Strong 4Q14 for Alon USA

Alon USA Partners, LP has announced its results for the quarter and year ended 31 December 2014. Net income for 4Q14 was US$42.1 million, or US$0.67 per unit, compared to US$13.5 million, or US$0.22 per unit, for the same period last year. Net income for the year ended 31 December 2014 was US$169.1 million, or US$2.71 per unit, compared to US$136.2 million, or US$2.18 per unit, for the same period last year.

Paul Eisman, CEO and President, said: "The Big Spring refinery ran well during the quarter, achieving record quarterly total throughput of 77 000 bpd and liquid recovery of approximately 101%. 4Q14 throughput surpassed the previous record throughput set in 3Q14 as we continue to benefit from investments made during the turnaround completed earlier in the year. However, our 4Q14 refining results were negatively impacted by a decline in crude spreads and seasonal weakness in crack spreads. Despite the volatility in petroleum markets during 4Q14, the Big Spring refinery was able to generate strong results, once again highlighting the refinery's operating capabilities and competitive advantages. The solid operational performance drove strong margin capture, as the refinery operating margin of US$15.12/bbl exceeded the Gulf Coast 3/2/1 crack spread adjusted for Midland crude discounts. The efficiency of our operations was also demonstrated by Big Spring's low direct operating expense of only US$3.67/bbl.

"With the cash generated during the fourth quarter, the Partnership paid a cash distribution of US$0.70 per unit on 2 March 2015. Based on our performance in 2014, the Partnership generated cash available for distribution of US$2.54 per unit. This is particularly noteworthy given the significant downtime associated with the major five year turnaround and vacuum tower project completed in 2Q14. With the turnaround and project completed, the refinery is poised to run well in 2015.

"We expect total throughput at the Big Spring refinery to average approximately 71 000 bpd for 1Q15 and 72 000 bpd for the full year of 2015."

4Q14 highlights

Refinery operating margin was US$15.12/bbl for 4Q14 compared to US$9.96/bbl for the same period in 2013. This increase in operating margin was primarily due to a widening of both the WTI Cushing to WTS spread and the WTI Cushing to WTI Midland spread, partially offset by a lower Gulf Coast 3/2/1 crack spread.

The Big Spring refinery average throughput for 4Q14 was 76 867 bpd compared to 73 613 bpd for the same period in 2013. The increased throughput was due to the completion of both the major turnaround and the vacuum tower project during 2Q14, which increased crude oil throughput to 73 000 bpd from 70 000 bpd and increased diesel production by 3000 bpd.

The average Gulf Coast 3/2/1 crack spread was US$9.04/bbl for 4Q14 compared to US$13.05/bbl for the same period in 2013, which was primarily influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for 4Q14 was US$3.70/bbl compared to US$9.89/bbl for the same period in 2013. The average WTI Cushing to WTS spread for 4Q14 was US$4.43/bbl compared to US$3.14/bbl for the same period in 2013. The average WTI Cushing to WTI Midland spread for 4Q14 was US$5.79/bbl compared to US$2.32/bbl for the same period in 2013.

2014 highlights

Refinery operating margin was US$16.69/bbl for 2014 compared to US$14.59/bbl for 2013. This increase in operating margin was primarily due to a widening of both the WTI Cushing to WTS spread and the WTI Cushing to WTI Midland spread, partially offset by a lower Gulf Coast 3/2/1 crack spread.

During 2Q14, we completed a major turnaround at the Big Spring refinery, including the vacuum tower project, which increased crude oil throughput to 73 000 bpd from 70 000 bpd and increased diesel production by 3000 bpd. As a result of downtime necessary to complete these projects, the refinery and operating results were lower during 2Q14, which reduced profitability and the related distribution amount for the period. However, despite the reduced throughput experienced during the second quarter of 39 000 bpd, the Big Spring refinery average throughput was 66 033 bpd for 2014 compared to 67 103 bpd for 2013.

The average Gulf Coast 3/2/1 crack spread for 2014 was US$14.52/bbl compared to US$19.16/bbl for 2013, which was primarily influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for 2014 was US$7.30/bbl compared to US$12.41/bbl for 2013. The average WTI Cushing to WTS spread for 2014 was US$6.04/bbl compared to US$3.72/bbl for 2013. The average WTI Cushing to WTI Midland spread for 2014 was US$6.93/bbl compared to US$2.59/bbl for 2013.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.hydrocarbonengineering.com/refining/05032015/strong-4q14-for-alon-usa-382/