TC Pipelines, LP Cash Flow Increases in Fourth Quarter 2011

TC PipeLines, LP (NYSE: TCP) on Feb., 16 reported fourth quarter 2011 Partnership cash flow of $83.3 million compared to $51.7 million for the same period in 2010. For the year ended Dec. 31, Partnership cash flow was $222.4 million, compared to $180.1 million in 2010.

Net income in the fourth quarter 2011 was $38.3 million or $0.70 per common unit, and for the year ended Dec. 31 was $157.4 million or $3.02 per common unit.

"The Partnership's results in 2011 demonstrate a commitment to our strategy of investing in stable, long-term assets. The addition of interests in two high-quality pipelines, GTN and Bison, diversified and strengthened our portfolio by adding new markets and new supply sources," said Steve Becker, president of TC PipeLines GP, Inc.

--  Full-Year Highlights:

    --  Partnership cash flows of $222.4 million

    --  Paid cash distributions of $154.8 million

    --  Increased cash distributions paid by 3.4 percent to $3.04 per common unit

    --  Net income of $157.4 million or $3.02 per common unit

    --  Acquired 25 percent interest in two long-haul natural gas pipelines: Gas Transmission Northwest LLC (GTN) and Bison Pipeline LLC (Bison)

    --  Raised $337.6 million in equity from a secondary issuance of common units in connection with the GTN and Bison acquisition

    --  Raised $350.0 million in first public debt offering and obtained investment grade credit ratings (BBB/Baa2)

--  Fourth Quarter Highlights:

    --  Partnership cash flows of $83.3 million, including a one-time cash distribution from GTN of $20.0 million related to its cash balance

        at the time of acquisition

    --  Paid cash distributions of $42.0 million

    --  Declared cash distributions of $0.77 per common unit

    --  Net income of $38.3 million or $0.70 per common unit

    --  Achieved rate case settlement on Tuscarora, pending Federal Energy Regulatory Commission (FERC) approval

    --  Received approval from FERC on GTN rate settlement

    --  Moved exchange listing to the New York Stock Exchange (NYSE) and changed trading ticker symbol to 'TCP'

Three energy pipeline MLPs that yield seven percent or better return

The following high-yielding MLPs are currently paying a return of seven percent or more per year:

BreitBurn Energy Partners (Nasdaq: BBEP). BBEP primarily invests in oil and gas properties in the Antrim Shale in northern Michigan, the Los Angeles Basin, Wyoming, Florida, and Kentucky. Unlike many MLPs, it does a considerable amount of exploration, so while its income is more risky, it is not self-liquidating. To ensure a steady cash flow, BBEP hedges its output for up to three years forward. This produces a stable cash flow but a wildly fluctuating income when oil prices bounce up and down. Thus, in the third quarter of 2011, BBEP reported net income of $2.87 per share as oil prices dropped, giving it a large profit on its forward hedges of three years' production. Operating EBITDA was about 90 cents per share and the company declared an increased quarterly dividend of $0.435 per share, or $1.74 per year, on the basis of which its yield is 9.8 percent. Since it's also trading at 14 percent below net asset value, BBEP looks like a good deal on both an income and a capital basis.

Penn Virginia Resource Partners LP (NYSE: PVR). Penn Virginia operates in two segments, coal and natural resource management, which manages and leases coal properties, and natural gas midstream, which offers gas processing, gathering, and other related services. It's somewhat diversified, with steady income but also has exposure to rising resource prices. Its quarterly dividend of $0.50 has risen steadily since 2003 and has doubled in that period. Net income currently does not quite cover the dividend, but cash flow is ample and there are many MLPs with worse income positions. It currently yields 7.7 percent but is trading at 4.4 times book value.

TC Pipelines LP (Nasdaq: TCLP): TC Pipelines transports natural gas in the United States and eastern Canada and owns 46.5 percent of Great Lakes Gas Transmission LP. Unlike many of these companies, its earnings cover its dividend - $3.11 per share in the last four quarters, compared with a 77-cent quarterly dividend totaling $3.08. Being a pipeline, it has the advantage of very steady earnings, and yields 6.8 percent. That may not exciting, but it's still more than three-times Treasuries for a cash flow that is bond-like in its assuredness.

TransCanada selling interest in GTN, Bison Pipelines to TC PipeLines, LP

CALGARY, Alta. - TransCanada Corp. (NYSE: TRP) on April 26 announced it has entered into agreements to sell a 25 percent interest in each of Gas Transmission Northwest LLC (GTN) and Bison Pipeline LLC to TC PipeLines, LP (NASDAQ: TCLP) for US$605 million, which includes US$81 million or 25 per ent of GTN's debt. The sale is expected to close in May 2011 and is subject to normal closing conditions.

"The proceeds from the sale of a 25 percent interest in both GTN and Bison will be used to help fund TransCanada's capital program," said Russ Girling, president and chief executive officer of TransCanada. "Once the transaction is complete, TransCanada will hold a 75 percent ownership interest in both pipelines and will continue to manage and operate these high quality assets as part of its integrated North American natural gas transmission network.”

The GTN pipeline system is a 1,353-mile natural gas transmission system that transports Western Canada Sedimentary Basin and Rocky Mountain-sourced natural gas to third party natural gas pipelines and markets in Washington, Oregon and California, and connects with the Partnership's Tuscarora pipeline system.

Bison is a new 303-mile natural gas pipeline connecting Rocky Mountain gas supply to downstream markets via the Northern Border pipeline system. The pipeline was constructed in 2010 and placed in service in January 2011. Shippers have contracts for 0.4 billion cubic feet per day on both Bison and Northern Border that expire in 2021. The Partnership has a 50 percent ownership interest in Northern Border.

TransCanada currently holds a 38.2 percent interest in TC PipeLines, LP, a U.S. master limited partnership.

S&P downgrades LP units of TC Pipelines from Buy to Hold

Standard & Poor's said on March 7 that it was downgrading units of TC Pipelines (Nasdaq: TCLP) from Buy to Hold based on valuation. The TCLP unit price has increased over 11 percent in the past four months.

S&P said it was encouraged that the partnership's Great Lakes segment has sold all its available capacity through October 2011, and that its Northern Border segment is fully contracted through March 2012. It believes that TCLP will increase its cash distribution 3.4 percent to $3.06 per unit in 2011.

S&P maintained its 2011 earnings per unit estimate of $2.89. It also kept its target price of $58, based on TCLP's 12-month forward distribution estimate and target yield of 5.3 percent, in line with its peers.

Dip in earnings at TC Pipelines L.P. prompts stock selloff

CALGARY, Alta. - TC PipeLines, LP (NASDAQ: TCLP) on July 30 reported second quarter 2009 net income of $13.7 million or $0.31 per common unit (all amounts in U.S. dollars), a decrease of $5.5 million compared to $19.2 million or $0.47 per common unit for the same period last year.
The market responded to the dip in earnings with 4.4 times normal volume changing hands. TCLP units dipped as low as $33.08 from its prior day close of $37.49 before settling at $36.00 on the day, down 3.97 percent.
TC Pipelines attributed the decrease in net income to lower Northern Border Pipeline Co. revenues and one-time costs associated with its acquisition of North Baja Pipeline, LLC (North Baja) and amendment of the associated incentive distribution rights (IDRs).
While unit income was down, TCLP announced an increase in its unit dividend. "We are very pleased to provide unitholders an increase in our quarterly cash distribution to $0.73 per common unit, equivalent to a $0.10 increase or $2.92 per common unit on an annualized basis. This followed the July 1st close of the transaction to acquire the North Baja pipeline from TransCanada Corp. and to amend the incentive distribution rights," said Russ Girling, chairman and chief executive officer of TC PipeLines GP, Inc.