Pipeline company TransCanada Corporation (TSE:TRP, Mkt cap 53.03B, Div/yield 0.62/4.09, EPS 0.28, Shares 866.91M) has successfully concluded a long-term, fixed-price open season to transport natural gas on the Canadian Mainline to Eastern Canada.
The Calgary-based company said on Monday that gas producers in the Western Canada Sedimentary Basin (WCSB) have agreed binding, long-term contracts for the transport 1.5 GJ/d of natural gas from the Empress receipt point in Alberta to the Dawn hub in Southern Ontario, at a single toll of $0.77/GJ.
The contracts have a term of 10 years, with early termination rights that can be exercised following the initial five years of service (upon payment of an increased toll for the final two years of the contract).
Russ Girling, president and CEO of TransCanada, said in a statement: "Today, WCSB producers are facing a much more challenging landscape than they have in the past. This new offering helps our customers compete more effectively by utilizing existing capacity on the Canadian Mainline, and demonstrates the importance and value of this system to deliver their products to markets in Eastern Canada and the Northeast U.S."
Girling added: "This long-term agreement provides significant benefits for our customers, shareholders, communities and governments that depend on the economic benefits that are generated by natural gas exploration, production and transportation. In addition to utilizing existing capacity and pipelines already in operation, the incremental revenue generated from this offering will make the Canadian Mainline more competitive."
Madison.com reported that TransCanada did not give up after its last open season to get gas producers in Western Canada to sign up for capacity on the pipeline failed. "That persistence has now paid off," the website said, with the simplified rate and early termination option proving to be a winning combination.
Most of the incremental revenue from these new contracts will flow to TransCanada's bottom line, Madison.com explained.
The Canadian Mainline currently transports about 20% of the natural gas produced in the WCSB to serve Canadian markets and interconnects with the United States.
TransCanada Corporation (TSE:TRP) is a Canadian energy infrastructure company with head offices in Calgary, Alberta. The Company operates through three segments: Natural Gas Pipelines, Liquids Pipelines and Energy. Natural Gas Pipelines and Liquids Pipelines consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. Its natural gas pipeline network transports natural gas to local distribution companies, power generation facilities and other businesses across Canada, the United States and Mexico. Its existing liquids pipeline infrastructure connects Alberta and the United States crude oil supplies to the United States refining markets in Illinois, Oklahoma and Texas, as well as connecting the United States crude oil supplies from the Cushing, Oklahoma hub to refining markets in the United States Gulf Coast. Energy includes its power operations and the non-regulated natural gas storage business in Canada. More from Reuters »
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