Condensed Interim Financial Statements for the Three Months Ended March, 2020
The Covid-19 pandemic has created a temporary demand collapse across all markets. This decline, coupled with the aftermath of a price war, has brought a massive crude oil supply inventory glut as producers struggle to find markets for their products; and it has sent some prices to unprecedented lows. Natural Gas Liquids (NGLs) prices, which correlate strongly with crude oil and refined product prices, predictably were negatively impacted during the quarter. Attempts by the world’s three largest crude oil producers—United States, Saudi Arabia, and Russia—to reduce global supply and boost crude oil prices were met with demand destruction that continued to outweigh the agreed production cut of about 10 million barrels per day.
For the three months to 31 March 2020, the turbulence in the energy commodity markets which closed off 2019 continued into 2020 and was exacerbated by the impact of the Coronavirus Disease (Covid-19) pandemic. The sharp decline in Mont Belvieu product prices significantly impacted the performance of the Company’s underlying asset, Phoenix Park Gas Processors Limited (PPGPL). Recorded prices were 32% lower than the corresponding period in 2019. The effects of Covid-19 have also disrupted the planned performance and markets of the petrochemical producers of Point Lisas. This disruption has translated into lower Natural Gas demand and lower gas volumes through the PPGPL facility for processing. PPGPL continued to be impacted by the lower NGL content in the gas stream. NGL production for the quarter was 10% lower than in 2019. Positively, PPGPL continues to maintain high operating availability and has sustained its focus on prudent cost and cash management.
In pursuance of its mandate to aggressively grow its business both locally and internationally, in February 2020 PPGPL—through its wholly-owned US subsidiary, Phoenix Park Energy Marketing LLC—acquired the NGL marketing assets of Twin Eagle Liquids Marketing LLC. Twin Eagle Liquids Marketing LLC is a company based in Houston, Texas, USA which is engaged in the business of marketing, trading, and transportation of Natural Gas Liquids. Earnings from this acquisition are expected to positively impact Company results in the future.
