Calumet Specialty Products Partners, L.P. (the Partnership) reported a net loss for the quarter ended 31 December 2014 of US$63.5 million, or US$(0.95) per diluted unit, compared to a net loss of US$15.5 million, or US$(0.27) per diluted unit for the same quarter in 2013. For the full year 2014, the Partnership reported a net loss of US$112.2 million, or US$(1.80) per diluted unit, versus net income of US$3.5 million, or US$(0.17) per diluted unit, in 2013.
Excluding special items, Calumet reported adjusted net income of US$65.5 million, or US$0.86 per diluted unit, for 4Q14, versus an adjusted net loss of US$20.1 million, or US$(0.34) per diluted unit, for 4Q13. The company reported adjusted EBITDA of US$76.4 million in 4Q14, versus US$53.2 million in the prior year. For the full year 2014, the Partnership generated adjusted EBITDA of US$305.9 million, compared to US$241.5 million in 2013. Excluding the special items noted above, adjusted EBITDA was US$136.1 million and US$366.8 million in 4Q14 and the full year 2014, respectively, compared to US$51.4 million and US$235.2 million in 4Q13 and the full year 2013, respectively.
The Partnership's specialty products and fuel products segments reported significant growth in adjusted EBITDA during 4Q14, when compared to the prior year period, primarily due to a combination of improved reliability at its key fuels refineries and a significant year over year decline in crude oil prices that contributed to improved margins, particularly within the Partnership's specialty products segment. During 4Q14, specialty products gross profit increased US$26.3 million.
Distributable cash flow (DCF) for 4Q14 was US$38.2 million, compared to US$10.6 million in the prior year period. For the full year 2014, DCF was US$142.9 million, compared to US$18.5 million in 2013. A year over year improvement in gross profit and a reduction in replacement and environmental capital expenditures and turnaround costs was partially offset by higher cash interest expense. Excluding the special items noted above, DCF was US$97.9 million and US$203.8 million in 4Q14 and the full year 2014, respectively, compared to US$8.8 million and US$12.2 million in 4Q13 and the full year 2013, respectively.
Bill Grube, Vice Chairman and Chief Executive Officer, commented on the results: "Consistently reliable refining operations and elevated specialty products margins contributed to significant growth in adjusted EBITDA during 4Q14, versus the prior year period. During 1Q15, specialty products margins remain strong, while fuels refining margins are trending higher in the niche, inland markets where we operate. Importantly, each of our key fuels refineries continues to operate on plan, with no major turnarounds scheduled at these refineries until 2018."
"During the next twelve months, Calumet is scheduled to complete all four of its previously announced organic growth projects, the combination of which are expected to provide significant incremental EBITDA upon which to further grow our Partnership. The Dakota Prairie refinery and Missouri esters plant expansions are scheduled for completion during 2Q15, while the San Antonio refinery solvents project is now scheduled for completion during 4Q15. Our Montana refinery expansion project remains scheduled for 1Q16 completion date."
Great Falls, Montana Refinery Expansion Project
Calumet is engaged in a project designed to increase production capacity at its Great Falls, Montana refinery from 10 000 to 25 000 bpd. This project will allow the Partnership to capitalise on local access to cost advantaged Bow River crude oil, while producing additional fuels and refined products for delivery into the regional market. The scope of this project includes the installation of a new crude unit that will process 25 000 bpd of crude oil and other feedstocks and a new 25 000 bpd hydrocracker. This project will be completed during the 1Q16.
The estimated total cost of the expansion project remains approximately US$400.0 million, subject to market conditions, while the total estimated annual EBITDA contribution from this project is revised to a range of between US$70 million to US$90 million, subject to market conditions. Estimated annual EBITDA contribution assumes a per barrel discount of US$10 on Bow River crude oil sourced for the Montana refinery, when compared to the per barrel price of West Texas Intermediate (WTI).
Dakota Prairie Refinery
Calumet, together with its 50/50 joint venture partner, MDU Resources, Inc., is nearing completion on the construction of a 20 000 bpd diesel refinery located in Dickinson, North Dakota. The refinery, which is expected to be completely supplied with locally sourced Bakken crude oil, is expected to commence operations during 2Q15.
The estimated total construction cost of the expansion project to the joint venture is approximately US$425.0 million to US$435.0 million, versus the prior estimate of approximately US$400.0 million, while the total estimated annual EBITDA contribution to the joint venture from this project is estimated to be US$60 million to US$70 million, subject to market conditions. Both the project cost and EBITDA contribution are to be split equally between the joint venture partners.
San Antonio, Texas Refinery Solvents Project
Calumet has commenced a project that will take a portion of its San Antonio refinery's ultra low sulfur diesel and jet fuel production and convert it into up to 3000 bpd of higher margin solvents that will meet customer requirements for low aromatic content. Solvents production will supplement the refinery's current fuels production slate and will be targeted toward the drilling fluid, paints and coating markets. This project is expected to be completed during 4Q15. The estimated total construction cost of the solvents project is approximately US$65.0 million to US$75.0 million, up from the prior estimate of approximately US$40.0 million, while the total estimated annual EBITDA contribution from this project is estimated to be approximately US$20.0 million.
Missouri Esters Plant Expansion Project
Calumet continues to make progress on a project designed to more than double the production capacity of its Louisiana, Missouri esters plant from 35 million lbs/y to an estimated 75 million lbs/y. This project is expected to be completed during 2Q15. Esters are a key base stock used in the aviation, refrigerant and automotive lubricants markets. The current estimated total construction cost of the esters plant expansion is approximately US$40.0 million to US$45.0 million, while the total estimated annual EBITDA contribution from this project is estimated to be US$8.0 million to US$12.0 million.
Adapted from press release by Rosalie Starling
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