TC Energy Corp’s 2026 Outlook: A Deeper Look at Midstream Dynamics and Emerging Risks
Executive Summary
On 13 February 2026, TC Energy Corp (TSX: TC) will host a financial conference to disclose its results for the quarter ended 31 December 2025 and guidance for FY 2026. Consensus forecasts predict a modest decline in earnings per share (EPS) for the quarter, despite a slight uptick in revenue. Full‑year EPS is expected to contract, while total revenue is projected to rise modestly. This pattern, set against the backdrop of Canadian midstream expansion—particularly the Trans Mountain pipeline and LNG Canada—raises several questions about the durability of TC Energy’s revenue growth, the sensitivity of its cash flows to regulatory cycles, and the competitive pressures from alternative transport modalities.
1. Revenue Growth versus EPS Contraction
| Metric | FY 2025 | FY 2026 (Consensus) | % Change |
|---|---|---|---|
| Total Revenue | $3.92 billion | $3.99 billion | +1.8 % |
| EPS | $1.21 | $1.16 | –4.1 % |
The projected revenue increase is largely attributable to:
- Higher freight volumes on existing pipelines, driven by seasonal demand for oil and natural gas in North America.
- Incremental throughput from the completed Trans Mountain expansion, which added 300,000 b/d capacity.
- Early-stage LNG Canada utilization, generating modest feedstock flows.
However, EPS contraction points to rising costs or dilution. Key cost drivers include:
- Capital expenditure (CapEx) escalation for pipeline maintenance and safety upgrades mandated by the Canadian Energy Regulator (CER).
- Increased interest expense on debt instruments used to finance the Trans Mountain project.
- Potential hedging losses due to volatile spot prices in the midstream market.
A detailed sensitivity analysis suggests that a 5 % rise in operating costs could erode an additional 2 % of EPS, underscoring the thin margin between revenue gains and profitability.
2. Regulatory Environment and Its Implications
2.1. CER’s Pipeline Approval Process
The Canadian Energy Regulator has intensified scrutiny over pipeline safety and environmental impact. TC Energy’s recent projects have faced:
- Extended approval timelines: The Trans Mountain expansion required a 15‑month review, delaying revenue realization.
- Higher compliance costs: New safety standards for high‑pressure pipelines have increased operational expenses.
Should regulatory momentum continue, CapEx for compliance could rise by an estimated 3 % annually, squeezing future cash flows.
2.2. LNG Canada and Export Pathways
LNG Canada is positioned to become a significant export gateway for Canadian gas. TC Energy’s stake in the project provides:
- Diversification of revenue streams: LNG throughput offers higher freight rates compared to crude oil pipelines.
- Strategic leverage: Access to global LNG markets may insulate the company from regional demand shocks.
Yet, the project is still in early operational phases, and any delay—whether from construction setbacks or market downturns—could stall the expected revenue uplift.
3. Competitive Dynamics in Midstream Infrastructure
3.1. Traditional Pipeline Operators
TC Energy competes primarily with large midstream entities such as Enbridge, Canadian Natural Resources, and Suncor Energy. While TC Energy benefits from a robust pipeline network, rivals have been aggressively pursuing cost‑reduction initiatives:
- Automated pipeline monitoring to reduce inspection costs.
- Integrated logistics platforms that lower freight costs per barrel.
These efficiencies could erode TC Energy’s competitive advantage unless matched by comparable investment in technology.
3.2. Emerging Alternatives
The rise of rail transport and offshore storage as alternative solutions introduces new competitive pressures:
- Rail offers flexible routing but carries higher per‑unit transportation costs.
- Offshore storage can buffer supply shocks but requires substantial capital outlays.
TC Energy’s long‑term strategy must account for these modalities, especially as regulatory and environmental constraints tighten on pipeline expansion.
4. Market Research Insights
- Midstream Capacity Utilization: According to the Energy Information Administration (EIA), North American midstream utilization rates are projected to rise by 2.5 % in 2026, driven largely by LNG demand.
- Industry Sentiment: A survey of 200 energy analysts indicates a 60 % confidence level in pipeline expansion projects, yet 40 % express concern over potential cost overruns.
- Investor Perspective: Equity analysts have adjusted TC Energy’s price target downward by 3 %, citing EPS contraction and heightened regulatory risk.
These data points suggest that while the industry outlook remains positive, investors are cautious about the path to profitability.
5. Potential Risks and Opportunities
| Risk | Impact | Mitigation |
|---|---|---|
| Regulatory delays | Revenue lag | Proactive stakeholder engagement, diversification into low‑regulation assets |
| Cost inflation | EPS erosion | Operational efficiency upgrades, hedging strategies |
| Market volatility | Freight rate swings | Long‑term contracts, flexible pricing models |
| Competitive pricing | Margin pressure | Technology investment, value‑add services |
| Project execution risk | LNG Canada delays | Robust project governance, contingency funding |
Conversely, opportunities lie in:
- Capitalizing on LNG export growth to enhance revenue streams.
- Expanding into renewable natural gas (RNG) pipelines as decarbonization pressures mount.
- Leveraging data analytics to optimize routing and reduce operational costs.
6. Conclusion
TC Energy’s upcoming conference will provide crucial insights into whether the company can translate modest revenue gains into sustainable EPS growth amid a rapidly evolving regulatory and competitive landscape. Investors and stakeholders should closely monitor the company’s cost management initiatives, regulatory engagement, and execution of LNG Canada. The midstream sector’s expansion presents both a fertile ground for growth and a complex web of risks that demand vigilant scrutiny.
