CenterPoint Energy on Thursday said it wrote off $1.6 billion in asset losses from its Enable Midstream Partners oil and gas pipeline and storage investment, resulting in a $1.2 billion loss (-$2.44/share) for the first quarter.

A year ago, CenterPoint reported first-quarter earnings of $140 million ($0.28/share). Last quarter’s revenue of $2.2 billion was similar to the same period a year earlier.

The Houston-based company took the impairment in Enable following the partnership’s recent cutbacks in the face of economic headwinds. Pummeled by the global slump in petroleum demand and the COVID-19 pandemic, Enable halved its quarterly distributions to investors and cut its capital expenditures for 2020 by $115 million, among other cost reductions.

CenterPoint has a 53.7% limited partner ownership interest in Enable and is expected to take a $115 million hit from the move on an annualized basis.

“We thought that was the right level [for distribution cuts],” interim CEO John Somerhalder said during a conference call with investors. “We’re confident in Enable’s ability to weather the downturn.”

Still, CenterPoint is taking other actions to “fortify its financial position,” announcing:

• • • A $1.4 billion equity investment that will eliminate all anticipated equity needs through 2022 and fund a “robust” $13 billion investment program.
    • The appointment of former Halliburton CEO David Lesar and Barry Smitherman, who has chaired the Texas Public Utility Commission and the Railroad Commission of Texas, to the company’s board.
    • The creation of a new Business Review and Evaluation Committee, chaired by Lesar and reporting to the board. The committee will conduct a comprehensive, five-month review of CenterPoint and its businesses.

Somerhalder said the equity investment, combined with the recent $850 million sale of a pipeline business and the pending $400 million sale of its Energy Services natural gas retail business, will be used to deleverage CenterPoint’s balance sheet and the overall credit profile.

“These equity investments provided a transformational opportunity for the company to operate from a position of heightened strength and flexibility,” Somerhalder said.

CenterPoint is also working with regulators across its diverse footprint to address the recovery of COVID-19 expenses. Nearly 70% of its regulated jurisdiction has recovery mechanisms in place, the company said.

The utility’s share price outperformed the market Thursday by closing at $17.81, an 11.45% gain from Wednesday’s close. CenterPoint stock hasn’t seen that level since early April.

OGE Energy Takes $492M Loss

Enable’s distribution cuts also led to a quarterly loss for its other major investor, OGE Energy, holder of a 25.5% limited partner interest and a 50% general partner interest.

OGE took a $780 million impairment in reporting a loss of $492 million (-2.46/share) for the quarter. A year ago, the company reported a $47 million ($0.24/share).

“While the Enable write-down was impactful to earnings this quarter, it was not a reflection of the cash flows generated by those assets,” CEO Sean Trauschke said. OGE still recorded a cash distribution of $37 million from the partnership, compared to $35 million in 2019.

The company revised its year-end earnings guidance from $2.19 to $2.31 per average diluted share to a net loss of -87 to -77 cents/share.

OGE’s share price gained 4 cents during the day, closing at $29.29. The company’s stock has lost almost 34% of its value since the year began, when it was $44.06/share.

Xcel Energy 3 Cents Shy of Earnings Expectations

Xcel Energy reported first-quarter earnings of $295 million ($0.56/share), falling short of 2019’s first-quarter performance of $315 million in profits ($0.61/share) and analysts’ expectations of 59 cents/share.

The Minneapolis-based company said the pandemic did not significantly affect the results, laying the blame instead on the negative impact of weather. Retail electricity sales were only down 1% in the quarter, the company said.

Preliminary sales revenue for April indicates a 9.6% drop, with commercial and industrial sales experiencing a 13.7% fall.

“We are responding to the economic impact from this global pandemic by implementing contingency plans to minimize the impact on our financial results,” CEO Ben Fowke said in a statement. “However, these are unprecedented times, and the ultimate economic impact from the pandemic may be greater than anticipated.”

Xcel plans to cut operating and maintenance expenses by as much as 5% and institute a hiring freeze.

Xcel reaffirmed its 2020 earnings-per-share guidance of $2.73 to $2.83/share, based on assumptions of a “severe” pandemic-related impacts in the second quarter with a slow economic recovery and a 4% loss in sales over last year. It still cautioned that such a scenario could undercut earnings by 17 cents/share.

“We expect to be a part of the solution to get the economy back on its feet … but this is a fluid situation,” Fowke told analysts during Xcel’s earnings conference call.

Xcel’s share price jumped to $62.06 after the market’s open Thursday, following a close the day before of $61.22. After the earnings call, the stock price slid to a close of $59.96.