Magellan Midstream Partners LP
) reported third quarter 2013 earnings per unit (EPU) of 54 cents
(excluding mark-to-market commodity-related pricing adjustments),
surpassing the prior-year quarter adjusted profit of 35 cents
amid strong segmental performances.
However, the results failed to beat the Zacks Consensus
Estimate of 59 cents. A rise in expenses could be held
responsible for the miss. Product purchase expenses flared up
40.2% year over year to $120.3 million and G&A expenses
increased 18.9% to $32.8 million.
The Tulsa, Oklahoma-based oil distributor's total revenue of
$443.8 million improved 36.2% year over year and also surpassed
the Zacks Consensus Estimate of $433.0 million. Strong
performance by the Crude Oil segment, contributions from the New
Mexico pipeline system and a promising pricing scenario aided the
Quarterly Distribution & Distributable cash
Magellan Midstream reported distributable cash flow of
approximately $141.1 million, up 40.1% from the year-ago period.
Recently, Magellan Midstream raised its third-quarter 2013 cash
distribution by 5% sequentially and 15% year over year to 55.75
cents per unit ($2.23 per unit annualized). Magellan Midstream's
new distribution is payable on Nov 14 to unitholders of record as
of Nov 7, 2013.
In this segment, quarterly operating profits (before affiliate
G&A and D&A expenses) were recorded at $146.8 million, up
53.1% from the year-ago period. The 6.2% increase in
transportation and terminal revenues, owing to the New Mexico
pipeline system that was brought online during the quarter,
favored the results.
In this segment, operating margin was approximately $50.6
million, significantly higher (up 126.2%) than the prior-year
quarter thanks to increased crude oil transportation revenues as
shipment began on the Longhorn pipeline. An increase in the joint
venture management fee to about $3.37 million from $0.20 million
in third quarter 2012 also aided the results.
This segment's operating margin increased 25.2% year over year to
$24.5 million, owing to storage fees from the tanks recently
constructed, higher throughput fees at the Galena Park terminal
and a decrease in operating expenses.
Management at Magellan Midstream increased its expected
distributable cash flows for full-year 2013 by $10.0 million to
$640.0 million. The partnership reiterated the annual
distribution growth target of 16% and 15% for 2013 and 2014,
respectively. Magellan guided fourth quarter and full-year 2013
earnings per unit of 81 cents and $2.54, respectively.
Magellan Midstream increased its expenditure plans to
approximately $925 million for growth projects in 2013, with
additional expenditure of $400 million in 2014 to complete the
projects. Moreover, the partnership will continue to put in more
than $500 million in potential growth projects.
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Magellan Midstream currently has a Zacks Rank #2 (Buy), implying
that it is expected to outperform the broader U.S. equity market
over the next 1 to 3 months.
In addition to Magellan Midstream, there are other pipeline
operators that are expected to perform well in the next three
months. These include
Pioneer Southwest Energy Partners L.P.
) which currently sports a Zacks Rank #1 (Buy) or
Pioneer Access Midstream Partners, L.P.
Energy Transfer Equity, L.P.
) which carry a Zacks Rank #2 (Buy).