NuStar Energy L.P. Reports Higher than Anticipated Third Quarter 2010 Results
10.25.2010 - NEWS
October 25, 2010 [Business Wire] - NuStar Energy L.P. (NS 63.33, +0.38, +0.60%) today announced distributable cash flow available to limited partners for the third quarter of $84.0 million, or $1.30 per unit, compared to 2009 third quarter distributable cash flow of $61.5 million, or $1.13 per unit.

The partnership also announced that its board of directors has declared a third quarter 2010 distribution of $1.075 per unit, which is $0.01 per unit or approximately 1% higher than the second quarter 2010 and third quarter 2009 distributions of $1.065 per unit. The third quarter 2010 distribution will be paid on November 5, 2010, to holders of record as of November 1, 2010. Distributable cash flow available to limited partners covers the distribution to the limited partners by 1.21 times for the third quarter of 2010.

NuStar Energy L.P. reported third quarter net income applicable to limited partners of $58.4 million, or $0.90 per unit, compared to $56.1 million, or $1.03 per unit, earned in the third quarter of 2009. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $131.0 million for the third quarter of 2010 compared to $124.4 million for the third quarter of 2009.

“I am excited to announce that our third quarter results were better than we expected when earnings guidance was provided in early August,” said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Higher than projected throughputs on our crude, refined products and ammonia pipelines and improved asphalt margins in our asphalt and fuels marketing segment caused our results to be higher than anticipated.”

“I am particularly pleased that, all three of our business segments generated higher operating income and EBITDA in the third quarter of 2010 and for the nine months ended September 30, 2010 when compared to the same periods in 2009. As a result of these strong results, we were able to increase our third quarter 2010 distribution,” said Anastasio.

Fourth Quarter and Full-Year 2010 EBITDA Projected to be Higher than 2009

“For the fourth quarter of 2010, we are projecting EBITDA to be in the range of $110 to $130 million, which would be the highest fourth quarter in our history and $20 to $40 million higher than the fourth quarter of 2009. Incremental EBITDA from internal growth projects coming online in the storage segment, additional profits attributable to the Mobile County, Alabama storage terminal acquisition that was completed in May 2010, and increased earnings from our fuels marketing operations will contribute to increased EBITDA in the fourth quarter of 2010,” said Anastasio.

Commenting on the full-year outlook for the fee-based storage and transportation business segments, Anastasio said, “We expect incremental EBITDA in our storage segment to be $14 to $18 million higher than 2009. This is lower than previous guidance largely because the start-up of one of our internal growth projects has been delayed by approximately 30 days and vessel activity at our St. Eustatius terminal has been negatively impacted by tropical storms during the third quarter. The good news is that EBITDA in our transportation segment is now projected to be $5 to $10 million higher than 2009 due to higher throughputs and a customer turnaround being delayed until 2011.”

Turkey Terminal Acquisition

“We expect to close our previously announced $50 to $60 million acquisition of a 75% controlling interest in a joint venture in Mersin, Turkey in December 2010. The joint venture will own two terminals with a storage capacity of 1.3 million barrels, a two-thirds interest in an off-shore ship platform, and land that can be used for the construction of additional terminal operations. The transaction is expected to be immediately accretive to NuStar Energy’s distributable cash flow per unit,” said Anastasio.

Eagle Ford Shale Project

“Last week NuStar and Koch Pipeline Company reached agreement on a pipeline connection and capacity lease agreement. Under this agreement, NuStar will reactivate a previously idled pipeline in South Texas that will now be utilized to transport Eagle Ford Shale crude oil production to Corpus Christi, Texas refineries and terminals. We expect this project to be completed and in service in the second quarter of 2011,” stated Anastasio.

“With the EBITDA benefits from our large strategic capital spending program and our upcoming Turkey terminal acquisition, EBITDA and distributable cash flow growth should continue into 2011 and beyond,” said Anastasio.

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