After being hit with an 85 per cent slide in profit for the first quarter (Q1) of 2020, Trinidad and Tobago NGL Ltd (TTNGL) has revealed a profit for the second quarter ended June 30th 2020 (Q2) of $7.6 million. This successive quarterly reduction in profits amounted to $20 million or 72.5 per cent.
Moreover, TTNGL’s profit of $14.5 million for its half-year ended June 30th 2020 also represented a large decline of 80.2 per cent or $58.9 million.
In TTNGL’s unaudited financial statements, the Chairman Conrad Enill said: “The 2019 novel coronavirus disease (COVID-19) pandemic has ravaged the worldwide economy and the reduced economic activity has resulted in changes in the energy supply and demand patterns in 2020.”
Enill acknowledged that economies across the world have suffered declines in gross domestic product (GDP) during the first half of 2020, as compared to the previous corresponding period last year.
He continued to note that uncertainties persist across all energy markets, including liquid fuels, natural gas, electricity, coal, and renewables.
Enill added that crude oil prices averaged 35 per cent lower than in 2019 and Natural Gas Liquids (NGL) prices, which correlate strongly with crude and refined product prices, were also materially lower during the first half of the year.
For the six months to 30 June 2020, Enill said the volatility in the energy commodity markets driven by the impact of COVID-19 resulted in the precipitous decline of Mont Belvieu (MB) product prices, and significantly impacted the performance of the Company’s underlying asset, Phoenix Park Gas Processors Ltd (PPGPL).
The NGL Chairman indicated that recorded MB product prices were 44 per cent lower than the corresponding period in 2019.
He asserted that the impact of the lower prices was mitigated by higher price differentials recognized during the year, noting “differentials were 34 per cent than in 2019 and reflected PPGPL’s strong competitive position in the markets it serves, despite the impact of COVID-19.”
Enill said that PPGPL’s strong position is further strengthened by the continued strong demand for its products, which have remained relatively steady since the onset of the pandemic.
Additionally Enill noted “the company has benefited from a slight recovery in product prices, which has positively impacted its profitability in Q2 2020.”
The TTNGL Chairman also remarked that the effects of COVID-19 also disrupted the planned performance and markets of the petrochemical producers at Point Lisas, which translated into lower natural gas demand and lower gas volumes through the PPGPL facility for processing.
However, Enill added: “Positively, NGL content in the gas stream was 6 per cent higher than in 2019, and was a result of continued efforts by NGC to deliver higher NGL content gas streams to Point Lisas Industrial Estate.”
According to Enill, NGL production to June 2020 was 10 per cent lower than in 2019 and PPGPL continued to maintain high operating availability (over 99 per cent), and has sustained its focus on prudent cost and cash management.
Following the acquisition of the NGL liquids marketing assets of Twin Eagle Liquids Marketing LLC in February 2020, PPGPL created a subsidiary—Phoenix Park Energy Holdings (PPEH) to own and operate the assets acquired from Twin Eagle.
Enill expressed: “Since start-up, the performance of PPEH has been positive, and earnings from this acquisition are expected to impact PPGPL results positively in the short term.”
Notwithstanding a challenging market and operating environment, Enill posited that the TTNGL Board of Directors remains cautiously optimistic about the future and its investment in PPGPL.