Wednesday, November 9, 2011

Magellan profit grows

Pipeline operator Magellan Midstream Partners has announced strong Q3 2011 results, aided by contributions from recently-completed acquisitions and expansion projects.

The Tulsa, Oklahoma-based oil distributor reported earnings per unit (EPU) of $0.79 (€0.57) (excluding mark-to-market commodity-related pricing adjustments).

Total revenues, at $435.5 million, were up 7.2% year over year.

Recently, Magellan raised its Q3 2011 cash distribution by 1.9% sequentially and 7.4% year over year to $0.80 per unit ($3.20 per unit annualised). The cash distribution is up 205% since its initial public offering (IPO) in the beginning of 2001. Magellan’s new distribution is payable on November 14 to unitholders of record as on November 1, 2011.

Segmental performance

Petroleum products pipeline system: In the petroleum products pipeline system, quarterly operating profits (before affiliate G&A and D&A expenses) were a record $149.1 million, up 34.7% year over year. The increase reflects higher transportation and terminals revenues as well as improved fees for leased storage, partially offset by increase in operating expenses.

Petroleum products terminals: In the petroleum products terminals segment, operating margin was a record $40.3 million, up 36.5% year over year. The improvement reflects the recently acquired/constructed tankage at the partnership’s storage facilities, as well as higher ethanol and additive fees, partially offset by lower throughput volumes.

Ammonia pipeline system: The partnership’s Ammonia Pipeline System reported an operating loss of $1.7 million, narrower than the $7.6 million lost in the third quarter of 2010. The segment results were favourably affected on account of higher revenues and lower operating expenses.

2011 guidance

Management continues to expect distributable cash flows of approximately $445 million for the full year and is targeting an annual distribution growth of 7%. Magellan guided towards Q4 and full-year earnings per unit of $0.93 and $3.62, respectively.

The partnership plans to spend approximately $240 million on growth projects in 2011, $270 million in 2012, with expenditures of $65 million thereafter required to complete these projects in 2013. Additionally, the partnership continues to look for more than $500 million of potential growth projects in the earlier stages of development.

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