Enterprise Products Partners Q4 2020 profits hit by slow energy demand recovery

MOSCOW (MRC) -- Enterprise Products Partners reported Feb. 3 a 69% decline in profit for the final three months of 2020 amid a slow demand recovery from the worst shocks of the coronavirus pandemic, reported S&P Global.

The operator of pipelines, processing plants and export and storage facilities recorded a year-on-year decline in natural gas and NGL, crude oil, refined products and petrochemical transportation volumes for the October-December quarter. NGL fractionation and propylene plant production volumes rose.

The company reiterated its plan to cut spending over the next two years, though it will bring online several additions during that timeframe. They include the expansion of an ethane pipeline serving the petrochemical industry on the Gulf Coast, a gas pipeline that will deliver Haynesville production to LNG markets in Louisiana and a hydrotreater in Texas that will remove sulfur in natural gasoline.

Perhaps the greatest uncertainty going forward comes from potential policy changes from the Biden administration that could affect fossil fuel interests. During an investor conference call, Enterprise executives acknowledged the impact that limits on shale drilling volumes would have on pipeline, processing and export volumes.

"Reading the news, some may think the sun is setting on oil and gas," co-CEO James Teague said on the call. "Obviously, policy proposals from this new administration have been supportive of renewables. The cleaner energy future does not mean a world without fossil fuels. The reality is nothing could be further from the truth."

Teague said that while discussion of the global energy transition often implies shifting away from traditional hydrocarbons, Enterprise still believes an "all-of-the-above approach" will be required to meet the world's growing energy needs.

"Limiting supply only makes Russia, OPEC and Iran richer and more powerful," Teague said. "And it says to the 3 billion people on this planet that live in energy poverty that US politicians don't care about their quality of life."

Enterprise sees potential production limits as bullish for prices and Biden's revocation of a key permit for TC Energy's Keystone XL heavy crude pipeline - effectively suspending work on the $8 billion project - as potentially having a positive effect on throughput on Enterprise's Seaway pipeline system. Also, Enterprise is working with Magellan Midstream Partners to make Houston the most desirable destination to ship crude oil. They are teaming to develop a new crude oil futures contract.

"It works for producers, it should work for refiners, it should work for consumers, and the fact there's transparency for people to go out and conduct their business long-term," Brent Secrest, Enterprise's chief commercial officer, said on the investor call.

For the three months ended Dec. 31, Enterprise reported net income attributable to common unit holders of USD337 million, or 15 cents a share, compared with a profit of USD1.1 billion, or 50 cents a share, in the same period of 2019. Fourth-quarter 2020 revenue fell 12% to USD7.04 billion from USD8.01 billion in the October-December quarter of 2019.

Total natural gas transportation volumes slid to 13.7 TBtus/d in the final quarter of 2020 from 13.8 TBtus/d for the same quarter of 2019. Total crude oil pipeline transportation volumes in the latest quarter fell year-on-year to 2 million b/d from 2.3 million b/d. NGL fractionation volumes jumped 20% to 1.3 million b/d in the fourth quarter of 2020 from 1.1 million b/d in the same period of 2019, Enterprise said.

The prolific Permian Basin in West Texas and southeastern New Mexico remains a key market for Enterprise, supplying significant volumes of oil and gas to its pipeline system.

With the Biden administration talking about limiting drilling on federal lands, Enterprise is mindful of how that could impact future production.

"It's hard for me to say that we're going to have a bunch of discretionary barrels until the Permian Basin recovers, and that's going to take years, but I feel when it comes to weathering the storm, we'll be okay," Secrest said.

As MRC informed previously, Enterprise Product Partners' propane dehydrogenation (PDH) unit in Mont Belvieu, Texas, was taken off-line for a turnaround in early February. Thus, the PDH unit was shut for scheduled maintenance on Feb. 1 for approximately six weeks. This PDH unit has the capacity of 750,000 mt/y of propylene.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Enterprise Products Partners L.P. is an American midstream natural gas and crude oil pipeline company with headquarters in Houston, Texas. It acquired GulfTerra in September 2004. The company ranked No. 105 in the 2018 Fortune 500 list of the largest United States corporations by total revenue
MRC

MOSCOW (MRC) -- Finnish paints maker Tikkurila said on Thursday Pittsburgh-based PPG has raised its all-shares offer for the company to 34.00 euros per share, topping a rival bid from Akzo Nobel, reported Reuters.

The two industry heavyweights are seeking to tap into Tikkurila’s strong position in Finland, Sweden, the Baltics, Russia and Poland.

“Today’s bid values Tikkurila ...well above both Akzo Nobel’s and PPG’s own multiples, highlighting the quality and importance of acquiring the asset,” Citi analysts said in a note.

Tikkurila’s board has unanimously decided to recommend that the shareholders accept the PPG’s raised offer, which values the firm at 1.5 billion euros (US1.8 billion).

Shares in Tikkurila were up 3.6% at 34.2 euros at 1031 GMT.

Tikkurila said some major shareholders, holding 29.3% of its shares, have agreed to accept the offer if PPG gets regulatory approvals for the acquisition.

PPG has lowered its acceptance rate for the offer to 66.7% of shares from its original 90% target.

The battle for Tikkurila started in December with PPG’s 25 euros per share offer, which it raised to 27.75 euros after rival Hempel approached Tikkurila.

Akzo Nobel last week made a binding offer of 31.25 euros per share, valuing Tikkurila at 1.4 billion euros.

As MRC informed previously, in February 2020, PPG said it had completed its acquisition of Industria Chimica Reggiana (ICR, Reggio Emilia, Italy), a maker of automotive refinish products. Financial terms of the deal, including purchase price, were not disclosed. The deal was announced on 8 January. ICR was founded in 1961 and employs about 180 people. ICR manufactures automotive refinish products, including putties, primers, basecoats and clear coats. It also makes a range of coatings, enamels and primers for light commercial vehicles and other light industrial coatings applications. ICR employs about 180 people and sells its products in more than 70 countries in Europe, Africa, the Middle East, the US and Latin America.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.
MRC

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for all polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) in Europe, according to the company's press release.

Effective February 1, 2021, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

- STYRON general purpose polystyrene grades (GPPS) -- by EUR40 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR40 per metric ton;
- MAGNUM ABS resins - by EUR200 per metric ton.

As MRC informed before, Trinseo last raised its prices for all PS, ABS and acrylonitrile-styrene copolymer (SAN) grades on January 1 2021, as stated below:

- STYRON GPPS -- by EUR135 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech HIPS - by EUR135 per metric ton;
- MAGNUM ABS resins - by EUR400 per metric ton;
- TYRIL SAN resins - by EUR170 per metric ton.

According to ICIS-MRC Price report, last week, Nizhnekamskneftekhim announced to buyers an increase of Rb12,000/tonne in its February selling PS prices. Thus, prices of Nizhnekamskneftekhim's GPPS will reach Rb122,000-128,000/tonne, CPT Moscow, including VAT, this month, whereas HIPS prices will reach Rb126,000-132,000/tonne CPT Moscow, including VAT. Prices of Penoplex's material will grow even higher, the total range of February prices will be Rb129,000-131,000/tonne CPT Moscow, including VAT.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

MOSCOW (MRC) -- Bayer says it has reached an agreement with plaintiffs’ counsel to resolve future cases in the Roundup class-action lawsuit, reported Chemweek.

The suit addresses claims that glyphosate-based Roundup herbicide, a legacy Monsanto product, causes cancer, a subject of longstanding litigation.

Under the settlement agreement Bayer “committed to pay up to USD2 billion, provision for which was made and disclosed last year, to support the claims and programs covered by the class plan,” the company says. The plan includes a fund to compensate future claimants, a science advisory panel that will help generate evidence in future claims cases, and research and diagnostic programs. Bayer will also seek information from the US EPA to put an informational label on glyphosate products.

The agreement is part of a broader strategy “designed to provide closure to the Monsanto Roundup litigation,” Bayer says. Last year, Bayer announced a series of agreements involving payments of USD10.1-10.9 billion to settle the various claims, although parts of that plan have been the subject of further litigation.

Bayer acquired Monsanto in 2017.

As MRC wrote earlier, Covestro (formerly Bayer MaterialScience) closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

Covestro is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) rose in January-November 2020 by 18% year on year to 83,600 tonnes (70,600 tonnes a year earlier).
MRC

MOSCOW (MRC) -- ExxonMobil Corp has created a division to commercialize its technology that helps reduce carbon emissions, as the US oil major looks to step up efforts against climate change amid rising pressure from investors and activists, according to Hydrocarbonprocessing.

The move comes as Exxon looks to burnish its environmental credentials as it engages in a proxy fight with hedge fund Engine No. 1, which is attempting to appoint candidates on the oil company’s board and push toward a more renewables-focused future.

Exxon said its Low Carbon Solutions would initially focus on carbon capture and storage and directly compete with Occidental Petroleum Corp’s Oxy Low Carbon Ventures, which is looking to develop the largest ever facility to pull carbon dioxide out of the atmosphere.

The oil major said it would invest USD3 billion on lower emission solutions through 2025, by which time it plans to reduce the intensity of its oilfield greenhouse gas emissions by 15%-20% from 2016 levels. (Reporting by Rithika Krishna in Bengaluru; Editing by Ramakrishnan M.)

As MRC informed earlier, last year, Exxon Mobil Corp announced it will lay off about 1,900 employees in the United States as the COVID-19 pandemic batters energy demand and prices.

We remind that ExxonMobil has undertaken a planned shutdown at its cracker in Singapore. The company halted operations at the cracker for maintenance on September 14, 2020. The cracker was expected to remain off-line till end-October, 2020. Located at Jurong Island, Singapore, the cracker has an ethylene production capacity of 1 million mt/year and a propylene production capacity of 450,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC