TC Energy closes $1.1bn sale of Portland Natural Gas Transmission System to advance asset divestiture goals

In a significant move toward its 2024 financial targets, TC Energy Corporation, along with its partner Northern New England Investment Company, Inc., a subsidiary of Énergir L.P., has successfully completed the sale of the Portland Natural Gas Transmission System (PNGTS) for a gross purchase price of USD 1.14 billion. The transaction, initially announced in July 2023, includes the assumption of USD 250 million in Senior Notes by the buyers, marking a crucial step for TC Energy as it strives to achieve its USD 3 billion asset divestiture target for the year.

TC Energy’s Strategic Financial Management

The sale of the Portland Natural Gas Transmission System is a pivotal part of TC Energy’s broader strategy to fortify its balance sheet and focus on core operations. François Poirier, President and CEO of TC Energy, underscored the importance of this transaction, emphasising that it brings the company closer to its goal of reducing its debt-to-EBITDA ratio to 4.75 by the end of 2024. The completion of this sale contributes approximately CAD 750 million in pre-tax cash equity proceeds to TC Energy, aligning with its ongoing efforts to enhance financial stability and optimise its portfolio.

Overview of the Portland Natural Gas Transmission System

TC Energy completes a $1.14 billion sale of the Portland Natural Gas Transmission System, advancing its $3 billion asset divestiture goal for 2024.

The Portland Natural Gas Transmission System is a 474-kilometre (295-mile) pipeline that stretches from the Quebec-Vermont border through New Hampshire and into Maine, providing a critical energy link for the New England region. Constructed in 1999, PNGTS is integral to the region’s energy infrastructure, transporting natural gas from Canadian reserves to meet the energy needs of residential, commercial, and industrial customers in the northeastern United States.

With a capacity of approximately 168 million cubic feet of gas per day, the Portland Natural Gas Transmission System is essential for ensuring a stable and reliable energy supply in New England. The pipeline’s strategic importance has made it a valuable asset within the energy sector, facilitating the delivery of natural gas for heating, electricity generation, and various industrial applications.

Expert Opinions on the Sale

Industry analysts have highlighted the strategic nature of the Portland Natural Gas Transmission System sale, viewing it as a well-calculated move by TC Energy to focus on its core assets and strengthen its financial position. One expert noted that divesting PNGTS allows TC Energy to redirect capital toward areas with higher growth potential, particularly in the natural gas and renewable energy sectors. The sale is also seen as a reflection of the evolving dynamics in the energy industry, where companies are increasingly focused on optimising their portfolios to navigate changing market conditions.

Transition and Future Outlook

As part of the sale agreement, TC Energy has committed to providing customary transition services to ensure a smooth and orderly transfer of the Portland Natural Gas Transmission System to the new owners. The collaboration between TC Energy and the buyers will be crucial in maintaining the safety and reliability of the pipeline during this transition period. With the sale now finalised, TC Energy is set to continue its focus on achieving its financial targets for 2024, with the Portland Natural Gas Transmission System sale serving as a key milestone in its broader strategy.

The sale of the Portland Natural Gas Transmission System for USD 1.14 billion represents a significant achievement for TC Energy as it progresses toward its asset divestiture goals for 2024. This transaction not only advances TC Energy’s financial objectives but also underscores its commitment to disciplined capital management and strategic portfolio optimisation. With this deal now complete, TC Energy is well-positioned to achieve its USD 3 billion divestiture target by the end of the year.