Trans Mountain Pipeline Operated at Capacity through the COVID-19 Pandemic and have Ensured Adherence to Direction from Health Officials

Trans Mountain Corporation (“TMC”) today posted its financial statements and associated management report for the three and six month periods ending June 30, 2020. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.

For the three month period ended June 30, 2020, net income was $29.8 million, a decrease of $44.9 million as compared to net income of $74.7 million in the same period of the prior year. The decrease is mainly due to the $60.4 million increase in income tax expense, due to the significant income tax recovery recognized in the prior year, coupled with a  $3.7 million decrease in Adjusted EBITDA and the $1.5 million increase in interest expense, partially offset by the $20.0 million increase in equity AFUDC (Allowance for Funds Used During Construction).

Net income for the six month period ended June 30, 2020 was $55.0 million, a decrease of $32.1 million as compared to net income of $87.1 million in the same period of the prior year. The decrease is mainly due to the $64.2 million increase in income tax expense, due to the significant income tax recovery recognized in the prior year, and a $5.7 million decrease in Adjusted EBITDA. These decreases were partially offset by the $36.4 million increase in equity AFUDC and the $2.8 million decrease in interest expense, due to increased capitalized interest, both of which were a result of increased capital spending on the Trans Mountain Expansion Project (“TMEP”).

The mainline remained full through the period, with average daily throughput for the quarter averaging approximately 293,000 barrels per day, throughput to Washington State on the Puget pipeline averaged approximately 152,000 barrels per day, and Westridge Marine Terminal averaged 68,000 barrels per day during the period.

“Our financial results for the quarter reflect the continued strong demand for capacity on the pipeline. Operating performance and financial results for the quarter, adjusted for an increased income tax provision, were very close to plan,” said Ian Anderson, President and CEO of Trans Mountain Corporation.

“The first half of the year was also  marked by the unprecedented situation the world is facing with the ongoing  pandemic and Trans Mountain has continued to put the safety of our workforce and communities first ,” added  Anderson “With close to 5,000 people working on the Expansion Project across B.C. and Alberta, we know the important role Trans Mountain plays in the economic recovery of communities .”

In the second quarter of 2020, work continued at B.C.’s Lower Mainland terminals with considerable progress made on the expansion at the Westridge Marine Terminal and ongoing work to prepare for the start of tunnel boring and the installation of tanks at the Burnaby Terminal. In June, work began in Kamloops to support pipeline construction and preparation activities including the opening of Trans Mountain’s first camp community for workforce accommodation in the North Thompson region. In Alberta, several river crossings have been completed and pipeline construction is nearing completion in the Greater Edmonton area. The project remains on track for late 2022 completion.

On June 13, 2020, Trans Mountain experienced a release of between 150-190 cubic metres of crude oil at its Sumas Pump Station in Abbotsford, B.C. The company immediately responded to the incident and at no time did the product migrate beyond Trans Mountain’s property.

“Our initial assessment is that the release is related to a failed fitting on a small diameter pipe connected to the mainline. Our cleanup and restoration efforts on site are continuing, with ongoing monitoring of air quality and ground water. Monitoring has indicated no risk to the public or the community,” said Anderson. “Our response to this incident demonstrated our abilities to execute our emergency response plans quickly and in cooperation with the local Indigenous community, the municipal community and regulators.”

Trans Mountain is conducting a thorough investigation into the incident and is fully cooperating with all authorities including the Transportation Safety Board and the Canada Energy Regulator.

On July 2, 2020, the Supreme Court of Canada dismissed all applications for leave to appeal the Federal Court of Appeal’s February 4, 2020 dismissal of challenges to the Federal Government’s approval of the TMEP.

See the full financial statements and management report documents here

See Canada Development Investment Corporation’s Quarterly Report here.

Non-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.