Canadian National Railway Crude Shipments Raise 2019 Revenue, Expect Q4 Downturn
(Reuters) — Canadian National Railway Co on Tuesday reported a rise in crude shipment revenue while cautioning an expected drop in growth during Q4.
Canadian railroad operators reaped the benefits of oil producers looking for alternatives to ship booming production in the backdrop of pipeline congestion early in 2019 but have seen softer crude-by-rail volumes after Alberta, the oil producing province, cut output levels and government contracts were delayed.
Revenue from the petroleum and chemicals segment, which includes its crude-by-rail shipments, rose 18% this year to C$788 million with crude revenue up 34%.
However, the company cautioned that with the delay in government contracts and ramp up in crude shipments, it does not expect to see the same level of crude shipments in the fourth quarter compared to the year ago.
The company also expects slightly negative volume growth in 2019 in terms of revenue ton miles (RTMs) compared to its earlier estimates of mid single-digit volume growth. RTMs measures the relative weight and distance of freight transported by a railroad.
“We’re going to be slightly down, I think, in crude-by-rail volume going Q3 and Q4 unless something changes,” said a senior company executive James Cairns.
Chief Executive Officer Jean-Jacques Ruest said on a conference call with analysts that he expects things to get better in the second half of 2020.
“It’s a crystal ball for next year, it’s not clear yet,” he added.
Alberta’s government is trying to offload on to the private sector nearly C$4 billion ($3 billion) of crude-by-rail contracts that were signed by the former government, amounting to 120,000 barrels-per-day of crude.
However, the largest Canadian railroad operator, reported a better-than-expected profit for the third quarter due to higher freight rates.
Excluding one-time items, the railroad company earned C$1.66 per share, beating the average analyst estimate of C$1.62, according to IBES data from Refinitiv.
The company’s net income rose 5.4% to C$1.20 billion, or C$1.66 per share, in the quarter ended Sept. 30.
Revenue from intermodal shipments rose 13% to C$1.02 billion ($778.92 million) in the third quarter, driving the total revenue up 4% to C$3.83 billion, which however missed estimates of C$3.87 billion.
Related News
Related News
- Keystone Oil Pipeline Resumes Operations After Temporary Shutdown
- Biden Administration Buys Oil for Emergency Reserve Above Target Price
- Freeport LNG Plant Runs Near Zero Consumption for Fifth Day
- Enbridge to Invest $500 Million in Pipeline Assets, Including Expansion of 850-Mile Gray Oak Pipeline
- Mexico Seizes Air Liquide's Hydrogen Plant at Pemex Refinery
- Evacuation Technologies to Reduce Methane Releases During Pigging
- Editor’s Notebook: Nord Stream’s $20 Billion Question
- Enbridge Receives Approval to Begin Service on Louisiana Venice Gas Pipeline Project
- Mexico Seizes Air Liquide's Hydrogen Plant at Pemex Refinery
- Russian LNG Unfazed By U.S. Sanctions
Comments