanada could be granted the AGIA License later this year.
Broadwater Energy, LLC achieved another major milestone on January 11, 2008 as the FERC issued its FEIS for the Broadwater project, the proposed offshore liquefied natural gas (LNG) facility in Long Island Sound, New York. FERC has reaffirmed its conclusions that Broadwater is an environmentally responsible way to meet the region's natural gas needs in the coming years, given the alternatives. This includes consideration of the project's purpose and need and the environmental impacts associated with the location, design, and construction methods of the alternatives. The New York State Department of State is expected to release a decision on the Coastal Zone Management Act in first quarter 2008.
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