Veresen Inc. T.VSN.DB.B

TD Waterhouse Comments Today

[hawk35]

Still a buy and target price remains 11.00.  TD is not pricing in any JC and still feels it has only a 5% chance of happening. 

My personal feeling is I hope the appeal is rejected and VSN can move on to other growth projects with a better chance of success. 

Below is the cut and paste.

Impact: POSITIVE
Demonstrates Commercial Support for Jordan Cove: Although a
finalized tolling agreement is still outstanding, this announcement for at
least 25% of the initial total capacity of Jordan Cove is a step in the right
direction for the project and reaffirms that the project could be
commercially viable.
Could Help with Potential Appeal: VSN will submit this preliminary
agreement in its planned request for rehearing filing following the
FERC’s March 11, 2016 certificates denial.
No Changes in Jordan Cove’s Probability of Success: Although we
view the preliminary agreement positively, we note that there is
continued uncertainty over the regulatory fate of the project and have not
changed our 5% probability that Jordan Cove will proceed.

TD Investment Conclusion
Our BUY rating is based on our view that: 1) the Alliance Pipeline looks
well-positioned to service the Montney, Duvernay, and Bakken and 2) asset
diversification strengthens support for the dividend. We do not have any
value for Jordan Cove in our $11.00 target price, and although it is not
impossible that the project can eventually be built, we believe that a 5%
probability of the project proceeding is appropriate given the chance for a
rehearing of the FERC’s denial and the recent evidence of some commercial
support, but challenges on both the regulatory and commercial front still
persist.