By Rod Nickel

WINNIPEG, Manitoba (Reuters) – As TC Energy Corp prepares to unload C$5 billion ($3.7 billion) in assets next year, investors and analysts say the North American pipeline operator has plenty of options without touching its core gas business.

Chief Executive Francois Poirier cleared up any ambiguities this week when asked how much of TC’s portfolio is in the shop window.

“I remember reading a book once called, ‘Sacred Cows Make the Best Burgers,'” Poirier said at the company’s investor day.

“There are no sacred cows.”

Calgary, Alberta-based TC is widely known for its Keystone oil pipeline, a critical artery for moving Canadian oil to U.S. refiners that dominated headlines over the past decade for an expansion that ultimately failed.

But moving natural gas around the United States, Canada and Mexico is the bigger part of TC’s business.

TC should consider selling Keystone along with its stake in Ontario’s Bruce Power nuclear facility, since they are not part of its core business, said Rob Thummel, senior portfolio manager at TC shareholder Tortoise Capital Advisors.

“As far as a strategy, they’re trying to figure out, do they want to be a utility company or more of an infrastructure play?” Thummel said. “The stuff that’s not core, you could look at selling and implementing a buyback program or look at energy transition ideas.”

Keystone could fetch TC C$12.8 billion, said CIBC analyst Robert Catellier in a note. He added that reducing TC’s oil exposure would help it reach its emissions-reduction goals.

Selling Keystone, and the rest of TC’s oil pipelines, makes sense since other companies are more dominant than TC in liquids, said Brandon Thimer, equity analyst at TC shareholder First Avenue Investment Counsel.

“I think the market is going to applaud some of these dispositions.”

TC’s fund-raising plans to reduce debt and fund projects, notably the troubled Coastal GasLink pipeline in British Columbia, are critical to reviving investor confidence in a company whose shares have lagged those of rival Enbridge Inc.

The sales may reassure the market that TC will not need to issue common equity to raise funds in light of Coastal’s cost over-runs and a deal in August to develop a $4.5 billion pipeline in Mexico, RBC analyst Robert Kwan said.

TC stock has gained less than 1% year to date, while Enbridge has added nearly 12% as of Thursday.

TC’s stake in the Millennium natural gas pipeline in New York state is another logical sale candidate and could fetch $1 billion, said Scotiabank analyst Robert Hope. Small Alberta oil pipelines, Grand Rapids and White Spruce, could also be for sale, Hope said.

TC may be in sell mode now, but it has no intentions of shrinking. Poirier said the company needs to reduce debt to below five times its EBITDA to give TC the capacity to buy other assets that it expects to become available in coming years.

“Our highest priority in 2023 is to accelerate our deleveraging because we do see over the ensuing years some opportunities for us potentially to be opportunistic in M&A,” Poirier said.

“You can’t do that unless you’ve built some cushion.”

(This story has been refiled to fix the name of the shareholder in paragraph 10)

(Reporting by Rod Nickel in Winnipeg; additional reporting by Maiya Keidan in Toronto; Editing by Marguerita Choy)

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