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Citing better-than-expected performance, Standard & Poor’s (S&P) Ratings Services revised its rating outlook on Phoenix Park Gas Processors Ltd (PPGPL) from negative to stable yesterday. In its rating report, S&P said the outlook on PPGPL had been negative due to significant natural gas supply interruptions in 2013, which S&P expected would lead to diminished debt service coverage ratios (DSCR) through the rest of the year.
“Despite the disruptions, the project has outperformed operational expectations, resulting in a DSCR of more than 6x (multiple of 6) in 2013, and we anticipate that this will continue through the rest of 2014 and 2015 at current commodity prices. As a result, we are revising our outlook to stable from negative and affirming our ‘A-’ rating,” S&P said.
On S&P’s scale, an ‘A-’ rating is seven notches below the highest rating (‘AAA’) and four notches above junk or “non-investment grade.” The rating applies to PPGPL’s two tranches of senior secured notes (bonds), which are PPGPL’s and Phoenix Park Funding Ltd’s senior secured project debt.
“The rating outlook is stable. We expect 2014 product pricing and increased throughput volumes will produce a DSCR in excess of 6x through 2015, a modest drop from 7.3x during 2011, but still likely sufficient to maintain the rating level during the next few years.
“We believe this will largely result from the continuation of normal upstream natural gas production after interruptions caused by maintenance activities at offshore production facilities. In our forecast, we assume somewhat lower natural gas liquids (NGL) prices relative to recent years, which are more than offset by lower projected debt levels and good operational performance. Financial performance highly depends on commodity prices. For example, the DSCR fell to about 3.5x in 2009 when market conditions were at trough levels,” S&P said.
Phoenix Park processes and sells the NGLs (propane, butane, and natural gasoline) from native natural gas and other streams at its plant in Trinidad’s Point Lisas industrial estate. The facility receives its feedstocks from several sources: natural gas comes from National Gas Company of T&T Ltd (NGC), associated gas is supplied by the Petroleum Company of T&T Ltd (Petrotrin), and direct NGLs come from Atlantic LNG.
The project combines NGLs processed from these gas streams with the NGLs acquired from Atlantic LNG and then fractionates them into propane, mixed butane, and natural gasoline, all of which it exports to regional markets. The project is owned by NGC NGL Company Ltd and Pan West Engineers and Constructors Inc.