San Antonio-based publicly traded partnership,
NuStar Energy LP
), announced better-than-expected second-quarter 2013 earnings,
mainly due to higher contribution from Pipeline and Fuels
NuStar's earnings per unit (EPU) from continuing operations came
in at 27 cents. The earnings beat the Zacks Consensus Estimate of
21 cents. The result also came well ahead of the year-ago
adjusted profit of 6 cents.
Revenues of $904.2 million were 48.9% below the year-ago level
and also failed to beat the Zacks Consensus Estimate of $ 1,008.0
million. Lower contribution from the Storage unit has impacted
NuStar announced a quarterly distribution of $1.095 per unit
($4.38 per unit annualized), which remains unchanged from the
year-ago and previous-quarter distributions. The distribution is
payable on Aug 9, 2013, to unitholders of record as on Aug 5,
Distributable cash flow (DCF) available to limited partners for
the second quarter was $55.1 million or 71 cents per unit,
compared with $31.5 million or 45 cents per unit in the
Total quarterly throughput volumes in the Pipeline segment was
810,513 barrels per day (BBL/D) representing an increase of 7.9%
as compared with the year-ago period.
The throughput volumes in the crude oil pipelines increased 20.2%
from the year-ago quarter to 350,850 BBL/D. The improvement is
based on the gains from the completion of several organic growth
developments in the Eagle Ford shale.
The increased throughput in the crude oil pipelines boosted the
segment's operating income by 62.3% year over year to $51.2
million. Operating revenues increased 30.0% to $97.0 million.
Throughput volumes in the Storage segment increased 8.8% year
over year to 813,345 B/D.
Quarterly revenues were down 5.0% to $145.1 million compared to
the second quarter of the previous year. The drop is primarily
due to the fall in demand for storage at some of NuStar's
Moreover, quarterly operating income reached $41.7 million (down
22.9% year-over-year), lowered by higher operating expenses.
The unit reported a profit of $3.4 million against the year-ago
quarter loss of $290.9 million. The significant decline in
operating expenses along with reduced depreciation and
amortization expenses aided the result.
As of Jun 30, 2013, the debt to capitalization ratio was recorded
at 50.6% as compared to 52.0% in the year-ago period.
NuStar projects its third quarter 2013 EPU to be in the range of
20 cents to 30 cents per unit.
Moreover, NuStar expects its reliability capital spending for
2013 to be between $35.0 million to $45.0 million while strategic
capital spending will be $350.0 million to $400.0 million.
Stocks to Consider
NuStar is a master limited partnership (MLP), which currently
carries a Zacks Rank #5 (Strong Sell), implying that it is
expected to significantly underperform the broader U.S. equity
market over the next one to three months.
DELEK LOGISTICS (DKL): Free Stock Analysis
NUSTAR ENERGY (NS): Free Stock Analysis
PIONEER SW EGY (PSE): Free Stock Analysis
SUMMIT MIDSTRM (SMLP): Free Stock Analysis
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Over the last few years, NuStar has consolidated its business
through a combination of organic efforts and accretive
acquisitions. We believe that the higher operating expenses
associated with asset base expansion may lead to reduced returns.
Meanwhile, one can look at oil and gas production pipeline MLPs
Delek Logistics Partners LP
Pioneer Southwest Energy Partners LP
Summit Midstream Partners LP
) as attractive investments. All three firms sport a Zacks Rank