Two months on from the winter freeze that paralyzed Texas and sent electricity and gas prices soaring, another big winner has emerged. BP Plc said Tuesday its gas trading unit had an “exceptional” first quarter, helping to drive profit well above pre-pandemic levels. While executives didn’t spell it out, all signs point to large gains from the frigid weather in Texas. “It was a very exceptional quarter in gas trading,” Chief Executive Officer Bernard Looney said in an interview. “We were well-positioned for colder-than-normal weather in the U.S.,” as well as in Asia.
During one of the most remarkable weeks in the market’s history, BP, the biggest physical gas supplier in the U.S., took advantage of prices that skyrocketed 300-fold in some areas.
The next-biggest supplier, Macquarie Group Ltd., also enjoyed a windfall from gas and power price swings, pocketing $210 million. Other companies to profit included pipeline operator Kinder Morgan Inc., which reported a $1 billion gain, and more may emerge as earnings season progresses.
Yet among BP’s oil peers, some have already flagged that their results will suffer from the deep freeze. Royal Dutch Shell Plc has warned its adjusted earnings will take a hit of about $200 million, while Exxon Mobil Corp. expects profit to be curtailed by as much as $800 million.
Trading Giant
BP benefits from having one of the largest in-house trading units in the industry. Last year, the company offered a glimpse into just how profitable the secretive trading operation is: it boosts returns on average capital employed by around 2 percentage points, suggesting it brings in as much as $2.5 billion a year.