Interest-rate derivatives hit Pattern

Pattern Development's Gulf Wind farm in Texas.

Pattern Development's Gulf Wind farm in Texas.

US wind yieldco Pattern Energy reported a net loss of $14.7m in the first half of 2014, compared to a profit of $25.2m in the year-ago period, as it was hit by unrealised losses on interest rate derivatives.

During the second quarter, Pattern’s net income was a positive $7.2m, compared to $44m last year.

Pattern, which was at the vanguard of the US yieldco boom with its September 2013 IPO, blamed the drop in its fortunes this year on “unrealised losses on energy and interest rate derivatives and a higher recognition of deferred tax expense”.

On the bright side, Pattern says that its Cash Available for Distribution (CAFD) – a critical metric for any yieldco – had already reached 61% of the yearly target by the end of the second quarter.

The company bumped up its quarterly dividend by 2% compared to the first quarter, with its Class A shares now kicking off $1.312 on an annualised basis – equivalent to a 4.1% yield at the current share price.

In the second quarter Pattern hauled in revenues of $65m – up 11% year on year – on electricity sales of 770GWh.

Although commercial operation commenced at three large wind farms in which Pattern holds a stake during the first half of the year – South Kent in Ontario, Panhandle 1 in Texas, and El Arrayan in Chile – none provided a “meaningful contribution” to the CAFD. All are expected to do so during the second half of the year, however.

“It was a strong quarter in which we improved our performance and continued to execute on our growth strategy,” says chief executive Mike Garland. “Our CAFD at midyear is tracking ahead of the 2014 target we committed to at the IPO.”

Also on Tuesday Pattern’s parent company, Pattern Development, announced it had acquired a 200MW wind farm in Texas, with 160MW of that capacity expected to “drop down” into Pattern Energy’s portfolio at some point.

“There will be more additions to come,” says Garland.

Pattern Energy presently has a portfolio of 1.47GW, including 214MW under construction. In addition, it has Right of First Offer on 601MW spread across five projects in Texas and Canada.

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