AltaGas Ltd T.ALA

Thoughts on the 1st Qtr -21 ... good , bad or indifferent

[rfguysd]

Some  off the top of head thoughts(IMHO):

1) This is the 1^st 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 2^nd 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’ 1^st 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

[Johnwith30years]

Thoughtful thank you.   The tax issue is not very significant as they can pass the utility side cost on to regulators.  Randy indicated that if dollar is stronger there is an offset with their debt obiligation in last call with analysts. Moving into some hydrogen will enhance a positive reputation and costs will be transferred to others so all in all I am looking for a steady Eddy

[Capharnaum]

Regarding hydrogen, there are a couple of caveats. First, it's fairly costly at the moment (compared to natural gas, or renewable natural gas which has negative net carbon emissions). Then, it's more volatile than natural gas and there's a mix limit to what you can put into the system. Finally, not all equipments and meters work with hydrogen, so you can't just inject it widely at

[Johnwith30years]

I agree  with your hydrogen comments  - there is a long way to go but I do think we will see companies begin to position themselves in the field much as ENB is beginning to do.  There is a premium though at just the mention that a company is beginning to move toward some renewable capacity and I do not expect that premium to disappear.  Quite apart from this conversation is

[Capharnaum]

Just an information tidbit regarding the concerns. Both corporate tax rates and carbon tax costs are "pass throughs" for utilities and shouldn't affect earnings long term (short term, it depends on the timing between rates filings and when the tax hike takes effect).

[rfguysd]

Allow  me  to add a bit more color  to the Petrogas acquisition and add further to some of the comments and analysis already provided .  I  do  want to go back to the presentation that was provided by Randy on Dec10….pg30. 1)” Over the past three years (2017-2019), Petrogas’ average annual normalized EBITDA has been ~$186 million with the trailing twelve months

[bossu]

RFguy. You have the perfect read of the situation and this is exactlly what I'm thinking and $ 186 M to $  218 M is what we are expecting from the Petrogas acqisition.Will it be that number ? It is everybody's guest Just want to add the second answer from the investor relation I received  but d'ont beleive his number and over stated : «Hi Paul, so the $7,917MM revenue

[Capharnaum]

Petrogas being an energy marketer means their bottom line won't be steady over time. This makes it hard to predict as it won't be a steady flow of increasing EBITDA/Earnings. I'm positive about the acquisition being accretive but I wouldn't make steady increased projections for them.

[Bushman3333]

Do your best, and prepare for worse, f@ck the rest. .