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Magellan Midstream Up on Stellar Q3 Earnings & Revenues

Pipeline operator Magellan Midstream Partners LPMMP announced strong third-quarter 2015 results. Record shipment of refined products along with improved profits from the Houston crude oil pipeline led to the outperformance. Following the announcement, the partnership rose more than 6% on the NYSE.

The Tulsa, OK-based oil distributor reported earnings per unit (EPU) - excluding mark-to-market commodity-related pricing adjustments - of 86 cents, breezing past the Zacks Consensus Estimate of 73 cents and improving from the year-ago adjusted figure of 71 cents.

Magellan Midstream Partners LP (MMP) - Earnings Surprise | FindTheCompany

Total revenues of $577.2 million also outperformed the Zacks Consensus Estimate of $520 million and improved from $521.6 million generated in third-quarter 2014.

Distributable Cash Flow

Magellan Midstream reported distributable cash flow of $230 million, up 25.4% from the year-ago quarter.

Cash Distribution

Last month, Magellan Midstream declared its board of director's approval to increase the third-quarter cash distribution. The new payout of 76.25 cents per unit represents a sequential hike of 3% and a year-over-year improvement of 14%. The distribution is payable on Nov 13 to unitholders of record as of Nov 2.

Segmental Performance

Refined Products: In this segment, quarterly operating profits (before affiliate G&A and D&A expenses) were recorded at $241.6 million, up 20.5% from the year-ago quarter. Record shipments of refined products aided the results.

Crude Oil: The unit's operating margin was approximately $94.7 million, up 34.7% from the prior-year quarter. Significant profit from the Houston crude oil pipeline, which stretches over roughly 40 miles, led to the improvement.

Marine Storage: This segment's operating margin increased about 16.7% year over year to $32.2 million owing to increased throughput fees and lower operating expenses.

Guidance

Magellan Midstream now projects 2015 distributable cash flows of $920 million, reflecting a $40 million increase from the previous guidance. Moreover, the partnership again reaffirmed its target of annual distribution growth by 15% in 2015 and at least 10% in 2016. Magellan Midstream guided fourth-quarter earnings per unit of 84 cents and increased the 2015 earnings projection to $3.53 per unit.

Zacks Rank

Magellan Midstream currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Sprague Resources LP SRLP , Seadrill Partners LLC SDLP and Natural Gas Services Group Inc. NGS . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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MAGELLAN MDSTRM (MMP): Free Stock Analysis Report

SEADRILL PTNRS (SDLP): Free Stock Analysis Report

NATURAL GAS SVC (NGS): Free Stock Analysis Report

SPRAGUE RESRCS (SRLP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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