Shares in Kinder Morgan Canada fell in their debut Tuesday on the Toronto Stock Exchange as political uncertainty swirled around the company's flagship Alberta-British Columbia Trans Mountain expansion project.
The newly listed shares (TSX:KML) dipped to as low as $15.75 before recovering somewhat to $16.19 in midday trading, down 4.76 per cent from the $17 they were priced at in their initial public offering.
At $1.75 billion, the IPO was on track to be the fourth largest in the Toronto Stock Exchange's history. Kinder Morgan said it fulfilled the final requirement for it to proceed with the Trans Mountain expansion.
The Houston-based company had originally set a higher target price for the stock in the $19 to $21 range when preliminary plans for the stock offering were first announced.
Since then, the future of the Trans Mountain expansion has been clouded in doubt, with the anti-pipeline Greens and NDP announcing Monday they have come to an agreement that could see the formation of a minority New Democratic Party government in British Columbia.
Greens and NDP oppose pipeline plan
Both parties have voiced their opposition to the Trans Mountain expansion, which would triple the capacity of a 1,150-kilometre pipeline running from Edmonton to Burnaby, B.C., to 890,000 barrels of oil per day.
Ian Anderson, the president of Kinder Morgan Canada, issued a statement Tuesday extolling the IPO without acknowledging the political challenges that could be ahead.
"This is an exciting day for our customers, for communities and for the many individuals who are relying on this project to deliver jobs and economic benefits to their communities," said Anderson.
"This securing of financing for the project demonstrates the need for and interest in the opportunity for Canada to have better access to world markets."
Speaking in Rome, Prime Minister Justin Trudeau defended the federal government's decision to approve the $7.4-billion project.
"The decision we took on the Trans Mountain pipeline was based on facts and evidence on what is in the best interests of Canadians and indeed, all of Canada," said Trudeau.
"Regardless of the change in government in British Columbia or anywhere, the facts and evidence do not change."
LNG project and Site C dam in question
Alberta Premier Rachel Notley issued a statement saying the provincial government remains "steadfastly committed" to using all means at its disposal to seeing the project through to completion.
The shifting political landscape in B.C. has also raised questions about the future of the Pacific NorthWest LNG project and the Site C dam, both of which NDP Leader John Horgan and Green Leader Andrew Weaver have criticized in the past.
Desjardins Capital Markets analyst Kristopher Zack said in a note that the deal between the Greens and NDP presents another element of uncertainty for Canada's oil and gas industry.
Zack said the general tone of the two parties is less business-friendly than the Liberals, though he sees pipelines as under greater threat than shale gas development.
"Our primary concern is the future of the Trans Mountain Expansion, which has been a major flash point in the province and the subject of criticism from both parties," wrote Zack.
Construction of the Trans Mountain expansion is expected to begin in September, Kinder Morgan Canada said.
— With files from Joanna Smith in Rome.