TC Energy reports solid second quarter 2023 results, while significantly advancing Coastal GasLink and Southeast Gateway projects to planned cost and schedule

Unlocking incremental shareholder value through spinning off Liquids Pipelines, integrating our Natural Gas Pipelines
business units and utilizing strategic partnerships to enable energy transition and drive energy security

CALGARY, Alberta, July 27, 2023 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, : TRP) (TC Energy or the Company) released its second quarter results today. François Poirier, TC Energy’s President and Chief Executive Officer commented, “Today’s announcement to separate our Natural Gas Pipelines and Power and Energy Solutions businesses from our Liquids Pipelines business will maximize the value of our assets. The separated industry-leading companies will have greater strategic focus to execute major projects, drive efficiencies and operational excellence, and enhanced flexibility to pursue disciplined growth." Poirier continued, “In addition, we have made significant progress on our 2023 strategic priorities. First, we continue to safely execute our secured capital program, including Coastal GasLink and Southeast Gateway which remain on planned cost and schedule. Second, we have significantly accelerated our deleveraging goal ahead of our year-end target with the sale of a 40 per cent equity interest in the Columbia Gulf and Columbia Gas systems for total cash proceeds of $5.2 billion. And third, we are safely and reliably operating our assets that provide essential services across North America, which is a testament to the dedication and hard work of our people.”

Highlights

(All financial figures are unaudited and in Canadian dollars unless otherwise noted)

• Strong performance during the first six months of 2023 delivered 10 per cent comparable EBITDA¹ growth and 11 per cent segmented earnings growth year-over-year
• Second quarter 2023 results were underpinned by solid utilization and reliability across our assets
  • Total NGTL System receipts were 13.5 Bcf/d, up 0.1 Bcf/d from second quarter 2022
  • NGTL System achieved record single-day receipts of 14.6 Bcf on April 21, 2023
  • U.S. Natural Gas Pipelines flows averaged 25.4 Bcf/d, consistent with second quarter 2022
  • Achieved record LNG feedgas deliveries of 3.8 Bcf on April 21, 2023
  • Keystone Pipeline System operational reliability of 94.6 per cent, ensuring the continued delivery of all contracted volumes
  • Marketlink throughput increased over 150,000 Bbl/d year-over-year
  • Bruce Power achieved 94 per cent availability while successfully completing a planned outage on Unit 4 on time and within budget
  • Strong cogeneration fleet performance with 93 per cent availability
• Second quarter 2023 financial results:
  • Net income attributable to common shares of $0.3 billion or $0.24 per common share compared to $0.9 billion or $0.90 per common share in second quarter 2022. Comparable earnings¹ of $1.0 billion or $0.96 per common share compared to $1.0 billion or $1.00 per common share in 2022
  • Segmented earnings of $1.0 billion compared to $1.7 billion in 2022 and comparable EBITDA of $2.5 billion compared to $2.4 billion in 2022
• TC Energy’s Board of Directors approved plans to spin off the Liquids Pipelines business and separate into two industry-leading, investment-grade companies. The separation is expected to be achieved on a tax-free basis to TC Energy shareholders, anticipated to be complete in the second half of 2024
• Announced the sale of a 40 per cent equity interest in Columbia Gas Transmission, LLC (Columbia Gas) and Columbia Gulf Transmission, LLC (Columbia Gulf) to Global Infrastructure Partners (GIP) for proceeds of $5.2 billion. Closing of the transaction is anticipated during fourth quarter 2023, subject to customary closing conditions
• Following the partial sale of a 40 per cent equity interest in Columbia Gas and Columbia Gulf, we continue to expect 2023 comparable EBITDA to be five to seven per cent higher than 2022; however, comparable earnings per common share for 2023 is now expected to be generally consistent with 2022
• Placed approximately $2.1 billion of natural gas and liquids capacity capital projects in service during the first six months of 2023, progressing to our expected $6 billion of assets placed into service in 2023
• The Coastal GasLink project is approximately 91 per cent complete overall and continues to track cost and schedule with mechanical completion expected by year end
  • As previously communicated, based on the expectation that additional equity contributions will predominantly be funded by TC Energy, there is a pre-tax impairment charge of the full value of our investment in Coastal GasLink LP of $843 million ($809 million after tax) in second quarter 2023
• Southeast Gateway Pipeline project progressing according to planned milestones; commenced onshore pipe installation and facilities construction this summer and expect offshore pipe installation to begin by year end
• Placed North Baja XPress into service
• Filed uncontested Columbia Gulf rate settlement on July 7, 2023
• Government of Ontario announced the proposed Ontario Pumped Storage Project moving to final evaluation from the Minister of Energy with a decision expected by the end of the year, subject to Board approval
• Finalized contracts to sell 50 MW under TC Energy’s 24-by-7 carbon-free power offering in Alberta. Contract terms range from 15 to 20 years and are expected to commence in 2025
• Declared a quarterly dividend of $0.93 per common share for the quarter ending September 30, 2023
• Dividend Reinvestment and Share Purchase Plan (DRP) participation rate amongst common shareholders was approximately 39 per cent, resulting in $374 million to be reinvested in common equity from the dividends declared on April 27, 2023
• Subsequent to the dividends declared for the quarter ended June 30, 2023, which are being paid on July 31, 2023, TC Energy has discontinued the discounted DRP as outlined in our 2022 Annual Report.
  

2023 Report on Sustainability highlights progress across the business

• Reduced absolute methane emissions by 14 per cent between 2019 and 2022, while increasing natural gas throughput 11 per cent and natural gas comparable EBITDA 20 per cent
• Increased weighting of environmental, social and governance (ESG) from 25 per cent in 2022 to 30 per cent in 2023 corporate scorecard
• Greater transparency with Report on Sustainability and ESG Data Sheet combined and published earlier in year, and publication of new Methane Emissions Disclosure Report and Climate-related Lobbying Report
• Advanced safety culture with third-party safety assessment results being applied in 2023
• Became a pilot member for the Task Force on Nature-based Financial Disclosures
• Commitment to supporting human rights in our Code of Business Ethics Policy and through the adoption of UN Global Compact principles into strategy, culture and day-to-day activities.

1 Includes Capital expenditures, Capital projects in development and Contributions to equity investments. Refer to the Financial condition – Cash (used in) provided by investing activities section for additional information.

CEO Message

Delivering on our 2023 priorities
We remain laser focused on our 2023 priorities and have achieved significant milestones during the first half of the year. We continue to safely execute major projects like Coastal GasLink and Southeast Gateway that continue to track cost and schedule. We have accelerated our deleveraging by advancing our $5+ billion asset divestiture program, and we continue to maximize the value and performance of our assets through safe operations and reliability of service. In late 2022, we initiated our Focus Project, which is fundamentally about re-thinking the way we do our work. We have recently completed our Wave 1 initiative design and identified $750 million of annual run-rate opportunities to be realized by end of 2025, with approximately $150 million of that complete this year. These opportunities are predominantly in the form of capital reductions and other efficiencies, which primarily will flow back to our customers and enhance the competitiveness of our services, and are included in our $6 billion to $7 billion net capital expenditure outlook. Our Wave 2 analysis, which recently commenced, indicates the potential for an additional $250 million of opportunities that in part represent an upside to our plan, and will be partially flowed back to our customers consistent with regulatory and commercial agreements.

In conjunction with the spinoff of our Liquids business and the combining of our highly integrated North American Natural Gas Pipelines business into a single, unified business, our Focus Project will enable us to unlock synergies to create value for our customers and our shareholders. As a result, Stanley (Stan) G. Chapman, III has been promoted to Executive Vice-President and Chief Operating Officer, Natural Gas Pipelines. His deep industry experience across North America will drive further integration and strengthen our business model through alignment and simplification, leading to safety, operational, commercial and project execution excellence.

Unlocking shareholder value through the creation of two premium energy infrastructure companies
On July 27, 2023, we announced our Board of Directors has approved plans to spin off our Liquids Pipelines business that follows a comprehensive two-year review to unlock incremental shareholder value. The separation of our Natural Gas Pipelines and Power and Energy Solutions businesses from our Liquids Pipelines business will maximize the value of our assets. Led by dedicated and highly experienced teams, both companies can pursue growth through disciplined capital allocation and a continued commitment to finding efficiencies and operational excellence.

• TC Energy will focus on natural gas, driven by strong long-term fundamentals and power and energy solutions, driven by nuclear, pumped hydro energy storage and new energy opportunities.
• The Liquids Pipelines Company will focus on enhancing the value of our asset base by increasing capacity on underutilized portions of the system and increasing connectivity between critical Canadian supply and the largest, most resilient demand markets.

Leading the spinoff entity, Bevin Wirzba, our Executive Vice-President and Group Executive, Canadian Natural Gas Pipelines and Liquids Pipelines, and President, Coastal GasLink, will assume the role of President and CEO of the new Liquids Pipelines Company. His expertise and leadership capabilities will capture the opportunities ahead as this world-class company provides critical inf