Thoughts on the 1st Qtr -21 ... good , bad or indifferentSome off the top of head thoughts(IMHO):
1) This is the 1st qtr that Altagas will experience the operating revenues of Petrogas. The ownership share increased from 37% to 74%, Idemitsu holds the remaining balance of ownership.
2) FEI propane pricing has been very good this past quarter due to the Texas freeze and cold winter in northern Asia. Pricing remains strong since Asia needs to build inventory and Texas gas producers are slowly coming on line.
3) Operational efficiencies between Ferndale and Ripet started and will continue as the two export terminals share resources and propane sources. I look for the majority of savings to occur 2nd qtr.
4)RIPET exports have stabilized around the 50k bbls/day. Ferndale‘s exports have been slowly rising. Altagas is promoting >50k bbls/day for Ferndale. Let’s see how they do it?
(Frankly, I think there is far more opportunity to increase Ferndale’s exports than there is at RIPET. How lucky can Altagas be to have their very own export wharf on the west coast … all to themselves?)
5)Utility side has experienced a colder winter than last years’ 1st qtr(on weighted average). The impact has been suggested in the range of 3% due to “revenue smoothing” between qtrs.
6)Uncertainity in the hedges. Hedges may determine how good the quarter will be.
7)Low cost funding continues replacing higher priced notes.
Concerns:
1)Canadian dollar continues to be strong in the quarter.
2)Biden’s proposal for corporate tax will affect the utilities. Corporate rate will rise from 21% to 28% .
3)Carbon Tax increases in Canada and proposals in the US. Altagas has been carefully monitoring. Altagas will need to address issues more substantively soon rather than later. ie….. (work with ENB to introduce hydrogen to the natural gas line … as being considered in Quebec’s experiment with ENB and gas utility there. Semco would be the target.)
Other thoughts?
GLTA
RFguy