Vistra executives expressed confidence in their hedging strategy Friday, telling financial analysts during their first-quarter earnings call that the company is “very well positioned” to take advantage of a tight natural gas market.
“In a nutshell, the U.S. natural gas complex is already tight and likely to be increasingly tied to world gas economics,” CEO Curt Morgan said in his prepared comments. “As an expanding pivotal supplier on the world stage, we expect U.S. supply and demand to tighten even further. Higher natural gas prices in turn lead to higher power prices, and Vistra is long power and natural gas equivalents.”
Vistra’s retiring CEO said the company “is in the right position to capitalize on the strong forward curves” and that its “prudent” hedging strategy has locked in value through 2025.
Curt Morgan | © RTO Insider LLC“The forwards have also risen materially out to 2030. The market clearly believes there has been a fundamental shift in the energy commodity complex,” Morgan said. “This shift … offers continued opportunities to hedge more while remaining mindful of the potential liquidity requirements against further commodity price moves.”
The Irving, Texas-based company released first-quarter adjusted EBITDA from ongoing operations of $547 million. That is a more than three-fold improvement over the same period the year before, when Vistra reported a loss of $1.2 billion following the February winter storm disaster. (See Vistra’s Winter Storm Loss Deepens to $1.6B.)
Vistra uses adjusted EBITDA as a performance measure, saying it believes that outside analysis of its business is improved by visibility into both net income prepared in accordance with GAAP and adjusted EBITDA.
The company reaffirmed its previously announced guidance of adjusted EBITDA from ongoing operations of $2.81 billion to $3.31 billion. Morgan noted that Vistra, the largest generator in the ERCOT market, still has the summer months ahead of it and “carries a little more open position than in the past for risk management purposes.”
“We reaffirm this guidance with increased confidence given the favorable energy commodities markets we continue to experience,” he said.
Wall Street reacted favorably Friday, driving the company’s share price to its 52-week high of $27.10. Vistra’s stock closed at $26.62, a $1.21 (4.8%) gain on the day. The share price has gained 65.9% over the last year, when it stood at $16.05.
Vistra continues “sensibly progressing” its zero-carbon generation fleet, having completed construction of two solar facilities totaling 158 MW of capacity and a 260-MW energy storage facility, all in Texas. In California, it is installing replacement connectors in the water-based heat suppression safety systems at its Moss 300 and Moss Landing 100 storage facilities.
The earnings call was Morgan’s last at CEO. He announced his retirement in March and is transitioning his leadership role to CFO Jim Burke. (See Burke to Succeed Morgan as Vistra’s CEO.)
“I’m proud of all that we’ve accomplished, and [I] believe Vistra is well positioned to drive continued industry leadership,” Morgan said.
