Rose Rock Midstream, L.P.
) reported third-quarter 2013 earnings per unit of 45 cents,
beating the Zacks Consensus Estimate of 39 cents by 15.4%.
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Quarterly earnings surged 18.4%, primarily on the heels of an
increase in revenues and a rise in marketing volumes due to the
acquisition of Barcas Field Services. The positives were
partially offset by lower margins at the pipeline transportation
operations and an increase in interest expenses.
The partnership's total revenues were $181.8 million, surpassing
the Zacks Consensus Estimate of $171 million by 6.3%. On a
year-over-year basis, revenues jumped 38.2% on the back of strong
contribution from the partnership's
(up 38% year over year) and
(up 41% year over year) segments.
In the quarter under review, Rose Rock Midstream's total expenses
spiked 40% year over year to $174.1 million. This was primarily
due to higher costs of products sold and operating as well as
The partnership's earnings from equity method investment were
$3.5 million, up 2.2% sequentially.
An increase in total expenses was more than offset by a rise in
revenues and addition of the partnership's earnings from equity
method investment. Consequently, operating margin in the reported
quarter increased to 6.2% from 5.3% in the year-ago quarter.
Rose Rock Midstream's interest expenses jumped more than 300%
primarily due to a rise in long-term debt.
Quarterly adjusted earnings before interest, tax, depreciation
and amortization (EBITDA) was $15.7 million, 65% higher than the
As of Sep 30, 2013, the partnership's current assets were $294.3
million versus $250.6 million as of Dec 31, 2012.
Long-term debt as of Sep 30, 2013 was $85 million compared with
$4.6 million at the end of 2012.
During the third quarter of 2013, the partnership invested $1.1
million under the maintenance capital expenditure program.
During the three-month period ended Sep 30, 2013, the
partnership's net cash provided by (used in) operating activities
was ($1.2) million compared with $15.4 million.
Cash Distribution Update
On Oct 24, 2013, the board of directors of Rose Rock Midstream
increased its quarterly cash distribution by 2.3% to 45 cents per
unit. The new rate is effective from the third quarter 2013. On
an annualized basis, the new distribution rate will be $1.80 per
The partnership intends to acquire an additional 33.3% interest
in SemCrude Pipeline, L.L.C., a unit of
In addition, Rose Rock Midstream also announced that it will
acquire a crude oil pipeline, stretching from Platteville, CO to
Tampa, CO, from
Noble Energy, Inc.
) for $8.3 million.
The partnership expects bullish demand for midstream services to
prevail and increase in the near term due to higher upstream
activities. This factor propels Rose Rock Midstream to expand its
operations through inorganic route, thereby serving more
Rose Rock Midstream currently has a Zacks Rank #3 (Hold). Another
stock from the industry that is presently performing well is
Magellan Midstream Partners LP
) with a Zacks Rank #2 (Buy).