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British Columbia boosts power plan but electrifying LNG proving big challenge
© Reuters. FILE PHOTO: LNG Canada site construction activities are held, in Kitimat, Canada, September 2022. LNG Canada/Handout via REUTERS/File Photo
(This Jan. 19 story has been corrected to fix the affiliation of source to Clean Energy Canada, not Clean Energy BC, in paragraph 17)
By Rod Nickel
WINNIPEG, Manitoba (Reuters) – British Columbia boosted its C$36 billion ($26.7 billion) plan to expand its grid over the next decade, but Canada’s Pacific Coast province will still fall short of supplying the biggest liquefied (LNG) projects with hydropower needed to avoid generating high emissions.
Long regulatory processes mean a critical northern transmission line expansion will only be ready years after LNG plants start operating and droughts are already curbing British Columbia’s (B.C.’s) power generation.
B.C. boosted its electricity grid spending plans on Tuesday by 50%, as demand soars from industry for renewable hydropower and as the province switches to electric vehicles and electric heating in buildings.
“It’s a huge challenge to meet all the potential demand for electricity – daunting,” said Barry Penner, a former B.C. environment minister and now chair of Energy Futures Initiative, a program of advocacy group Resource Works.
Supplying hydropower to LNG projects, including Shell-led LNG Canada, is critical to the goals of the province and Canada to cut emissions sharply by 2030. LNG export facilities would tap into lucrative offshore demand for Canadian natural gas.
LNG Canada, which is 90% complete, will run its 14 million-metric ton per annum facility on high-emission natural gas, complicating Canada’s net-zero goals. The company, which is considering a second phase that may switch to grid power once it’s available, said in a statement on Thursday it is encouraged by government efforts to expedite electricity expansion.
The key part of B.C.’s grid plan for LNG Canada is the C$3 billion expansion of a northwest transmission line. Building it would take up to 10 years because of the need for agreement with First Nations and permitting, BC Hydro CEO Chris O’Riley said.
“We’re all committed to getting these projects built as quickly as possible and we all want them to run on electricity. That’s our goal,” O’Riley said in an interview.
BC Hydro’s timeline means the transmission line won’t be expanded until the early 2030s, after LNG Canada and rival proposals Ksi Lisims LNG and Cedar LNG are running.
FIRST NATIONS SUPPORT
A capacitor station project in northwestern B.C. will provide sufficient power for Cedar LNG, a project of the Haisla Nation and Pembina Pipeline (NYSE:), O’Riley said. Ksi Lisims plans to start up as early as 2028.
First Nations support for the northwest transmission line could accelerate the regulatory timeline. K’uul Power, a consortium of 11 First Nations, is in talks to buy 50% of the project from BC Hydro.
“If you’re in charge, then you’re OK with going fast because you can protect your interests,” said K’uul CEO Alex Grzybowski. “An expedited process is entirely on the table.”
B.C. has formed a task force to speed up permitting for clean energy projects.
B.C., like Quebec, whose government-owned Hydro Quebec utility released its own long-term plan for grid expansion in November, relies on hydro for most of its power. That resource and B.C.’s coastal ports have made it the center of Canada’s nascent LNG industry. Neighboring Alberta by contrast relies on high-emission natural gas to generate power.
Droughts pose another challenge for B.C. BC Hydro imported a record one-fifth of its 2023 power needs as drought cut hydropower generation.
BC Hydro plans to add wind and solar generation to help hedge the drought risk, O’Riley said.
But B.C. may still lack sufficient power to satisfy all industries, from LNG to mining of critical minerals and hydrogen proposals, said Evan Pivnick, program manager at Clean Energy Canada.
“One of the key questions that B.C. is going to have to confront is, which industries is it prioritising?” Pivnick said.
($1 = 1.3511 Canadian dollars)
On Friday, Argus increased its stock price target on Rithm Capital Corp. (NYSE: RITM) to $13.00, up from the previous $12.00, while reaffirming its Buy rating on the stock. The firm highlighted the company’s ongoing transformation and expansion efforts as the rationale behind the revised target price.
Rithm Capital, which rebranded from New Residential Investment Corp. in August 2022, has since transitioned to internal management after previously being managed by Fortress Investment Group. This change is part of a broader transformation of the company’s business model initiated following the financial crisis in late March 2020.
The company has been actively growing its mortgage servicing operations and seizing new debt-related investment opportunities. In its expansion efforts, Rithm Capital has acquired a 50% interest in GreenBarn Investment Group, a commercial real estate equity and debt investment management firm.
Further bolstering its portfolio, Rithm Capital has also made significant acquisitions, including purchasing $1.4 billion worth of Marcus consumer loans from Goldman Sachs for $145 million. Moreover, the company has completed the acquisition of Computershare Mortgage Services Inc. and its affiliates, including Specialized Loan Servicing LLC (SLS), for an approximate total of $720 million.
Completing its notable transactions, Rithm Capital finalized the acquisition of the $33 billion alternative asset manager Sculptor Capital Management (NYSE:) in the fourth quarter of 2023. These strategic moves have contributed to the firm’s positive outlook on Rithm Capital’s stock and its increased price target.
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In light of Argus’s stock recent price target increase for Rithm Capital Corp. (NYSE: RITM), InvestingPro data further supports the optimistic outlook. Rithm Capital’s market capitalization stands at a robust $5.55 billion, while maintaining an attractive P/E ratio of 7.41, indicating that the stock may be undervalued relative to its earnings.
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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
On Friday, JPMorgan upheld its Overweight rating on CK Infrastructure Holdings (1038:HK) (OTC: CKISY) with a consistent price target of HK$50.00. The firm’s analysis was based on a review of the company’s financial year 2023 results and current operating trends. Adjustments were made to the earnings forecasts for the years 2024 and 2025, with a slight reduction for 2024 by 2% and an increase for 2025 by 2%. These revisions take into account the influence of regulatory changes, inflation, and fluctuating exchange rates on the company’s regulated assets, particularly in the United Kingdom, Australia, and other regions.
The updated model reflects the latest developments and anticipates the potential financial impact on CK Infrastructure. The firm has decided to roll forward its price target to June 2025, while maintaining the previous target of HK$50. The Overweight rating suggests that JPMorgan continues to view the stock favorably in comparison to the sector average.
CK Infrastructure Holdings, which operates a diversified portfolio of infrastructure businesses, has been assessed for its performance and outlook in light of various external factors. The company’s exposure to regulatory resets and economic conditions in different geographies necessitates a nuanced understanding of its earnings potential.
The revised earnings estimates are a direct result of the firm’s comprehensive evaluation of the company’s regulated assets. These assets, which are subject to oversight by regulatory bodies, can be affected by policy changes and economic shifts, such as inflation and currency exchange rates.
JPMorgan’s reaffirmation of the Overweight rating indicates confidence in CK Infrastructure’s ability to navigate the complexities of its operating environment. The price target of HK$50 remains unchanged, signaling the firm’s belief in the company’s value proposition and its prospects for the future.
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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
On Friday, Argus maintained a Buy rating on Ashland Inc . (NYSE: NYSE:) and increased the stock’s price target to $118 from $109. This adjustment suggests a potential total return of approximately 21%, including dividends, based on the current share prices.
The specialty chemicals and additives provider has experienced underwhelming operational and financial performance over recent quarters, including the second quarter of 2024. This was attributed to slower economic growth in key regions such as China, Europe, and parts of Asia. These areas faced challenges due to soft customer demand and ongoing inventory destocking by suppliers, which adversely affected Ashland’s revenue and profit margins.
Despite these challenges, there have been positive signs in the last quarter indicating a shift in market conditions. Ashland’s management has reported a gradual increase in demand across most of the company’s end markets.
According to Argus, this improvement is a result of the destocking cycle nearing its end and customer demand beginning to rise, which are seen as favorable trends for Ashland’s future growth.
The revised stock price target reflects the analyst’s confidence in Ashland’s recovery trajectory as the market dynamics that previously hindered the company’s performance are starting to reverse. The upward revision in the price target is based on the expectation of a continued recovery in customer demand patterns and the conclusion of inventory destocking.
Investors and market watchers will be monitoring Ashland’s progress closely, as the company aims to capitalize on the improving demand in its various markets and work towards delivering value to its shareholders.
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InvestingPro Insights
As Argus maintains a positive outlook on Ashland Inc. (NYSE: ASH), highlighting the potential for a 21% total return, InvestingPro data provides additional insights into the company’s financial health and market performance.
Ashland’s management’s aggressive share buyback strategy and a high shareholder yield are noteworthy, as noted by InvestingPro Tips. Furthermore, the company’s consistent dividend growth, with dividends raised for five consecutive years and maintained for 54 years, underscores its commitment to shareholder returns.
From a market perspective, Ashland’s stock is trading near its 52-week high, with analysts predicting profitability for the year. The company’s strong liquidity position, with liquid assets surpassing short-term obligations, is reassuring for investors.
Key financial metrics include a market capitalization of $4.98 billion, a P/E ratio of 26.25, and a dividend yield of 1.64%. Despite a decline in revenue growth over the last twelve months, the stock has experienced a significant price uptick, with a 29.41% total return over the last six months.
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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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