July 27, 2015 [OPIS] - NuStar Energy said on Friday that it has adjusted its projection for Gulf Coast oil pipeline volume lower for the remainder of this year after a higher-than-expected performance in the first quarter.
However, its storage earnings projections for the rest of the year are adjusted upward due to higher throughput and favorable contract renewals.
“Due to reduced volume projections for the remainder of the year on pipelines that serve our Gulf Coast markets, we now expect our pipeline segment EBITDA to be $25 [million] to $45 million higher than 2014,” said Brad Barron, CEO of NuStar Energy and NuStar GP Holdings.
This is compared with a projection of $35 million to $55 million by the company in April.
With higher storage throughputs and favorable renewals at several of its terminals, NuStar now expects storage segment EBITDA to be $20 million to $40 million higher than 2014, Barron said. This is higher than the April projection of $10 million to $30 million.
NuStar’s fuels marketing segment EBITDA is still projected to be in the range of $20 million to $30 million, said Barron.
NuStar’s second-quarter 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $143.0 million, compared to second-quarter 2014 EBITDA from continuing operations of $140.1 million.
Net income in the second quarter was $55.325 million versus $55.399 million a year ago.
For the six months ended June 30, 2015, the partnership reported $357.0 million of EBITDA from continuing operations, compared to $266.8 million for the six months ended June 30, 2014.
Net income for the first six months was $182.224 million, compared with $95.036 million in the corresponding period of 2014.
NuStar, a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar has 8,651 miles of pipeline and 80 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids.
The partnership’s combined system has approximately 93 million bbl of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom.
“Despite an unprecedented amount of rainfall in the South Texas area and operational issues at third party gas processing plants during the second quarter, we averaged a record of 193,000 b/d of Eagle Ford throughput volumes into our Corpus Christi North Beach facility and ultimately across our docks,” Barron said.
“These volumes, which benefitted both our pipeline and storage segments, helped us achieve a strong quarterly distribution coverage ratio of 1.08 times,” he added.
Second-quarter 2015 distributable cash flow (DCF) from continuing operations available to limited partners was $92.2 million, or $1.18 per unit, compared to 2014 second-quarter DCF from continuing operations available to limited partners of $93.6 million, or $1.20 per unit.
For the six months ended June 30, 2015, DCF from continuing operations available to limited partners was $198.9 million, or $2.55 per unit, compared to $171.5 million, or $2.20 per unit, for the six months ended June 30, 2014. The partnership reported second-quarter 2015 net income applicable to limited partners of $42.4 million, or $0.54 per unit, compared to $43.6 million, or $0.56 per unit, earned in the second quarter of 2014.
For the six months ended June 30, 2015, net income applicable to limited partners was $157.0 million, or $2.01 per unit, compared to net income applicable to limited partners of $71.7 million, or $0.92 per unit, for the six months ended June 30, 2014.
Absent a gain related to the company’s Jan. 2, 2015, acquisition of the remaining 50% ownership in the Linden, N.J., terminal, adjusted EBITDA from continuing operations for the six months ended June 30, 2015, would have been $300.7 million, while adjusted net income applicable to limited partners would have been $101.8 million, or $1.30 per unit.
NuStar has updated its capital spending projections for 2015. The company’s 2015 strategic capital spending is now expected to be $430 million to $450 million, while its 2015 reliability capital spending is expected to be $35 million to $45 million.
This is compared with a strategic capital spending estimate of $400 million to $420 million in April and reliability spending was at $45 million-$55 million.
In April, NuStar reported its highest first-quarter EBITDA in the company’s history.
