Houston—Energy Transfer swung to a massive first-quarter profit from a year-ago loss as the midstream operator was able to keep strategically located pipelines and storage assets working during the Texas freeze in February and benefitted from the higher prices that resulted from the surge in demand.
The strong results reported in a statement May 6 came despite a decline in overall gas volumes that moved on its intrastate and interstate systems.The operator of the Rover gas pipeline, Dakota Access crude pipeline and Mariner East NGL pipeline, as well as developer of the proposed Lake Charles LNG export project in Louisiana, said preparation for the coldest temperatures to hit the state in decades helped. By pre-deploying employees and equipment and adding line pack to pipelines to serve as additional storage, it was able to deliver natural gas to facilities throughout Texas for residential consumption and power generation.
"As the winter storm approached, we had ample advance warning," co-CEO Thomas Long said during an investor conference call.
Separate from the storm, NGLs strength also helped give Energy Transfer a boost in the January-March quarter. During the period, it commissioned its ethane export facilities at Nederland, Texas, and through April has loaded three Very Large Ethane Carriers. The company saw very strong NGL demand on Mariner East for April and is similarly seeing that for May, Long said.
While some midstream operators like Energy Transfer were able to keep power plant fuel moving, others were not. Also, multiple electricity generation facilities throughout Texas were shut down or were only able to offer limited capacity for extended periods during the week-long storm. As a result, rolling blackouts were ordered by the grid operator and millions of residents and businesses lost power, in some cases for as long as four days.
Looking ahead to growth, Energy Transfer has seen Permian Basin crude volumes on its system pick up since the end of the first quarter, as well completions rise, Long said.
The company said it believes the Federal Trade Commission will sign off on its acquisition of Enable Midstream Partners, which it announced in February. The company said that while it is committed to closing the transaction, it now is targeting completion in the second half of 2021, versus an initial estimate of mid-2021.
T he all-equity transaction valued at roughly $7.2 billion would expand Energy Transfer's natural gas and NGL transportation business through the addition of natural gas gathering and processing assets in the Anadarko Basin in Oklahoma; Arkoma Basin across Oklahoma and Arkansas; and Haynesville Shale in East Texas and North Louisiana. It would also integrate assets with the partnership's NGL transportation and fractionation assets on the US Gulf Coast.
For the three months ended March 31, Energy Transfer reported net income attributable to partners of $3.29 billion, or $1.21 a share, compared with a loss of $854 million, or 32 cents a share, in the year-ago period. Revenue in the first quarter jumped 46% to $17 billion from $11.63 billion in the January-March quarter of 2020.
While it lost Shell as a joint venture partner last year in the proposed Lake Charles LNG export project, Energy Transfer has proceeded with development, though it has yet to announce any firm long-term offtake agreements tied to the project. During the investor call, Tom Mason, who heads the company's LNG business, said commercial interest has picked up in recent months as global LNG demand and prices have strengthened.
"It could be making a good turn to get that project moving forward in a positive way," Mason said.
