Expansion Project Marked Key milestones in 2019, with construction expected to be underway across the pipeline in 2020.
Trans Mountain Corporation (TMC) today posted to its website the company’s financial statements and associated management report for the year ending December 31, 2019. The company’s financial results were also included in Canada Development Investment Corporation’s recently approved consolidated financial statements.
For the year ended December 31, 2019, TMC net income totaled $130.9 million as compared to $9.5 million in the prior year. The increase is due to a full year of results in 2019 following the acquisition of the Trans Mountain entities on August 31, 2018 coupled with an increase in equity AFUDC (Allowance for Funds Used During Construction) and capitalized interest due the increased capital spending on TMEP (Trans Mountain Expansion Project) and an income tax recovery due to the July 2019 decrease in the Alberta corporate tax rate.
Total throughput on the pipeline for the year averaged approximately 313,900 barrels per day and throughput to Washington State on the Puget pipeline averaged approximately 203,000 barrels per day for the year.
“This past year we saw significant progress and developments for the Expansion Project culminating with pipe in the ground in Alberta, a key milestone for Project construction” said Ian Anderson, President and CEO of Trans Mountain Corporation. “Both operationally and financially it was a successful year for the corporation, built on a foundation and culture of environment responsibility, health and safety and a commitment to the communities where we operate and are constructing.”
As of December 31, 2019 Trans Mountain and its contractors have hired more than 2,900 people to work on the Project including more than 300 Indigenous hires and spent almost 7 million person hours on the Expansion Project. Current workforce projections will see more than 5,500 people working during peak construction, expected to be in mid to late 2021.
“We’re excited and optimistic about the year ahead and expect to have construction underway on the Project across the entire line,” added Anderson. “The Project has set new standards for Indigenous participation and inclusion, reflects the input and feedback from thousands of Canadians and incorporates the very best safety and environmental protections.”
On February 4, 2020, The Federal Court of Appeal dismissed challenges to the Federal Government’s approval of the Project. On February 7, 2020, TMC announced a revised cost estimate for the Expansion Project of $12.6 billion with service expected to start by the end of 2022. The projected adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization and equity AFUDC) is expected to be at least $1.5 billion in the first year of TMEP’s operation and expected to grow annually thereafter. These projections are underpinned by long-term contractual commitments for 80% of the system’s 890,000 barrels a day of capacity.
Construction of the Expansion Project has continued safely during the unprecedented Covid-19 pandemic. Extensive safe work measures have been adopted based upon the advice of health authorities and industry leading best practices. The safety of all of our workers and communities remains our number one priority.
See the full financial statements and management report documents here.
See Canada Development Investment Corporation’s Quarterly Report here.
Non-Generally accepted accounting principle (GAAP) measures
We make use of certain financial measures that do not have a standardized meaning under U.S. GAAP because we believe they improve management’s ability to evaluate our operating performance and compare results between periods. These are known as non-GAAP measures and may not be similar to measures provided by other entities. Adjusted EBITDA is a non-GAAP measure we use to evaluate our operating performance absent the impact of financing decisions, non- cash depreciation and amortization, and non-cash equity AFUDC.
AFUDC is an amount recognized by rate-regulated entities to reflect a return on the equity and debt components of capital invested in construction work in progress.
This Report reflects financial results for the period ending December 31, 2019. As TMC was incorporated on May 28, 2018 and acquired the Trans Mountain Entities on August 31, 2018, prior year figures only contain operations from September to December 2018.