TC Energy enters agreement to sell Prince Rupert Gas Transmission entities to Nisga’a Nation and Western LNG
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Insights
The sale of Prince Rupert Gas Transmission Holdings Ltd. (PRGT) by TC Energy to Nisga’a Nation and Western LNG aligns with TC Energy's strategic focus on capital discipline and asset optimization. By maintaining its capital expenditure within the projected range post-2024, TC Energy is signaling a commitment to financial prudence and operational efficiency.
The transaction also highlights the growing trend of Indigenous participation in large-scale energy projects, which can foster goodwill and potentially streamline project approvals and development. The inclusion of Indigenous co-ownership could enhance the social license to operate and may lead to a more sustainable and inclusive approach to project development.
Although initial proceeds are not deemed material to TC Energy, the structure of the deal with potential additional payments contingent on project milestones indicates a strategic approach to risk-sharing and value realization. This could be a model for future infrastructure transactions, balancing immediate financial considerations with long-term project success.
The non-material initial proceeds suggest that the immediate impact on TC Energy's balance sheet will be limited. However, the potential for additional payments based on project milestones introduces a variable component to the company's future revenue stream. This contingent payment structure may be indicative of the project's risk profile and the company's confidence in the project's completion and operation.
Investors should note that the deal's closing is subject to definitive agreements and customary conditions, which implies a degree of uncertainty. The market's response will likely hinge on the perceived benefits of the transaction in terms of balance sheet flexibility, capital allocation and the project's alignment with TC Energy’s long-term strategic objectives.
The transaction also speaks to the broader market's appetite for energy infrastructure investments and the role of natural gas in the global energy mix. The emphasis on responsibly produced Canadian natural gas for emissions reduction may resonate with ESG-focused investors, potentially influencing TC Energy's stock performance in a market increasingly sensitive to sustainability considerations.
The strategic sale of PRGT is indicative of TC Energy's broader strategy within the energy sector, particularly in relation to the liquefied natural gas (LNG) market. By enabling the development of a new LNG corridor, TC Energy is contributing to Canada's positioning as a key player in the global LNG supply chain, especially in the context of increasing demand for secure and sustainable energy sources.
The collaboration with Indigenous communities and the co-ownership model may serve as a benchmark for future infrastructure projects, potentially influencing industry standards and expectations. This could lead to increased investor interest in companies that proactively engage with Indigenous communities and adopt inclusive development practices.
Furthermore, the transaction may have implications for the Western Canadian Sedimentary Basin (WCSB) growth, as it could unlock new opportunities for gas exploration and production, thereby impacting the broader market dynamics within the energy sector. Monitoring how this development influences the WCSB's output and Canada’s LNG export capacity will be important for stakeholders invested in the North American energy landscape.
Transaction demonstrates TC Energy’s focus on its strategic priorities while facilitating the development of critical energy infrastructure
CALGARY, Alberta, March 14, 2024 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) announced today that it has entered into a binding letter agreement with Nisga’a Nation and Western LNG (the Buyers) regarding the purchase and sale of all outstanding shares in Prince Rupert Gas Transmission Holdings Ltd. and the limited partnership interests in Prince Rupert Gas Transmission Limited Partnership (collectively, PRGT). PRGT is a wholly owned subsidiary of TC Energy and the developer of a natural gas pipeline project in British Columbia and potential delivery corridor that would further unlock Canada as a secure, affordable and sustainable source of LNG.
This transaction demonstrates TC Energy’s resolve toward delivering its 2024 strategic priorities while facilitating the development of critical energy infrastructure. TC Energy’s strategic priorities are focused on staying within its
“We are pleased to see this important project move forward while remaining firm on our commitment to our strategic priorities. This is an important agreement that will see Indigenous co-ownership and development of an integrated LNG project. Enabling LNG development in British Columbia is good for Indigenous communities, our customers, supports the long-term growth of the WCSB and global emissions reduction through the export of responsibly produced Canadian natural gas,” said François Poirier, President and CEO, TC Energy.
As part of the letter agreement, TC Energy has committed to provide transition services, on a reimbursable basis, to facilitate the seamless transition of the pipeline project and support development work planned for this year. Subject to the execution of definitive agreements and customary closing conditions, the transaction is expected to close in the second quarter of 2024. Initial proceeds from the transaction are not expected to be material to TC Energy, with the potential to receive additional payments contingent upon the project achieving final investment decision and commercial operation.
About TC Energy
We’re a team of 7,000+ energy problem solvers working to safely move, generate and store the energy North America relies on. Today, we’re delivering solutions to the world’s toughest energy challenges – from innovating to deliver the natural gas that feeds LNG to global markets, to working to reduce emissions from our assets, to partnering with our neighbours, customers and governments to build the energy system of the future. It’s all part of how we continue to deliver sustainable returns for our investors and create value for communities.
TC Energy’s common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP. To learn more, visit us at TCEnergy.com.
FORWARD-LOOKING INFORMATION
This release contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). Forward-looking statements in this document are intended to provide TC Energy security holders and potential investors with information regarding TC Energy and its subsidiaries, including management's assessment of TC Energy's and its subsidiaries' future plans and financial outlook. All forward-looking statements reflect TC Energy's beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. As actual results could vary significantly from the forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking information due to new information or future events, unless we are required to by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the most recent Quarterly Report to Shareholders and Annual Report filed under TC Energy’s profile on SEDAR+ at www.sedarplus.ca and with the U.S. Securities and Exchange Commission at www.sec.gov.
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Media Inquiries:
Media Relations
media@tcenergy.com
403-920-7859 or 800-608-7859
Investor & Analyst Inquiries:
Gavin Wylie / Hunter Mau
investor_relations@tcenergy.com
403-920-7911 or 800-361-6522
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