Magellan Midstream boasts record fourth-quarter earnings
BY ROD WALTON World Staff Writer
Wednesday, February 06, 2013
2/06/13 at 7:30 AM
Local companies are major players in a vital industry.
Record pipeline margins drove earnings at Magellan Midstream Partners LP to a record high in the fourth quarter, the Tulsa-based refined and crude petroleum transporter reported Tuesday.
Net income totaled $153.8 million, an increase of $40 million from the last three months of 2011. The pipeline operating margin topped $193 million for the quarter, up $43.2 million.
Crude volumes rose 54 percent on deliveries from new locations connected to Magellan's pipeline system, the company said, and gasoline shipments increased 7 percent.
CEO Michael Mears applauded the Magellan's records on a variety of financial metrics, and also pointed to capital growth projects such as the Longhorn and BridgeTex pipelines.
"Even more importantly, the year 2012 set Magellan on the path to become the premier provider of crude oil distribution services while maintaining our key position in the refined products space," Mears said during a conference call with analysts and media.
The company's terminals segment logged $50.1 million in operating margin, another quarterly record, while its ammonia pipeline system improved its margin by $1 million over same time a year earlier.
"In fact, each of our business segments experienced increases for the quarter," Chief Financial Officer John Chandler said during the conference call.
For the year, Magellan reported a $435.7 million profit, compared with $413.6 million in 2011.
The partnership's distributable cash flow in 2012 hit a record $539.8 million, or 1.3 times the amount needed to meet unitholder distributions.
As of Dec. 31, the partnership had $2.4 billion of debt outstanding and $328.3 million of cash on hand.
Magellan says it may spend about $700 million on capital projects this year. The company has started work on its BridgeTex crude oil pipeline in south Texas, a joint venture with Occidental Petroleum due for completion by mid-2014, and also plans to finish the Crane-to-Houston pipeline, formerly known as the Longhorn, by this spring.
Rising crude oil production in the U.S. will result in Magellan changing its reporting structure beginning with first-quarter earnings three months from now. The three new segments will be crude oil pipelines and terminals, refined products pipelines and terminals, and marine storage.
"We are making this change because of the growing significance of crude oil storage and logistics assets to Magellan's profitability," Chandler said.
Magellan owns and operates about 9,500 miles in refined petroleum and crude oil pipelines, as well as 80 million barrels in storage capacity.
The company entered the crude oil sector only three years ago with the purchase of some BP pipeline assets and terminal facilities at the Cushing interchange.
Magellan Midstream Partners Earnings
|
2012 4Q |
2011 4Q |
2012 Full-year |
2011 Full-year |
| Revenue |
$503.2M |
$486.9M |
$1.77B |
$1.75B |
| Net income |
$153.8M |
$110.3M |
$435.7M |
$413.6M |
| Net per share |
$0.68 |
$0.49 |
$1.92 |
$1.83 |
Original Print Headline: Magellan boasts record 4Q earnings
Rod Walton 918-581-8457
rod.walton@tulsaworld.com
