Wed 23 Apr 2014, 14:28 GMT

NuStar forecasts higher Q2 earnings on improved bunkering results


Q2 results for pipeline and fuels marketing segments are expected to be higher due to increased pipeline throughputs and improved results for its bunkering operations.



NuStar Energy L.P. has announced that first quarter net income increased by US$14.8 million, or 111.3 percent, to $28.1 million, up from $13.3 million, or $0.17 per unit, in the first quarter of 2013.

First quarter earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $126.7 million compared to first quarter 2013 EBITDA of $94.1 million.

Distributable cash flow from continuing operations available to limited partners during the first quarter of 2014 was $77.9 million, or $1.00 per unit, compared to $57.1 million, or $0.73 per unit, during the corresponding period in 2013.

NuStar also announced that its board of directors has declared a first quarter 2014 distribution of $1.095 per unit. The first quarter 2014 distribution will be paid on May 12, 2014, to holders of record as of May 7, 2014. Distributable cash flow from continuing operations available to limited partners covers the distribution to the limited partners by 0.91 times for the first quarter of 2014, which is the highest first quarter coverage ratio since 2009.

Commenting on the results, Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC, said: "NuStar’s first quarter EPU and distributable cash flow results were our strongest first quarter results since 2009. They were also much higher than last year and we expect our results to continue to exceed last year’s results as we move through the remainder of 2014.

"During the first quarter, we took steps to improve NuStar’s profitability by divesting our remaining interest in the asphalt joint venture and by finalizing several agreements related to our pipeline and terminal operations. In February, we announced the signing of a long-term agreement with Occidental Petroleum to transport NGLs on our currently idled, 200-mile, 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas. Then in early March, we announced that we signed long-term storage agreements for our St. Eustatius and Pt. Tupper terminals for a combined eight million barrels of storage capacity."

Project Updates

In mid-February, NuStar completed the construction of a private marine loading dock at its North Beach Terminal in Corpus Christi, Texas. This new dock more than tripled the previous loading capacity, of approximately 125,000 barrels per day, and will allow NuStar to handle all the new volume associated with Phase 1 and Phase 2 of the South Texas Crude Oil Pipeline expansion, as well as additional volumes shipped to Corpus Christi. In fact, NuStar reports that the facility recently loaded 700,000 barrels in a 24-hour period.

Phase 1 of the South Texas Crude Oil Pipeline expansion is scheduled to start service in May of 2014 and will allow for increased throughputs of 35,000 barrels per day. Phase 2, which will allow for an additional 65,000 barrels per day, is expected to come on line during the first quarter of 2015.

NuStar’s 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas has already begun generating distributable cash flow and is expected to be in full NGL service in the second quarter of 2015, at which time it is expected to generate an incremental $23 million in annual EBITDA. Occidental Petroleum Corporation will utilize the majority of the line’s 110,000 barrel per day capacity.

2014 Earnings Guidance

"NuStar’s second quarter EPU and EBITDA results as well as our coverage ratio should also exceed last year’s second quarter results. EBITDA results in our pipeline and fuels marketing segments are expected to be higher than last year’s second quarter primarily due to increased pipeline throughputs and improved results in our bunkering operations. Second quarter storage segment results are expected to be down slightly compared to the same quarter last year," said Barron.

"Reaffirming the 2014 guidance we provided in February, we expect our pipeline segment EBITDA to be $40 to $60 million higher than 2013 and our storage segment adjusted EBITDA to be comparable to 2013. We expect our fuels marketing segment to generate EBITDA in the range of $10 to $30 million. Based on these projections, we expect to start covering our distributions in the second half of 2014 and for the full year 2014," Barron said.

Barron added: "We expect to spend $350 to $370 million on internal growth projects during 2014, the majority of which will be spent on projects in our pipeline segment. Our 2014 reliability capital spending remains unchanged, and is expected to be in the range of $35 to $45 million."


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