TC Energy Corp. announced on Monday, March 4, that it has agreed to sell the Portland Natural Gas Transmission System (PNGTS) to a BlackRock-managed fund and Morgan Stanley Infrastructure Partners for $1.14 billion.

The sale is part of TC Energy's ongoing efforts to reduce debt and fund investments as the Calgary-based company undergoes a strategic shift toward natural gas transportation. 

Last year, the company announced plans to spin off its liquids business to focus on the natural gas transportation sector.

"The sale is an excellent first step towards meeting TC Energy's C$3 billion asset sale goal," said Morningstar analyst Stephen Ellis. "The valuation is reasonable."

TC Energy is grappling with long-term debt of about C$49.98 billion ($36.84 billion) as of December 31, 2023. CEO Francois Poirier had previously stated that the company aimed to raise more than C$5 billion ($3.69 billion) through asset sales in 2023.

The PNGTS pipeline spans 475 kilometers (295 miles) and serves the upper New England and Atlantic Canada markets. 

BlackRock will assume $250 million of outstanding debt associated with the asset. The deal is expected to close in mid-2024, with proceeds split pro-rata based on ownership interests.

TC Energy owns PNGTS jointly with Northern New England Investment Company, a unit of Energir, in a 61.7% - 38.3% ratio. Both companies agreed to sell the portfolio to BlackRock and Morgan Stanley.

TC Energy aims to sell at least C$3 billion ($2.2 billion) worth of assets in 2024 to reduce debt further. 

The company is exploring joint venture opportunities in Mexico and Canada and aims to limit annual net capital expenditures from C$6 billion( $4.4 billion)  to C$7 billion ( $5.2 billion) after 2024.