Sunoco announces unit spilt and earnings for Q1 2014

Sunoco Logistics Partners L.P. has announced its results for the first quarter ended 31 March 2014. Adjusted EBITDA for the period was US$ 208 million, compared to US$ 236 million for Q1 2013. Net income attributable to partners for Q1 2014 was US$ 107 million (US$ 0.66 per limited partner unit diluted), compared with US$ 140 million (US$ 1.09 per limited partner unit diluted) for Q3 2013.

Q1 2014 highlights

• Distributable cash flow of US$ 158 million for Q1 2014.
• Eighth consecutive distribution increase of at least 5%; 21% distribution increase to US$ 2.78 (annualised) compared to Q1 2013
• Ended the quarter with a Debt to Adjusted EBITDA ratio of 3.0x calculated in accordance with our credit agreement.
• Established an at-the-market equity offering programme up to US$ 250 million.
• Acquired additional ownership interests in Explorer Pipeline for US$ 42 million.
• Successfully completed US$ 1 billion in debt financing in April to finance the expansion capital programme.

"New assets continue to generate increasing fee-based, long-term cash flow to help offset the margin decline which we expected in our crude marketing business," said Michael J. Hennigan, President and CEO. "Our first quarter results demonstrate this as we saw year-over-year growth in three of our four segments. Our Permian Express 1 and Longview Access projects bolstered our crude pipeline earnings. We continue to see growth in our terminal facilities, particularly with the expanded oil flows through Nederland and with our growing butane blending business. In addition, with the startup of our Mariner West project, our refined products pipelines earnings have increased as we begin to convert under-performing gasoline and distillate pipeline assets to higher demand natural gas liquid service."

On the Partnership’s 2014 organic capital programme, Hennigan noted: "We now expect our 2014 organic growth to be approximately US$ 1.7 billion, almost twice as much as our record 2013 organic program of US$ 965 million. This increase from our previous guidance reflects the inclusion of our successful Permian Express 2 open season as well as some capital spend timing updates on our previously announced projects."

Sunoco Logistics also announced a two-for-one split of the Partnership’s common units. The unit split was effective on 12th June 2014 through a distribution of one additional common unit for every one unit owned as of the record date, which was 5th June 2014.

Speaking on the two-for-one unit split Hennigan said, "With the continued success in our growth programme, and in order to make our units more liquid and accessible to a broader retail investor base, we are pleased to announce another unit split. This two-for-one unit split reflects our continued confidence in our strategy and our commitment to growing our cash flow over the near and long term."

Crude Oil Pipelines

Adjusted EBITDA for the Crude Oil Pipelines segment increased US$ 32 million due primarily to higher throughput volumes largely attributable to expansion projects supporting the demand for West Texas crude oil which began operating in2013. Higher pipeline tariffs and the timing of maintenance and pipeline integrity costs also contributed to the increase.These improvements were partially offset by lower pipeline operating gains, increased utility expenses associated with higher throughput volumes and increased environmental remediation costs.

Crude Oil Acquisition and Marketing

Adjusted EBITDA for the Crude Oil Acquisition and Marketing segment was US$ 12 million compared to US$ 112 million in the prior year period. The decrease was primarily associated with lower crude oil margins driven by significantly contracted crude differentials compared to the prior year period. This impact was partially offset by increased crude oil volumes resulting from higher market demand and the expansion in the crude oil trucking fleet.

Terminal Facilities

Adjusted EBITDA for the Terminal Facilities segment increased US$ 32 million due primarily to higher volumes and increased margins from the refined products acquisition and marketing activities and improved contributions from the Nederland terminal attributable to higher throughput volumes. These improvements were partially offset by lower results from the refined products terminals and the Marcus Hook facility.

Refined Products Pipelines

Adjusted EBITDA for the Refined Products Pipelines segment increased US$ 8 million to US$ 17 million for the Q1 2014 compared to the prior year period. The increase was due primarily to operating results from the Mariner West project, which commenced operations in Q4 2013. This improvement was partially offset by higher operating expenses, which included increased utility and maintenance costs.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/16062014/sunoco_announces_unit_spilt_and_earnings_for_q1_2014_511/