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TransCanada to Divest Coolidge Generating Station for $465M

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TransCanada Corporation (TRP - Free Report) recently agreed to divest its Coolidge Generating Station to Southwest Generation Operating Company’s subsidiary SWG Coolidge Holdings. The deal is worth around C$623 million ($465 million). The 575-megawatt power facility that runs on natural gas — located in Coolidge, AZ — is underpinned by a contract that has an expiry date in 2031.

After the closing of the deal, the Bruce Power nuclear facility and nine low-emission power plants will remain part of the portfolio of TransCanada, which will still have more than 6,000 megawatts of power generating capacity in Canada and the United States.

The divestment of the Coolidge facility is in line with the company’s strategy of boosting shareholder value. Along with the company’s C$630 million ($484 million) divestment of Cartier Wind Energy and pre-development cost reimbursement on the Coastal GasLink pipeline project, the sale of the Coolidge facility is anticipated to create a C$1.7 billion fund that will likely be used for the company’s near-term capital program.

Notably, TransCanada has several projects in its pipeline through 2023 (including some maintenance works), with a fund requirement of C$36.2 billion. Around C$12.5 billion has been invested in this program till Nov 13. Among these, around C$10 billion worth projects are expected to come online in the beginning of 2019. So far, C$3 billion worth projects from TransCanada’s capital program have already come online. 

Calgary, Alberta-based TransCanada is a premier energy infrastructure provider in North America. Established in 1951, the company is primarily focused on natural gas transmission through its 57,100-mile network of pipelines located in Canada, the United States and Mexico. TransCanada is also involved in other businesses, including power generation, natural gas storage and crude oil pipelines. It has a storage capacity of 653 billion cubic feet.

Zacks Rank and Other Stocks to Consider

Currently, TransCanada has a Zacks Rank #2 (Buy). Investors interested in the energy sector can opt for other top-ranked stocks given below.

Transportadora De Gas Sa Ord B (TGS - Free Report) is a production and pipeline company that sports a Zacks Rank #1 (Strong Buy). The company’s bottom line for 2018 is likely to improve 16.8% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

SilverBow Resources Inc. , an upstream company carrying a Zacks Rank #1, is expected to witness 19% top-line growth in 2018.

Frank's International N.V. (FI - Free Report) , a provider of engineered tubular services to the oil and gas industry, holds a Zacks Rank #2. The company’s bottom line for 2018 is anticipated to improve 31.2% year over year.

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