TC Energy unveils $5B asset sale plan for 2023, boosts profit outlook

TC Energy says it plans to raise $5 billion by selling assets next year. (REUTERS/Dado Ruvic/Illustration)
TC Energy says it plans to raise $5 billion by selling assets next year. (REUTERS/Dado Ruvic/Illustration)

TC Energy (TRP.TO)(TRP) plans to generate more than $5 billion by selling "non-core" assets through 2023, the company said on Wednesday, as it reported third-quarter financial results.

The Calgary-based energy and infrastructure firm says its divestiture program will focus on "discrete assets" or "minority interests" in order to bankroll growth and pay down debt. Speaking on a conference call with analysts, CEO François Poirier confirmed the company plans to announce and close a series of deals next year.

"There is a need to balance our sources and uses of capital without the reliance on further external equity," Poirier said on the call.

He was tight-lipped about which assets could be put up for sale. However, he did note, "we are going to consider the impacts of our GHG emissions going forward."

Toronto-listed TC Energy shares added 2.43 per cent to $61.62 at 10:47 a.m. ET on Wednesday.

Analysts had anticipated Wednesday's announcement. Last month, Robert Kwan of RBC Capital Markets said TC Energy could look to monetize its liquids pipelines, as well as smaller gas pipelines with targeted proceeds of as much as $4 billion.

"We believe the market will positively receive the company's asset sale strategy," he wrote in a note to clients on Wednesday.

Scotiabank analyst Robert Hope also notes the $5 billion sales target is "slightly larger than we were expecting", in a research note.

TC Energy says it's "opportunity rich," with a $34 billion portfolio of secured capital projects. Poirier said the company plans to approve about $5 billion worth of projects per year throughout the decade.

While the company is primarily focused on natural gas pipelines and power generation, it has made recent investments in solar, and expressed optimism that small modular nuclear reactors could provide power to Alberta oilsands operations.

TC Energy reported $841 million in net income for the three months ended Sept. 30, up nearly eight per cent from $779 million year-over-year. The company also declared a quarterly dividend of $0.90 per common share for the quarter ending Dec. 31.

“Demand for our services remains high,” Poirier added on the call. “We continue to deliver strong utilization, availability and overall operational performance across our system.”

TC Energy raised its 2023 profitability outlook on Wednesday, calling for comparable earnings before interest, taxes, depreciation, and amortization (EBITDA) to increase about four per cent year-over-year.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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