NuStar Energy L.P. (NS) announced a Q2 2014 distributable cash flow from continuing operations available to limited partners of US$ 93.6 million, or US$ 1.2 per unit, compared to Q2 2013 distributable cash flow from continuing operations available to limited partners of US$ 56.8 million, or US$ 0.73 per unit. For the six months ended 30 June 2014, distributable cash flow from continuing operations available to limited partners was US$ 171.5 million, or US$ 2.2 per unit, compared to US$ 113.9 million, or US$ 1.46 per unit for the six months ended 30 June 2013.
Second quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations was US$ 140.1 million, compared to Q2 2013 EBITDA of US$ 114.3 million. For the six months ended 30 June 2014, EBITDA was US$ 266.8 million, compared to US$ 208.5 million for the six months ended 30 June 2013. The partnership reported second quarter net income applicable to limited partners of US$ 43.6 million, or US$ 0.56 per unit, compared to US$ 21.6 million, or US$ 0.28 per unit, earned in Q2 2013. For the six months ended 30 June 2014, net income applicable to limited partners was US$ 71.7 million, or US$ 0.92 per unit, compared to net income applicable to limited partners of US$ 34.9 million, or US$ 0.45 per unit, for the six months ended 30 June 2013.
The partnership also announced that its board of directors has declared a Q2 2014 distribution of US$ 1.095 per unit. The Q2 2014 distribution will be paid on 11 August 2014, to holders of record as of 6 August 2014. Distributable cash flow from continuing operations available to limited partners covers the distribution to the limited partners by 1.10 times for Q2 2014 and by 1.00 times for the six months ended 30 June 2014.
“All three of our operating segments continued to perform well in the second quarter,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “In May, we completed Phase 1 of our South Texas Crude Oil Pipeline expansion and set a new single-vessel loading record at our Corpus Christi North Beach Terminal, when we loaded over 750 000 bbls. These were significant milestones for us and contributed to improved results in both our pipeline and storage segments.”
Barron went on to say, “Our coverage ratio in the second quarter was our highest since the third quarter of 2011 and was better than we initially projected. Higher than expected throughput volumes in both our pipeline and storage segments, as well as the deferral of some maintenance expenses and reliability capital spending to the back half of 2014 helped drive the coverage ratio to 1.10 times.”
Internal growth project update
Phase 2 of the South Texas Crude Oil Pipeline expansion is expected to come online during Q1 2015 and will allow for increased throughputs of up to 65 000 bbls/d. NuStar’s 12 in. pipeline between Mont Belvieu and Corpus Christi, Texas, began generating distributable cash flow in the second quarter and is expected to be in full NGL service in Q2 2015, at which time it is expected to generate an incremental US$ 23 million in annual EBITDA, based on committed volumes.
2014 earnings guidance
“NuStar’s third quarter EPU and EBITDA results as well as our coverage ratio, should exceed last year’s third quarter results. Similar to the second quarter, third quarter EBITDA results in our pipeline, storage and fuels marketing segments are all expected to be higher than last year’s third quarter,” said Barron.
“In regard to full year 2014 guidance, we still expect our pipeline segment EBITDA to be US$ 40 to US$ 60 million higher than 2013 and our storage segment adjusted EBITDA to be comparable to 2013. However, we now expect our fuels marketing segment to generate EBITDA in the range of US$ 20 to US$ 30 million. Based on these projections, we expect to cover our distributions for the full year 2014.
“Our 2014 internal growth spending projections have been reduced slightly to reflect the deferral of spending on some of our key growth projects into 2015. Spending is now expected to be in the range of US$ 330 to US$ 350 million, the majority of which will be spent on projects in our pipeline segment.”
Adapted from press release by Rosalie Starling
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