TTNGL sees decrease in profit after tax

TT NGL Ltd (TTNGL) – of which the National Gas Co of TT Ltd is the parent organisation – has recorded its profit after tax – excluding impairment charges – as $165.8 million for 2022.

This is compared to $192.3 million in 2021.

The impairment charge amounted to $562.4 million in 2022 compared to the restated reversal amount of $267.2 million for 2021.

"Impairment charge" is a term used to describe a drastic reduction or loss in the recoverable value of an asset.

Impairment can occur because of a change in legal or economic circumstances or as the result of a casualty loss from unforeseen hazards.

In the chairman’s statement, Dr Joseph Ishmael Khan said the impairment charge was owing to the 2022 fair-value assessment of TTNGL’s investment in its underlying asset Phoenix Park Gas Processors Ltd (PPGPL).

Available cash for the end of 2022 was $105.5 million compared to $132.3 million in 2021.

For 2022, PPGPL recorded a drop in profit after tax, recording US$63.8 million, or 13.4 per cent, compared to 2021 when it earned US$73.7 million.

This comes as feedstock cost was higher, while NGL was lower, coming out of reduced gas volumes to Point Lisas for processing.

PPGPL also grew its North American footprint with its acquisition – through its wholly-owned US subsidiary Phoenix Park Energy Marketing LLC – of the assets of the Hull Terminal from Keyera Energy Inc and the Rush City terminal from the Interstate Fuel and Energy LLC in January and November 2022 respectively.

For its North American subsidiary – Phoenix Park TT Energy Holdings Ltd – the warmer winter resulted in lower demand for the product in a period that normally yields higher demand and prices.

The weakened demand and a combination of higher US NGL production and exports kept those inventories about the five-year average – both of which dampened NGL prices accounting for over 60 per cent of PPGPL's year-to-date sales revenue variance at June this year.

Sales volumes stood at 15,205 barrels per day, 3.8 per cent above the 2022 level, although its earnings were dampened by lower demands; margins per gallon for this segment remain robust.

But the company experienced higher trading volume in 2022 over 2021.

PPGPL said it has continued to focus on high operating efficiency, operational safety, financial discipline and accruing long-term value for its shareholders, notwithstanding the impact of external factors on its business for sustainability.

Khan said the company is assertively pursuing high potential investment opportunities that meet its financial requirements.

Its strategy of market diversification of its US subsidiary and expansion of its terminals in Hull and Minnesota are expected to contribute positively to the company’s overall performance.

PPGPL’s marketing of its skills and expertise, reflected in its recent agreement with a Ghanaian consortium, will also add to the company’s revenue in the future.

PPGPL and the wider NGC group will continue to play a critical role in the energy value chain and deliver long-term value creation to its shareholders, said Khan.

TTNGL, in another release on Monday, said the financial performance and revenues were adversely impacted by external market factors.

In the domestic market, NGL sales volumes for the period up to June were 39.7 per cent because of lower NGL production.

The release said this was because of a planned 20-day facility-wide turnaround for maintenance and ongoing domestic gas supply challenges, which resulted in 25 per cent lower production when compared to quarter two last year.

Despite this, TTNGL recorded $14.6 million in after-tax profit in the first quarter; however, results from the second quarter led the company to post a year-to-date loss after tax of $2.8 million at the end of June.

This performance was primarily derived from TTNGL’s investment in PPGPL, which recorded a loss after tax of US$0.8 million for the first half of this year.

Khan said, in the release, “TTNGL is an energy-based stock, and the reality is that the world’s increasingly unstable climate, shifting market demand and gas supply uncertainties will inevitably put pressure on margins in our business. However, shareholders can rest assured that PPGPL is undeterred in its mission to grow long-term value through cost-rationalisation, customer focus, market expansion and retention and building operational efficiency.

Moreover, the wider NGC group continues to evolve and adapt its business model, making significant strides on its journey to become a successful, diversified and global clean energy brand. All resources are being devoted towards restoring and maximising profitability across the group, the release said.