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Energy Transfer Reaps $2.4 Billion Windfall From Texas Freeze

Energy Transfer

ET 2.08%

LP emerged as one of the big winners of the Texas freeze, saying it expected an additional $2.4 billion in earnings this year stemming from the February storm.

The Dallas pipeline operator controlled by billionaire

Kelcy Warren

disclosed the windfall Thursday as it reported a $3.6 billion profit in the first quarter, several times what it collected in all of 2020.

Revenue climbed to about $17 billion, 46% higher than the same period last year and the largest amount in quarterly sales the company has ever reported, according to FactSet.

Energy Transfer benefited from surging natural gas prices during the freeze, as power plants and other customers ran low on supplies and millions of homes lost power due to extreme cold weather.

The freeze and blackouts cut the state’s natural gas production by more than a third from normal levels during the weeklong storm event, according to Wood Mackenie. Physical prices in Houston vaulted 12,000% to $400 per million British thermal units, according to Natural Gas Intelligence.

Energy Transfer credited the reliability of its pipelines and storage facilities in Texas, and its efforts to dispatch employees ahead of the disaster to gird pipelines and other assets against cold weather.

CPS Energy, a San Antonio-owned utility company, in March filed lawsuits against several gas suppliers, including two affiliates of Energy Transfer, alleging the companies were profiteering from scarcity during the disaster and that the gas prices it was charged amounted to price gouging. The bills in dispute included almost $257 million that CPS Energy was charged by Energy Transfer’s units.

Energy Transfer said it had to estimate its ultimate takeaway from the storm in part because disputes with some counterparties remained unresolved. But in a conference call with analysts,

Thomas Long,

co-chief executive of Energy Transfer, said the company’s efforts to collect on natural gas bills “have gone very well.”

“All of it is in the door,” Mr. Long said of the $2.4 billion estimated earnings impact for 2021.

Compared with the same period last year, Energy Transfer generated $1.52 billion in higher realized margins from storage operations as it withdrew larger amounts of natural gas to customers desperate for the fuel. Its natural gas sales were $983 million higher than the first quarter of 2020 as prices soared.

It noted a $52 million increase in earnings from power trading, largely due to the February freeze.

Energy Transfer wasn’t the only pipeline company to reap a windfall from the storm. Its Houston-based rival,

Kinder Morgan Inc.,

which operates a network of gas pipelines in Texas, reported its largest quarterly profit since at least 2009, largely on the Texas winter storm.

Kinder Morgan reported about $1.4 billion of net income in the first quarter, roughly two-thirds of its profits in all of 2019 and several times what it made throughout the pandemic last year, according to FactSet.

Some Wall Street firms also reaped paper profits from the storm after power plants they had invested in were able to keep operating despite the subfreezing temperatures.

Write to Collin Eaton at

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Read More: Energy Transfer Reaps $2.4 Billion Windfall From Texas Freeze

2021-05-06 02:00:00

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