Why is TC Energy So Cheap?

Still plenty of other pipeline opportunities.

Andrew Willis 3 September, 2021 | 4:28AM
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The cancellation of the Keystone XL pipeline had a profound impact on pipeline operator TC Energy (TRP). Sector strategist Stephen Ellis says that it cost the company 21 billion dollars….

But investors may have overreacted to the cancellation when considering that there are some silver linings. The 700 million dollar VR project, for example, which will improve its natural gas pipeline assets in the U.S., while reducing the company’s carbon emissions profile. And TC Energy hasn’t given up the fighting when it comes to the Keystone XL pipe – filing notice of intent to make a NAFTA claim to recover more than 15 billion in damages.

We think the odds of TC energy recovering anything material to be quite small, but it could influence lasting and favourable change in the regulatory process, reducing uncertainty around future Canada-U.S. pipeline proposals. And the political situation could further improve thanks to its joint project alongside Pembina, known as the Alberta Carbon Grid, which is set to reduce oil sands emissions by 30% by 2025. With this environment, TC energy’s broad network of existing pipelines looks primed for continued expansion.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
TC Energy Corp52.95 CAD-0.56Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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