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TransCanada (TRP) to Divest Stakes in 2 U.S. Pipelines

Zacks Equity Research

Calgary-based midstream company TransCanada Corporation TRP recently announced the sale of two U.S. pipelines to affiliated limited partnership, TC Pipelines, LP TCP in order to fund the purchase of Columbia Pipeline Group. The deal will likely strengthen the cash flows and enable the company to increase its quarterly dividend. The financial terms of the agreement remain undisclosed as yet. The deal is subject to regulatory approvals and satisfactory closing conditions.

TransCanada is negotiating the sale of 49.3 % stake in Iroquois Natural Gas Transmission System which connects its pipeline system to U.S. Northeast.  The company will also sell  its remaining11.8% interest in the Portland Natural Gas Transmission System, an inter-state system carrying gas from Canada to England.

TransCanada had earlier sold 49.9% stake in Portland system and 25.9 % stake in Iroquois system for $223 and $286.5 million, respectively. TransCanada has been divesting stakes in many of its other assets lately to fund the ambitious Columbia Pipeline acquisition deal inked in July last year.

TransCanada has a boatload of projects underway, including Nova Gas Transmission, Canadian Mainline natural gas systems, power generation and other crude pipeline projects which will enable the company to deliver robust earnings and dividends growth in future.

Zacks Rank and Other Stocks to Consider

Headquartered in Canada, TransCanada is engaged in the natural gas transmission and power services. The company indirectly owns about 27% of TC Pipelines. Currently, TransCanada carries a Zacks Rank #2 (Buy).

TransCanada has outperformed the Zacks categorized Oil & Gas Production and Pipeline industry quarter to date. During the aforesaid period, shares of the company rallied 2.4% while the broader industry gained around 1%.

Some favorably placed players in the industry include Semgroup Corporation SEMG and Crescent Point Energy Corporation CPG. Both these companies sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks # 1 stocks here.

Semgroup delivered average positive earnings surprise of 79.10% for the trailing four quarters.

Crescent Point Energy reported positive earnings surprise in each of the last four quarters, the average being 127.16%.

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Semgroup Corporation (SEMG): Free Stock Analysis Report
TransCanada Corporation (TRP): Free Stock Analysis Report
TC PipeLines, LP (TCP): Free Stock Analysis Report
Crescent Point Energy Corporation (CPG): Free Stock Analysis Report
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