Crude oil pipelines and terminals operator
Sunoco Logistics Partners L.P.
) announced impressive first-quarter 2012 results, driven by good
performances of crude oil pipelines and terminals facilities.
The partnership's diluted earnings per unit (EPU) came in at 77
cents, breezing past the Zacks Consensus Estimate of 62 cents and
the year-ago profit of 36 cents.
Revenues of $3,401.0 million in the quarter shot up 50.6% year
over year from $2,258.0 million and also beat our projection of
$2,478.0 by 37.2%.
The partnership announced a quarterly distribution of 42.75
cents or $1.71 per unit annualized. The distribution will be paid
on May 15, 2012 to unit holders of record as of May 9, 2012.
Distributable cash flow escalated approximately 93.7% year over
year to a record $122.0 million.
Effective fourth quarter of 2011, the partnership is reporting
in four segments: Refined Products Pipelines, Terminal Facilities,
Crude Oil Pipelines and the newly formed, Crude Oil Acquisition and
Refined Products Pipeline System
Operating income from the segment was $6.0 million in the quarter,
up 20% year over year. The positive variance was due to Inland
pipeline acquisition last year and a gain of $5 million related to
its sale of Texas-based Big Sandy terminal. The results were partly
offset by lower volumes from its refined product pipelines and
higher remedial expenditure to preserve environment.
The partnership's Terminal Facilities business segment recorded
quarterly operating income of $37.0 million in the quarter, up
27.6% from $29.0 million in the prior-year period. The positive
results were attributed to gain on sale of a terminal and pipeline,
recent acquisition activities, partly offset by shrinking volumes
at its refinery terminals.
Crude Oil Pipelines:
In the first quarter, operating income of the Crude Oil Pipelines
segment surged 33.3% year over year to $52.0 million, driven by
elevated pipeline fees and reduced operating expenses, partly
offset by increased operating supplies.
Crude Oil Acquisition and Marketing
The segment registered operating income of $34 million compared
with the prior-year level of $2 million, supported by increased
crude oil volumes and margins plus benefits of the acquired
Capital Expenditure & Balance Sheet
For the first quarter, the partnership's maintenance capital
expenditure and expansion capital expenditure totaled $7.0 million
and $43.0 million, respectively.
As of March 31, 2012, Sunoco had $1,583.0 million in total debt,
representing a debt-to-capitalization ratio of approximately
Going forward, Sunoco Logistics expects to reap significant
benefits from the growing fee-based businesses. Management remains
optimistic about its crude expansion projects along West Texas. The
partnership expects its collaboration with
MarkWest Energy (
) -- the Mariner West project -- to come operational in mid-2013,
thereby giving the partnership easy access to waterborne
Philadelphia-based Sunoco Logistics owns a high-quality and
diverse portfolio of midstream assets that generate stable and
recurring revenues by way of long-term fee-based contracts. Over
the past few years, the partnership has consolidated its position
in the midstream business, which was achieved through a combination
of organic efforts and accretive acquisitions. It is primarily
engaged in crude oil and refined products transportation and
storage, with a strong track record for distribution
Sunoco Logistics Partners L.P. currently maintains a Zacks #2
Rank, which is equivalent to a short-term Buy rating. We are
maintaining our Outperform recommendation on the stock over the
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