TC Energy Corp plans to spin off its crudie oil pipeline division into a separate business, effectively splitting the energy giant into two companies.
The move, announced after the bell Thursday, will create two publicly traded companies, according to the announcement. The new TC Energy will focus primarily on natural gas infrastructure, along with assets in pumped hydro energy storage and low-carbon energy.
The pipeline business will focus on maximizing the value of its 4,900 kilometers of crude oil pipeline, including the Keystone pipeline that transports oil from Alberta to the midwest and Gulf Coast of the US.
The company will remain headquartered in Calgary, with another office in Houston, Texas.
Current TC Energy CEO Francois Poirier plans to lead the new natural gas company, while executive vice president Bevin Wirzba is slated to head the new pipeline company.
Porter said the move earned the approval of TC Energy’s board of directors and is expected to close by the end of 2024.
“When we took a step back and looked at all the opportunity we had in all of our franchises, it was way more than we could … pursue as one company, given our financial and human capacity,” Poirier said.
“It’s simply a case of having limited resources, and we feel like we can pursue a bigger percentage of our opportunity set as two different companies.”
Ultimately, the idea seems to be to attract new energy investors to TC Energy while retaining the oil pipeline investor base.
“The shareholders of TC Energy today really like that (oil pipeline) business,” he said. “It’s just that there’s been so much growth on the gas and low-carbon side of the business.”
In the short term, however, its stock has taken a hit. Shares of TC Energy traded more than 5% lower Friday morning to US$33.91.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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