The controversial Keystone XL oil pipeline is expected to come into service a bit later than previously expected, TransCanada Corp. said Tuesday as it reported stronger fourth-quarter results and hiked its dividend by five per cent.
The Calgary-based pipeline and utility giant is now aiming for the US$7.6-billion Alberta-to-Texas pipeline to come into service in early 2015, compared to its earlier target of late-2014.
Also Tuesday, the company reported earnings attributable to common shares of $375 million, or 53 cents per share, during the last three months of 2011, up from $269 million, or 39 cents per share, a year earlier
Comparable earnings, which TransCanada deems a more accurate measure of its performance, were $366 million, or 52 cents per share, slightly missing the average analyst estimate of 53 cents per share, according to Thomson Reuters. Quarterly revenues rose to $2.36 billion from $2.06 billion.
The company also said its quarterly dividend will be raised to 44 cents per share, up from 42 cents, payable March 31.
The Keystone XL pipeline, which would extend the reach of an existing oil pipeline that currently delivers crude to the U.S. Midwest, has become a major political flashpoint as U.S. President Barack Obama seeks re-election this November.
Last month, the U.S. government denied a permit for the project, but left the door open for TransCanada to apply for a new one.
'The company, while disappointed, remains fully committed to the construction of Keystone XL.' —TransCanada statement
Obama said a deadline imposed on his administration by the Republicans to make a decision by Feb. 21 didn't allow enough time to adequately study a new route through Nebraska to avoid the ecologically sensitive Sandhills region, so it had no choice but to reject the project.
But he said the decision had less to do with the pipeline's merits than with the arbitrary deadline the Republicans had set.
"The company, while disappointed, remains fully committed to the construction of Keystone XL. Plans are already underway on a number of fronts to largely maintain the construction schedule of the project," TransCanada said in a statement.
"TransCanada will re-apply for a Presidential Permit and expects a new application would be processed in an expedited manner to allow for an in-service date of early 2015."
Although backers of the project say it would create thousands of jobs in both countries and supplant crude imports from unfriendly regimes if approved, it has also come under fire from critics who worry the line will increase U.S. dependence on "dirty" oilsands crude and cause ecological harm to the American heartland in the event of a spill.
UBS Investment Research analyst Chad Friess said the fourth-quarter earnings disappointed, as did the revised timeline for Keystone XL.
In a research note, he said there was "broad-based weakness" across most of TransCanada's natural gas pipelines.
Outages at the Bruce Power nuclear plant on the shores of Lake Huron in Ontario also dragged in TransCanada's earnings, and low power prices affected its U.S. power business.
Friess said he expects to hear more on the next steps for Keystone XL on a conference call with management later Tuesday.
TransCanada said the quarter included a $127-million after-tax provision, amounting to 18 cents per share, against advances to the Aboriginal Pipeline Group for the long-stagnant Mackenzie Gas Project in the Northwest Territories.
For the year, TransCanada's comparable earnings were $1.57 billion, or $2.23 per share, versus $1.36 billion or $1.97 in 2010.
Some $10 billion in new assets have been placed into service since mid-2010, said chief executive officer Russ Girling in a statement.
"Having made substantial progress on our unprecedented capital program, these new operating assets are doing what they were designed to do — producing sustainable earnings and cash flow for our shareholders while delivering energy safely and reliably to customers across North America," he said.
TransCanada shares closed up 67 cents, or 1.6 per cent, at $42.15 on the Toronto Stock Exchange.