New Jersey Resources Corp. (NYSE:NJR) Q4 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 10:00 am ET

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New Jersey Resources Corp. (NYSE:NJR) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Stephen D. Westhoven

the transportation that serve constrained or growing markets.

Let me walk you through the highlights. First, we acquired the Leaf River Energy Center, I'll provide more details on the next slide, but we are excited about the opportunities that holds for NJR. Second in 2019 Steckman Ridge our storage asset in Marcellus Shale contributed $0.09 per share of NFE. Moving to our pipeline assets, although PennEast has experienced some recent challenges we remain committed to the project. It's an important role in our energy future. PennEast is currently pursuing its appellate rights and continues to evaluate development options to proceed with construction.

In 2019, PennEast contributed $0.04 of NFE per share in AFUDC and we expect a similar minimal contribution in 2020. For Adelphia Gateway, we are still awaiting FERC certificate of Public Convenience and Necessity. Once we received approval we expect to assume operations immediately and begin to conversion of the southern end of the pipeline. Moving to Slide nine, our acquisition of Leaf River is significant for several reasons. First, since 1995 our Energy Services business unit has cultivated strong customer relationships and effectively manage the portfolio of natural gas storage assets across the US, including region served by Leaf River. This experience in our relationships will help drive future opportunities for this investment.

Second, Leaf River which is connected to six interstate pipelines is located near the Gulf Coast, the fastest growing market for natural gas in the United States. Forces driving this demand include the expansion of industrial activity in the region. The growth of LNG exports and an increase in natural gas fire generation. Over 80% of Leaf River's revenue is contracted -- creditworthy counterparties with an average contract life of approximately five years and Leaf River has the potential for expansion. It's three storage caverns are amongst the newest in North America and the facility was designed to accommodate a possible fourth Capital.

Turning to Slide 10, for an update on Clean Energy Ventures. At the top of the slide you'll note that we placed seven commercial solar projects in the service in 2019 adding about 52 megawatts. In 2020, capital expenditures will range from $130 million to $140 million adding between 47 megawatts to 52 megawatts of capacity in generating $38 million to $42 million and ITCs. Finally, at the bottom right you can see that the solar portfolio is expected to generate between $79 million and $81 million in SREC revenues in 2020.

On Slide 11 are the results for energy services over the past few years, we've experienced a broad range of performance. In 2018 we saw what can happen with weather conditions, pricing spreads, and volatility are working in our favor. To contrast that, in 2019 we experienced milder weather, narrow pricing spreads and decreased volatility. Despite these factors energy service continue to generate positive NFE which supports our long option strategy. Given our past history, we expect energy services results to be within 5% to 15% NFE guidance range.