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NGL eyes possible acquisitions

Thursday, May 18 2017

Trinidad and Tobago NGL (TTNGL) and its underlying asset, Phoenix Park Gas Processors Limited (PPGPL), are pursuing several initiatives to maximise value and growth to ensure a consistent future healthy earnings stream for investors.

This was announced by TTNGL chairman, Gerry Brooks, during TTNGL’s Annual General Meeting on April 25, at the Hilton Trinidad and Conference Centre, Port-of-Spain.

“The management outlined a host of initiatives – product trading, commodity trading, marketing initiatives, and we’re also looking at a couple possible acquisitions as well, which would only further enhance the performance of the organisation, having taken TT$161 million of costs out of the organisation.” Brooks told reporters now that the organisation is operating in a low-cost environment, “as prices come back and as the market comes back, all of that will flow to the bottom line and provide an improved yield, both for Phoenix Park and for TTNGL.” During the formal proceedings, TTNGL shareholders heard that these growth initiatives are designed to maximise value and growth to ensure a consistent future healthy earnings stream for the investors.

In a statement issued on May 5, TTNGL explained that, “More specifically, PPGPL is at an important stage in evaluating these options to enable the processing of natural gas that will be supplied to the consumers at Union Industrial Estate at La Brea.” “The company is also exploring the option of maximisation of spare fractionation, storage and terminal capacity. Additionally, the benefits of importing product to address the issue of gas curtailment by supplying propane directly to the downstream companies as fuel gas, are being examined, as is the possibility of product trading. Other targeted areas include the creation of a commodity trading desk, cost saving initiatives and expanding into other regions such as Africa,” TTNGL stated. Following the AGM, Business Day asked Brooks whether these proposed acquisitions would be local, regional or international.

“For Phoenix Park, the acquisitions will be regional and international because we are the largest player regionally and therefore our outlook has to be hemispheric and international. They’re going to be very selected jurisdictions that we’re looking at, where we run our (due) diligence. Once there’s a good strategic fit, we’ll proceed with it.” Regarding TTNGL’s performance in 2016, Brooks said the board and management were “very, very encouraged.” For the year ended December 31, 2016, TTNGL recorded total comprehensive income of TT$344.8 million. Earnings per share was TT$1.16 for 2016, while TTNGL’s share of profits from its 39 percent shareholding in PPGPL improved operationally by 20.3 percent from TT$136.3 million in 2015 to TT$164.0 million in 2016.

This improved performance at PPGPL was directly linked to the deliberate efforts of the company to rationalise expenses in the face of lowered Natural Gas Liquids (NGL) production caused by continued gas supply challenges and lowered product prices.

The board approved a final dividend of TT $1.00 per share (2015: TT $1.00) bringing the total dividend for 2016 to TT $1.50. Brooks said this is consistent with the dividend payout for 2015 and represents a dividend yield of 7.14 percent at the end of 2016.

“It is the highest dividend yield on the TTSE. The final dividend will be paid on April 12, 2017 to shareholders on the Register as at March 28, 2017,” Brooks stated.

At the AGM, shareholders voted in favour of a resolution to receive dividend payments in either TT or US currency. However, US dollar dividend payments completion of, “a number of steps first,” including getting necessary approvals from the TT Stock Exchange and the TT Securities and Exchange Commission.

Brooks said, “It’s also going to be extremely important that shareholders establish a US dollar account because if they do not have (one), there’s no basis on which to pay. We want to work through those steps very carefully first and then, of course, we’d want to have a conversation with Government; in terms of a policy, but it’s an important step.” TTNGL and PPGPL are subsidiaries of the National Gas Company (NGC) Group of Companies, which Brooks also chairs.

Asked about NGC’s involvement in Guyana, Brooks said this is taking place on several different levels.

“We’ve had National Energy go across to Guyana, we’ve had Professor (Andrew) Jupiter go across to Guyana. We’ve also had Phoenix Park go across to Guyana. Guyana is extremely important because we’re talking about 1.3 million barrels of oil that could play directly into Petrotrin in terms of refining capacity, but you also have some other potential from an NGC standpoint as well, in terms of ship to shore services.” “How do we use Brighton (port at LABIDCO, La Brea)? Our phase one development of Brighton is very important in that regard as well as the exchange of technical capability and technical skill. Here, the NGC, as a group, is trying to lift the entire energy service sector because TT has a service sector that has over 100 years of energy experience, and that technical expertise, that energy expertise has to be made available to the people of Guyana in the context of the CARICOM agreement that we have, in the context of some bilaterals.” “The Prime Minister himself visited, there is an MOU (Memorandum of Understanding) in play. We’re looking to deepen that from an NGC standpoint, from a National Energy standpoint and our sister company, Petrotrin, is also looking to do the same as well. So those discussions are going well and we want to progress them,” Brooks stated.



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