Terminal operator, asphalt refiner and bunker supplier,
NuStar Energy L.P., reports that fuels marketing sales plummeted 61 percent during the third quarter of 2015 compared to the corresponding period last year.
Total fuels marketing sales fell by $324,494,000 between July and September, to $206,696,000, down from $531,190,000 in 2014. As a result, segment operating income fell to a loss of $1,819,000 from a profit of $7,518,000 in the prior-year quarter.
During the first nine months of 2015, fuels marketing sales were down by $855,093,000, or 52.0 percent, to $790,719,000, down from $1,645,812 the previous year.
Operating income declined by $11,141,000, or 51.9 percent, to $10,756,000 between January and September, down from $21,897,000 in 2014.
Earnings
Third quarter 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $155.1 million, compared to $145.1 million last year.
Third quarter net income applicable to limited partners was $52.9 million, or $0.68 per unit, compared to $50.1 million, or $0.64 per unit, in 2014.
For first the nine months of 2015, NuStar posted an EBITDA from continuing operations of $512.1 million, compared to $411.9 million during the same period in 2014.
Net income during this nine-month period was $209.9 million, or $2.69 per unit, compared to $121.8 million, or $1.56 per unit, in 2014.
Distributable cash flow
Distributable cash flow (DCF) from continuing operations available in the third quarter was $89.4 million, or $1.15 per unit, compared to $87.9 million, or $1.13 per unit, last year.
For the nine months ended September 30, 2015, DCF from continuing operations was $288.3 million, or $3.70 per unit, compared to $259.4 million, or $3.33 per unit, in 2014.
Commenting on the company's results,
Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC, said: "Higher storage utilization and positive renewals at several of our terminals, as well as the added benefit from our Linden terminal acquisition, contributed to a 17% increase in storage lease revenues for the quarter. Despite the recent pullback in domestic shale production, overall our pipeline segment experienced improved crude and refined products throughput volumes, compared to the same quarter last year."
Barron added: "Due to the continued strength of our core, fee-based operations, we achieved a healthy distribution coverage ratio of 1.05 times, our sixth consecutive quarter above 1.0 times, and we remain on track to cover the distribution for the full-year."
Earnings guidance for 2015
In NuStar's earnings guidance, Barron said: "We haven't changed our overall view of 2015 from what we conveyed to you in the past, but we have adjusted our expectations for each segment. We now expect our pipeline segment EBITDA to be $25 to $35 million higher than 2014, which is less than prior guidance, due to lower expected throughputs on our crude oil pipeline system as a result of recent Eagle Ford shale production declines. Our 2015 storage segment EBITDA, on the other hand, should be $40 to $50 million over 2014, higher than we previously anticipated, due to better than expected throughput activity and renewals, as well as insurance proceeds related to our Linden terminal that we expect to receive in the fourth quarter."
Commenting on the fuels marketing division, Barron said: "Our fuels marketing segment EBITDA is now projected to be in the range of $10 to $20 million, less than previous guidance, due to weaker than expected margins across the segment."
He added: "We expect our 2015 strategic capital spending, which includes internal growth and acquisition spending, to be $435 to $445 million. Our anticipated 2015 reliability capital spending has been reduced slightly to reflect estimated savings and is now expected to be $30 to $40 million.”
Looking ahead to 2016, Barron commented, "We expect increased throughputs on our refined product pipelines to be largely offset by lower projected Eagle Ford crude oil system volumes. As a result, our pipeline segment's 2016 EBITDA should be comparable to slightly higher than 2015. We expect 2016 storage segment EBITDA to decrease $15 to $35 million compared to 2015, primarily due to lower projected storage throughputs at our North Beach terminal that serves our South Texas Pipeline System and the absence of expected current year insurance proceeds in 2016. We project 2016 EBITDA in our fuels marketing segment to be $15 to $35 million.
"With regard to capital spending projections for 2016, we plan to spend $360 to $380 million on strategic capital spending and $35 to $45 million on reliability capital spending."
Barron concluded by saying: "Based on our current projections, we expect to cover our distribution again for the full-year 2016."
