San Antonio-based publicly traded partnership,
NuStar Energy LP
), announced better-than-expected third-quarter 2013 earnings,
mainly due to higher contribution from the Pipeline business unit
along with significantly lower operating expenses.
NuStar's earnings per unit (EPU) from continuing operations came
in at 28 cents, beating the Zacks Consensus Estimate of 27 cents.
The result significantly surpassed the year-ago adjusted profit
of 19 cents.
Revenues of $780.0 million were 51.1% below the year-ago level
and also failed to beat the Zacks Consensus Estimate of $937.0
million. Lower contribution from the Storage and Fuels marketing
units has impacted the results.
Last month, NuStar announced quarterly distribution of $1.095 per
unit ($4.38 per unit annualized), which remains unchanged from
the previous quarter's distributions. The distribution is payable
on Nov 14, 2013, to unitholders of record as on Nov 11, 2013.
Distributable cash flow (DCF) available to limited partners for
the third quarter was $67.2 million or 86 cents per unit against
$63.0 million or 87 cents per unit in the year-earlier quarter.
Total quarterly throughput volumes in the Pipeline segment was
884,050 barrels per day (BBL/D) representing a marginal increase
of 0.7% from the year-ago period.
The throughput volumes in the crude oil pipelines increased 7.1%
from the year-ago quarter to 382,539 BBL/D. Higher volumes at
Eagle Ford pipeline aided the result.
Lower operating costs along with increased throughput in the
crude oil pipelines boosted the segment's operating income by
38.6% year over year to $58.0 million. Throughput revenues
increased 20.5% to $111.5 million.
Throughput volumes in the Storage segment increased 6.6% year
over year to 832,412 BBL/D.
However, quarterly revenues were down 5.7% to $140.5 million from
the third quarter of the previous year. The drop is primarily due
to the fall in demand along with decreased renewal rates for
storage at some of NuStar's terminal facilities.
Moreover, quarterly operating income came in at $38.2 million
(down 24.2% year-over-year), hampered by significant higher
depreciation and amortization expense.
The unit reported a loss of $9.1 million, wider than the year-ago
quarter loss of $6.5 million. Bunker fuel's consistent low demand
along with higher competition in the Caribbean market affected
The partnership recorded total operating cost at $120.5
million, down 15.2% year over year.
MATADOR RESOURC (MTDR): Free Stock Analysis
NUSTAR ENERGY (NS): Free Stock Analysis
PACIFIC DRILLNG (PACD): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
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As of Sep 30, 2013, the debt to capitalization ratio was 51.0% as
compared to 43.2% in the year-ago period.
NuStar projects its fourth-quarter 2013 EPU in the range of 20
cents to 30 cents per unit.
The partnership maintains its previous expectation of reliability
capital spending for 2013 in the range of $35.0-$45.0 million,
while the same figure is anticipated for 2014. However, NuStar
lowered its strategic capital spending to the band of $300.0
million to $325.0 million for 2013 as it deferred some project
expenses toward 2014. For 2014, strategic capital spending is
anticipated in the range of $350-$375 million.
Stocks to Consider
NuStar is a master limited partnership, which currently carries a
Zacks Rank #3 (Hold), implying that it is expected to perform in
line with the broader U.S. equity market over the next one to
Meanwhile, one can look at energy firms like
Matador Resources Company
Pacific Drilling SA
SM Energy Company
) that offer value. All the stocks sport a Zacks Rank #1 (Strong