(Calgary) TC Energy on Monday announced the sale of a 40% stake in its Columbia Gas Transmission and Columbia Gulf Transmission systems to New York-based Global Infrastructure Partners for $5.2 billion.
The move is the culmination of an asset disposal program that Calgary-based TC Energy announced last fall. The company said at the time that it would seek to sell at least $5 billion in non-core assets by the end of 2023, to help fund its larger expansion goals without taking on heavy debt.
The Columbia Gas and Columbia Gulf pipelines stretch more than 24,000 kilometers across North America, supplying a substantial portion of the daily demand for natural gas in the United States, including approximately 20% of the United States supply of liquefied natural gas (LNG).
TC Energy said it would continue to operate the pipelines and fund their annual maintenance, upgrades and growth in conjunction with Global Infrastructure Partners.
Global Infrastructure Partners’ share of capital spending will average more than $1.3 billion per year over the next three years, TC Energy said.
The divestiture comes as TC Energy has faced rising costs at its Coastal GasLink project, which is currently under construction in British Columbia and more than 90% complete. Earlier this year, TC Energy raised the expected cost of the Coastal GasLink project to $14.5 billion from an earlier estimate of $11.2 billion.
Royal Bank analyst Robert Kwan wrote in a research note on Monday that he liked the Columbia Pipelines deal because it took a “significant chunk” of TC Energy’s $5+ billion asset monetization program all at once, through a deal with a “well-regarded partner.”
Kwan said he expects TC Energy to announce additional divestments in the coming months.
TC Energy is due to release its second-quarter financial results on Friday.