Petroleum pipeline growth sets record pace for Magellan Midstream earnings
BY ROD WALTON World Staff Writer
Wednesday, August 01, 2012
Oil and refined petroleum transporter Magellan Midstream Partners LP gained a record $137.8 million in net income for the second quarter, the Tulsa firm announced Wednesday.
All of Magellan’s operating segments reported increases over the same period last year.
The biggest jump was with the petroleum pipeline system, which achieved a quarterly record of $176.3 million in operating margin due to higher gasoline and crude oil shipments.
“Magellan remains on track for a record year in 2012 due to our business model of providing essential transportation and storage services for refined petroleum products and crude oil,” CEO Michael Mears said in a statement. “Our stable base operations, significant growth projects and disciplined management philosophy give us confidence in Magellan’s future.”
Operating margin for the petroleum terminals segment rose by $7.3 million to $42.7 million for the three months ending June 30. Revenues increased due to new Cushing hub terminal tanks coming on line.
Higher interest and depreciation costs cut into the company profits due to capital expenditure expansions. Magellan had $2.1 billion in outstanding debt and $230 million in cash on hand as of June 30.
Magellan officials plan to spend $500 million on expansion projects this year with another $200 million earmarked next year to complete them, according to the earnings release. Management also raised the distributable cashflow guidance $30 million to approximately $520 million for 2012.
The Tulsa-based company owns and operates 10,000 miles in refined petroleum and crude oil pipelines throughout the Mid-Continent region of the U.S. Magellan assets also include 27 inland terminals, including storage in Tulsa and Cushing, and a 1,100 ammonia pipeline system.
Trading for Magellan shares rose 67 cents to $78.90 per share Wednesday morning on the New York Stock Exchange.