Nfld. & Labrador

Oil turnaround continuing to fuel profits at Nalcor Energy

Nalcor says first-quarter profits for 2017 have nearly doubled from a year ago.

Higher production, prices doubles profits for first quarter to nearly $60M

Nalcor CEO Stan Marshall spoke positively Thursday about the energy corporation's financial results from the first quarter of 2017. (Eddy Kennedy/CBC)

Profits continue to grow at Nalcor, with Newfoundland and Labrador's energy corporation reporting Thursday that first-quarter profits for 2017 have nearly doubled from a year ago.

And with construction of the Lower Churchill hydroelectric project continuing, the value of assets at Nalcor have also skyrocketed.

Those were some of the highlights as Nalcor CEO Stan Marshall and chief financial officer Derrick Sturge released first-quarter results.

"Our financial performance continues to improve," Marshall said during a live webcast.

Muskrat Falls project making progress

Higher oil production and prices helped drive earnings, with first-quarter profits surging to $57 million, up from $29 million over the same period in 2016.

Sturge said the price for a barrel of oil was $13 higher than last year, and production was up by roughly 500,000 barrels, mainly from Hibernia.

Derrick Sturge is the chief financial officer at Nalcor Energy. (Nalcor)

But those profits were pinched by reduced revenue from power sales. This was the result of the commencement of the renewal contract last September with Hydro Quebec for the purchase of Upper Chuchill power.

The new contract requires Nalcor to sell power at lower rates.

Total assets at Nalcor have grown by about $2 billion over the last year as construction continues on the 824 megawatt hydroelectric generating station at Muskrat Falls, and the 1,100-kilometre Labrador-Island Link that will transmit power from Labrador to Soldiers Pond on Newfoundland's Avalon Peninsula.

The link is roughly three-quarters complete, said Marshall, and "further progress" is expected on the generating station this year.

He said nearly $400 million was spent on the project during the quarter. Overall, Nalcor expects to spend nearly $3 billion in capital expenditures this year.

Protecting the power supply

A new 230 kilovolt transmission line being constructed from Bay d'Espoir to the Avalon Peninsula is also progressing. The upgraded transmission corridor will strengthen the island's electrical network, Marshall explained.

Meanwhile, total assets at Nalcor have grown to about $14.5 billion, though 75 per cent of those assets — primarily the Muskrat Falls project and the Nalcor's equity stake in the Hebron project — are not currently generating revenue.

Nalcor CEO Stan Marshall says significant progress is expected this year on the 824 megawatt hydroelectric generating facility at Muskrat Falls. (Nalcor)

"As a company, we have been focused on continuing to execute our priority projects in an efficient and cost-effective manner in the interest of the province's ratepayers and taxpayers," Marshall stated.

Marshall also confirmed that "several" proposals have been received by Nalcor for the use of the Bull Arm fabrication site in Trinity Bay, though he would not give any details.

Bull Arm's future is now in doubt following completion of the Hebron oil platform.