May 11, 2020 [San Antonio Business Journal] – NuStar Energy LP reported a net loss of $148 million for the first quarter as the oil and gas market struggles.
The net loss, which equates to $1.68 per unit, comes as NuStar (NYSE: NS) recorded a $225 million noncash goodwill impairment charge due to a decline in demand for oil and refined products largely related to the coronavirus pandemic’s impact on the economy, according to a Tuesday news release.
“As people sheltered in place to stop the spread of the virus and energy demand plummeted, that already difficult situation on the demand side was exacerbated by the OPEC+ alliance’s oversupply actions, and the resulting impact to the global economy and markets around the world has been unprecedented,” NuStar President and CEO Brad Barron said in a statement.
NuStar reported an adjusted net income of $77 million, or 39 cents per unit, from continuing operations, which is up $48 million, or 167%, from first quarter 2019. NuStar’s adjusted earnings were $196 million, up $54 million from first quarter 2019. It reported cash flow of $122 million, a $55 million increase from 2019.
The San Antonio-based pipeline operator has taken multiple actions to weather the pandemic’s hit on the oil and gas market, including a three-year $750 million loan agreement with Oaktree Capital Management LP. The company agreed to the $500 million loan with an additional $250 million option in April. It used $500 million to pay off debt, and it will use $250 million to “enhance” financial flexibility, according to the news release.
NuStar spokesman Chris Cho said previously that the loan will not increase the company’s debt load.
In addition to the loan, NuStar cut projected spending by $145 million, or a 45% decrease. NuStar had previously announced that it planned to spend $300 million to $350 million on projects, and now plans to spend $165 to $195 million.
As of Tuesday midafternoon, NuStar’s stock was trading at about $12.20 per unit, up from its previous close of $11.50.
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