See-saw year of declines, acquisitions for Phoenix Park Gas

THE YEAR 2019 proved to be a challenging one for TTNGL Limited (TTNGL), and its underlying investment Phoenix Park Gas Processors Limited (PPGPL), but was also a year of landmark accomplishments.

This was reported by TTNGL chairman Conrad Enill last week during the company's first virtual annual general meeting.

"2019 was challenging for PPGPL as it was for the global energy sector. But crucially, 2019 was a year of tremendous accomplishments and opportunities because of PPGPL’s commitment, perseverance and resolve to achieve sustained growth and continue to remain a consistently profitable company."

He explained that in 2019 PPGPL operated in an environment of lower Mont Belvieu product prices (the benchmark price for propane/LPG), reduced natural gas liquids (NGL) production and an increase in feedstock costs. The company also operated under the framework of amended international accounting standards which negatively impacted its 2019 performance.

These standards included the international financial reporting standards (IFRS) 9 and 16: financial instruments and leases, respectively. Earnings were affected by the recognition of the accounting impact of these standards and in particular IFRS 9 with the recognition of a credit loss allowance for receivables outstanding from Petrotrin.

"Consequently, PPGPL ended the financial year with after-tax profits of US$34.3 million (TT$231.4 million) compared with US$92.1 million (TT$622.2 million) in 2018."

He said despite the prevailing difficulties and less than favourable market conditions that continued through 2019 and into 2020, PPGPL continued to be heavily focused on drivers of new growth, strategic initiatives and priorities to expand business, both at home and internationally, along the energy value chain.

"This expansionary thrust is robustly supported by stringent financial planning, sustainable cost improvements and managerial and operational efficiency."

Enill said that over the last three years, PPGPL undertook very deliberate and precise steps to expand its revenue stream to include condensate processing and physical product trading. He cited an important landmark development in 2019 was PPGPL’s aggressive pursuit of acquiring NGL’s assets based in North America. PPGPL, through its wholly owned US subsidiary, Phoenix Park Energy Marketing LLC, completed the purchase of the NGL marketing assets of Twin Eagle Liquids Marketing LLC during the first quarter of 2020. Twin Eagle, based in Houston, Texas, is engaged in the business of marketing, trading and transportation of natural gas liquids in Canada, US and Mexico via rail.

"Though this acquisition started in 2019, PPGPL has anchored its growth strategy even more firmly by further diversifying its business. It also provides a focal point for an expansion thrust, deeper engagement and a range of opportunities in the lucrative North American gas market.

"Shareholders, ladies and gentlemen, the acquisition of Twin Eagle Liquids Marketing LLC represents an ambitious and strategic step to add value and a new source of revenue to PPGPL’s existing portfolio and by extension for the shareholders of TTNGL."

He added that to mitigate the negative impacts of lower prices and production which dominated the international environment in 2019, PPGPL remained focused on improving its competitiveness in its core Caribbean markets.

"PPGPL’s strategies for reducing impact include sustaining the high operating availability and reliability of its facilities (greater than 99 per cent) and on prudent cost and cash management. Moreover, significant strides were made by PPGPL in 2019 in securing new sources of revenue from condensate processing and additional opportunities are being pursued to increase these volumes this year."

On TTNGL, he reported profit after tax in 2019 was recorded at TT$129.5 million as compared to profit after tax of TT$253 million in the prior year. Consequently, earnings per share for 2019 was TT$0.84, compared to 2018’s TT$1.63.

He said despite some volatility in the company’s share price for 2019, the share traded above the initial public offering price of TT $20 for all of 2019. It reached an elevated price of TT $30.50 on April 3, 2019 and a base of TT$20.98 on November 27, 2019. At the end of 2019, TTNGL’s share price stood at TT$23.96, just 17.7 per cent below the closing price of TT $29.10 in 2018.

Based on the company’s 2019 performance, the board of directors approved a final dividend of TT 25 cents per share bringing the total dividend for 2019 to TT 75 cents. Enill said this is reflective of lowered earnings and dividend payments from PPGPL. The final dividend of TT$38.7 million was distributed to shareholders on May 13, 2020.

Enill also said that PPGPL is continuously assessing the potential impact of covid19 and its fall-out on markets.

"However, we are unwavering and are committed to our strategic objectives which will guide our medium to long term growth plans."

He continued: "I’m heartened that PPGPL, and by extension TTNGL, has already implemented systemic changes to transform into an agile company which puts us in a strong position to navigate risks, make necessary adjustments and emerge more resilient. In this new paradigm, it is important to emphasize PPGPL’s effective resilience planning for its current and future viability and for the country to benefit from its sustainable growth strategy."

He said that although 2019 was a challenging year for many companies, PPGPL included, the company has responded robustly to the domestic and international environment by actively pursuing new areas of growth and revenue streams to expand and further solidify its position along the energy value chain.

"In these extraordinary circumstances that the world has found itself, PPGPL is in a strong position to pursue its strategies to remain viable and contribute tremendously to the development of the country."