NuStar Sounds Optimistic Note as Q2 Results Roll In
08.05.2020 - NEWS

August 05, 2020 [San Antonio Business Journal] – San Antonio-based NuStar Energy LP reported a $30 million profit for the second quarter and said the market appears to be improving in the fall.

Though the pipeline operator reported a loss in the first quarter, an increased demand for storage as producers and refiners struggled to sell their product as well as cost-cutting measures at the company helped lead it to a profitable second quarter, NuStar (NYSE: NS) told investors Tuesday.

The company’s second-quarter earnings show a net income of $29.7 million, compared to $46.9 million in second quarter 2019. NuStar said it had $62 million in cash available to distribute to stockholders in the second quarter compared to $83 million in second quarter 2019.

Before accounting for taxes, interest and asset depreciation — a measurement known as EBITDA — the company’s earnings from its operations were $2 million higher than during the same period last year.

“To improve EBITDA during a quarter that was a low-water mark for not only U.S. refined product demand, but also U.S. refinery utilization and U.S. crude oil production, in an environment in which individuals and businesses around the world were struggling, is a true testament to the self-help actions we took over the past months and the resilience and flexibility we have built into our business over the past few years,” CEO Brad Barron said in a statement.

Among those self-help actions were a $145 million reduction in planned spending for the year and $40 to $50 million in cuts to operating expenses. NuStar also took out a $500 million loan with Oaktree Capital Management LP in April to pay down debt and to infuse the company with additional working capital.

The company also said it was encouraged by the rising demand that has appeared so far this quarter. By July, NuStar was moving almost as much crude oil through its Permian pipeline system as it was at the beginning of the year, before prices dropped off. While April saw demand for NuStar’s services fall to 70% of its typical level, by the end of July, the company said it was seeing 94% of its normal demand.

An increased need for storage combined with cost-cutting measures put the pipeline operator back in the black for the recent quarter.

NuStar anticipates earnings of $665 to $735 million this year.


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