COST: 155 $MM
COST: 1.438 $B
TULSA, Okla., Feb. 2, 2021 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $183.9 million for fourth quarter 2020 compared to $286.4 million for fourth quarter 2019. The decrease in fourth-quarter 2020 net income continued to be driven by reduced demand for refined products from the ongoing impact of COVID-19 and related restrictions, the negative impact of the lower commodity price environment on various aspects of the partnership's business as well as lower volumes and average rates on its crude oil pipelines.
Diluted net income per common unit was 82 cents in fourth quarter 2020 and $1.25 in fourth quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 94 cents for fourth quarter 2020 was higher than the 80-cent guidance provided by management last fall, primarily due to incremental revenues from the partnership's refined products pipeline system as a result of higher-than-expected shipments and average tariff rates.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $269.7 million for fourth quarter 2020 compared to $357.8 million for fourth quarter 2019.
"Despite the backdrop of the most challenging industry and economic conditions experienced in our 20-year history as a public company, Magellan produced solid financial results during 2020 while ensuring continuity of important fuel supply for our country. We also returned nearly $1.2 billion of value to our investors through payment of a consistent cash distribution and equity repurchases," said Michael Mears, chief executive officer. "Magellan's business fundamentals remain sound, and we stand ready to serve the nation as travel and economic activity progress with additional reopening efforts. Magellan enters the new year in a strong position with an investment-grade balance sheet and resilient business model to manage our company for the long term."
An analysis by segment comparing fourth quarter 2020 to fourth quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $249.6 million, a decrease of $46.7 million. Transportation and terminals revenue decreased $18.9 million primarily due to continued lower demand associated with the ongoing impact from COVID-19 and related restrictions as well as reduced drilling activity in response to the lower commodity price environment during 2020. Revenues also decreased due to the sale of three marine terminals in first quarter 2020. These declines were partially offset by contributions from the recently-expanded West Texas pipeline segment that began operations in the third quarter of 2020 and higher tariff rates as a result of the 3.5% average increase that occurred on July 1, 2020.
Operating expenses decreased $11.3 million primarily due to lower throughput activity during the 2020 period, as well as the absence of costs associated with the assets sold in first quarter 2020. Earnings of non-controlled entities decreased slightly between periods as lower financial results from the partnership's Powder Springs Logistics joint venture offset additional contributions from new storage and dock assets placed into service in early 2020 at its Pasadena joint venture marine terminal.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $38.2 million between periods primarily due to lower sales volume and reduced margins on the partnership's gas liquids blending activities as a result of the overall lower commodity price environment.
Crude oil. Crude oil operating margin was $109.8 million, a decrease of $43.2 million. Transportation and terminals revenue decreased $27.1 million due to lower average tariff rates and less volume shipped. Average tariff rates decreased primarily as a result of the recent expiration of several higher-priced contracts on the partnership's Longhorn pipeline, as well as the recognition of deficiency revenue that had benefited the 2019 quarter. Transportation volumes also declined due to those recent Longhorn contract expirations, with much of this volume replaced by activities of Magellan's marketing affiliate. Lower tariff movements on the Houston distribution system due to a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility were largely offset by incremental revenue from the related new terminal transfer fee.
Operating expenses increased $5.6 million due to the timing of planned integrity spending, and other operating expense was unfavorable due to insurance proceeds that positively impacted the 2019 period. Earnings of non-controlled entities declined $8.6 million between periods primarily due to a lower contribution from Saddlehorn following Magellan's sale of a 10% interest in Feb. 2020 and decreased uncommitted shipments on the BridgeTex pipeline.
Other items. G&A expense increased $9.3 million primarily due to severance associated with the partnership's recent early retirement program and higher incentive compensation accruals. Net interest expense increased $3.5 million mainly as a result of lower capitalized interest from less ongoing expansion capital spending. As of Dec. 31, 2020, Magellan had $5.0 billion of debt outstanding and $13 million of cash on hand, with no borrowings outstanding on its commercial paper program or revolving credit facility.
Annual results
For the year ended Dec. 31, 2020, net income was $817.0 million compared to $1,020.8 million in 2019. The annual decline was driven by decreased contributions from both segments. The refined products segment was negatively impacted by lower demand for refined products due to the ongoing impact of COVID-19 as well as reduced drilling activity in response to the lower commodity price environment and the sale of three marine terminals in early 2020. The crude oil segment generated lower financial results primarily due to less third-party spot shipments, which move at a higher rate than shipments made pursuant to long-term commitments, as a result of unfavorable differentials between the Permian Basin and Houston, as well as lower average tariffs on the Longhorn pipeline resulting from the 2020 expiration of a portion of historical contracts. Further, Magellan earned less from Saddlehorn due to the sale of a 10% interest in early 2020.
Full-year diluted net income per common unit was $3.62 in 2020 and $4.46 in 2019. Annual DCF was $1,044.5 million in 2020, or 1.13 times the amount needed to pay distributions related to 2020, compared to $l,297.5 million in 2019.
Financial guidance for 2021
Management currently expects the partnership to generate annual DCF of $1.02 billion for 2021. Guidance assumes that refined products demand will continue to increase during 2021 as vaccines become more readily available, travel and economic activity recover and drilling activity returns due to an improved demand and commodity price environment. Further, Magellan's refined products shipments are expected to benefit from commitments associated with recent expansion projects within the state of Texas, which should drive more volume to the partnership's pipeline system. As a result, current 2021 estimates assume total refined products shipments increase 13% compared to 2020 results, comprised of 16% higher gasoline, 8% higher distillate and 20% higher aviation fuel. For reference, total 2021 refined products shipments are expected to increase 3% versus 2019, which is more representative of historical demand, as improved gasoline volumes from expansion projects are partially offset by lower aviation fuel.
Guidance also assumes long-haul crude oil pipeline shipments generally in-line with customer commitments and lower profits from the partnership's gas liquids blending activities due to compressed margins between the price of gasoline and butane. Further, Magellan has made significant progress on its business optimization effort started more than a year ago, with 2021 guidance including an approximate $50 million benefit from identified efficiencies.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level of $1.0275 per unit for the remainder of 2021. Based on the current distribution amount and number of units outstanding, distribution coverage for 2021 is expected to be 1.1 times the amount necessary to pay cash distributions for the year, generating excess cash of $100 million for 2021.
Management does not intend to provide specific financial guidance beyond 2021 at this time but expects annual DCF to improve over the next few years. Further, management continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices return to more historical levels.
Net income per common unit is estimated to be $3.55 for 2021, with first-quarter guidance of 75 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to expect the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with direct commodity-related activities contributing less than 15% of the partnership's operating margin.
Capital allocation
Magellan remains focused on delivering long-term value for its investors through a disciplined combination of quarterly cash distributions, equity repurchases and capital investments.
During fourth quarter 2020, the partnership repurchased nearly 0.6 million of its units for $25 million, resulting in a total of 5.6 million units repurchased during 2020 for $277 million under its $750 million repurchase program authorized through 2022. The timing, price and actual number of any additional unit repurchases will depend on a number of factors including expected expansion capital spending, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Magellan spent $355 million on expansion capital during 2020 and plans to spend approximately $75 million in 2021 to complete its identified slate of projects. The 2021 estimates now include high-returning projects to expand the truck loading capacity of the partnership's Cheyenne, Wyoming refined products terminal and enhanced connectivity to improve butane sourcing for its Houston-area gas liquids blending activities.
Corporate conversion analysis
To address recent questions and commentary by the investment community on the subject of a potential conversion from a publicly traded partnership to a corporation, management has posted highlights of its analysis and the reasoning behind its conclusions at www.magellanlp.com/investors/webcasts.aspx.
Based on this analysis, management has concluded a corporate conversion is not warranted at this time but will continue to monitor the relative valuations of midstream partnerships and corporations, potential developments in tax policy and investors' thoughts and preferences, while managing Magellan's business with a focus on long-term investor value.
Earnings call details
Management will discuss fourth-quarter 2020 financial results, annual guidance for 2021 and the corporate conversion analysis during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 952-3470, conference code 21988939.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, guides, assume, believe, estimate, expect, become, return, continue, future, target, remain, ready, resilient, intend, long-term, may, will, should and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 497,001 | $ | 451,113 | $ | 1,970,630 | $ | 1,794,854 | |||||||
Product sales revenue | 238,301 | 129,877 | 736,092 | 611,719 | |||||||||||
Affiliate management fee revenue | 5,380 | 5,334 | 21,190 | 21,229 | |||||||||||
Total revenue | 740,682 | 586,324 | 2,727,912 | 2,427,802 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 149,740 | 143,762 | 634,081 | 601,359 | |||||||||||
Cost of product sales | 188,552 | 117,851 | 619,279 | 513,715 | |||||||||||
Depreciation, amortization and impairment | 65,106 | 64,780 | 246,134 | 258,676 | |||||||||||
General and administrative | 47,116 | 56,386 | 196,650 | 173,478 | |||||||||||
Total costs and expenses | 450,514 | 382,779 | 1,696,144 | 1,547,228 | |||||||||||
Other operating income (expense) | 1,437 | (438) | 2,975 | 101 | |||||||||||
Earnings of non-controlled entities | 46,732 | 36,843 | 168,961 | 153,327 | |||||||||||
Operating profit | 338,337 | 239,950 | 1,203,704 | 1,034,002 | |||||||||||
Interest expense | 55,801 | 54,762 | 221,123 | 234,133 | |||||||||||
Interest capitalized | (4,865) | (819) | (19,284) | (11,270) | |||||||||||
Interest income | (639) | (134) | (3,285) | (1,037) | |||||||||||
Gain on disposition of assets | — | — | (28,966) | (12,887) | |||||||||||
Other (income) expense | 2,608 | 1,456 | 11,830 | 5,164 | |||||||||||
Income before provision for income taxes | 285,432 | 184,685 | 1,022,286 | 819,899 | |||||||||||
Provision for income taxes | (1,013) | 765 | 1,437 | 2,934 | |||||||||||
Net income | $ | 286,445 | $ | 183,920 | $ | 1,020,849 | $ | 816,965 | |||||||
Basic net income per common unit | $ | 1.25 | $ | 0.82 | $ | 4.46 | $ | 3.62 | |||||||
Diluted net income per common unit | $ | 1.25 | $ | 0.82 | $ | 4.46 | $ | 3.62 | |||||||
Weighted average number of common units outstanding used for | 228,705 | 223,889 | 228,658 | 225,503 | |||||||||||
Weighted average number of common units outstanding used for | 229,358 | 224,000 | 228,842 | 225,531 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.664 | $ | 1.724 | $ | 1.616 | $ | 1.675 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 73.1 | 71.4 | 280.5 | 270.8 | |||||||||||
Distillates | 45.8 | 47.9 | 184.6 | 175.5 | |||||||||||
Aviation fuel | 11.3 | 4.8 | 41.1 | 21.6 | |||||||||||
Liquefied petroleum gases | 0.8 | 0.4 | 9.7 | 0.9 | |||||||||||
Total volume shipped | 131.0 | 124.5 | 515.9 | 468.8 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 0.898 | $ | 0.714 | $ | 0.939 | $ | 1.028 | |||||||
Volume shipped (million barrels)(1) | 78.1 | 62.0 | 317.2 | 229.9 | |||||||||||
Terminal average utilization (million barrels per month) | 23.2 | 26.6 | 23.0 | 25.2 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 39.0 | 32.1 | 156.3 | 132.0 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 16.7 | 15.1 | 56.1 | 61.6 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 345,870 | $ | 326,959 | $ | 1,355,682 | $ | 1,241,846 | |||||||
Affiliate management fee revenue | 1,634 | 1,594 | 6,719 | 6,270 | |||||||||||
Other operating income (expense) | 537 | 1,024 | 10,185 | 3,247 | |||||||||||
Earnings of non-controlled entities | 7,925 | 6,609 | 8,070 | 32,555 | |||||||||||
Less: Operating expenses | 108,873 | 97,577 | 471,743 | 425,443 | |||||||||||
Transportation and terminals margin | 247,093 | 238,609 | 908,913 | 858,475 | |||||||||||
Product sales revenue | 229,371 | 116,929 | 707,812 | 578,630 | |||||||||||
Less: Cost of product sales | 180,216 | 105,978 | 591,228 | 471,292 | |||||||||||
Product margin | 49,155 | 10,951 | 116,584 | 107,338 | |||||||||||
Operating margin | $ | 296,248 | $ | 249,560 | $ | 1,025,497 | $ | 965,813 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 152,713 | $ | 125,623 | $ | 620,365 | $ | 559,570 | |||||||
Affiliate management fee revenue | 3,746 | 3,740 | 14,471 | 14,959 | |||||||||||
Other operating income (expense) | 900 | (1,462) | (7,210) | (3,146) | |||||||||||
Earnings of non-controlled entities | 38,807 | 30,234 | 160,891 | 120,772 | |||||||||||
Less: Operating expenses | 43,830 | 49,442 | 173,261 | 189,087 | |||||||||||
Transportation and terminals margin | 152,336 | 108,693 | 615,256 | 503,068 | |||||||||||
Product sales revenue | 8,930 | 12,948 | 28,280 | 33,089 | |||||||||||
Less: Cost of product sales | 8,336 | 11,873 | 28,051 | 42,423 | |||||||||||
Product margin | 594 | 1,075 | 229 | (9,334) | |||||||||||
Operating margin | $ | 152,930 | $ | 109,768 | $ | 615,485 | $ | 493,734 | |||||||
Segment operating margin | $ | 449,178 | $ | 359,328 | $ | 1,640,982 | $ | 1,459,547 | |||||||
Add: Allocated corporate depreciation costs | 1,381 | 1,788 | 5,506 | 6,609 | |||||||||||
Total operating margin | 450,559 | 361,116 | 1,646,488 | 1,466,156 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 65,106 | 64,780 | 246,134 | 258,676 | |||||||||||
General and administrative expense | 47,116 | 56,386 | 196,650 | 173,478 | |||||||||||
Total operating profit | $ | 338,337 | $ | 239,950 | $ | 1,203,704 | $ | 1,034,002 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P RECONCILIATION OF NET INCOME AND NET INCOME PER COMMON UNIT EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES (Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
December 31, 2020 | |||||||||||||
Net Income | Basic Net | Diluted Net | |||||||||||
As reported | $ | 183,920 | $ | 0.82 | $ | 0.82 | |||||||
Commodity-related adjustments associated with future | 27,024 | ||||||||||||
Excluding commodity-related adjustments | $ | 210,944 | $ | 0.94 | $ | 0.94 | |||||||
Weighted average number of common units outstanding used for | 223,889 | ||||||||||||
Weighted average number of common units outstanding used for | 224,000 | ||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | December 31, | 2021 | |||||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||||||
Net income | $ | 286,445 | $ | 183,920 | $ | 1,020,849 | $ | 816,965 | $ | 793,000 | |||||||||
Interest expense, net | 50,297 | 53,809 | 198,554 | 221,826 | 226,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 63,979 | 61,178 | 240,874 | 254,586 | 243,000 | ||||||||||||||
Equity-based incentive compensation(2) | 1,434 | 6,405 | 14,247 | (2,715) | 12,000 | ||||||||||||||
Gain on disposition of assets(3) | — | — | (16,280) | (10,511) | — | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated | 16,022 | 25,541 | 29,690 | 29,275 | |||||||||||||||
Derivative gains (losses) recognized in previous periods | (1) | (4,992) | 71,214 | (20,900) | |||||||||||||||
Inventory valuation adjustments(5) | (3,054) | (3,704) | (12,681) | 5,836 | |||||||||||||||
Total commodity-related adjustments | 12,967 | 16,845 | 88,223 | 14,211 | (18,000) | ||||||||||||||
Distributions from operations of non-controlled entities in excess | 18,719 | 18,112 | 34,641 | 54,273 | 72,000 | ||||||||||||||
Adjusted EBITDA | 433,841 | 340,269 | 1,581,108 | 1,348,635 | 1,328,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (49,442) | (53,054) | (186,942) | (205,446) | (223,000) | ||||||||||||||
Maintenance capital(7) | (26,566) | (17,558) | (96,702) | (98,718) | (85,000) | ||||||||||||||
Distributable cash flow | $ | 357,833 | $ | 269,657 | $ | 1,297,464 | $ | 1,044,471 | $ | 1,020,000 | |||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense includes debt prepayment costs of $8.3 million in the year ended December 31, 2019 and $12.9 million in the year ended December 31, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 26, 2021 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period Oct. 1 through Dec. 31, 2020.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Feb. 12 to unitholders of record at the close of business on Feb. 5.
For the year, Magellan declared distributions of $4.11 per unit for 2020, or 1% higher than distributions of $4.065 per unit for 2019. The partnership has increased its annual distribution payout each of the 19 years since its initial public offering in 2001.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 3, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the Wells Fargo Virtual Midstream and Utility Symposium at 2:00 p.m. Eastern on Tues., Dec. 8.
The virtual session will be moderated by Praneeth Satish, Wells Fargo equity research analyst, with a webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 2, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $300 million of its 3.95% senior notes due 2050. The notes, which are additional notes of the series originally issued on Aug. 19, 2019, were priced at 109.678% of par, with a re-offer yield of 3.418%. The partnership intends to use the net proceeds from this offering of approximately $322 million, after deducting underwriting discounts, estimated offering expenses and accrued interest, for general partnership purposes, which may include repayment of indebtedness, including borrowings under its revolving credit facility and commercial paper program, capital expenditures and repurchases of its common units.
The offering is expected to close on Dec. 16, 2020 and is subject to the satisfaction of customary closing conditions. Wells Fargo Securities, LLC, Barclays Capital Inc., PNC Capital Markets LLC, TD Securities (USA) LLC and Truist Securities, Inc. are joint book-running managers for the debt offering, with J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: estimated, expected, intends, may, subject, conditions and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 9, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to participate in the following virtual investor conferences during November:
The live webcasts will be available on the partnership's website at www.magellanlp.com/investors/webcasts.aspx, with replays available for at least 30 days.
In addition, management will be hosting virtual meetings with institutional investors during the conferences. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-upcoming-virtual-investor-conferences-301168975.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today the publication of its inaugural sustainability report.
"Magellan's first sustainability report demonstrates that Moving What Moves America® is more than just our motto. It represents who we are and our commitment to safely and reliably deliver petroleum products that are essential and beneficial to everyday life," noted Michael Mears, chief executive officer. "Sustainability is not new to Magellan. For nearly two decades as a public company, we have focused on long-term, sustainable operations and disciplined management, and publication of this report emphasizes our commitment to provide transparency around how we manage and measure our environmental, social and governance performance."
In developing its inaugural report, Magellan conducted a materiality assessment to better understand the most critical topics for key internal and external stakeholders, guided by the Global Reporting Initiative standards for sustainability reporting.
Magellan's sustainability report is available on its website at www.magellanlp.com/sustainability/.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $211.6 million for third quarter 2020 compared to $273.0 million for third quarter 2019. The decrease in third-quarter 2020 net income was primarily driven by reduced demand for refined products due to the ongoing impact from COVID-19 and related restrictions as well as the negative impact of the lower commodity price environment on various aspects of the partnership's business.
Diluted net income per common unit was 94 cents in third quarter 2020 and $1.19 in third quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 97 cents for third quarter 2020 was higher than the range of 75 cents to 85 cents previously provided by management in late July. Actual results benefited from lower expenses and higher-than-expected commodity profits from additional sales volume. Other results, including refined products pipeline and terminals revenue, trended slightly better than the partnership's projections for the quarter.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $258.8 million for third quarter 2020 compared to $306.8 million for third quarter 2019.
"Magellan continues to generate solid results during a difficult year for both our industry and nation, reinforcing the resilient nature of our business that focuses on the safe and reliable delivery of petroleum products that are essential and beneficial to everyday life," said Michael Mears, chief executive officer. "Magellan is a strong company on firm financial footing, with our investment-grade balance sheet providing strength to weather the current challenging environment and build for the future."
An analysis by segment comparing third quarter 2020 to third quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $239.0 million, a decrease of $31.5 million. Transportation and terminals revenue decreased $31.8 million primarily due to lower demand during third quarter 2020 associated with the ongoing impact from COVID-19 and related restrictions as well as reduced drilling activity in response to the lower commodity price environment. Revenues also decreased due to the sale of three marine terminals in first quarter 2020 and discontinuation of the ammonia pipeline operations in late 2019. These declines were partially offset by an increase in the average tariff rate in the current period as well as contributions from the recently-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019 and the West Texas expansion that began operations in the third quarter of 2020. Average tariff rates increased as a result of the 3.5% average mid-year adjustment that occurred on July 1, 2020 as well as reduced short-haul shipments on the South Texas segment, which move at a lower rate.
Operating expenses decreased $8.7 million primarily due to the timing of planned integrity spending as well as no costs in the current period associated with the sold or discontinued assets, partially offset by less favorable product overages (which reduce operating expenses). Other operating income declined $3.1 million due to insurance proceeds received in third quarter 2019 related to Hurricane Harvey.
Earnings of non-controlled entities increased by $3.0 million due to contributions from the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal, partially offset by lower earnings from its Powder Springs Logistics joint venture.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $8.2 million between periods due to the recognition of unrealized losses in third quarter 2020 compared to gains in 2019 on futures contracts used to economically hedge the partnership's commodity-related activities, partially offset by higher sales volume related to its fractionation activities.
Crude oil. Crude oil operating margin was $135.8 million, a decrease of $20.7 million. Transportation and terminals revenue decreased slightly between periods. Lower third-party spot shipments on the partnership's Longhorn pipeline due to less favorable differentials between the Permian Basin and Houston were largely offset by the activities of Magellan's marketing affiliate. Average tariff rates increased as a result of lower shipments on the partnership's Houston distribution system, which move at a lower rate than longer-haul shipments. Lower transportation volume on the Houston distribution system resulted primarily from a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility, and was offset by incremental revenue from the related new terminal transfer fee. The 2020 period also benefited from increased storage revenues as more contract storage was utilized at higher rates.
Operating expenses increased $2.0 million due to the timing of planned integrity spending and less favorable product overages. Earnings of non-controlled entities declined $14.0 million between periods primarily due to decreased spot volumes and customer use of previously earned credits on the BridgeTex pipeline as well as lower contribution from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020. Product margin decreased $4.6 million primarily as a result of the reclassification of affiliate marketing activities to transportation revenue to conform with the current period's presentation.
Other items. Depreciation, amortization and impairment expense increased $15.2 million between periods primarily due to the impairment in third quarter 2020 of certain terminalling assets and more assets placed into service, and G&A expense decreased $13.1 million primarily due to lower incentive compensation accruals.
Gain on disposition of assets was $2.5 million unfavorable due to additional gain recorded in the prior year related to the partnership's discontinued Delaware Basin pipeline construction project that was sold to a third party.
Net interest expense increased $5.4 million primarily due to lower capitalized interest as a result of lower ongoing construction project spending and higher outstanding debt. As of Sept. 30, 2020, Magellan had $4.95 billion of debt outstanding, including $248 million outstanding on its commercial paper program, with $9 million of cash on hand.
Financial guidance for 2020
As the nation's reopening efforts progress, travel and economic activity have continued to improve from their spring lows, although the pace of recovery to more historically-normal levels of refined products demand still remains unclear. Assuming recent trends continue for refined products demand for the remainder of the year, management currently estimates annual 2020 DCF to be $1.025 billion. This estimate assumes no additional lockdowns occur in the markets served by Magellan, with average base business volumes (excluding the impact of expansion projects) expected to be lower by approximately 13% during the fourth quarter of 2020 compared to the same period in 2019, comprised of 8% lower gasoline, 12% lower distillate and 50% lower aviation fuel. Including the expected contribution from recent expansion projects, which have been ramping a bit slower than initially anticipated due to current market conditions, total refined products volumes during fourth quarter 2020 are expected to be down approximately 7% compared to fourth quarter 2019.
Including actual results so far this year, net income per unit is estimated to be $3.60 for 2020, which results in fourth-quarter guidance of 80 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding, distribution coverage for 2020 is expected to be approximately 1.11 times the amount necessary to pay cash distributions for the year, generating excess cash of more than $100 million for 2020.
Continuing its historical approach, Magellan plans to provide guidance specific to 2021 early next year in conjunction with reporting year-end 2020 financial results. However, management currently intends to target cash distributions for 2021 consistent with the current payout level. Further, management continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices stabilize and return to more historical levels.
Capital allocation
Management remains focused on executing its long-term strategy to maximize value for Magellan's investors. In addition to returning cash to investors via quarterly distributions, Magellan intends to deliver incremental value to its investors by utilizing unit repurchases and investments that meet its disciplined risk/reward profile.
During third quarter 2020, the partnership repurchased nearly 1.4 million of its units for $50 million. So far in 2020, Magellan has repurchased a total of 5.0 million units for $252 million under its $750 million repurchase program authorized through 2022. The timing, price and actual number of any additional unit repurchases will depend on a number of factors including expected expansion capital spending needs, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Based on the progress of projects already under construction, the partnership expects to spend approximately $400 million in 2020 (of which $310 million had been spent through third quarter) and $40 million in 2021 to complete its current slate of expansion projects, with its largest projects now in-service. Of its remaining projects, the 100,000 barrel-per-day expansion of the Saddlehorn pipeline is still expected to be complete by the end of 2020.
Earnings call details
Management will discuss third-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:00 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (877) 256-4701, conference code 21969538.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, guidance, weather, believe, estimate, anticipate, expect, continue, future, target, remain, resilient, intend, long-term, may, will, should and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 506,432 | $ | 473,531 | $ | 1,473,629 | $ | 1,343,741 | |||||||
Product sales revenue | 144,807 | 119,445 | 497,791 | 481,842 | |||||||||||
Affiliate management fee revenue | 5,357 | 5,288 | 15,810 | 15,895 | |||||||||||
Total revenue | 656,596 | 598,264 | 1,987,230 | 1,841,478 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 169,387 | 161,982 | 484,341 | 457,597 | |||||||||||
Cost of product sales | 108,757 | 96,119 | 430,727 | 395,864 | |||||||||||
Depreciation, amortization and impairment | 56,627 | 71,822 | 181,028 | 193,896 | |||||||||||
General and administrative | 51,156 | 38,016 | 149,534 | 117,092 | |||||||||||
Total costs and expenses | 385,927 | 367,939 | 1,245,630 | 1,164,449 | |||||||||||
Other operating income (expense) | (379) | (2,863) | 1,538 | 539 | |||||||||||
Earnings of non-controlled entities | 50,189 | 39,135 | 122,229 | 116,484 | |||||||||||
Operating profit | 320,479 | 266,597 | 865,367 | 794,052 | |||||||||||
Interest expense | 53,750 | 54,212 | 165,322 | 179,371 | |||||||||||
Interest capitalized | (5,831) | (1,272) | (14,419) | (10,451) | |||||||||||
Interest income | (648) | (260) | (2,646) | (903) | |||||||||||
Gain on disposition of assets | (2,532) | — | (28,966) | (12,887) | |||||||||||
Other (income) expense | 2,602 | 1,455 | 9,222 | 3,708 | |||||||||||
Income before provision for income taxes | 273,138 | 212,462 | 736,854 | 635,214 | |||||||||||
Provision for income taxes | 100 | 824 | 2,450 | 2,169 | |||||||||||
Net income | $ | 273,038 | $ | 211,638 | $ | 734,404 | $ | 633,045 | |||||||
Basic net income per common unit | $ | 1.19 | $ | 0.94 | $ | 3.21 | $ | 2.80 | |||||||
Diluted net income per common unit | $ | 1.19 | $ | 0.94 | $ | 3.21 | $ | 2.80 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,720 | 225,222 | 228,642 | 226,045 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,754 | 225,222 | 228,667 | 226,045 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.618 | $ | 1.719 | $ | 1.600 | $ | 1.658 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 74.5 | 71.9 | 207.4 | 199.4 | |||||||||||
Distillates | 47.0 | 42.5 | 138.8 | 127.6 | |||||||||||
Aviation fuel | 11.1 | 4.7 | 29.8 | 16.8 | |||||||||||
Liquefied petroleum gases | 3.8 | 0.1 | 8.9 | 0.5 | |||||||||||
Total volume shipped | 136.4 | 119.2 | 384.9 | 344.3 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 0.935 | $ | 1.401 | $ | 0.952 | $ | 1.145 | |||||||
Volume shipped (million barrels)(1) | 79.2 | 45.1 | 239.1 | 167.9 | |||||||||||
Terminal average utilization (million barrels per month) | 22.9 | 25.9 | 22.7 | 24.7 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 40.8 | 30.6 | 117.3 | 99.9 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 17.0 | 15.1 | 39.4 | 46.5 | |||||||||||
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. | ||||||||||||||
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. | ||||||||||||||
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Refined products: | ||||||||||||||||
Transportation and terminals revenue | $ | 352,611 | $ | 320,809 | $ | 1,009,812 | $ | 914,887 | ||||||||
Affiliate management fee revenue | 1,764 | 1,579 | 5,085 | 4,676 | ||||||||||||
Other operating income (expense) | 3,249 | 193 | 9,648 | 2,223 | ||||||||||||
Earnings of non-controlled entities | 4,142 | 7,134 | 145 | 25,946 | ||||||||||||
Less: Operating expenses | 127,328 | 118,579 | 362,870 | 327,866 | ||||||||||||
Transportation and terminals margin | 234,438 | 211,136 | 661,820 | 619,866 | ||||||||||||
Product sales revenue | 136,464 | 114,252 | 478,441 | 461,701 | ||||||||||||
Less: Cost of product sales | 100,416 | 86,356 | 411,012 | 365,314 | ||||||||||||
Product margin | 36,048 | 27,896 | 67,429 | 96,387 | ||||||||||||
Operating margin | $ | 270,486 | $ | 239,032 | $ | 729,249 | $ | 716,253 | ||||||||
Crude oil: | ||||||||||||||||
Transportation and terminals revenue | $ | 155,377 | $ | 154,652 | $ | 467,652 | $ | 433,947 | ||||||||
Affiliate management fee revenue | 3,593 | 3,709 | 10,725 | 11,219 | ||||||||||||
Other operating income (expense) | (3,628) | (3,056) | (8,110) | (1,684) | ||||||||||||
Earnings of non-controlled entities | 46,047 | 32,001 | 122,084 | 90,538 | ||||||||||||
Less: Operating expenses | 44,961 | 46,956 | 129,431 | 139,645 | ||||||||||||
Transportation and terminals margin | 156,428 | 140,350 | 462,920 | 394,375 | ||||||||||||
Product sales revenue | 8,343 | 5,193 | 19,350 | 20,141 | ||||||||||||
Less: Cost of product sales | 8,341 | 9,763 | 19,715 | 30,550 | ||||||||||||
Product margin | 2 | (4,570) | (365) | (10,409) | ||||||||||||
Operating margin | $ | 156,430 | $ | 135,780 | $ | 462,555 | $ | 383,966 | ||||||||
Segment operating margin | $ | 426,916 | $ | 374,812 | $ | 1,191,804 | $ | 1,100,219 | ||||||||
Add: Allocated corporate depreciation costs | 1,346 | 1,623 | 4,125 | 4,821 | ||||||||||||
Total operating margin | 428,262 | 376,435 | 1,195,929 | 1,105,040 | ||||||||||||
Less: | ||||||||||||||||
Depreciation, amortization and impairment expense | 56,627 | 71,822 | 181,028 | 193,896 | ||||||||||||
General and administrative expense | 51,156 | 38,016 | 149,534 | 117,092 | ||||||||||||
Total operating profit | $ | 320,479 | $ | 266,597 | $ | 865,367 | $ | 794,052 | ||||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
September 30, 2020 | ||||||||||||||||||
Net Income | Basic Net | Diluted Net | ||||||||||||||||
As reported | $ | 211,638 | $ | 0.94 | $ | 0.94 | ||||||||||||
Commodity-related adjustments associated with future transactions(1) | 6,633 | |||||||||||||||||
Excluding commodity-related adjustments | $ | 218,271 | $ | 0.97 | $ | 0.97 | ||||||||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 225,222 | |||||||||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 225,222 | |||||||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | 2020 | |||||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||||||
Net income | $ | 273,038 | $ | 211,638 | $ | 734,404 | $ | 633,045 | $ | 810,000 | |||||||||
Interest expense, net | 47,271 | 52,680 | 148,257 | 168,017 | 221,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 57,972 | 71,822 | 176,895 | 193,408 | 258,000 | ||||||||||||||
Equity-based incentive compensation(2) | 6,773 | 1,169 | 12,813 | (9,120) | (5,000) | ||||||||||||||
Gain on disposition of assets(3) | — | — | (16,280) | (10,511) | (11,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | (1,720) | 5,839 | 13,669 | 6,741 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (5,454) | 2,889 | 71,214 | (18,915) | |||||||||||||||
Inventory valuation adjustments(5) | (181) | (18,291) | (9,627) | 9,540 | |||||||||||||||
Total commodity-related adjustments | (7,355) | (9,563) | 75,256 | (2,634) | (9,000) | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 4,893 | 10,811 | 15,922 | 36,161 | 61,000 | ||||||||||||||
Adjusted EBITDA | 382,592 | 338,557 | 1,147,267 | 1,008,366 | 1,325,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (46,441) | (51,933) | (137,500) | (152,392) | (205,000) | ||||||||||||||
Maintenance capital(7) | (29,313) | (27,858) | (70,136) | (81,160) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 306,838 | $ | 258,766 | $ | 939,631 | $ | 774,814 | $ | 1,025,000 | |||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. | ||||||||||||||||||
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. | ||||||||||||||||||
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. | ||||||||||||||||||
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. | ||||||||||||||||||
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. | ||||||||||||||||||
(6) | Interest expense includes debt prepayment costs of $8.3 million in the nine months ended September 30, 2019 and $12.9 million in the nine months ended September 30, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. | ||||||||||||||||||
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 22, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period July 1 through Sept. 30, 2020.
The third-quarter 2020 distribution is approximately 1% higher than the third-quarter 2019 distribution of $1.02 per unit and same as the second-quarter 2020 amount.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Nov. 13 to unitholders of record at the close of business on Nov. 6.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 1, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2020 before the market opens on Fri., Oct. 30. Management will discuss third-quarter 2020 earnings and outlook for the remainder of 2020 during a conference call with analysts at 1:00 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (877) 256-4701, conference code 21969538.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2020-financial-results-on-oct-30-301143694.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 3, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the Barclays CEO Energy-Power Conference at 4:25 p.m. Eastern on Wed., Sept. 9.
The virtual session will be moderated by Theresa Chen, Barclays equity research analyst, with a webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for at least 30 days at www.magellanlp.com.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-barclays-virtual-investor-conference-301123714.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $133.8 million for second quarter 2020 compared to $253.7 million for second quarter 2019. The decrease in second-quarter 2020 net income was primarily driven by reduced demand for refined products due to travel and economic restrictions related to COVID-19 and the negative impact of the lower commodity price environment on various aspects of the partnership's business.
Diluted net income per common unit was 59 cents in second quarter 2020 and $1.11 in second quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 65 cents for second quarter 2020 was higher than the range of 35 cents to 50 cents previously provided by management in early May. Actual results benefited from additional product overages, higher-than-expected commodity prices and lower operating expenses, which more than offset the $12.9 million, or 6-cent per unit, prepayment costs associated with the early extinguishment of the partnership's notes due Feb. 2021 that had not been assumed in the previous guidance. Other results, including refined products and crude oil pipeline volumes, generally trended in line with the partnership's expectations for the quarter.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $209.5 million for second quarter 2020 compared to $314.8 million for second quarter 2019.
"Magellan delivered results against the backdrop of a challenging environment for our industry and our nation that exceeded our expectations for the quarter," said Michael Mears, chief executive officer. "Our resilient business model and strong financial position allow us to confidently manage through current challenges while remaining focused on executing our long-term strategy to maximize value for Magellan's investors."
Beginning in first quarter 2020, the partnership reorganized its reporting segments to reflect changes to its business in conjunction with the sale of three of its marine terminals during March 2020. Historical financial results have been restated to conform to the new segment presentation.
An analysis by segment comparing second quarter 2020 to second quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $171.4 million, a decrease of $79.6 million. Transportation and terminals revenue decreased $67.9 million primarily due to lower demand during second quarter 2020 associated with travel and economic restrictions related to COVID-19 and reduced drilling activity in response to the lower commodity price environment. Revenues also decreased due to the sale of three marine terminals in first quarter 2020 and discontinuation of the ammonia pipeline in late 2019. These declines were partially offset by an increase in the average tariff rate in the current period as a result of the 2019 mid-year adjustment of 4.3% as well as contributions from the recently-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019.
Operating expenses decreased $29.4 million primarily due to the timing of planned integrity spending and more favorable product overages (which reduce operating expenses) as well as no costs in the current period associated with the sold or discontinued assets.
Earnings of non-controlled entities increased by $7.5 million due to additional earnings related to the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal as well as lower unrealized losses recognized in the current period on futures contracts used to hedge commodity-related activities at its Powder Springs Logistics joint venture.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $47.7 million between periods due to the recognition of higher unrealized losses in the 2020 period on futures contracts used to economically hedge the partnership's commodity-related activities as well as lower gas liquids sales volumes as a result of lower economic blending opportunities and the impact of lower commodity prices on the partnership's other commodity-related activities.
Crude oil. Crude oil operating margin was $128.3 million, a decrease of $34.9 million. Transportation and terminals revenue decreased $26.5 million primarily due to lower transportation revenue on the partnership's Longhorn pipeline as a result of less third-party spot shipments because of unfavorable differentials between the Permian Basin and Houston as well as the recent assignment of a customer contract to Magellan's marketing affiliate, with the related marketing activity recognized as product margin instead of transportation revenue. Lower tariff volume on Magellan's Houston distribution system resulted primarily from a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility, and was offset by incremental revenue from the related new terminal transfer fee as well as by more contract storage utilized at higher rates.
Operating expenses increased $7.2 million due to the timing of planned integrity spending, and other operating income was $9.8 million favorable primarily due to unrealized gains on a basis derivative agreement during the current period compared to losses in the 2019 quarter.
Earnings of non-controlled entities declined $14.6 million between periods primarily due to decreased spot volumes on the BridgeTex pipeline and lower contribution from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020.
Product margin increased slightly as a result of crude oil marketing activities conducted to facilitate intrastate shipments during the current period.
Other items. Depreciation, amortization and impairment expense decreased slightly between periods following the recently sold assets, and G&A expense decreased $10.2 million primarily due to lower incentive compensation accruals.
Gain on disposition of assets was $4.6 million unfavorable due to the 2019 period benefiting from the sale of an inactive terminal along the partnership's refined products pipeline system.
Net interest expense increased $18.9 million due to a $12.9 million debt prepayment cost during the current period and higher average outstanding borrowings, primarily as a result of borrowings made to fund the partnership's recent expansion capital projects. As of June 30, 2020, Magellan had $4.84 billion of debt outstanding, including $141 million outstanding on its commercial paper program, with $3 million of cash on hand.
Financial guidance for 2020
As reopening efforts continue, travel and economic activity have increased from their April lows. However, the pace of recovery and length of time for the markets served by Magellan to return to more historical levels of refined products demand remain unclear. Management currently estimates annual 2020 DCF to be in the range of $1.0 to $1.05 billion. The midpoint of this range includes the following key assumptions for the second half of the year:
Including actual results so far this year, net income per unit is estimated to be between $3.50 and $3.70 for 2020 based on the latest DCF forecast range, with third-quarter guidance ranging from 75 cents to 85 cents depending on the progress of continued recovery in the markets served by the partnership. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding as well as the latest DCF forecast for the year, distribution coverage for 2020 is expected to be approximately 1.1 to 1.14 times the amount necessary to pay cash distributions for the year, generating excess cash of $75 to $125 million for 2020. Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices stabilize and return to more historical levels.
Capital allocation
Management remains focused on managing Magellan's business for the long term and delivering value for its investors utilizing its historical disciplined approach. The partnership continues to make significant progress on its existing large-scale construction projects, which are nearing completion, and to evaluate well in excess of $500 million of potential organic growth projects to create incremental value for unitholders over the long term.
Based on the progress of projects now underway, the partnership expects to spend approximately $400 million in 2020 and $40 million in 2021 to complete its current slate of expansion projects. A number of new, low-risk smaller projects were recently launched and expected to meet or exceed management's 6 to 8 times EBITDA multiple target.
Magellan's west Texas refined products pipeline expansion began operations on July 1, with an additional 75,000 barrels per day (bpd) of capacity now available. The related new refined products terminal in Midland, Texas began service this week as well. Further, expansion of the Saddlehorn pipeline continues to progress, with an incremental 100,000 bpd of capacity expected to be available by the end of 2020.
During 2020, Magellan's board of directors authorized the repurchase of up to $750 million of common units through 2022. Through June 30, 2020, the partnership had repurchased 3.6 million units for $202 million, with no incremental units purchased during the second quarter. The timing, price and actual number of units repurchased will depend on a number of factors including expected expansion capital spending needs, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Earnings call details
Management will discuss second-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 954-0628, conference code 21965325.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, plan, target, forecast, guidance, believe, estimate, expect, continue, commit, future, remain, resilient, intend, nearing, term, may, will and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 506,405 | $ | 411,815 | $ | 967,197 | $ | 870,210 | |||||||
Product sales revenue | 189,989 | 43,277 | 352,984 | 362,397 | |||||||||||
Affiliate management fee revenue | 5,305 | 5,316 | 10,453 | 10,607 | |||||||||||
Total revenue | 701,699 | 460,408 | 1,330,634 | 1,243,214 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 168,929 | 146,107 | 314,954 | 295,615 | |||||||||||
Cost of product sales | 152,876 | 50,509 | 321,970 | 299,745 | |||||||||||
Depreciation, amortization and impairment | 62,530 | 58,540 | 124,401 | 122,074 | |||||||||||
General and administrative | 52,383 | 42,168 | 98,378 | 79,076 | |||||||||||
Total costs and expenses | 436,718 | 297,324 | 859,703 | 796,510 | |||||||||||
Other operating income (expense) | (5,024) | 3,913 | 1,917 | 3,402 | |||||||||||
Earnings of non-controlled entities | 40,785 | 33,689 | 72,040 | 77,349 | |||||||||||
Operating profit | 300,742 | 200,686 | 544,888 | 527,455 | |||||||||||
Interest expense | 51,406 | 69,259 | 111,572 | 125,159 | |||||||||||
Interest capitalized | (5,134) | (4,228) | (8,588) | (9,179) | |||||||||||
Interest income | (338) | (223) | (1,998) | (643) | |||||||||||
Gain on disposition of assets | (4,646) | — | (26,434) | (12,887) | |||||||||||
Other (income) expense | 4,570 | 1,446 | 6,620 | 2,253 | |||||||||||
Income before provision for income taxes | 254,884 | 134,432 | 463,716 | 422,752 | |||||||||||
Provision for income taxes | 1,181 | 589 | 2,350 | 1,345 | |||||||||||
Net income | $ | 253,703 | $ | 133,843 | $ | 461,366 | $ | 421,407 | |||||||
Basic net income per common unit | $ | 1.11 | $ | 0.59 | $ | 2.02 | $ | 1.86 | |||||||
Diluted net income per common unit | $ | 1.11 | $ | 0.59 | $ | 2.02 | $ | 1.86 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,647 | 225,351 | 228,603 | 226,461 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,688 | 225,351 | 228,623 | 226,461 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.606 | $ | 1.675 | $ | 1.590 | $ | 1.626 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 70.8 | 61.3 | 132.9 | 127.5 | |||||||||||
Distillates | 47.2 | 41.3 | 91.8 | 85.1 | |||||||||||
Aviation fuel | 9.9 | 2.7 | 18.7 | 12.1 | |||||||||||
Liquefied petroleum gases | 4.5 | — | 5.1 | 0.4 | |||||||||||
Total volume shipped | 132.4 | 105.3 | 248.5 | 225.1 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped(1) | $ | 0.977 | $ | 1.048 | $ | 0.961 | $ | 0.970 | |||||||
Volume shipped (million barrels)(1)(2) | 80.5 | 47.7 | 159.9 | 122.8 | |||||||||||
Terminal average utilization (million barrels per month) | 22.9 | 25.5 | 22.6 | 24.1 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(3) | 38.8 | 32.2 | 76.5 | 69.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(4) | 13.4 | 15.1 | 22.4 | 31.4 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. |
(3) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(4) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 347,630 | $ | 279,759 | $ | 657,201 | $ | 594,078 | |||||||
Affiliate management fee revenue | 1,659 | 1,513 | 3,321 | 3,097 | |||||||||||
Other operating income (expense) | 1,031 | 138 | 6,399 | 2,030 | |||||||||||
Earnings (loss) of non-controlled entities | (2,950) | 4,592 | (3,997) | 18,812 | |||||||||||
Less: Operating expenses | 132,850 | 103,405 | 235,542 | 209,287 | |||||||||||
Transportation and terminals margin | 214,520 | 182,597 | 427,382 | 408,730 | |||||||||||
Product sales revenue | 184,695 | 34,463 | 341,977 | 347,449 | |||||||||||
Less: Cost of product sales | 148,166 | 45,616 | 310,596 | 278,958 | |||||||||||
Product margin | 36,529 | (11,153) | 31,381 | 68,491 | |||||||||||
Operating margin | $ | 251,049 | $ | 171,444 | $ | 458,763 | $ | 477,221 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 160,116 | $ | 133,637 | $ | 312,275 | $ | 279,295 | |||||||
Affiliate management fee revenue | 3,646 | 3,803 | 7,132 | 7,510 | |||||||||||
Other operating income (expense) | (6,055) | 3,775 | (4,482) | 1,372 | |||||||||||
Earnings of non-controlled entities | 43,735 | 29,097 | 76,037 | 58,537 | |||||||||||
Less: Operating expenses | 38,764 | 45,917 | 84,470 | 92,689 | |||||||||||
Transportation and terminals margin | 162,678 | 124,395 | 306,492 | 254,025 | |||||||||||
Product sales revenue | 5,294 | 8,814 | 11,007 | 14,948 | |||||||||||
Less: Cost of product sales | 4,710 | 4,893 | 11,374 | 20,787 | |||||||||||
Product margin | 584 | 3,921 | (367) | (5,839) | |||||||||||
Operating margin | $ | 163,262 | $ | 128,316 | $ | 306,125 | $ | 248,186 | |||||||
Segment operating margin | $ | 414,311 | $ | 299,760 | $ | 764,888 | $ | 725,407 | |||||||
Add: Allocated corporate depreciation costs | 1,344 | 1,634 | 2,779 | 3,198 | |||||||||||
Total operating margin | 415,655 | 301,394 | 767,667 | 728,605 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 62,530 | 58,540 | 124,401 | 122,074 | |||||||||||
General and administrative expense | 52,383 | 42,168 | 98,378 | 79,076 | |||||||||||
Total operating profit | $ | 300,742 | $ | 200,686 | $ | 544,888 | $ | 527,455 | |||||||
Note: | Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2020 | |||||||||||||
Net Income | Basic Net | Diluted Net | |||||||||||
As reported | $ | 133,843 | $ | 0.59 | $ | 0.59 | |||||||
Commodity-related adjustments associated with future transactions(1) | 12,367 | ||||||||||||
Excluding commodity-related adjustments | $ | 146,210 | $ | 0.65 | $ | 0.65 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 225,351 | ||||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 225,351 | ||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, | June 30, | 2020 Annual | |||||||||||||||||||||
2019 | 2020 | 2019 | 2020 | Forecast Range | |||||||||||||||||||
Net income | $ | 253,703 | $ | 133,843 | $ | 461,366 | $ | 421,407 | $ | 790,000 | $ | 835,000 | |||||||||||
Interest expense, net | 45,934 | 64,808 | 100,986 | 115,337 | 220,000 | 220,000 | |||||||||||||||||
Depreciation, amortization and impairment(1) | 59,966 | 58,500 | 118,923 | 121,586 | 251,000 | 251,000 | |||||||||||||||||
Equity-based incentive compensation(2) | 10,890 | 4,256 | 6,040 | (10,289) | (10,000) | (10,000) | |||||||||||||||||
Gain on disposition of assets(3) | (5,280) | — | (16,280) | (10,511) | (11,000) | (11,000) | |||||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 17,627 | 9,982 | 20,843 | (4,938) | |||||||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (1,924) | 47,593 | 71,214 | (15,964) | |||||||||||||||||||
Inventory valuation adjustments(5) | (1,820) | (43,899) | (9,446) | 27,831 | |||||||||||||||||||
Total commodity-related adjustments | 13,883 | 13,676 | 82,611 | 6,929 | (13,000) | (8,000) | |||||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (793) | 14,267 | 11,029 | 25,350 | 66,000 | 66,000 | |||||||||||||||||
Adjusted EBITDA | 378,303 | 289,350 | 764,675 | 669,809 | 1,293,000 | 1,343,000 | |||||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (45,184) | (50,827) | (91,059) | (100,459) | (203,000) | (203,000) | |||||||||||||||||
Maintenance capital(7) | (18,325) | (28,982) | (40,823) | (53,302) | (90,000) | (90,000) | |||||||||||||||||
Distributable cash flow | $ | 314,794 | $ | 209,541 | $ | 632,793 | $ | 516,048 | $ | 1,000,000 | $ | 1,050,000 | |||||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense includes debt prepayment costs of $8.3 million in the six months ended June 20, 2019 and $12.9 million in the three and six months ended June 30, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 23, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period April 1 through June 30, 2020.
The second-quarter 2020 distribution is 1% higher than the second-quarter 2019 distribution of $1.0125 per unit and consistent with the first-quarter 2020 amount.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Aug. 14 to unitholders of record at the close of business on Aug. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2020 before the market opens on Thurs., July 30. Management will discuss second-quarter 2020 earnings and outlook for the remainder of the year during a conference call with analysts at 1:30 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 954-0628, conference code 21965325.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 15, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the J.P. Morgan Energy, Power & Renewables Virtual Conference at 10:10 a.m. Eastern on Wed., June 17.
The session will be moderated by Jeremy Tonet, J.P. Morgan equity research analyst, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 6, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 3.25% senior notes due 2030. The notes were priced at 99.88% of par to yield 3.264% to maturity. The partnership intends to use the net proceeds from this offering of approximately $495.4 million, after deducting underwriting discounts and estimated offering expenses, for general partnership purposes, which may include capital projects and repayment of indebtedness, including borrowings under its revolving credit facility and commercial paper program and redemption of its 4.25% senior notes due 2021.
The offering is expected to close on May 20, 2020 and is subject to the satisfaction of customary closing conditions. J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. are joint book-running managers for the debt offering, with Barclays Capital Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: estimated, expected, intends, may, subject, conditions and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; insufficiency of storage for crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 1, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $287.6 million for first quarter 2020 compared to $207.7 million for first quarter 2019. The increase in first quarter 2020 net income was primarily driven by mark-to-market (MTM) adjustments for hedge positions related to the partnership's commodity-related activities.
Diluted net income per common unit was $1.26 in first quarter 2020 and 91 cents in first quarter 2019. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.28 for first quarter 2020 was higher than the $1.08 guidance previously provided by management primarily as a result of lower operating expenses, higher gas liquids blending margins as well as a $12.9 million, or 6-cent per unit, gain on the sale of a portion of the partnership's investment in Saddlehorn Pipeline Company, LLC during Feb. 2020.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $306.5 million for first quarter 2020 compared to $318.0 million for first quarter 2019.
"While we are pleased with our solid financial results for the first quarter of 2020, we remain focused on managing Magellan's business through the current challenging environment. Our employees have ensured Magellan's essential operations remain fully functional to provide continuity of fuel supply to the communities we serve, and we thank them for their professionalism and dedication during this difficult time," said Michael Mears, chief executive officer. "Although we expect near-term financial impacts from the significantly lower commodity prices and unprecedented reductions in refined products demand, Magellan's disciplined management approach, resilient business model and financial strength position us well to respond not only to the short-term industry challenges but to successfully manage our company for the long term."
Beginning in first quarter 2020, the partnership reorganized its reporting segments to reflect changes to its business in conjunction with the sale of three of its marine terminals during March 2020. The partnership's Galena Park, Texas marine terminal and Pasadena, Texas joint venture marine terminal are now shown in the Refined products segment and its Corpus Christi, Texas marine terminal is now included with the Crude oil segment based on the primary products handled at these facilities. Historical financial results have been restated to conform to the new segment presentation, with historical contributions from the divested terminals also included in the Refined products segment.
An analysis by segment comparing first quarter 2020 to first quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $305.8 million, an increase of $98.1 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities.
Transportation and terminals revenue increased $4.7 million due to incremental refined products transportation volume and a higher average transportation rate. Shipments grew mainly as a result of the newly-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019, and the average rate in the current period increased slightly as the 2019 mid-year tariff adjustment of 4.3% was partially offset by more short-haul movements that ship at a lower rate. The impact of these favorable items was offset in part by lower demand during March 2020 associated with travel and economic restrictions related to COVID-19 and reduced drilling activity from the lower commodity price environment.
Operating expenses increased $3.2 million primarily due to higher property taxes, and other operating income decreased $3.5 million as a result of insurance settlements received in first quarter 2019 related to Hurricane Harvey.
Earnings of non-controlled entities increased by $15.3 million due to gains recognized in the current period compared to losses in first quarter 2019 on futures contracts used to hedge commodity-related activities at our Powder Springs Logistics joint venture. The current period also benefited from additional earnings related to the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $84.8 million between periods primarily due to the recognition of unrealized gains in the 2020 period compared to losses in 2019 on futures contracts used to economically hedge the partnership's commodity-related activities, partially offset by unfavorable lower of cost or net realizable value (LCM) adjustments in the current period resulting from the significant commodity price decline during 2020. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods primarily from improved fractionation contributions.
Crude oil. Crude oil operating margin was $119.9 million, a decrease of $23.0 million. Transportation and terminals revenue decreased $6.5 million primarily due to lower transportation revenue on the partnership's Longhorn pipeline as a result of less third-party spot shipments that move at a higher tariff rate, as the crude oil price differential between the Permian Basin and Houston was lower than the spot rate during the current period.
Operating expenses increased slightly as less favorable product overages (which reduce operating expenses) were mainly offset by lower environmental accruals, and other operating expense was $4.0 million unfavorable primarily due to realized losses on a basis derivative agreement during the current period.
Earnings of non-controlled entities declined $2.9 million between periods primarily due to lower earnings from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020.
Product margin decreased $8.8 million primarily due to an LCM adjustment on the partnership's product overages. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods due to the contribution of crude oil marketing affiliate activities to facilitate intrastate shipments during the current period.
Other items. Depreciation, amortization and impairment expense increased slightly between periods due to the commencement of depreciation for expansion projects placed into service over the past year, whereas G&A expense decreased $9.1 million due to lower incentive compensation accruals.
Gain on disposition of assets was unfavorable $8.9 million. The current period benefited from a $12.9 million gain on the sale of a 10% interest in Saddlehorn compared to a gain of $21.8 million in 2019 associated with the sale of a portion of the partnership's interest in BridgeTex Pipeline Company, LLC and the sale of a discontinued crude oil pipeline construction project.
Net interest expense decreased $4.5 million due to an $8.3 million debt prepayment cost in first quarter 2019, partially offset by higher average outstanding borrowings in the current period used to fund the partnership's expansion capital projects. As of March 31, 2020, Magellan had $4.75 billion of debt outstanding and $139 million of cash on hand with no borrowings outstanding on its commercial paper program or revolving credit facility.
Financial guidance for 2020
The recent restrictions on travel and economic activity and the dramatic decline in commodity prices since the beginning of the year have significantly disrupted the petroleum industry, and Magellan is not immune to their effects. Although a number of states within the partnership's asset footprint are beginning to reopen their economies, the pace of the recovery and length of time until these markets return to more historical levels of refined products demand are not clear. As a result, management is not providing specific guidance for 2020, but instead is providing an estimated annual DCF range for 2020 between $1.0 and $1.075 billion, utilizing the following sensitivity analysis:
($ in millions) | ||||
Original 2020 DCF guidance provided on 1/30/20 | $1,200 | |||
Estimated impacts from quarantine and lower commodity price environment: | ||||
- | Lower blending profits and tenders due to commodity prices, with no fall '20 blending margin forecasted; $10/bbl increase in crude price ~$30mm DCF | (140) | - | (110) |
- | Quarantine impact on base refined products demand. Low end assumes declines of 25% gasoline, 5% distillate and 70% aviation in 2Q20, followed by 1 month of transition (half the 2Q decline) before demand recovers, except aviation decline continues at 25% throughout '20. Upper end assumes less July impact | (70) | - | (60) |
- | Reduced drilling impact on distillate volumes | (30) | - | (20) |
- | Crude oil pipeline, lower uncommitted volume | (10) | - | (10) |
- | Other items, mainly expense savings and higher storage revenues | 50 | - | 75 |
Estimated 2020 DCF range | $1,000 | - | $1,075 |
Including actual results so far this year, net income per unit is now estimated to be between $3.35 and $3.70 for 2020 based on the range of outcomes above. With most of the travel and economic disruptions from the coronavirus expected to impact second-quarter results, the net income forecast for second quarter 2020 is expected to range from 35 cents to 50 cents, depending on how quickly regional economies reopen. The forecast excludes future MTM adjustments on the partnership's commodity-related activities.
In light of the challenging environment and investor feedback, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding and considering the above DCF sensitivity analysis, distribution coverage for 2020 is expected to be approximately 1.1 to 1.15 times the amount necessary to pay cash distributions for the year, generating excess cash of $75 to $150 million for 2020. Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage above 1.2 times once refined products demand returns to more historical levels and the commodity price environment stabilizes.
Capital allocation
Management remains focused on managing Magellan's business for the long term and delivering value for its investors. The partnership continues to make significant progress on its existing construction projects, which are nearing completion. Based on the progress of projects now underway, the partnership expects to spend approximately $400 million in 2020 to complete its current slate of expansion projects, with $155 million of that amount already spent during first quarter 2020.
Construction activities for Magellan's west Texas refined products pipeline expansion and new Midland terminal are in the final stages, with both projects expected to begin operations in early third quarter 2020. Further, expansion of the Saddlehorn pipeline is in process, with an incremental 100,000 barrels per day of capacity expected to be available in late 2020.
Even though it is not the top priority at the moment, the partnership continues to evaluate well in excess of $500 million of potential organic growth projects to create incremental value for unitholders over the long term. Management remains committed to the capital discipline that has been a consistent feature of its approach and is pursuing low-risk, fee-based capital projects that are expected to meet or exceed its targeted 6 to 8 times EBITDA multiple.
During 2020, Magellan's board of directors authorized the repurchase of up to $750 million of common units through 2022. Through March 31, 2020, the partnership had repurchased 3.6 million units for $202 million. The timing, price and actual number of units repurchased will depend on a number of factors including expected expansion capital spending needs, alternative investment opportunities, excess cash available, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Earnings call details
Management will discuss first-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 891-3493, conference code 21959668.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, plan, target, forecast, guidance, believe, estimate, expect, continue, commit, future, remain, intend, nearing, term, may, will and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; insufficiency of storage for crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Transportation and terminals revenue | $ | 460,792 | $ | 458,395 | |||
Product sales revenue | 162,995 | 319,120 | |||||
Affiliate management fee revenue | 5,148 | 5,291 | |||||
Total revenue | 628,935 | 782,806 | |||||
Costs and expenses: | |||||||
Operating | 146,025 | 149,508 | |||||
Cost of product sales | 169,094 | 249,236 | |||||
Depreciation, amortization and impairment | 61,871 | 63,534 | |||||
General and administrative | 45,995 | 36,908 | |||||
Total costs and expenses | 422,985 | 499,186 | |||||
Other operating income (expense) | 6,941 | (511) | |||||
Earnings of non-controlled entities | 31,255 | 43,660 | |||||
Operating profit | 244,146 | 326,769 | |||||
Interest expense | 60,166 | 55,900 | |||||
Interest capitalized | (3,454) | (4,951) | |||||
Interest income | (1,660) | (420) | |||||
Gain on disposition of assets | (21,788) | (12,887) | |||||
Other (income) expense | 2,050 | 807 | |||||
Income before provision for income taxes | 208,832 | 288,320 | |||||
Provision for income taxes | 1,169 | 756 | |||||
Net income | $ | 207,663 | $ | 287,564 | |||
Basic net income per common unit | $ | 0.91 | $ | 1.26 | |||
Diluted net income per common unit | $ | 0.91 | $ | 1.26 | |||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,558 | 227,571 | |||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,558 | 227,571 | |||||
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Refined products: | |||||||
Transportation revenue per barrel shipped | $ | 1.572 | $ | 1.582 | |||
Volume shipped (million barrels): | |||||||
Gasoline | 62.1 | 66.2 | |||||
Distillates | 44.6 | 43.8 | |||||
Aviation fuel | 8.8 | 9.4 | |||||
Liquefied petroleum gases | 0.6 | 0.4 | |||||
Total volume shipped | 116.1 | 119.8 | |||||
Crude oil: | |||||||
Magellan 100%-owned assets: | |||||||
Transportation revenue per barrel shipped(1) | $ | 0.945 | $ | 0.918 | |||
Volume shipped (million barrels)(1) | 79.4 | 75.1 | |||||
Terminal average utilization (million barrels per month) | 22.2 | 22.7 | |||||
Select joint venture pipelines: | |||||||
BridgeTex - volume shipped (million barrels)(2) | 37.7 | 37.1 | |||||
Saddlehorn - volume shipped (million barrels)(3) | 9.0 | 16.3 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Refined products: | |||||||
Transportation and terminals revenue | $ | 309,571 | $ | 314,319 | |||
Affiliate management fee revenue | 1,662 | 1,584 | |||||
Other operating income (expense) | 5,368 | 1,892 | |||||
Earnings (loss) of non-controlled entities | (1,047) | 14,220 | |||||
Less: Operating expenses | 102,692 | 105,882 | |||||
Transportation and terminals margin | 212,862 | 226,133 | |||||
Product sales revenue | 157,282 | 312,986 | |||||
Less: Cost of product sales | 162,430 | 233,342 | |||||
Product margin | (5,148) | 79,644 | |||||
Operating margin | $ | 207,714 | $ | 305,777 | |||
Crude oil: | |||||||
Transportation and terminals revenue | $ | 152,159 | $ | 145,658 | |||
Affiliate management fee revenue | 3,486 | 3,707 | |||||
Other operating income (expense) | 1,573 | (2,403) | |||||
Earnings of non-controlled entities | 32,302 | 29,440 | |||||
Less: Operating expenses | 45,706 | 46,772 | |||||
Transportation and terminals margin | 143,814 | 129,630 | |||||
Product sales revenue | 5,713 | 6,134 | |||||
Less: Cost of product sales | 6,664 | 15,894 | |||||
Product margin | (951) | (9,760) | |||||
Operating margin | $ | 142,863 | $ | 119,870 | |||
Segment operating margin | $ | 350,577 | $ | 425,647 | |||
Add: Allocated corporate depreciation costs | 1,435 | 1,564 | |||||
Total operating margin | 352,012 | 427,211 | |||||
Less: | |||||||
Depreciation, amortization and impairment expense | 61,871 | 63,534 | |||||
General and administrative expense | 45,995 | 36,908 | |||||
Total operating profit | $ | 244,146 | $ | 326,769 | |||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES (Unaudited, in thousands except per unit amounts) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, 2020 | ||||||||||||
Net Income | Basic Net Income | Diluted Net | ||||||||||
As reported | $ | 287,564 | $ | 1.26 | $ | 1.26 | ||||||
Unrealized derivative (gains) losses associated with future transactions(1) | (66,481) | |||||||||||
Inventory valuation adjustments associated with future transactions | 70,969 | |||||||||||
Excluding commodity-related adjustments(2) | $ | 292,052 | $ | 1.28 | $ | 1.28 | ||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 227,571 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 227,571 | |||||||||||
(1) | Includes the partnership's net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | 2020 Annual | |||||||||||||
2019 | 2020 | |||||||||||||
Net income | $ | 207,663 | $ | 287,564 | $ | 757,000 | $ | 835,000 | ||||||
Interest expense, net | 55,052 | 50,529 | 211,000 | 211,000 | ||||||||||
Depreciation, amortization and impairment(1) | 58,957 | 63,086 | 262,000 | 262,000 | ||||||||||
Equity-based incentive compensation(2) | (4,850) | (14,545) | — | — | ||||||||||
Gain on disposition of assets(3) | (11,000) | (10,511) | (11,000) | (11,000) | ||||||||||
Commodity-related adjustments: | ||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 25,036 | (66,740) | ||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | 51,318 | (11,737) | ||||||||||||
Inventory valuation adjustments(5) | (7,626) | 71,730 | ||||||||||||
Total commodity-related adjustments | 68,728 | (6,747) | 38,000 | 35,000 | ||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 11,822 | 11,083 | 41,000 | 41,000 | ||||||||||
Adjusted EBITDA | 386,372 | 380,459 | 1,298,000 | 1,373,000 | ||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (45,875) | (49,632) | (208,000) | (208,000) | ||||||||||
Maintenance capital(7) | (22,498) | (24,320) | (90,000) | (90,000) | ||||||||||
Distributable cash flow | $ | 317,999 | $ | 306,507 | $ | 1,000,000 | $ | 1,075,000 | ||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 23, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period Jan. 1 through March 31, 2020.
The first-quarter 2020 distribution is 2% higher than the first-quarter 2019 distribution of $1.005 per unit and consistent with the fourth-quarter 2019 amount.
"During this period of unprecedented restrictions on economic activity and commodity price declines, we have heard clearly from our investors that stability of the distribution and healthy distribution coverage remain of utmost importance to them," said Michael Mears, chief executive officer. "Magellan's resilient business model and strong balance sheet position us well to weather this environment; however, given the uncertain timing of the return of refined products demand to more historical levels, we believe it is prudent to maintain our current cash distribution amount at this time out of an abundance of caution."
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid May 15 to unitholders of record at the close of business on May 8.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 13, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2020 before the market opens on Fri., May 1. Management will discuss first-quarter 2020 earnings and outlook for the remainder of the year during a conference call with analysts at 1:30 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 891-3493, conference code 21959668.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it will host its 2020 annual meeting of limited partners on Thurs., April 23 at 10:00 a.m. Central Time via webcast. Due to the coronavirus pandemic, Magellan changed its previously-planned annual meeting in Tulsa to this webcast event. Unitholders will not be able to attend the annual meeting in person.
Unitholders of record at the close of business on Feb. 24, 2020 are entitled to participate in and vote at the annual meeting. The virtual annual meeting will be held at www.meetingcenter.io/218032134. To access the event, unitholders must enter the password MMP2020 and a Computershare-issued control number. Unitholders that are registered through Computershare, the partnership's transfer agent, can find the control number on the notice they previously received. Unitholders that hold their Magellan units through a broker, bank or other nominee must register with Computershare in advance to attend the virtual annual meeting. To register, the unitholder must contact their broker, bank or other nominee to request proof of ownership via a "legal proxy" and submit the legal proxy, along with the unitholder's name and email address, to Computershare at legalproxy@computershare.com by 4:00 p.m. Central Time on April 17. The unitholder will then receive an email response from Computershare to confirm registration and provide a control number for participation in the virtual annual meeting.
Once admitted to the meeting, unitholders will be able to submit questions electronically and vote by following the instructions on the meeting website. All unitholders are encouraged to vote and submit proxies in advance of the annual meeting by one of the methods described in the annual meeting proxy materials previously made available. The proxy materials contain important information about the matters on which unitholders are being asked to vote. Unitholders are also encouraged to submit proxies as early as possible to avoid processing delays. The proxy card included with the annual meeting proxy materials may still be used to vote units in connection with the annual meeting.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Feb. 4, 2020 /PRNewswire/ -- Saddlehorn Pipeline Company, LLC ("Saddlehorn") announced today that Black Diamond Gathering LLC ("Black Diamond"), through its majority owner Noble Midstream Partners LP (NASDAQ: NBLX) ("NBLX"), has purchased a 20% membership interest in Saddlehorn for $155 million effective Feb. 1, 2020. As previously announced, an option had been granted to Black Diamond in conjunction with recent volume commitments to the pipeline.
The Saddlehorn pipeline is currently capable of transporting 190,000 barrels per day ("bpd") of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma. Supported by increased volume commitments from shippers, the pipeline's capacity is being increased by 100,000 bpd to a new total capacity of approximately 290,000 bpd, providing shippers enhanced access to market. The higher capacity is expected to be available in late 2020 following the capital-efficient addition of incremental pumping and storage capabilities.
The Saddlehorn pipeline was previously owned jointly by affiliates of Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") and Western Midstream Partners, LP (NYSE: WES) ("WES"). After Black Diamond's purchase, with Magellan and Plains each selling a 10% interest, Magellan and Plains each own a 30% membership interest and Black Diamond and WES each own a 20% membership interest in Saddlehorn. Magellan continues to serve as operator of the Saddlehorn pipeline.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL") and natural gas. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles more than 6 million bpd of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About Western Midstream Partners, LP
Western Midstream Partners, LP (NYSE: WES) is a Delaware master limited partnership formed to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, NGLs and crude oil; and gathering and disposing of produced water for its customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts. More information is available at www.westernmidstream.com.
About Black Diamond Gathering LLC
Black Diamond is a joint venture between Noble Midstream Partners LP (NASDAQ: NBLX) and Greenfield Midstream. NBLX owns 54.4% of Black Diamond and Greenfield Midstream owns the remaining 45.6%. NBLX operates Black Diamond, which includes a large-scale integrated crude oil gathering system in the DJ Basin, consisting of approximately 240 miles of pipeline in operation, 300,000 bpd delivery capacity and 390,000 bpd crude oil storage capacity. The system is connected to every major takeaway pipeline in the DJ Basin, including the White Cliffs Pipeline, the Saddlehorn Pipeline, the Grand Mesa Pipeline and the Pony Express Pipeline. NBLX and Greenfield Midstream jointly provide commercial efforts to bring additional producer dedications to Black Diamond Gathering and pursue expansion opportunities.
Except for statements of historical fact, the information in this news release constitutes forward-looking statements as defined by federal law. Although the statements are based on reasonable assumptions, such forward-looking statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Important factors that could lead to material changes in performance include the risk and uncertainties discussed in filings with the Securities and Exchange Commission by Magellan, NBLX, Plains and WES. This news release speaks only as of the date issued, and the companies undertake no obligation to update any forward-looking statements because of new information, future events or any other factors.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Plains: | Brett Magill, Investor Relations Brad Leone, Media Relations | (866) 809-1291 (866) 809-1290 | |
WES: | Kristen Shults, Investor Relations Abby Dempsey, Investor Relations | (832) 636-6000 (832) 636-6000 | |
Black Diamond: | Park Carrere, Investor Relations Casey Nikoloric, Investor Relations | (281) 872-3208 (303) 433-4397 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $286.4 million for fourth quarter 2019 compared to $314.1 million for fourth quarter 2018. The decrease in fourth quarter 2019 net income was driven by mark-to-market (MTM) adjustments for hedge positions related to the partnership's commodity-related activities. Contributions from Magellan's core fee-based transportation and terminals activities increased between periods.
Diluted net income per limited partner unit was $1.25 in fourth quarter 2019 and $1.37 in fourth quarter 2018. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.31 for fourth quarter 2019 was higher than the $1.13 guidance previously provided by management, primarily as a result of lower operating expenses than expected, higher butane blending margins as well as higher demand for the partnership's crude oil services.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was a record $357.8 million for fourth quarter 2019, or 18% higher than the $302.4 million generated in fourth quarter 2018.
"Magellan closed out the year with another strong quarter, generating solid financial results from each of our segments and solidifying 2019 as a record year for our company," said Michael Mears, chief executive officer. "Our conservative business model has consistently proven successful as we focus on providing essential services to move the fuel that keeps America moving while ensuring attractive returns on capital deployed. Magellan's financial strength and discipline will remain key to producing long-term value not only in today's competitive environment but also for years to come."
An analysis by segment comparing fourth quarter 2019 to fourth quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $264.9 million, a decrease of $84.4 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Excluding these adjustments, financial results from this segment's fee-based activities increased between periods and represented a quarterly record.
Transportation and terminals revenue increased due to incremental refined products transportation volume and a higher average transportation rate. Shipments grew 3% mainly as a result of the newly-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019, and the average rate in the current period increased slightly as the 2019 mid-year tariff adjustment of 4.3% was partially offset by more short-haul movements that ship at a lower rate. The impact of these favorable items was reduced in part by lower ammonia revenues in the current period due to decommissioning of the ammonia pipeline in late 2019.
Operating expenses decreased $10.7 million primarily due to lower spending for asset integrity as a result of maintenance work timing and less asset retirements in the current period, partially offset by less favorable product overages (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $93.9 million between periods primarily due to the recognition of significant unrealized gains in the 2018 period on futures contracts used to economically hedge the partnership's commodity-related activities. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods mainly due to additional sales volume for its butane blending activities.
Earnings of non-controlled entities were also lower due to MTM adjustments for exchange-traded futures contracts used to hedge commodity-related activities for Powder Springs Logistics, LLC, which is owned 50% by Magellan.
Crude oil. Crude oil operating margin was $151.3 million, an increase of $21.5 million. Transportation and terminals revenue increased $7.4 million primarily due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the current period, as well as higher fees from increased customer activity at the partnership's crude oil facilities. Higher transportation volumes on the partnership's Houston distribution system due to increased movements to the export facility owned by its Seabrook Logistics, LLC joint venture were offset by lower transportation revenue on the Longhorn pipeline. As expected, the pricing differential between the Permian Basin and Houston declined during the final months of 2019, limiting demand for spot shipments on the Longhorn pipeline and resulting in both lower transportation volume and lower average rates.
Operating expenses decreased $15.6 million due to a number of favorable items, including lower environmental accruals, reduced spending for asset integrity as a result of maintenance work timing and less asset retirements than the 2018 period, which included the write-off of costs incurred for a cancelled pipeline project.
Earnings of non-controlled entities were relatively unchanged between periods as contributions from new commitments received in connection with the expansion of the Saddlehorn pipeline were offset by lower average tariffs on the BridgeTex pipeline, as shipments at the published spot tariff were replaced by volume at lower incentive rates.
Marine storage. Marine storage operating margin was $32.9 million, an increase of $2.3 million. Transportation and terminals revenue increased due to additional fees mainly related to new dock capacity and rail connectivity at the partnership's Galena Park, Texas facility, partially offset by lower storage utilization resulting from timing of maintenance work and a slightly lower average storage rate due to contract renewals at lower rates, primarily at its Wilmington, Delaware terminal. Operating expenses increased due to additional asset integrity spending and higher property taxes.
Other items. Depreciation, amortization and impairment expense decreased significantly between periods primarily related to a $49.1 million impairment to the partnership's ammonia pipeline system in 2018 as a result of management's decision to decommission this asset during 2019.
Net interest expense increased due to higher average outstanding borrowings to fund the partnership's expansion capital projects, partially offset by a lower average interest rate. As of Dec. 31, 2019, Magellan had $4.8 billion of debt outstanding and $58 million of cash on hand with no borrowings outstanding on its commercial paper program.
Annual results
For the year ended Dec. 31, 2019, net income was $1,020.8 million compared to $1,333.9 million in 2018, or $980.1 million excluding the $353.8 million gain on sale of a portion of BridgeTex. Primary drivers for the increase excluding the BridgeTex sale gain included higher contributions from fee-based activities due to continued strong demand for Magellan's refined products and crude oil transportation and storage services, partially offset by lower profits from the partnership's commodity-related activities due to favorable MTM adjustments for related hedge positions during 2018. Full-year diluted net income per limited partner unit was $4.46 in 2019 and $5.84 in 2018. Annual DCF was a record $1,297.5 million in 2019, or 1.4 times the amount needed to pay distributions related to 2019, compared to $1,109.7 million in 2018.
Expansion capital projects
Magellan continues to make significant progress on its current construction projects, spending $990 million on organic growth capital during 2019. Based on the progress of projects already underway, the partnership expects to spend approximately $400 million in 2020 to complete its current slate of expansion projects.
Construction of the second phase of the partnership's Pasadena, Texas joint venture marine terminal was essentially complete by year-end as expected. Commercial service has now commenced for the new dock and approximately half of the 4 million barrels of new storage, with full operations expected over the coming month as final permits are received.
Seabrook has now placed 800,000 barrels of recently-constructed storage into operation, with new dock capabilities expected to come online in mid-2020. In addition, another 750,000 barrels of storage is being built at Seabrook with an anticipated in-service date of early 2021.
Construction activities are progressing well for Magellan's west Texas refined products pipeline expansion and new Midland terminal, with both projects expected to begin operations in mid-2020. Further, expansion of the Saddlehorn pipeline is in process, with an incremental 100,000 barrels per day (bpd) of capacity expected to be available in late 2020.
The partnership continues to evaluate well in excess of $500 million of potential organic growth projects that would create incremental value for unitholders, including a cost-efficient solution to meet industry demand to transport crude oil from Cushing, Oklahoma to the Houston Gulf Coast region as well as a number of refined products and marine storage expansion opportunities. Management remains committed to the capital discipline that has been a consistent feature of its approach and is pursuing capital projects that are expected to meet or exceed its targeted 6 to 8 times EBITDA multiple.
Financial guidance for 2020
Management expects to increase annual cash distributions by 3% for 2020 and currently expects the partnership to generate annual DCF of $1.2 billion in 2020, resulting in 1.25 times the amount needed to pay cash distributions for the year. Current 2020 DCF guidance assumes a less favorable commodity price environment than that experienced in 2019, and in particular that the pricing differential between the Permian Basin and Houston will not be sufficient to encourage spot shipments on the Longhorn and BridgeTex pipelines, which provided considerable benefit to 2019 results.
Specific to the Longhorn pipeline, Magellan has made substantial progress on its re-contracting efforts and has secured a significant new 10-year take-or-pay customer agreement. The volume commitment in this new agreement ramps up over the next few years. Magellan plans to utilize its own marketing activities to facilitate intrastate shipments in the interim, and to that end has recently secured multi-year third-party commitments to backstop its marketing affiliate's use of transportation services on Longhorn. As a result of these transactions, Magellan expects total committed volumes to average approximately 230,000 bpd on Longhorn during 2020, with a current weighted-average contract life of approximately 7 years. Based on commitments secured to date, committed volume on Longhorn over the next 5 years is currently expected to average nearly 200,000 bpd. Advanced discussions continue with other third parties for additional commitments, and Magellan believes it is likely the committed volumes on Longhorn will increase over time.
Shipments on the BridgeTex pipeline are expected to average approximately 400,000 bpd based on a combination of third-party committed volume, incremental movements due to recently-implemented incentive tariff rates and marketing activities of the BridgeTex owners.
Further, guidance assumes the recently announced sale of the partnership's marine terminals in New Haven, Connecticut, Wilmington, Delaware and Marrero, Louisiana closes at the end of first quarter. The 2019 cash contribution from these facilities was less than $20 million on a combined basis.
Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage above 1.2 times for the foreseeable future.
"Managing our business in a prudent manner for the long-term benefit of our investors remains our top priority," added Mears. "While our business has continued to perform very well and demand for our services remains strong, recent outperformance has been driven in part by favorable conditions for our crude oil business that we do not think are likely to persist. As a result, we are taking a conservative approach to projected future increases in our quarterly cash distributions."
Mears continued, "Balanced with our stated intent to opportunistically utilize additional tools, such as the recently-announced unit repurchase program and potential special distributions, we believe annual distribution growth of 3% for 2020 with targeted annual distribution coverage above 1.2 times for the foreseeable future provides a healthy mix of stability and growth to maximize value for Magellan's investors."
Net income per limited partner unit is estimated to be $4.30 for 2020, with first-quarter guidance of $1.08. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to expect the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with commodity-related activities contributing less than 15% of the partnership's operating margin.
Earnings call details
An analyst call with management to discuss fourth-quarter 2019 financial results and annual guidance for 2020 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 895-8003 and provide code 21938575. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Feb. 5. To access the replay, dial (800) 633-8284 and provide code 21938575. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, projected, plan, target, guidance, believe, estimate, expect, continue, commit, foreseeable, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 486,028 | $ | 497,001 | $ | 1,878,988 | $ | 1,970,630 | |||||||
Product sales revenue | 374,428 | 238,301 | 927,220 | 736,092 | |||||||||||
Affiliate management fee revenue | 5,227 | 5,380 | 20,365 | 21,190 | |||||||||||
Total revenue | 865,683 | 740,682 | 2,826,573 | 2,727,912 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 174,180 | 149,740 | 649,436 | 634,081 | |||||||||||
Cost of product sales | 230,532 | 188,552 | 704,313 | 619,279 | |||||||||||
Depreciation, amortization and impairment | 103,351 | 65,106 | 265,077 | 246,134 | |||||||||||
General and administrative | 47,048 | 47,116 | 194,283 | 196,650 | |||||||||||
Total costs and expenses | 555,111 | 450,514 | 1,813,109 | 1,696,144 | |||||||||||
Other operating income (expense) | — | 1,437 | — | 2,975 | |||||||||||
Earnings of non-controlled entities | 50,274 | 46,732 | 181,117 | 168,961 | |||||||||||
Operating profit | 360,846 | 338,337 | 1,194,581 | 1,203,704 | |||||||||||
Interest expense | 52,444 | 55,801 | 220,979 | 221,123 | |||||||||||
Interest capitalized | (4,101) | (4,865) | (17,455) | (19,284) | |||||||||||
Interest income | (1,550) | (639) | (3,010) | (3,285) | |||||||||||
Gain on disposition of assets | — | — | (353,797) | (28,966) | |||||||||||
Other (income) expense | 3,569 | 2,608 | 13,868 | 11,830 | |||||||||||
Income before provision for income taxes | 310,484 | 285,432 | 1,333,996 | 1,022,286 | |||||||||||
Provision for income taxes | (3,588) | (1,013) | 71 | 1,437 | |||||||||||
Net income | $ | 314,072 | $ | 286,445 | $ | 1,333,925 | $ | 1,020,849 | |||||||
Basic net income per limited partner unit | $ | 1.38 | $ | 1.25 | $ | 5.84 | $ | 4.46 | |||||||
Diluted net income per limited partner unit | $ | 1.37 | $ | 1.25 | $ | 5.84 | $ | 4.46 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,403 | 228,705 | 228,377 | 228,658 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 229,052 | 229,358 | 228,573 | 228,842 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.652 | $ | 1.664 | $ | 1.556 | $ | 1.616 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 67.9 | 73.1 | 286.9 | 280.5 | |||||||||||
Distillates | 49.0 | 45.8 | 181.7 | 184.6 | |||||||||||
Aviation fuel | 9.7 | 11.3 | 31.0 | 41.1 | |||||||||||
Liquefied petroleum gases | 0.6 | 0.8 | 11.0 | 9.7 | |||||||||||
Total volume shipped | 127.2 | 131.0 | 510.6 | 515.9 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped(1) | $ | 0.945 | $ | 0.898 | $ | 1.208 | $ | 0.939 | |||||||
Volume shipped (million barrels)(1) | 74.4 | 78.1 | 242.8 | 317.2 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 17.6 | 20.8 | 16.5 | 20.6 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 38.2 | 39.0 | 138.2 | 156.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 8.9 | 16.7 | 27.4 | 56.1 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 23.2 | 22.9 | 22.7 | 23.6 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 300,488 | $ | 303,264 | $ | 1,151,980 | $ | 1,186,966 | |||||||
Affiliate management fee revenue | 512 | 433 | 1,512 | 1,747 | |||||||||||
Other operating income (expense) | — | 157 | — | 2,555 | |||||||||||
Earnings of non-controlled entities | 10,425 | 6,415 | 16,039 | 4,140 | |||||||||||
Less: Operating expenses | 105,181 | 94,521 | 424,851 | 411,849 | |||||||||||
Transportation and terminals margin | 206,244 | 215,748 | 744,680 | 783,559 | |||||||||||
Product sales revenue | 358,510 | 226,644 | 872,144 | 699,766 | |||||||||||
Less: Cost of product sales | 215,439 | 177,457 | 650,071 | 582,271 | |||||||||||
Product margin | 143,071 | 49,187 | 222,073 | 117,495 | |||||||||||
Operating margin | $ | 349,315 | $ | 264,935 | $ | 966,753 | $ | 901,054 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 140,520 | $ | 147,942 | $ | 549,849 | $ | 602,045 | |||||||
Affiliate management fee revenue | 3,504 | 3,747 | 14,832 | 14,471 | |||||||||||
Other operating income (expense) | — | 899 | — | (7,213) | |||||||||||
Earnings of non-controlled entities | 39,354 | 38,807 | 162,233 | 160,891 | |||||||||||
Less: Operating expenses | 56,250 | 40,667 | 166,213 | 164,236 | |||||||||||
Transportation and terminals margin | 127,128 | 150,728 | 560,701 | 605,958 | |||||||||||
Product sales revenue | 14,380 | 8,929 | 46,767 | 28,280 | |||||||||||
Less: Cost of product sales | 11,727 | 8,336 | 44,128 | 28,051 | |||||||||||
Product margin | 2,653 | 593 | 2,639 | 229 | |||||||||||
Operating margin | $ | 129,781 | $ | 151,321 | $ | 563,340 | $ | 606,187 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 45,958 | $ | 47,377 | $ | 180,850 | $ | 187,036 | |||||||
Affiliate management fee revenue | 1,211 | 1,200 | 4,021 | 4,972 | |||||||||||
Other operating income (expense) | — | 381 | — | 7,633 | |||||||||||
Earnings of non-controlled entities | 495 | 1,510 | 2,845 | 3,930 | |||||||||||
Less: Operating expenses | 15,175 | 17,515 | 68,010 | 68,919 | |||||||||||
Transportation and terminals margin | 32,489 | 32,953 | 119,706 | 134,652 | |||||||||||
Product sales revenue | 1,538 | 2,728 | 8,309 | 8,046 | |||||||||||
Less: Cost of product sales | 3,366 | 2,759 | 10,114 | 8,957 | |||||||||||
Product margin | (1,828) | (31) | (1,805) | (911) | |||||||||||
Operating margin | $ | 30,661 | $ | 32,922 | $ | 117,901 | $ | 133,741 | |||||||
Segment operating margin | $ | 509,757 | $ | 449,178 | $ | 1,647,994 | $ | 1,640,982 | |||||||
Add: Allocated corporate depreciation costs | 1,488 | 1,381 | 5,947 | 5,506 | |||||||||||
Total operating margin | 511,245 | 450,559 | 1,653,941 | 1,646,488 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 103,351 | 65,106 | 265,077 | 246,134 | |||||||||||
General and administrative expense | 47,048 | 47,116 | 194,283 | 196,650 | |||||||||||
Total operating profit | $ | 360,846 | $ | 338,337 | $ | 1,194,581 | $ | 1,203,704 |
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||
Three Months Ended | |||||||||||
December 31, 2019 | |||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||
As reported | $ | 286,445 | $ | 1.25 | $ | 1.25 | |||||
Unrealized derivative (gains) losses associated with future transactions(1) | 15,713 | ||||||||||
Inventory valuation adjustments associated with future transactions | (1,335) | ||||||||||
Excluding commodity-related adjustments(2) | $ | 300,823 | $ | 1.32 | $ | 1.31 | |||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,705 | ||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 229,358 |
(1) | Includes the partnership's net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December, 31, | December 31, | 2020 | |||||||||||||||||
2018 | 2019 | 2018 | 2019 | Guidance | |||||||||||||||
Net income | $ | 314,072 | $ | 286,445 | $ | 1,333,925 | $ | 1,020,849 | $ | 985,000 | |||||||||
Interest expense, net | 46,793 | 50,297 | 200,514 | 198,554 | 208,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 104,540 | 63,979 | 272,522 | 240,874 | 250,000 | ||||||||||||||
Equity-based incentive compensation(2) | 7,441 | 1,434 | 22,768 | 14,247 | 7,000 | ||||||||||||||
Gain on disposition of assets(3) | — | — | (351,215) | (16,280) | — | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | (81,930) | 16,022 | (71,548) | 29,690 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (24,315) | (1) | (39,646) | 71,214 | |||||||||||||||
Inventory valuation adjustments(5) | 9,011 | (3,054) | 9,207 | (12,681) | |||||||||||||||
Total commodity-related adjustments | (97,234) | 12,967 | (101,987) | 88,223 | 5,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (1,523) | 18,719 | 15,584 | 34,641 | 45,000 | ||||||||||||||
Other(6) | — | — | 3,644 | — | — | ||||||||||||||
Adjusted EBITDA | 374,089 | 433,841 | 1,395,755 | 1,581,108 | 1,500,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (46,019) | (49,442) | (197,274) | (186,942) | (205,000) | ||||||||||||||
Maintenance capital(8) | (25,633) | (26,566) | (88,736) | (96,702) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 302,437 | $ | 357,833 | $ | 1,109,745 | $ | 1,297,464 | $ | 1,200,000 |
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 amounts above are net of gains on the disposition of residual assets from expansion projects, which are considered ongoing in nature, and as such are included in DCF. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 21, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.0275 per unit for the period Oct. 1 through Dec. 31, 2019, representing the 71st distribution increase since its initial public offering in 2001.
The fourth-quarter 2019 distribution is 3% higher than the fourth-quarter 2018 distribution of 99.75 cents per unit and represents an approximate 1% increase over the third-quarter 2019 distribution of $1.02. For the year, Magellan declared distributions of $4.065 per unit for 2019, or 5% higher than distributions of $3.87 per unit for 2018.
The new distribution, which equates to $4.11 per unit on an annualized basis, will be paid Feb. 14 to unitholders of record at the close of business on Feb. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, the information in this news release constitutes forward-looking statements as defined by federal law. Although management believes the statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Important factors that could lead to material changes in performance include the risk and uncertainties described in the partnership's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended Dec. 31, 2018 and subsequent reports. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." This news release speaks only as of the date issued, and the partnership undertakes no obligation to update any forward-looking statements because of new information, future events or any other factors.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 21, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an agreement to sell three marine terminals to Buckeye Partners, L.P. for $250 million. The terminals are located in New Haven, Connecticut, Wilmington, Delaware and Marrero, Louisiana.
"Magellan remains focused on capital discipline and managing our business for the long term," said Michael Mears, chief executive officer. "Optimization of our asset portfolio, including divestiture of facilities outside our strategic footprint, is an important element to maximize unitholder value and our strong financial position."
Mears continued, "I would also like to personally and on behalf of the organization express our gratitude for the contributions from all employees supporting these facilities through the years and during this time of transition."
The sale is expected to close by late first quarter or early second quarter 2020, subject to regulatory approvals.
The partnership intends to provide 2020 financial guidance as part of its fourth-quarter 2019 earnings release on Jan. 30 but does not expect the terminals sale to have a material impact on its future financial results.
Jefferies served as financial advisor and GableGotwals served as legal counsel to Magellan in connection with the transaction.
Unit repurchase program
The partnership also announced that its board of directors has authorized the repurchase of up to $750 million of common units through 2022. Magellan intends to purchase its common units from time-to-time through a variety of methods, including open market purchases and negotiated transactions, all in compliance with the rules of the Securities and Exchange Commission and other applicable legal requirements.
"Magellan remains committed to our long-standing disciplined approach to financing our business and pursuing attractive projects," confirmed Mears. "In addition, we intend to opportunistically utilize additional tools, including the unit repurchase program announced today as well as potential special distributions, to accomplish our core goal of maximizing value for our investors."
The timing, price and actual number of common units repurchased will depend on a number of factors including the partnership's expected expansion capital spending needs, alternative investment opportunities, excess cash available, legal and regulatory requirements, market conditions and the trading price of its common units. The repurchase program does not obligate the partnership to acquire any particular amount of common units, and the repurchase program may be suspended or discontinued at any time at the partnership's discretion.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations, financial condition and transactions described in this news release are: its ability to obtain all required regulatory approvals; its ability to complete the contemplated divestiture; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its existing or planned facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; the occurrence of operational hazards or unforeseen interruptions; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; its capital needs, cash flows and availability of cash to fund unit repurchases or special distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Investors: | Media: |
Paula Farrell | Bruce Heine | |
(918) 574-7650 | (918) 574-7010 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for fourth quarter 2019 before the market opens on Thurs., Jan. 30. Management will discuss fourth-quarter 2019 earnings, annual guidance for 2020 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 895-8003 and provide code 21938575. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Jan. 30 through midnight on Feb. 5. To access the replay, dial (800) 633-8284 and provide code 21938575. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 20, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an extension of the supplemental open season to solicit additional commitments for transportation volume on the western leg of its refined petroleum products pipeline system in Texas. Binding commitments are now due by 5:00 p.m. Central Time on Jan. 3, 2020. The extension provides interested shippers additional time to make commitments.
Magellan is in the process of expanding the capacity of its west Texas refined products pipeline system to approximately 175,000 barrels per day (bpd) from its current capacity of 100,000 bpd. In addition, the partnership is currently building a new refined products terminal in Midland, Texas.
Based on the timing of current construction activities, Magellan expects both the west Texas refined products pipeline expansion and new Midland terminal to be operational in mid-2020.
Magellan's west Texas pipeline system primarily transports gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas as well as New Mexico. The pipeline system also can access markets in Arizona and Mexico via connections to third-party pipelines.
Subject to the results of the supplemental open season, Magellan is considering the addition of another 25,000 bpd of capacity on the west Texas pipeline, for a total capacity up to 200,000 bpd, which could be operational by the end of 2021.
For customer inquiries about the open season, please contact Trey Barrow at (918) 574-7480 or trey.barrow@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of operational hazards or unforeseen interruptions; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Investors: | Media: | |
Paula Farrell | Bruce Heine | ||
(918) 574-7650 | (918) 574-7010 | ||
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 5, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to present at the Wells Fargo Midstream Symposium at 3:25 p.m. Eastern on Wed., Dec. 11 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
DALLAS, Nov. 26, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce an upcoming interim change to constituents of The Cushing® MLP High Income Index (the "Index"). On September 15, 2019, Index constituents SemGroup Corporation (NYSE: SEMG) and Energy Transfer LP (NYSE: ET) entered into an Agreement and Plan of Merger ("Merger Agreement") that would result in SEMG common shares ceasing to be publicly traded, subject to the approval of the holders of at least a majority of the SEMG common and preferred shares. A special meeting of SEMG stockholders will be held on December 4, 2019, for the purpose of voting on the Merger Agreement. Per the Index's methodology guide, this event will result in a constituent replacement. Accordingly, after the market closes on December 4, 2019, and effective on December 5, 2019, Magellan Midstream Partners, L.P. (NYSE: MMP) will replace SEMG as a constituent of the Index at SEMG's then-current weight.
There will be no changes to the remaining constituents of the Index due to this event.
ABOUT THE CUSHING® MLP HIGH INCOME INDEX
The Cushing® MLP High Income Index provides a benchmark that is designed to track the performance of 30 higher-yielding publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" and collectively, "Midstream Companies"). Constituents are chosen according to a three-tiered proprietary weighting system developed by Cushing® Asset Management, LP. The Cushing® MLP High Income Index is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPY".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts, providing active management in markets where inefficiencies exist.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® MLP High Income Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing® Asset Management, LP, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to maintain and calculate the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Swank Capital, LLC, and Cushing® Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones S&P nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-MLPY
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SOURCE Cushing® Asset Management, LP; Swank Capital, LLC
TULSA, Okla., Nov. 11, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today a supplemental open season to solicit additional commitments for transportation volume on the western leg of its refined petroleum products pipeline system in Texas. Binding commitments are due from interested customers by 5:00 p.m. Central Time on Dec. 20, 2019.
Magellan is in the process of expanding the capacity of its west Texas refined products pipeline system to approximately 175,000 barrels per day (bpd) from its current capacity of 100,000 bpd. In addition, the partnership is currently building a new refined products terminal in Midland, Texas.
Based on the timing of current construction activities, Magellan expects both the west Texas refined products pipeline expansion and new Midland terminal to be operational in mid-2020.
Magellan's west Texas pipeline system primarily transports gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas as well as New Mexico. The pipeline system also can access markets in Arizona and Mexico via connections to third-party pipelines.
Subject to the results of the supplemental open season launched today, Magellan is considering the addition of another 25,000 bpd of capacity on the west Texas pipeline, for a total capacity up to 200,000 bpd, which could be operational by the end of 2021.
For customer inquiries about the open season, please contact Trey Barrow at (918) 574-7480 or trey.barrow@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of operational hazards or unforeseen interruptions; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Investors: | Media: |
Paula Farrell | Bruce Heine | |
(918) 574-7650 | (918) 574-7010 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 31, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $273.0 million for third quarter 2019 compared to $594.5 million for third quarter 2018, or $240.7 million excluding the $353.8 million gain related to the sale of a portion of the partnership's ownership interest in BridgeTex Pipeline Company, LLC in the year-ago period.
Diluted net income per limited partner unit was $1.19 in third quarter 2019 and $2.60 in third quarter 2018, or $1.05 excluding the $1.55 favorable impact of the BridgeTex gain. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, was also $1.19 for third quarter 2019 and higher than the $1.03 guidance provided by management in early August primarily due to more favorable product overages, the timing of operating expenses and demand for the partnership's crude oil services.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $306.8 million for third quarter 2019 compared to $281.8 million for third quarter 2018.
"Magellan continued its positive trend in 2019, generating stronger financial results than expected during the third quarter and keeping us on track for another record year," said Michael Mears, chief executive officer. "Further, we are pleased with the significant progress of our large-scale construction projects, including commercial start-up of our new East Houston-to-Hearne refined products pipeline during mid-September. Magellan remains focused on delivering stable, fee-based transportation and terminals services and ensuring capital discipline for future investments to support Magellan's long-term success."
An analysis by segment comparing third quarter 2019 to third quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $240.1 million, an increase of $25.4 million. Transportation and terminals revenue increased $10.4 million due to 4% higher transportation volumes, representing record refined products shipments, and a slightly higher average transportation rate. Volumes increased due to continued solid demand for refined products coupled with incremental shipments associated with a recent connection near El Paso, Texas and the newly-constructed East Houston-to-Hearne pipeline segment. The average rate per barrel in the current period benefited from the 2019 mid-year tariff adjustment of 4.3%, partially offset by more short-haul movements that ship at a lower rate.
Operating expenses decreased slightly due to lower spending for asset integrity as a result of maintenance work timing, partially offset by higher property taxes in part due to a favorable adjustment in the 2018 period.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $13.4 million between periods primarily due to higher gains on futures contracts used to economically hedge the partnership's commodity-related activities. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods mainly due to lower costs for its butane blending activities.
Crude oil. Crude oil operating margin was $154.4 million, a slight increase of $0.5 million. Transportation and terminals revenue increased $5.8 million primarily due to fees earned from recently-constructed storage tanks at Cushing, Oklahoma and Corpus Christi, Texas as well as storage capacity Magellan leases at the export facility owned by its Seabrook Logistics, LLC joint venture. Higher transportation volumes on the partnership's Houston distribution system primarily due to the increased activity at Seabrook were more than offset by reduced transportation revenue on the Longhorn pipeline as a result of lower average rates following long-term contract renewals in late 2018. Overall, the average crude oil rate per barrel decreased between periods due to significantly more volumes on the Houston distribution system, which move at a lower rate, and the lower average Longhorn tariff.
Operating expenses decreased $2.7 million primarily due to lower environmental accruals and more favorable product overages (which reduce operating expenses), partially offset by additional fees paid to Seabrook for storage and dock services that Magellan utilized to provide services to its customers. Other operating expense was $3.6 million in 2019 primarily resulting from MTM adjustments associated with a new basis derivative agreement with a joint venture co-owner's affiliate that committed intrastate transportation volume to the joint venture pipeline.
Earnings of non-controlled entities decreased $3.4 million between periods. Following Magellan's sale of a 20% interest in BridgeTex during Sept. 2018, contributions from BridgeTex were lower in the current period, partially offset by higher earnings from Saddlehorn Pipeline Company, LLC due to new commitments received in connection with the recently-announced expansion of the Saddlehorn pipeline as well as additional volume from recent incentive tariff arrangements.
Marine storage. Marine storage operating margin was $32.4 million, an increase of $3.4 million. Transportation and terminals revenue increased due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the current period, and additional fees from new dock capacity at the partnership's Galena Park, Texas facility. Operating expenses increased slightly due to additional asset integrity spending and higher property taxes, and other operating income included the remaining insurance proceeds related to Hurricane Harvey that were recognized in the third quarter of 2019.
Other items. G&A expense increased primarily due to higher compensation costs resulting from an increase in employee headcount to support Magellan's growth. Gain on disposition of assets was lower due to the 2018 benefit from the $353.8 million gain on the sale of a 20% interest in BridgeTex.
Net interest expense decreased due to lower average outstanding borrowings and a slightly lower average interest rate due to recent debt refinancings. As of Sept. 30, 2019, the partnership had $4.8 billion of debt outstanding and $135 million of cash on hand with no borrowings outstanding on its commercial paper program.
Expansion capital projects
Magellan continues to make progress on its significant construction projects, with commercial operations commencing for the partnership's East Houston-to-Hearne refined products pipeline in Texas during mid-September.
The second phase of the partnership's Pasadena, Texas joint venture marine terminal is in the final stages of completion and testing, with an additional 4 million barrels of storage and supporting dock and pipeline infrastructure expected to be in-service during December.
Storage and export capabilities at Seabrook are progressing as well and expected to be operational in early 2020, with another 750,000 barrels of storage now approved for construction and expected to be operational in early 2021. Construction continues for Magellan's west Texas refined products pipeline expansion and new Midland terminal with both projects expected to begin operations in mid-2020.
Based on the progress of expansion projects underway, the partnership expects to spend approximately $1.0 billion in 2019 and $400 million in 2020 to complete its current slate of construction projects. As previously announced, these spending estimates now include Magellan's estimated share to expand the Saddlehorn pipeline by 100,000 barrels per day to be operational by late 2020. In addition, these estimates include a number of new projects supported by customer commitments and expected to generate returns meeting or exceeding the partnership's targeted return multiple of 6 to 8 times EBITDA, including pipeline enhancements to transport incremental refined products in West Texas and additional crude oil storage in the Permian Basin.
Magellan remains focused on identifying additional opportunities for future growth, with well in excess of $500 million of potential organic growth projects still under review for future investment. Capital discipline remains a priority for Magellan's management.
Financial guidance for 2019
As a result of continued strong financial performance so far this year, management is increasing its annual DCF guidance by $40 million to $1.26 billion for 2019, or 1.35 times the amount needed to pay projected cash distributions for 2019. As previously indicated and as evidenced by the current pricing environment, guidance continues to assume the pricing differential between the Permian Basin and Houston will not be sufficient to encourage spot shipments on the Longhorn and BridgeTex pipelines during the fourth quarter. However, guidance does assume that shipments above committed levels will move on these systems due to recently-implemented incentive tariff rates and as needed, Magellan's own crude oil marketing activities to facilitate intrastate shipments within the state of Texas.
Including actual results so far this year, net income per limited partner unit is now estimated to be $4.34 for 2019, which results in fourth-quarter guidance of $1.13. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management remains committed to its stated goal of increasing annual cash distributions by 5% for 2019 and targeting distribution coverage of at least 1.2 times for the foreseeable future. Consistent with its historical approach, management plans to provide guidance specific to 2020 early next year in conjunction with reporting year-end 2019 financial results.
Earnings call details
An analyst call with management to discuss third-quarter financial results and outlook for the remainder of 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 909-4795 and provide code 21930394. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Nov. 6. To access the replay, dial (800) 633-8284 and provide code 21930394. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: trend, potential, possible, projected, outlook, plan, goal, target, guidance, believe, estimate, expect, continue, commit, foreseeable, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 488,775 | $ | 506,432 | $ | 1,392,960 | $ | 1,473,629 | |||||||
Product sales revenue | 144,403 | 144,807 | 552,792 | 497,791 | |||||||||||
Affiliate management fee revenue | 4,842 | 5,357 | 15,138 | 15,810 | |||||||||||
Total revenue | 638,020 | 656,596 | 1,960,890 | 1,987,230 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 172,115 | 169,387 | 475,256 | 484,341 | |||||||||||
Cost of product sales | 120,510 | 108,757 | 473,781 | 430,727 | |||||||||||
Depreciation, amortization and impairment | 56,228 | 56,627 | 161,726 | 181,028 | |||||||||||
General and administrative | 47,389 | 51,156 | 147,235 | 149,534 | |||||||||||
Total costs and expenses | 396,242 | 385,927 | 1,257,998 | 1,245,630 | |||||||||||
Other operating income (expense) | — | (379) | — | 1,538 | |||||||||||
Earnings of non-controlled entities | 53,795 | 50,189 | 130,843 | 122,229 | |||||||||||
Operating profit | 295,573 | 320,479 | 833,735 | 865,367 | |||||||||||
Interest expense | 55,133 | 53,750 | 168,535 | 165,322 | |||||||||||
Interest capitalized | (3,099) | (5,831) | (13,354) | (14,419) | |||||||||||
Interest income | (501) | (648) | (1,460) | (2,646) | |||||||||||
Gain on disposition of assets | (353,797) | (2,532) | (353,797) | (28,966) | |||||||||||
Other (income) expense | 1,694 | 2,602 | 10,299 | 9,222 | |||||||||||
Income before provision for income taxes | 596,143 | 273,138 | 1,023,512 | 736,854 | |||||||||||
Provision for income taxes | 1,609 | 100 | 3,659 | 2,450 | |||||||||||
Net income | $ | 594,534 | $ | 273,038 | $ | 1,019,853 | $ | 734,404 | |||||||
Basic net income per limited partner unit | $ | 2.60 | $ | 1.19 | $ | 4.47 | $ | 3.21 | |||||||
Diluted net income per limited partner unit | $ | 2.60 | $ | 1.19 | $ | 4.46 | $ | 3.21 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,397 | 228,720 | 228,368 | 228,642 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,449 | 228,754 | 228,412 | 228,667 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.600 | $ | 1.618 | $ | 1.524 | $ | 1.600 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 73.4 | 74.5 | 219.0 | 207.4 | |||||||||||
Distillates | 45.6 | 47.0 | 132.7 | 138.8 | |||||||||||
Aviation fuel | 8.1 | 11.1 | 21.3 | 29.8 | |||||||||||
Liquefied petroleum gases | 4.4 | 3.8 | 10.4 | 8.9 | |||||||||||
Total volume shipped | 131.5 | 136.4 | 383.4 | 384.9 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.266 | $ | 0.935 | $ | 1.325 | $ | 0.952 | |||||||
Volume shipped (million barrels) | 62.8 | 79.2 | 168.4 | 239.1 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 16.0 | 20.5 | 16.1 | 20.3 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(1) | 36.5 | 40.8 | 100.0 | 117.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(2) | 6.7 | 17.0 | 18.5 | 39.4 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 22.6 | 23.6 | 22.6 | 23.8 | |||||||||||
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 300,034 | $ | 310,482 | $ | 851,492 | $ | 883,702 | |||||||
Affiliate management fee revenue | 351 | 432 | 1,000 | 1,314 | |||||||||||
Other operating income (expense) | — | 1,046 | — | 2,398 | |||||||||||
Earnings (losses) of non-controlled entities | 3,393 | 3,373 | 5,614 | (2,275) | |||||||||||
Less: Operating expenses | 112,279 | 111,839 | 319,670 | 317,328 | |||||||||||
Transportation and terminals margin | 191,499 | 203,494 | 538,436 | 567,811 | |||||||||||
Product sales revenue | 129,926 | 134,755 | 513,634 | 473,122 | |||||||||||
Less: Cost of product sales | 106,756 | 98,144 | 434,632 | 404,814 | |||||||||||
Product margin | 23,170 | 36,611 | 79,002 | 68,308 | |||||||||||
Operating margin | $ | 214,669 | $ | 240,105 | $ | 617,438 | $ | 636,119 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 145,118 | $ | 150,926 | $ | 409,329 | $ | 454,103 | |||||||
Affiliate management fee revenue | 3,463 | 3,592 | 11,328 | 10,724 | |||||||||||
Other operating income (expense) | — | (3,629) | — | (8,112) | |||||||||||
Earnings of non-controlled entities | 49,420 | 46,047 | 122,879 | 122,084 | |||||||||||
Less: Operating expenses | 45,195 | 42,529 | 109,963 | 123,569 | |||||||||||
Transportation and terminals margin | 152,806 | 154,407 | 433,573 | 455,230 | |||||||||||
Product sales revenue | 12,666 | 8,343 | 32,387 | 19,351 | |||||||||||
Less: Cost of product sales | 11,590 | 8,341 | 32,401 | 19,715 | |||||||||||
Product margin | 1,076 | 2 | (14) | (364) | |||||||||||
Operating margin | $ | 153,882 | $ | 154,409 | $ | 433,559 | $ | 454,866 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 44,546 | $ | 46,580 | $ | 134,892 | $ | 139,659 | |||||||
Affiliate management fee revenue | 1,028 | 1,333 | 2,810 | 3,772 | |||||||||||
Other operating income (expense) | — | 2,204 | — | 7,252 | |||||||||||
Earnings of non-controlled entities | 982 | 769 | 2,350 | 2,420 | |||||||||||
Less: Operating expenses | 17,178 | 17,921 | 52,835 | 51,404 | |||||||||||
Transportation and terminals margin | 29,378 | 32,965 | 87,217 | 101,699 | |||||||||||
Product sales revenue | 1,811 | 1,709 | 6,771 | 5,318 | |||||||||||
Less: Cost of product sales | 2,164 | 2,272 | 6,748 | 6,198 | |||||||||||
Product margin | (353) | (563) | 23 | (880) | |||||||||||
Operating margin | $ | 29,025 | $ | 32,402 | $ | 87,240 | $ | 100,819 | |||||||
Segment operating margin | $ | 397,576 | $ | 426,916 | $ | 1,138,237 | $ | 1,191,804 | |||||||
Add: Allocated corporate depreciation costs | 1,614 | 1,346 | 4,459 | 4,125 | |||||||||||
Total operating margin | 399,190 | 428,262 | 1,142,696 | 1,195,929 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 56,228 | 56,627 | 161,726 | 181,028 | |||||||||||
General and administrative expense | 47,389 | 51,156 | 147,235 | 149,534 | |||||||||||
Total operating profit | $ | 295,573 | $ | 320,479 | $ | 833,735 | $ | 865,367 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
September 30, 2019 | |||||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||||
As reported | $ | 273,038 | $ | 1.19 | $ | 1.19 | |||||||
Unrealized derivative (gains) losses associated with future transactions(1) | (2,333) | ||||||||||||
Inventory valuation adjustments associated with future transactions | 1,310 | ||||||||||||
Excluding commodity-related adjustments(2) | $ | 272,015 | $ | 1.19 | $ | 1.19 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,720 | ||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,754 | ||||||||||||
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | 2019 | |||||||||||||||||
2018 | 2019 | 2018 | 2019 | Guidance | |||||||||||||||
Net income | $ | 594,534 | $ | 273,038 | $ | 1,019,853 | $ | 734,404 | $ | 992,000 | |||||||||
Interest expense, net | 51,533 | 47,271 | 153,721 | 148,257 | 200,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 57,898 | 57,972 | 167,982 | 176,895 | 238,000 | ||||||||||||||
Equity-based incentive compensation(2) | 7,933 | 6,773 | 15,327 | 12,813 | 19,000 | ||||||||||||||
Gain on disposition of assets(3) | (351,215) | — | (351,215) | (16,280) | (16,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 13,017 | (1,720) | 33,945 | 13,669 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (14,993) | (5,454) | (38,894) | 71,214 | |||||||||||||||
Inventory valuation adjustments(5) | 456 | (181) | 196 | (9,627) | |||||||||||||||
Total commodity-related adjustments | (1,520) | (7,355) | (4,753) | 75,256 | 80,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (506) | 4,893 | 17,107 | 15,922 | 32,000 | ||||||||||||||
Other(6) | — | — | 3,644 | — | — | ||||||||||||||
Adjusted EBITDA | 358,657 | 382,592 | 1,021,666 | 1,147,267 | 1,545,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (50,741) | (46,441) | (151,255) | (137,500) | (190,000) | ||||||||||||||
Maintenance capital(8) | (26,143) | (29,313) | (63,103) | (70,136) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 281,773 | $ | 306,838 | $ | 807,308 | $ | 939,631 | $ | 1,260,000 | |||||||||
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The year-to-date amounts above have been reduced by $9.3 million and $9.8 million for 2018 and 2019, respectively, for cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 period includes a $12.7 million gain on the sale of residual assets related to the development of expansion projects which are considered ongoing in nature, and as such are included in DCF. The 2018 period includes the portion of the gain recognized from the sale of the partnership's interest in BridgeTex that is not related to its ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 24, 2019 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.02 per unit for the period July 1 through Sept. 30, 2019, representing the 70th distribution increase since its initial public offering in 2001.
The third-quarter 2019 distribution is 4% higher than the third-quarter 2018 distribution of 97.75 cents per unit and represents an approximate 1% increase over the second-quarter 2019 distribution of $1.0125.
The new distribution, which equates to $4.08 per unit on an annualized basis, will be paid Nov. 14 to unitholders of record at the close of business on Nov. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 3, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2019 before the market opens on Thurs., Oct. 31. Management will discuss third-quarter earnings, outlook for the remainder of 2019 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 909-4795 and provide code 21930394. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Oct. 31 through midnight on Nov. 6. To access the replay, dial (800) 633-8284 and provide code 21930394. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2019-financial-results-on-oct-31-300930601.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 29, 2019 /PRNewswire/ -- Saddlehorn Pipeline Company, LLC ("Saddlehorn") announced today a further expansion of the Saddlehorn pipeline. Following a successful open season during July and subsequent increased volume commitments from shippers, the pipeline's capacity will be increased by a total of 100,000 barrels per day ("bpd") to a new total capacity of approximately 290,000 bpd. The higher capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities.
The Saddlehorn pipeline, which is jointly owned by affiliates of Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") and Western Midstream Partners, LP (NYSE: WES) ("WES"), is currently capable of transporting 190,000 bpd of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. Magellan serves as operator of the Saddlehorn pipeline.
In conjunction with the increased volume commitments, Noble Midstream Partners LP (NYSE: NBLX) ("NBLX"), through its affiliate Black Diamond Gathering LLC, has an option to buy up to a 20% ownership interest in Saddlehorn, with Magellan and Plains each selling up to a 10% interest to NBLX if the option were exercised.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL") and natural gas. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About Western Midstream Partners, LP
Western Midstream Partners, LP (NYSE: WES) is a Delaware master limited partnership formed to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, NGLs and crude oil; and gathering and disposing of produced water for its customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts. More information is available at www.westernmidstream.com.
This press release includes certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. Important risks, uncertainties and other factors that could affect future results or outcomes are discussed in filings with the Securities and Exchange Commission by Magellan, Plains and WES. The companies undertake no obligation to update or revise any forward-looking statement to reflect new information or events occurring after today's date.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Plains: | Roy Lamoreaux, Investor Relations Brad Leone, Media Relations | (866) 809-1291 (866) 809-1290 | |
WES: | Jack Spinks, Investor Relations | (832) 636-6000 |
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SOURCE Magellan Midstream Partners, L.P.
DALLAS, Aug. 9, 2019 /PRNewswire/ -- Alerian reported, as of June 28, 2019, total products directly tied to and tracking the Alerian indices was $13.7 billion.
Exchange traded funds, exchange traded notes, return of capital notes, and variable insurance portfolios represent $12.7 billion of the total $13.7 billion. Below is a list of energy master limited partnership (MLP) positions, as of June 28, 2019, in the $12.7 billion of such assets tracking Alerian's indices.
Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | |
AM | 2,402,831 | 209,671 | HESM | 7,694,422 | 394,586 | |
AMID | 4,919,211 | 951,492 | MMLP | 5,598,671 | 784,128 | |
ANDX | 403,075,523 | 11,094,840 | MMP | 1,276,581,260 | 19,946,582 | |
BPL | 782,332,474 | 19,058,038 | MPLX | 1,273,711,451 | 39,568,545 | |
BPMP | 18,205,543 | 1,176,069 | NBLX | 89,522,800 | 2,691,606 | |
CEQP | 220,495,699 | 6,164,263 | NGL | 214,053,630 | 14,492,460 | |
CNXM | 14,513,491 | 1,032,989 | NS | 331,580,260 | 12,217,401 | |
CQP | 214,074,794 | 5,075,268 | OMP | 5,663,726 | 263,429 | |
DCP | 329,731,673 | 11,253,641 | PAA | 1,305,749,277 | 53,624,200 | |
DKL | 6,791,101 | 212,222 | PAGP | 7,638,294 | 305,899 | |
ENBL | 153,164,680 | 11,171,749 | PBFX | 16,284,545 | 770,319 | |
ENLC | 327,210,823 | 32,429,219 | PSXP | 342,743,828 | 6,945,164 | |
EPD | 1,277,755,891 | 44,258,950 | SHLX | 319,209,192 | 15,405,849 | |
EQM | 462,044,829 | 10,341,200 | SMLP | 7,589,588 | 1,020,106 | |
ET | 1,262,122,882 | 89,639,409 | TCP | 253,540,259 | 6,739,507 | |
GEL | 298,090,775 | 13,611,451 | TGE | 419,509,147 | 19,872,532 | |
GPP | 3,882,098 | 277,293 | USDP | 3,861,679 | 342,044 | |
HEP | 156,422,759 | 5,688,100 | WES | 773,416,245 | 25,135,400 |
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of June 28, 2019, nearly $14 billion of products, including exchange traded funds and notes, are directly tied to and tracking the Alerian Index Series. Visit alerian.com to learn more.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-june-30-2019-index-linked-product-positions-300899499.html
SOURCE Alerian
TULSA, Okla., Aug. 8, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 3.950% senior notes due 2050. The notes were priced at 99.910% of par to yield 3.955% to maturity. The partnership intends to use the net proceeds from this offering of approximately $494.4 million, after deducting underwriting discounts and estimated offering expenses, for general partnership purposes, including expansion capital projects.
The offering is expected to close on August 19, 2019 and is subject to the satisfaction of customary closing conditions. Barclays Capital Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC are joint book-running managers for the debt offering, with J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 1, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $253.7 million for second quarter 2019 compared to $214.4 million for second quarter 2018.
Diluted net income per limited partner unit was $1.11 in second quarter 2019 and 94 cents in second quarter 2018. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.20 for second quarter 2019 was higher than the $1.13 guidance provided by management in early May primarily due to incremental revenue from its Texas crude oil pipelines as well as the favorable benefit of an improved commodity pricing environment.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $314.8 million for second quarter 2019 compared to $266.6 million for second quarter 2018.
"Magellan continues to produce strong results, with each of our business segments generating higher operating margin than the year-ago period driven by increased average refined products pipeline tariff rates, favorable market conditions for our crude oil pipelines and the improved commodity pricing environment overall," said Michael Mears, chief executive officer. "Magellan's solid fundamentals and disciplined approach have proven to be an effective combination to produce consistent and stable results over time while managing our business for the long term."
An analysis by segment comparing second quarter 2019 to second quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $224.1 million, an increase of $32.7 million. Transportation and terminals revenue increased $15.2 million due to higher average transportation rates. The current period benefited from the 2018 mid-year tariff adjustment of 4.4% as well as longer haul shipments on the Mid-Continent pipelines, which move at a higher rate. Less short-haul movements on the South Texas pipelines resulted in approximately 1% overall lower shipments, with these supply-driven barrels causing the fluctuations in product mix transported as well. Excluding the South Texas portion of the system, refined products demand was relatively unchanged between periods, with gasoline demand 1% lower and distillate demand 1% higher than the second quarter of 2018.
Operating expenses increased slightly due to higher spending for asset integrity as a result of maintenance work timing and less favorable product overages (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $23.3 million between periods primarily due to higher sales prices and lower butane costs for the partnership's butane blending activities.
Earnings (losses) of non-controlled entities was unfavorable due to losses on open futures contracts in 2019 for Powder Springs Logistics, LLC.
Crude oil. Crude oil operating margin was $160.3 million, an increase of $8.3 million and a quarterly record for this segment. Transportation and terminals revenue increased $17.6 million due to fees earned from new storage and dock services in conjunction with capacity that Magellan leases from the Seabrook Logistics, LLC export facility and higher transportation volumes on the partnership's Houston distribution system primarily due to the increased activity at Seabrook. Overall, the average crude oil tariff decreased between periods due to significantly more volume on the Houston distribution system, which moves at a much lower rate, and lower average committed rates on the Longhorn pipeline that became effective in the fourth quarter of 2018.
Operating expenses increased $6.0 million due to fees paid to Seabrook for storage and dock services that Magellan utilized to provide services to its customers and higher maintenance costs for the condensate splitter during the current period. Other operating expense was $6.1 million in 2019 primarily resulting from MTM adjustments associated with a new basis derivative agreement with a joint venture co-owner's affiliate that committed intrastate transportation volume to the joint venture pipeline.
Earnings of non-controlled entities increased slightly between periods. The 2019 quarter benefited from higher results from Seabrook due to the initiation of export capabilities at the facility beginning in Aug. 2018 and more earnings from Saddlehorn Pipeline Company, LLC due to recent incentive tariff arrangements that attract incremental volume to Saddlehorn and increased volume from a contractual step-up in committed volumes in Sept. 2018. These favorable items were mostly offset by a lower contribution from BridgeTex Pipeline Company, LLC, which was owned 50% by Magellan through Sept. 2018 and 30% thereafter following Magellan's sale of a portion of its interest in BridgeTex.
Marine storage. Marine storage operating margin was $30.0 million, an increase of $1.7 million. Transportation and terminals revenue increased due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the second quarter of 2019. Operating expenses increased slightly due to higher property taxes.
Other items. Depreciation, amortization and impairment expense increased primarily due to recent expansion capital expenditures and asset impairments recognized in the current period. Gain on disposition of assets in 2019 was related to the sale of an inactive terminal along the partnership's refined products pipeline system. Other expense was unfavorable due to higher pension settlement costs in the second quarter of 2019.
Net interest expense decreased due to lower outstanding borrowings resulting from the early extinguishment of notes earlier this year that were due July 2019 and a slightly lower average interest rate. As of June 30, 2019, the partnership had $4.4 billion of debt outstanding, including $197 million outstanding on its commercial paper program, with $3 million of cash on hand.
Expansion capital projects
Magellan is nearing completion on a number of its significant construction projects to enhance its service offering and benefit its future growth.
The partnership's expanded dock capabilities at its Galena Park, Texas marine terminal are now operational, with 5 docks for a combined capacity of approximately 750,000 barrels per day (bpd) now available at this location. Construction activities are in the final stages of completion and testing for the partnership's East Houston-to-Hearne refined products pipeline in Texas. Magellan remains on-target to begin operations at the end of August for this new pipeline segment.
The second phase of the partnership's Pasadena, Texas joint venture marine terminal is nearing completion as well, with an additional 4 million barrels of storage and supporting dock and pipeline infrastructure still expected to be in-service by the end of 2019.
Additional storage and export capabilities at Seabrook are progressing and expected to be operational in early 2020, and construction is now underway for Magellan's west Texas refined products pipeline expansion and new Midland terminal that are expected to begin service in mid-2020.
Based on the progress of expansion projects underway, the partnership expects to spend approximately $1.1 billion in 2019 and $150 million in 2020 to complete its current slate of construction projects. These spending estimates include Magellan's estimated share to expand the Saddlehorn pipeline by an additional 60,000 bpd to be operational by late 2020. The Saddlehorn pipeline could be further expanded up to a total 100,000 bpd of new capacity if warranted by optional increased volume commitments by shippers that may be exercised in the near future.
Magellan remains focused on identifying additional investment opportunities for future growth, with well in excess of $500 million of potential organic growth projects under consideration, and also continues to evaluate acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. These potential projects include expansion opportunities in each of Magellan's business segments, including the proposed Voyager crude oil pipeline for which an open season continues through the end of August.
Financial guidance for 2019
As a result of strong financial performance so far this year and a more favorable overall commodity margin and differential environment, management is increasing its annual DCF guidance by $40 million to $1.22 billion for 2019, or approximately 1.3 times the amount needed to pay projected cash distributions for 2019. Guidance now assumes that the current favorable pricing differential between the Permian Basin and Houston will continue during the third quarter, resulting in spot shipments on the Longhorn and BridgeTex pipelines through Sept. 30.
Management remains committed to its stated goal of increasing annual cash distributions by 5% for 2019 and targeting distribution coverage of at least 1.2 times for the foreseeable future.
Including actual results so far this year, net income per limited partner unit is now estimated to be $4.20 for 2019, with third-quarter guidance of $1.03. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss second-quarter financial results and outlook for the remainder of 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 745-9830 and provide code 21925916. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Aug. 7. To access the replay, dial (800) 633-8284 and provide code 21925916. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: projected, outlook, plan, goal, target, guidance, believe, estimate, expect, continue, maintain, commit, foreseeable, future, may, intend, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 472,248 | $ | 506,405 | $ | 904,185 | $ | 967,197 | |||||||
Product sales revenue | 166,797 | 189,989 | 408,389 | 352,984 | |||||||||||
Affiliate management fee revenue | 5,046 | 5,305 | 10,296 | 10,453 | |||||||||||
Total revenue | 644,091 | 701,699 | 1,322,870 | 1,330,634 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 159,845 | 168,929 | 303,141 | 314,954 | |||||||||||
Cost of product sales | 153,679 | 152,876 | 353,271 | 321,970 | |||||||||||
Depreciation, amortization and impairment | 53,619 | 62,530 | 105,498 | 124,401 | |||||||||||
General and administrative | 53,290 | 52,383 | 99,846 | 98,378 | |||||||||||
Total costs and expenses | 420,433 | 436,718 | 861,756 | 859,703 | |||||||||||
Other operating income (expense) | — | (5,024) | — | 1,917 | |||||||||||
Earnings of non-controlled entities | 42,510 | 40,785 | 77,048 | 72,040 | |||||||||||
Operating profit | 266,168 | 300,742 | 538,162 | 544,888 | |||||||||||
Interest expense | 56,750 | 51,406 | 113,402 | 111,572 | |||||||||||
Interest capitalized | (5,608) | (5,134) | (10,255) | (8,588) | |||||||||||
Interest income | (380) | (338) | (959) | (1,998) | |||||||||||
Gain on disposition of assets | — | (4,646) | — | (26,434) | |||||||||||
Other (income) expense | (119) | 4,570 | 8,605 | 6,620 | |||||||||||
Income before provision for income taxes | 215,525 | 254,884 | 427,369 | 463,716 | |||||||||||
Provision for income taxes | 1,116 | 1,181 | 2,050 | 2,350 | |||||||||||
Net income | $ | 214,409 | $ | 253,703 | $ | 425,319 | $ | 461,366 | |||||||
Basic net income per limited partner unit | $ | 0.94 | $ | 1.11 | $ | 1.86 | $ | 2.02 | |||||||
Diluted net income per limited partner unit | $ | 0.94 | $ | 1.11 | $ | 1.86 | $ | 2.02 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,387 | 228,647 | 228,354 | 228,603 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,425 | 228,688 | 228,393 | 228,623 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.503 | $ | 1.606 | $ | 1.485 | $ | 1.590 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 78.0 | 70.8 | 145.6 | 132.9 | |||||||||||
Distillates | 44.1 | 47.2 | 87.1 | 91.8 | |||||||||||
Aviation fuel | 6.9 | 9.9 | 13.2 | 18.7 | |||||||||||
Liquefied petroleum gases | 4.9 | 4.5 | 6.0 | 5.1 | |||||||||||
Total volume shipped | 133.9 | 132.4 | 251.9 | 248.5 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.492 | $ | 0.977 | $ | 1.360 | $ | 0.961 | |||||||
Volume shipped (million barrels) | 49.9 | 80.5 | 105.6 | 159.9 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 16.6 | 20.5 | 16.1 | 20.2 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(1) | 35.2 | 38.8 | 63.5 | 76.5 | |||||||||||
Saddlehorn - volume shipped (million barrels)(2) | 6.0 | 13.4 | 11.8 | 22.4 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 22.6 | 23.8 | 22.6 | 23.8 | |||||||||||
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 291,064 | $ | 306,215 | $ | 551,458 | $ | 573,220 | |||||||
Affiliate management fee revenue | 352 | 470 | 649 | 882 | |||||||||||
Other operating income (expense) | — | 738 | — | 1,352 | |||||||||||
Earnings (losses) of non-controlled entities | (97) | (4,218) | 2,221 | (5,648) | |||||||||||
Less: Operating expenses | 113,342 | 115,811 | 207,391 | 205,489 | |||||||||||
Transportation and terminals margin | 177,977 | 187,394 | 346,937 | 364,317 | |||||||||||
Product sales revenue | 150,934 | 183,211 | 383,708 | 338,367 | |||||||||||
Less: Cost of product sales | 137,543 | 146,516 | 327,876 | 306,670 | |||||||||||
Product margin | 13,391 | 36,695 | 55,832 | 31,697 | |||||||||||
Operating margin | $ | 191,368 | $ | 224,089 | $ | 402,769 | $ | 396,014 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 137,953 | $ | 155,569 | $ | 264,211 | $ | 303,177 | |||||||
Affiliate management fee revenue | 3,849 | 3,646 | 7,865 | 7,132 | |||||||||||
Other operating income (expense) | — | (6,056) | — | (4,483) | |||||||||||
Earnings of non-controlled entities | 41,851 | 43,735 | 73,459 | 76,037 | |||||||||||
Less: Operating expenses | 31,177 | 37,217 | 64,768 | 81,040 | |||||||||||
Transportation and terminals margin | 152,476 | 159,677 | 280,767 | 300,823 | |||||||||||
Product sales revenue | 13,282 | 5,295 | 19,721 | 11,008 | |||||||||||
Less: Cost of product sales | 13,761 | 4,710 | 20,811 | 11,374 | |||||||||||
Product margin | (479) | 585 | (1,090) | (366) | |||||||||||
Operating margin | $ | 151,997 | $ | 160,262 | $ | 279,677 | $ | 300,457 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 44,146 | $ | 45,962 | $ | 90,346 | $ | 93,079 | |||||||
Affiliate management fee revenue | 845 | 1,189 | 1,782 | 2,439 | |||||||||||
Other operating income (expense) | — | 294 | — | 5,048 | |||||||||||
Earnings of non-controlled entities | 756 | 1,268 | 1,368 | 1,651 | |||||||||||
Less: Operating expenses | 17,693 | 18,586 | 35,657 | 33,483 | |||||||||||
Transportation and terminals margin | 28,054 | 30,127 | 57,839 | 68,734 | |||||||||||
Product sales revenue | 2,581 | 1,483 | 4,960 | 3,609 | |||||||||||
Less: Cost of product sales | 2,375 | 1,650 | 4,584 | 3,926 | |||||||||||
Product margin | 206 | (167) | 376 | (317) | |||||||||||
Operating margin | $ | 28,260 | $ | 29,960 | $ | 58,215 | $ | 68,417 | |||||||
Segment operating margin | $ | 371,625 | $ | 414,311 | $ | 740,661 | $ | 764,888 | |||||||
Add: Allocated corporate depreciation costs | 1,452 | 1,344 | 2,845 | 2,779 | |||||||||||
Total operating margin | 373,077 | 415,655 | 743,506 | 767,667 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 53,619 | 62,530 | 105,498 | 124,401 | |||||||||||
General and administrative expense | 53,290 | 52,383 | 99,846 | 98,378 | |||||||||||
Total operating profit | $ | 266,168 | $ | 300,742 | $ | 538,162 | $ | 544,888 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES (Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2019 | |||||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||||
As reported | $ | 253,703 | $ | 1.11 | $ | 1.11 | |||||||
Unrealized derivative (gains) losses associated with future transactions(1) | 20,110 | ||||||||||||
Inventory valuation adjustments associated with future transactions | 1,366 | ||||||||||||
Excluding commodity-related adjustments(2) | $ | 275,179 | $ | 1.20 | $ | 1.20 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,647 | ||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,688 | ||||||||||||
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | 2019 | |||||||||||||||||
2018 | 2019 | 2018 | 2019 | Guidance | |||||||||||||||
Net income | $ | 214,409 | $ | 253,703 | $ | 425,319 | $ | 461,366 | $ | 960,000 | |||||||||
Interest expense, net | 50,762 | 45,934 | 102,188 | 100,986 | 200,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 56,208 | 59,966 | 110,084 | 118,923 | 238,000 | ||||||||||||||
Equity-based incentive compensation(2) | 10,047 | 10,890 | 7,394 | 6,040 | 19,000 | ||||||||||||||
Gain on disposition of assets(3) | — | (5,280) | — | (16,280) | (16,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative losses recognized in the period associated with future transactions(4) | 29,318 | 17,627 | 35,828 | 20,843 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (23,358) | (1,924) | (38,801) | 71,214 | |||||||||||||||
Inventory valuation adjustments(5) | 838 | (1,820) | (260) | (9,446) | |||||||||||||||
Total commodity-related adjustments | 6,798 | 13,883 | (3,233) | 82,611 | 70,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 397 | (793) | 17,613 | 11,029 | 34,000 | ||||||||||||||
Other(6) | — | — | 3,644 | — | — | ||||||||||||||
Adjusted EBITDA | 338,621 | 378,303 | 663,009 | 764,675 | 1,505,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (49,928) | (45,184) | (100,514) | (91,059) | (190,000) | ||||||||||||||
Maintenance capital(8) | (22,100) | (18,325) | (36,960) | (40,823) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 266,593 | $ | 314,794 | $ | 525,535 | $ | 632,793 | $ | 1,220,000 | |||||||||
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The amounts above have been reduced by $9.3 million and $9.8 million, respectively, for cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 period includes a $10.2 million gain on the sale of residual assets related to the development of expansion projects which are considered ongoing in nature, and as such are included in DCF. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 25, 2019 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.0125 per unit for the period April 1 through June 30, 2019, representing the 69th distribution increase since its initial public offering in 2001.
The second-quarter 2019 distribution is approximately 6% higher than the second-quarter 2018 distribution of 95.75 cents per unit and represents an approximate 1% increase over the first-quarter 2019 distribution of $1.005.
The new distribution, which equates to $4.05 per unit on an annualized basis, will be paid Aug. 14 to unitholders of record at the close of business on Aug. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 8, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2019 before the market opens on Thurs., Aug. 1. Management will discuss second-quarter earnings, outlook for the remainder of 2019 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 745-9830 and provide code 21925916. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Aug. 1 through midnight on Aug. 7. To access the replay, dial (800) 633-8284 and provide code 21925916. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 1, 2019 /PRNewswire/ -- Saddlehorn Pipeline Company, LLC ("Saddlehorn") announced today a capital-efficient expansion of the Saddlehorn pipeline and a new Ft. Laramie, Wyoming origin. In connection with these enhancements, Saddlehorn has launched an open season to solicit long-term commitments for capacity on the pipeline system. Interested customers must submit binding commitments by 12:00 p.m. Central Time on July 31, 2019.
The Saddlehorn pipeline, which is jointly owned by affiliates of Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") and Western Midstream Partners, LP (NYSE: WES) ("WES"), is currently capable of transporting approximately 190,000 barrels per day ("bpd") of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. Magellan serves as operator of the Saddlehorn pipeline.
The expansion will increase the pipeline's capacity by up to 100,000 bpd, to a new total capacity of 290,000 bpd. The higher capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities. Saddlehorn will add the new Ft. Laramie origin by leasing capacity on third-party pipelines.
For customer inquiries or additional information about the Saddlehorn open season, please contact Matt Gooding of Magellan at (918) 574-7838 or matt.gooding@magellanlp.com. More information about the open season is available at https://www.magellanlp.com/WhatWeDo/LiquidPipelineTariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL") and natural gas. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About Western Midstream Partners, LP
Western Midstream Partners, LP (NYSE: WES) is a growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, NGLs and crude oil; and gathering and disposing of produced water for Anadarko, as well as for third-party customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts. More information is available at www.westernmidstream.com.
This press release includes certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. Important risks, uncertainties and other factors that could affect future results or outcomes are discussed in filings with the Securities and Exchange Commission by Magellan, Plains and WES. The companies undertake no obligation to update or revise any forward-looking statement to reflect new information or events occurring after today's date.
Contact Information:
Magellan: | Paula Farrell, Investor Relations | (918) 574-7650 | |
Bruce Heine, Media Relations | (918) 574-7010 | ||
Plains: | Brett Magill, Investor Relations | (866) 809-1291 | |
Brad Leone, Media Relations | (866) 809-1290 | ||
WES: | Jack Spinks, Investor Relations | (832) 636-6000 |
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SOURCE Magellan Midstream Partners, L.P.; Plains All American Pipeline, L.P.; Western Midstream Partners, LP
TULSA, Okla., June 13, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Aaron Milford, chief operating officer, is scheduled to participate in a question and answer session about Magellan at the 2019 J.P. Morgan Energy Conference at 9:10 a.m. Eastern on Wed., June 19 in New York City.
The session will be moderated by Jeremy Tonet, J.P. Morgan equity research analyst, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be meeting with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and DALLAS, May 31, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) and Navigator Energy Services announced today an extension of the open season to solicit commitments from shippers for the proposed Voyager Pipeline to transport crude oil from Cushing, Oklahoma and Midland, Texas to Houston. Binding commitments are now due by 12:00 p.m. Central Daylight Time on Aug. 30, 2019.
The level of shipper interest in the Midland origin, announced in March, combined with shipper requests for additional grades of crude oil and condensate at Cushing, requires further evaluation of the scope of the Voyager Pipeline project. As currently contemplated, the proposed Voyager Pipeline would include construction of 20-inch diameter pipelines from both Magellan's Cushing and Midland terminals to Magellan's terminal in Frost, Texas. From Frost, a 24-inch diameter pipeline would be constructed to Magellan's terminal in East Houston.
At the Cushing origin, the Voyager Pipeline would provide shippers optionality to originate deliveries from the Magellan-operated Saddlehorn Pipeline serving the Rockies and Bakken production regions and from Navigator's Glass Mountain Pipeline serving the Mid-Continent basin, as well as other connections within the strategic Cushing crude oil hub. Additional storage and operational capabilities to move other grades of crude oil and condensate to the Gulf Coast are also being evaluated.
The Midland origin would enhance the project's supply flexibility from the prolific Permian Basin. As a result, facility options consistent with shipper demand are being reviewed, which could include the repurposed use of existing Magellan pipeline and rights-of-way, new-build pipeline or a combination of both.
At the destination, Magellan's comprehensive Houston crude oil distribution system could further deliver the multiple grades of crude oil to the Houston and Texas City refineries or to crude oil export facilities, such as the terminal owned by Seabrook Logistics, LLC, which is owned 50% by Magellan.
As proposed, the Voyager Pipeline is expected to have an initial capacity of up to 400,000 barrels per day, with the ability to expand if warranted by industry demand. Subject to receipt of sufficient customer commitments and all necessary permits and approvals, the pipeline is expected to be operational in early 2021.
For customer inquiries or additional information about the Voyager Pipeline open season, please contact Brett Hunter of Magellan at (918) 574-7477 or brett.hunter@magellanlp.com. More information about the open season is available at https://www.magellanlp.com/WhatWeDo/LiquidPipelineTariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Navigator Energy Services
Headquartered in Dallas, Navigator Energy Services provides oil producers with comprehensive midstream services including crude oil gathering, transportation and storage. Navigator is focused on domestic midstream opportunities in both developing and mature producing areas. To learn more about Navigator, please visit www.navigatorenergyservices.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Navigator Energy Services believe such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for crude oil and condensate; (4) the ability to establish and collect acceptable tariff rates for the Voyager pipeline or other rates or terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential pipeline. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission, including Magellan's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the companies in this release are based only on information currently known, and the companies undertake no obligation to revise any forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact Information: | |||
Magellan: | Paula Farrell, Investor Relations | (918) 574-7650 | |
Bruce Heine, Media Relations | (918) 574-7010 | ||
Navigator: | Meggan Morrison, Media Relations | (972) 639-8715 |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 24, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that its board of directors has elected Chansoo Joung as an independent board member effective immediately.
Joung had a distinguished career in the finance industry working with energy companies. From 2005 to 2015, Joung worked first as a partner then as senior advisor at Warburg Pincus LLC, where he managed investments across the energy and clean energy sectors. From 1987 to 2004, he held increasingly senior positions at Goldman Sachs, culminating his 17-year career there as head of the Americas Energy and Power investment banking group.
Joung also currently serves as a board member for Apache Corporation, where he chairs the audit committee and is a member of the corporate governance and nominating committee.
"Chansoo has exceptional respect within the energy industry, and we are very pleased he has joined Magellan's board of directors," said Michael Mears, chief executive officer and chairman of the board. "His extensive investment banking background and sound business judgment should provide valuable contributions to our organization."
Joung earned a bachelor's degree in physics and a master of business administration from Dartmouth College.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 13, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the 2019 MLP & Energy Infrastructure Conference hosted by the Master Limited Partnership Association at 9:15 a.m. Pacific Time on Wed., May 15 in Las Vegas, Nevada.
The session will be moderated by Mirek Zak, Citi equity research analyst, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be meeting with institutional investors and research analysts during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 1, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $207.7 million for first quarter 2019 compared to $210.9 million for first quarter 2018.
Diluted net income per limited partner unit was 91 cents in first quarter 2019 and 92 cents in first quarter 2018. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.06 for first quarter 2019 was higher than the 90-cent guidance provided by management earlier this year. The better-than-expected 2019 results primarily benefited from the combined $21.8 million gain on disposition of assets related to the recognition of additional gain on the 2018 sale of a portion of the partnership's ownership interest in BridgeTex Pipeline Company, LLC and gain on the recent sale of assets related to its discontinued Delaware Basin pipeline project to a third party. Further excluding the 10-cent favorable impact of these gains, diluted net income per limited partner unit of 96 cents for first quarter 2019 also exceeded guidance primarily due to the favorable impact of a higher commodity price environment on the partnership's commodity-related activities and value of its product overages.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was a record $318.0 million for first quarter 2019 compared to $258.9 million for first quarter 2018. DCF for the 2019 period was positively impacted by a $10.8 million gain from the recent sale of the discontinued crude oil pipeline project.
"Magellan kicked off 2019 on solid footing, generating higher financial results from our core, fee-based transportation and terminals activities and record quarterly distributable cash flow during the first quarter of 2019," said Michael Mears, chief executive officer. "Although our reported earnings were negatively impacted by mark-to-market accounting for open commodity hedges, we generated improved cash margin from our commodity-related activities during the current period as well."
Mears continued, "Our outlook for the remainder of 2019 has strengthened based on favorable market conditions for our crude oil pipeline shipments and an improved commodity pricing environment. Magellan's business fundamentals and financial position remain strong, bolstered by our commitment to capital discipline that we believe will serve as the foundation of our long-term success."
An analysis by segment comparing first quarter 2019 to first quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation, amortization and impairment expense:
Refined products. Refined products operating margin was $171.9 million, a decrease of $39.5 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Otherwise, financial results from this segment's fee-based transportation and terminals activities increased between periods.
Transportation and terminals revenue increased $6.6 million due to higher average pipeline rates. The current period benefited from the mid-year tariff adjustment of 4.4% on July 1, 2018. Further, the overall average refined products tariff increased between periods due to less volume transported on the supply-driven South Texas pipelines, which move at a much lower rate. The vast majority of the partnership's refined products pipeline movements serve end-use demand-driven markets in Texas and the Mid-Continent region of the United States, and shipments to those markets were essentially unchanged between periods.
Operating expenses decreased $4.4 million due to a pension valuation correction that negatively impacted the 2018 results and lower spending for asset integrity in the 2019 period due to timing of maintenance work, partially offset by less favorable product overages (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $47.4 million between periods largely due to the recognition of unrealized losses in the current period on open futures contracts used to economically hedge the partnership's commodity-related activities compared to gains in 2018. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods due to higher hedged sales prices for its butane blending activities.
Crude oil. Crude oil operating margin was $140.2 million, an increase of $12.5 million. Transportation and terminals revenue increased $21.4 million due to fees earned from new storage and ancillary services in conjunction with storage capacity that Magellan leases from Seabrook Logistics, LLC, which is owned 50% by Magellan, higher contributions from the partnership's condensate splitter and higher transportation volumes as a result of the favorable pricing differential between the Permian Basin and Houston. Overall, the average crude oil tariff decreased significantly between periods due to proportionately more volume on the Houston distribution system, which moves at a much lower rate, and also lower average committed rates on the Longhorn pipeline that became effective in the fourth quarter of 2018.
Earnings of non-controlled entities increased slightly between periods. The 2019 quarter benefited from higher contributions from Seabrook due to recently constructed storage, pipeline and export capabilities and more earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased volume from a contractual step-up in committed volumes in Sept. 2018 and recent joint tariff arrangements that drive incremental volume to Saddlehorn. These favorable items were mostly offset by lower earnings from BridgeTex, which was owned 50% by Magellan through Sept. 2018 and 30% thereafter following Magellan's sale of a portion of its interest in BridgeTex.
Operating expenses increased $10.2 million due to fees paid to Seabrook for contract storage and ancillary services that Magellan utilized to provide services to its shippers and higher spending for asset integrity mainly related to planned maintenance for the condensate splitter during the current period.
Marine storage. Marine storage operating margin was $38.5 million, an increase of $8.5 million and a quarterly record for this segment. Transportation and terminals revenue increased and operating expenses decreased mainly due to timing of maintenance work, which resulted in more tanks utilized for contract storage in the first quarter of 2019. Other income was $4.8 million in 2019 primarily from the favorable benefit of insurance proceeds received in the current year related to Hurricane Harvey.
Other items. Depreciation, amortization and impairment expense increased $10.0 million primarily due to recent expansion capital expenditures and asset impairments recognized in the current period. Gain on disposition of assets was $21.8 million in 2019 related to the recognition of an additional $11.0 million gain in the current period on the 2018 sale of a portion of the partnership's ownership interest in BridgeTex now that certain litigation subject to an indemnification obligation has been settled and $10.8 million attributable to the recent sale of assets related to Magellan's discontinued Delaware Basin crude oil pipeline project to a third party. Other expense decreased $6.7 million as the first quarter of 2018 was negatively impacted by a pension valuation correction.
Net interest expense increased as a result of an $8.3 million debt prepayment cost in first quarter 2019 related to the partnership's early extinguishment of its 6.55% notes that were due July 2019 with proceeds from its Jan. 2019 debt offering, partially offset by lower average borrowings and interest rate. As of March 31, 2019, the partnership had $4.3 billion of debt outstanding, including $69 million outstanding on its commercial paper program, and $13.5 million of cash on hand.
Expansion capital projects
Magellan continues to make excellent progress on its expansion projects, with key construction projects on-target to become operational during 2019.
The initial phase of the partnership's joint-venture marine terminal in Pasadena, Texas became operational during Jan. 2019 with 1 million barrels of storage and a Panamax-capable dock. The second phase, representing an additional 4 million barrels of storage and supporting Aframax-capable dock and pipeline infrastructure, is expected to be in-service by the end of 2019.
Construction is well underway for the partnership's East Houston-to-Hearne refined products pipeline. Based on the current schedule, Magellan expects to begin operations in late August. Significant activity is also underway for Magellan's west Texas refined products pipeline expansion. Pipe production is nearing completion, with construction activities expected to begin later this month, and a mid-2020 in-service date is still projected.
Based on the progress of expansion projects underway, the partnership expects to spend approximately $1.1 billion in 2019 and $150 million in 2020 to complete its current slate of construction projects. These spending estimates include the construction of a new refined products terminal in Midland, Texas to be operational in mid-2020, consistent with start-up of the west Texas pipeline expansion.
In addition, Magellan remains focused on identifying incremental investment opportunities to fuel Magellan's next wave of growth. The partnership continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time.
Financial guidance for 2019
As a result of solid financial performance during the first quarter and a more favorable overall commodity pricing environment, management is increasing its annual DCF guidance by $40 million to $1.18 billion for 2019, or approximately 1.27 times the amount needed to pay projected cash distributions for 2019. Guidance now assumes that the current favorable pricing differential between the Permian Basin and Houston continues during the second quarter, resulting in spot shipments on the Longhorn and BridgeTex pipelines through June 30. If the favorable differential were to continue beyond that period, management estimates the financial benefit of these uncommitted shipments is approximately $20 million per quarter.
Management remains committed to its stated goal of increasing annual cash distributions by approximately 5% for 2019 and is targeting distribution coverage of at least 1.2 times for the foreseeable future.
Including actual results so far this year, net income per limited partner unit is now estimated to be $4.05 for 2019, with second-quarter guidance of $1.13. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss first-quarter financial results and outlook for the remainder of 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 909-7944 and provide code 21920463. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on May 7. To access the replay, dial (800) 633-8284 and provide code 21920463. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments and the gain on disposition of assets, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation, amortization and impairment expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: projected, outlook, plan, goal, target, guidance, believe, estimate, expect, continue, maintain, commit, foreseeable, future, may, intend, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands, except per unit amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Transportation and terminals revenue | $ | 431,937 | $ | 460,792 | |||
Product sales revenue | 241,592 | 162,995 | |||||
Affiliate management fee revenue | 5,250 | 5,148 | |||||
Total revenue | 678,779 | 628,935 | |||||
Costs and expenses: | |||||||
Operating | 143,296 | 146,025 | |||||
Cost of product sales | 199,592 | 169,094 | |||||
Depreciation, amortization and impairment | 51,879 | 61,871 | |||||
General and administrative | 46,556 | 45,995 | |||||
Total costs and expenses | 441,323 | 422,985 | |||||
Other income | — | 6,941 | |||||
Earnings of non-controlled entities | 34,538 | 31,255 | |||||
Operating profit | 271,994 | 244,146 | |||||
Interest expense | 56,652 | 60,166 | |||||
Interest capitalized | (4,647) | (3,454) | |||||
Interest income | (579) | (1,660) | |||||
Gain on disposition of assets | — | (21,788) | |||||
Other expense | 8,724 | 2,050 | |||||
Income before provision for income taxes | 211,844 | 208,832 | |||||
Provision for income taxes | 934 | 1,169 | |||||
Net income | $ | 210,910 | $ | 207,663 | |||
Basic net income per limited partner unit | $ | 0.92 | $ | 0.91 | |||
Diluted net income per limited partner unit | $ | 0.92 | $ | 0.91 | |||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,320 | 228,558 | |||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,360 | 228,558 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Refined products: | |||||||
Transportation revenue per barrel shipped | $ | 1.464 | $ | 1.572 | |||
Volume shipped (million barrels): | |||||||
Gasoline | 67.6 | 62.1 | |||||
Distillates | 43.0 | 44.6 | |||||
Aviation fuel | 6.3 | 8.8 | |||||
Liquefied petroleum gases | 1.1 | 0.6 | |||||
Total volume shipped | 118.0 | 116.1 | |||||
Crude oil: | |||||||
Magellan 100%-owned assets: | |||||||
Transportation revenue per barrel shipped | $ | 1.241 | $ | 0.945 | |||
Volume shipped (million barrels) | 55.7 | 79.4 | |||||
Crude oil terminal average utilization (million barrels per month) | 16.0 | 19.8 | |||||
Select joint venture pipelines: | |||||||
BridgeTex - volume shipped (million barrels)(1) | 28.3 | 37.7 | |||||
Saddlehorn - volume shipped (million barrels)(2) | 5.8 | 9.0 | |||||
Marine storage: | |||||||
Marine terminal average utilization (million barrels per month) | 22.6 | 23.9 |
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||
(Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Refined products: | |||||||
Transportation and terminals revenue | $ | 260,394 | $ | 267,005 | |||
Affiliate management fee revenue | 297 | 412 | |||||
Other income | — | 614 | |||||
Earnings (losses) of non-controlled entities | 2,318 | (1,430) | |||||
Less: Operating expenses | 94,049 | 89,678 | |||||
Transportation and terminals margin | 168,960 | 176,923 | |||||
Product sales revenue | 232,774 | 155,156 | |||||
Less: Cost of product sales | 190,333 | 160,154 | |||||
Product margin | 42,441 | (4,998) | |||||
Operating margin | $ | 211,401 | $ | 171,925 | |||
Crude oil: | |||||||
Transportation and terminals revenue | $ | 126,258 | $ | 147,608 | |||
Affiliate management fee revenue | 4,016 | 3,486 | |||||
Other income | — | 1,573 | |||||
Earnings of non-controlled entities | 31,608 | 32,302 | |||||
Less: Operating expenses | 33,591 | 43,823 | |||||
Transportation and terminals margin | 128,291 | 141,146 | |||||
Product sales revenue | 6,439 | 5,713 | |||||
Less: Cost of product sales | 7,050 | 6,664 | |||||
Product margin | (611) | (951) | |||||
Operating margin | $ | 127,680 | $ | 140,195 | |||
Marine storage: | |||||||
Transportation and terminals revenue | $ | 46,200 | $ | 47,117 | |||
Affiliate management fee revenue | 937 | 1,250 | |||||
Other income | — | 4,754 | |||||
Earnings of non-controlled entities | 612 | 383 | |||||
Less: Operating expenses | 17,964 | 14,897 | |||||
Transportation and terminals margin | 29,785 | 38,607 | |||||
Product sales revenue | 2,379 | 2,126 | |||||
Less: Cost of product sales | 2,209 | 2,276 | |||||
Product margin | 170 | (150) | |||||
Operating margin | $ | 29,955 | $ | 38,457 | |||
Segment operating margin | $ | 369,036 | $ | 350,577 | |||
Add: Allocated corporate depreciation costs | 1,393 | 1,435 | |||||
Total operating margin | 370,429 | 352,012 | |||||
Less: | |||||||
Depreciation, amortization and impairment expense | 51,879 | 61,871 | |||||
General and administrative expense | 46,556 | 45,995 | |||||
Total operating profit | $ | 271,994 | $ | 244,146 |
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||
Three Months Ended | |||||||||||
March 31, 2019 | |||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||
As reported | $ | 207,663 | $ | 0.91 | $ | 0.91 | |||||
Unrealized derivative (gains) losses associated with future physical product sales(1) | 28,833 | ||||||||||
Inventory valuation adjustments associated with future physical product transactions | 4,753 | ||||||||||
Excluding commodity-related adjustments(2) | $ | 241,249 | $ | 1.06 | $ | 1.06 | |||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,558 | ||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,558 |
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||
(Unaudited, in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | 2019 | ||||||||||
2018 | 2019 | Guidance | |||||||||
Net income | $ | 210,910 | $ | 207,663 | $ | 925,000 | |||||
Interest expense, net | 51,426 | 55,052 | 205,000 | ||||||||
Depreciation, amortization and impairment(1) | 53,876 | 58,957 | 235,000 | ||||||||
Equity-based incentive compensation(2) | (2,653) | (4,850) | 15,000 | ||||||||
Gain on disposition of assets(3) | — | (11,000) | (11,000) | ||||||||
Commodity-related adjustments: | |||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(4) | 11,479 | 25,036 | |||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period(4) | (20,412) | 51,318 | |||||||||
Inventory valuation adjustments(5) | (1,098) | (7,626) | |||||||||
Total commodity-related adjustments | (10,031) | 68,728 | 60,000 | ||||||||
Distributions from operations of non-controlled entities in excess of earnings | 17,216 | 11,822 | 38,000 | ||||||||
Other(6) | 3,644 | — | — | ||||||||
Adjusted EBITDA | 324,388 | 386,372 | 1,467,000 | ||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (50,586) | (45,875) | (192,000) | ||||||||
Maintenance capital(8) | (14,860) | (22,498) | (95,000) | ||||||||
Distributable cash flow | $ | 258,942 | $ | 317,999 | $ | 1,180,000 |
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The amounts above have been reduced by $9.3 million and $9.8 million, respectively, for cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 period includes a $10.8 million gain on the sale of residual assets related to the development of expansion projects which are considered ongoing in nature, and as such are included in DCF. |
(4) | Certain derivatives used by the partnership as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these hedges from its determination of DCF until the related products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in its determination of DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 25, 2019 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.005 per unit for the period Jan. 1 through March 31, 2019, representing the 68th distribution increase since its initial public offering in 2001.
The first-quarter 2019 distribution is 7% higher than the first-quarter 2018 distribution of 93.75 cents per unit and represents a 1% increase over the fourth-quarter 2018 distribution of 99.75 cents.
The new distribution, which equates to $4.02 per unit on an annualized basis, will be paid May 15 to unitholders of record at the close of business on May 8.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 3, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2019 before the market opens on Wed., May 1. Management will discuss first-quarter earnings, outlook for the remainder of 2019 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 909-7944 and provide code 21920463. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on May 1 through midnight on May 7. To access the replay, dial (800) 633-8284 and provide code 21920463. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-first-quarter-2019-financial-results-on-may-1-300823873.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and DALLAS, March 29, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) and Navigator Energy Services announced today an extension of the open season to solicit commitments from shippers for the proposed Voyager Pipeline, to transport various grades of light crude oil and condensate from Cushing, Oklahoma to Houston, Texas. Binding commitments are now due by 12:00 p.m. Central Daylight Time on May 31, 2019. Significant interest continues to be expressed from potential shippers, particularly those reaching Voyager from connecting carriers in multiple producing regions. The extension provides these shippers additional time to finalize their commitments across multiple pipelines and evaluate a new origin point near Midland, Texas.
The proposed Voyager Pipeline would include construction of nearly 500 miles of 20- or 24-inch diameter pipeline from Magellan's terminal in Cushing to Magellan's terminal in East Houston. At the Cushing origin, the Voyager Pipeline would provide shippers optionality to originate deliveries at Cushing from the Magellan-operated Saddlehorn Pipeline serving the Rockies and Bakken production regions, Navigator's Glass Mountain Pipeline serving the Mid-Continent basin, as well as other connections within the strategic Cushing crude oil hub.
At the request of potential shippers, the sponsors are evaluating the addition of a Midland origin to provide further supply flexibility from the prolific Permian Basin. The Midland origin could be accomplished in part through Voyager's use of an existing Magellan pipeline that may be idled in the near future as part of Magellan's announced West Texas refined products pipeline expansion project. Voyager would have the ability to utilize an existing Magellan terminal in Frost to construct assets and connect to the Cushing-to-Houston segment.
At the destination, Magellan's comprehensive Houston crude oil distribution system could further deliver the multiple grades of crude oil to the Houston and Texas City refineries or to crude oil export facilities, such as the terminal owned by Seabrook Logistics, LLC, which is owned 50% by Magellan.
As proposed, the Voyager Pipeline is expected to have an initial capacity of at least 300,000 barrels per day with the ability to expand further if warranted by industry demand. Subject to receipt of sufficient customer commitments and all necessary permits and approvals, the pipeline is planned to be operational in late 2020.
For customer inquiries or additional information about the Voyager pipeline open season, please contact Brant Easterling of Magellan at (918) 574-7665 or brant.easterling@magellanlp.com. More information about the open season is available at https://www.magellanlp.com/WhatWeDo/LiquidPipelineTariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Navigator Energy Services
Headquartered in Dallas, Navigator Energy Services provides oil producers with comprehensive midstream services including crude oil gathering, transportation and storage. Navigator is focused on domestic midstream opportunities in both developing and mature producing areas. To learn more about Navigator, please visit www.navigatorenergyservices.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Navigator Energy Services believe such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for crude oil and condensate; (4) the ability to establish and collect acceptable tariff rates for the Voyager pipeline or other rates or terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential pipeline. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission, including Magellan's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the companies in this release are based only on information currently known, and the companies undertake no obligation to revise any forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Navigator: | Meredith Howard, Media Relations | (210) 737-4478 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., March 27, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Aaron Milford has been promoted to chief operating officer effective May 1. Milford previously served as chief financial officer for Magellan. In this newly-created position, Milford will have overall responsibility for the operations, commercial, engineering and information technology aspects of the business.
Milford has worked in the energy industry for 24 years with extensive experience in financial analysis, mergers and acquisitions and business development. He has spent his entire career with Magellan or its predecessors. Milford holds a bachelor's degree in accounting and a master of business administration from the University of Tulsa and is a chartered financial analyst.
"The board and I have great confidence in Aaron's leadership capabilities and strategic vision," said Michael Mears, chief executive officer. "His proven track record and in-depth knowledge of Magellan's businesses will continue to serve the company well in his expanded role."
The partnership's former vice president of finance and treasurer, Jeff Holman, will be promoted to chief financial officer also effective May 1, filling the vacancy created by Mr. Milford's promotion. Holman has been with Magellan since its inception and has served in his most recent role since 2010 and other senior-level finance positions prior to that. He is a certified public accountant and a chartered financial analyst and holds bachelor degrees in accounting and English from the University of Tulsa.
"Jeff has been an essential part of Magellan's outstanding financial performance and conservative business philosophy from the beginning," continued Mears. "His financial expertise and diligence will remain important contributions to our most senior-level financial position."
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership the primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: | Investors: | Media: |
Paula Farrell | Bruce Heine | |
(918) 574-7650 | (918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-promotes-executives-to-chief-operating-officer-and-chief-financial-officer-300819718.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Feb. 28, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to participate in the following investor conferences next week:
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-upcoming-investor-conferences-300804287.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 31, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $314.1 million for fourth quarter 2018 compared to $237.9 million for fourth quarter 2017. The increase in current year net income was largely driven by higher profits from the partnership's commodity-related activities due to favorable mark-to-market (MTM) adjustments for related hedge positions. The 2018 results also were negatively impacted by a $49.1 million impairment to the partnership's ammonia pipeline system. Magellan has made the decision to discontinue commercial operations of the ammonia pipeline beginning in late 2019 due to the system's low profitability and the expected decline in anhydrous ammonia production.
Diluted net income per limited partner unit was $1.37 in fourth quarter 2018 and $1.04 in fourth quarter 2017. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, was $1.03 for fourth quarter 2018, or $1.24 excluding the 21-cent negative impact of the ammonia pipeline impairment, consistent with guidance provided by management in early November.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $302.4 million for fourth quarter 2018 compared to $308.3 million for fourth quarter 2017. DCF for the 2018 period was negatively impacted by $9.0 million of expected cash costs associated with the future shutdown of the ammonia pipeline as well as $9.0 million of write-off charges for discontinued capital projects.
"Despite the volatility in the energy space during 2018, Magellan generated record distributable cash flow for the year driven by continued strong demand for our essential fee-based refined petroleum products and crude oil pipeline and terminal services," said Michael Mears, chief executive officer. "Magellan remains committed to our stable fee-based business model, conservative financial policy and disciplined management approach with a long-term perspective. This approach has proven to be very successful in the past and we believe will continue to be the most effective way to manage and grow our company in order to maximize the value created for our investors."
An analysis by segment comparing fourth quarter 2018 to fourth quarter 2017 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation, amortization and impairment expense:
Refined products. Refined products operating margin was $349.3 million, an increase of $133.1 million, largely due to the favorable impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities.
Transportation and terminals revenue increased $13.3 million due to higher average pipeline rates. The current period benefited from the mid-year tariff adjustment of 4.4% on July 1, 2018. Further, the overall average refined products tariff increased between periods due to less volume transported on the supply-driven South Texas pipelines, which move at a much lower rate. The vast majority of the partnership's refined products pipeline movements serve end-use demand markets in Texas and the Mid-Continent region of the United States. Shipments increased 2% for those markets primarily supported by record quarterly distillate shipments from strong demand in crude oil production regions in Texas served by the partnership.
Earnings of non-controlled entities improved due to higher blending margins and sales volume as well as recognition of unrealized gains on open futures contracts of Powder Springs Logistics, LLC, which is owned 50% by Magellan.
Operating expenses increased $17.7 million due to more integrity spending in the current period related to timing of maintenance work, write-off of project costs associated with a previously-announced transmix fractionator that is no longer deemed necessary and higher personnel costs.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $125.5 million between periods largely due to the recognition of significant unrealized gains in the current period on open futures contracts used to economically hedge the partnership's commodity-related activities. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, also increased between periods due to higher hedged sales prices for its butane blending activities.
Crude oil. Crude oil operating margin was $129.8 million, a decrease of $12.0 million. Transportation and terminals revenue increased $11.9 million due to fees earned from new storage and ancillary services in conjunction with storage capacity that Magellan now leases from Seabrook Logistics, LLC, which is owned 50% by Magellan, and higher contributions from the partnership's condensate splitter. Revenues earned from crude oil pipeline movements were relatively flat between periods. Pipeline shipments grew 25% to a quarterly record due to increased movements on the partnership's Houston distribution system as well as more spot shipments on the Longhorn pipeline as a result of the favorable pricing differential between the Permian Basin and Houston. However, the overall average crude oil tariff decreased significantly between periods due to proportionately more volume on the Houston distribution system, which moves at a much lower rate, and lower average committed rates on the Longhorn pipeline that became effective in the fourth quarter of 2018.
Earnings of non-controlled entities decreased $4.4 million primarily due to lower contributions from BridgeTex Pipeline Company, LLC, which was owned 50% by Magellan through Sept. 28, 2018 and 30% thereafter following Magellan's sale of a portion of its interest in BridgeTex. Otherwise, the partnership benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased shipments associated with a contractual step-up in committed volumes in Sept. 2018 and recent joint tariff arrangements that drive incremental volume to Saddlehorn. Earnings from Seabrook Logistics also increased due to new storage, pipeline and export capabilities it placed into service during third quarter 2018.
Operating expenses increased by $25.3 million due to a number of variance items. These higher costs include fees paid to Seabrook Logistics for contract storage and ancillary services that Magellan utilized to provide services to its shippers, write-off of costs associated with a previously-announced Delaware Basin pipeline project that is no longer being pursued as a stand-alone project, higher environmental accruals related to a product release earlier in 2018, asset retirements for inactive tanks at Cushing and less favorable product overages.
Marine storage. Marine storage operating margin was $30.7 million, an increase of $4.6 million. Transportation and terminals revenue increased due to higher utilization in the current period as a result of more tanks out of service for maintenance work in the fourth quarter of 2017, in part due to damage from Hurricane Harvey. Operating expenses declined mainly due to environmental accruals and clean-up work related to the hurricane that negatively impacted the 2017 period.
Other items. Depreciation, amortization and impairment expense increased due to recent expansion capital expenditures and a $49.1 million impairment to the partnership's ammonia pipeline system as a result of management's decision to begin decommissioning this asset later this year due to its challenging economic outlook. G&A expense increased because of higher personnel costs resulting from an increase in employee headcount to support the partnership's growth and higher incentive compensation expense due to company performance.
Other expense increased due to higher pension-related costs, and provision for income taxes declined as a result of a favorable adjustment in the current period related to prior years.
Net interest expense decreased as a result of lower debt, in part due to repayment of the senior notes due in July 2018 and proceeds from the Sept. 2018 sale of a portion of BridgeTex. As of Dec. 31, 2018, the partnership had $4.3 billion of debt outstanding and $218.3 million of cash on hand with no borrowings outstanding on its commercial paper program.
Annual results
For the year ended Dec. 31, 2018, net income grew to $1,333.9 million compared to $869.5 million in 2017. Primary drivers for the increase relate to the gain on sale of a portion of BridgeTex, higher profits from the partnership's commodity-related activities due to favorable MTM adjustments for related hedge positions, increased fee-based activities due to strong demand for refined products and crude oil transportation services and the full-year benefit from the partnership's condensate splitter. Full-year diluted net income per limited partner unit was $5.84 in 2018 and $3.81 in 2017. Annual DCF was a record $1,109.7 million in 2018, or 1.26 times the amount needed to pay distributions related to 2018, compared to $1,021.4 million in 2017.
Expansion capital projects
Magellan remains focused on expansion opportunities, spending nearly $640 million on organic growth construction projects during 2018. Based on the progress of expansion projects already underway, the partnership expects to spend approximately $1.3 billion in 2019 and $400 million in 2020 to complete its current slate of construction projects.
The initial phase of the partnership's joint-venture marine terminal in Pasadena, Texas became operational earlier this month, comprised of 1 million barrels of storage and a Panamax-capable dock. The partnership continues to make significant progress on the second phase of Pasadena, with an additional 4 million barrels of storage and supporting Aframax-capable dock and pipeline infrastructure expected to be in-service by the end of 2019.
Construction continues for the partnership's East Houston-to-Hearne refined products pipeline that is expected to be operational in mid-2019. Significant activity is underway for Magellan's west Texas refined products pipeline expansion, with right-of-way work and pipe steel production in process. Construction is expected to commence in mid-2019, with the west Texas expansion operational in mid-2020.
At this time, Magellan is no longer pursuing a stand-alone project to build a new crude oil pipeline in the Delaware Basin from Wink to Crane, Texas.
"Magellan has become known for its disciplined approach to growth and management of our company," continued Mears. "Our recent decision to shut down the ammonia pipeline and cancellation of our stand-alone Delaware Basin pipeline construction project demonstrate our commitment to managing all aspects of our business in a disciplined manner."
In addition, Magellan continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Potential projects under development include a crude oil pipeline from Cushing, Oklahoma to Houston for which an open season is currently underway through March 29 and an expansion of the Saddlehorn pipeline system.
Financial guidance for 2019
Consistent with its previously-stated goal, management expects to increase annual cash distributions by 5% for 2019 and currently expects to generate annual DCF of $1.14 billion in 2019, resulting in approximately 1.2 times the amount needed to pay cash distributions for 2019. Due to the volatility in the pricing differential between the Permian Basin and Houston that encourages spot shipments on the Longhorn and BridgeTex pipelines, current guidance assumes spot shipments occur on both pipelines during the first quarter of 2019 only. If spot shipments continued throughout the remainder of the year, the partnership's DCF could be up to $1.2 billion for 2019. Management does not intend to provide financial guidance beyond 2019 at this time but intends to target distribution coverage of at least 1.2 times for the foreseeable future.
"Magellan will continue managing our business in a responsible manner with a focus on creating long-term value for our investors," added Mears. "We believe our stated goal of increasing annual distributions by 5% for 2019 while maintaining annual distribution coverage of at least 1.2 times for the foreseeable future provides a healthy balance of growth, stability and financial strength during what we expect to be a dynamic period for the energy industry."
Net income per limited partner unit is estimated to be $3.80 for 2019, with first-quarter guidance of 90 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to believe the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with commodity-related activities contributing less than 15% of the partnership's operating margin.
Earnings call details
An analyst call with management to discuss fourth-quarter financial results and annual guidance for 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 908-8951 and provide code 21912805. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Feb. 6. To access the replay, dial (800) 633-8284 and provide code 21912805. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments and the ammonia pipeline impairment, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation, amortization and impairment expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, target, guidance, believe, estimate, expect, continue, maintain, foreseeable, future, may, intend, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Transportation and terminals revenue | $ | 458,930 | $ | 486,028 | $ | 1,731,775 | $ | 1,878,988 | |||||||
Product sales revenue | 209,572 | 374,428 | 758,206 | 927,220 | |||||||||||
Affiliate management fee revenue | 4,797 | 5,227 | 17,680 | 20,365 | |||||||||||
Total revenue | 673,299 | 865,683 | 2,507,661 | 2,826,573 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 135,724 | 174,180 | 577,978 | 649,436 | |||||||||||
Cost of product sales | 194,947 | 230,532 | 635,617 | 704,313 | |||||||||||
Depreciation, amortization and impairment | 50,527 | 103,351 | 196,630 | 265,077 | |||||||||||
General and administrative | 44,841 | 47,048 | 165,717 | 194,283 | |||||||||||
Total costs and expenses | 426,039 | 555,111 | 1,575,942 | 1,813,109 | |||||||||||
Earnings of non-controlled entities | 42,821 | 50,274 | 120,994 | 181,117 | |||||||||||
Operating profit | 290,081 | 360,846 | 1,052,713 | 1,194,581 | |||||||||||
Interest expense | 56,045 | 52,444 | 210,698 | 220,979 | |||||||||||
Interest capitalized | (4,761) | (4,101) | (15,565) | (17,455) | |||||||||||
Interest income | (627) | (1,550) | (1,415) | (3,010) | |||||||||||
Gain on disposition of assets | — | — | (18,505) | (353,797) | |||||||||||
Other expense | 377 | 3,569 | 4,139 | 13,868 | |||||||||||
Income before provision for income taxes | 239,047 | 310,484 | 873,361 | 1,333,996 | |||||||||||
Provision for income taxes | 1,152 | (3,588) | 3,830 | 71 | |||||||||||
Net income | $ | 237,895 | $ | 314,072 | $ | 869,531 | $ | 1,333,925 | |||||||
Basic net income per limited partner unit | $ | 1.04 | $ | 1.38 | $ | 3.81 | $ | 5.84 | |||||||
Diluted net income per limited partner unit | $ | 1.04 | $ | 1.37 | $ | 3.81 | $ | 5.84 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,203 | 228,403 | 228,176 | 228,377 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,682 | 229,052 | 228,338 | 228,573 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.512 | $ | 1.652 | $ | 1.495 | $ | 1.556 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 76.8 | 67.9 | 295.5 | 286.9 | |||||||||||
Distillates | 46.6 | 49.0 | 166.2 | 181.7 | |||||||||||
Aviation fuel | 6.3 | 9.7 | 26.5 | 31.0 | |||||||||||
Liquefied petroleum gases | 0.3 | 0.6 | 9.9 | 11.0 | |||||||||||
Total volume shipped | 130.0 | 127.2 | 498.1 | 510.6 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.199 | $ | 0.945 | $ | 1.348 | $ | 1.208 | |||||||
Volume shipped (million barrels) | 59.4 | 74.4 | 196.4 | 242.8 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 15.0 | 17.6 | 15.3 | 16.5 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(1) | 32.0 | 38.2 | 98.4 | 138.2 | |||||||||||
Saddlehorn - volume shipped (million barrels)(2) | 6.9 | 8.9 | 19.0 | 27.4 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 22.1 | 23.2 | 23.1 | 22.7 | |||||||||||
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||
Refined products: | ||||||||||||
Transportation and terminals revenue | $ | 287,222 | $ | 300,488 | $ | 1,096,040 | $ | 1,151,980 | ||||
Affiliate management fee revenue | 353 | 512 | 1,388 | 1,512 | ||||||||
Earnings (losses) of non-controlled entities | (1,465) | 10,425 | (1,632) | 16,039 | ||||||||
Operating expenses | 87,528 | 105,181 | 400,439 | 424,851 | ||||||||
Transportation and terminals margin | 198,582 | 206,244 | 695,357 | 744,680 | ||||||||
Product sales revenue | 208,072 | 358,510 | 717,140 | 872,144 | ||||||||
Less: Cost of product sales | 190,459 | 215,439 | 586,751 | 650,071 | ||||||||
Product margin | 17,613 | 143,071 | 130,389 | 222,073 | ||||||||
Operating margin | $ | 216,195 | $ | 349,315 | $ | 825,746 | $ | 966,753 | ||||
Crude oil: | ||||||||||||
Transportation and terminals revenue | $ | 128,642 | $ | 140,520 | $ | 458,455 | $ | 549,849 | ||||
Affiliate management fee revenue | 3,639 | 3,504 | 13,950 | 14,832 | ||||||||
Earnings of non-controlled entities | 43,785 | 39,354 | 120,173 | 162,233 | ||||||||
Less: Operating expenses | 30,929 | 56,250 | 120,920 | 166,213 | ||||||||
Transportation and terminals margin | 145,137 | 127,128 | 471,658 | 560,701 | ||||||||
Product sales revenue | 177 | 14,380 | 35,053 | 46,767 | ||||||||
Less: Cost of product sales | 3,511 | 11,727 | 41,325 | 44,128 | ||||||||
Product margin | (3,334) | 2,653 | (6,272) | 2,639 | ||||||||
Operating margin | $ | 141,803 | $ | 129,781 | $ | 465,386 | $ | 563,340 | ||||
Marine storage: | ||||||||||||
Transportation and terminals revenue | $ | 43,981 | $ | 45,958 | $ | 180,683 | $ | 180,850 | ||||
Affiliate management fee revenue | 805 | 1,211 | 2,342 | 4,021 | ||||||||
Earnings of non-controlled entities | 501 | 495 | 2,453 | 2,845 | ||||||||
Less: Operating expenses | 19,543 | 15,175 | 65,296 | 68,010 | ||||||||
Transportation and terminals margin | 25,744 | 32,489 | 120,182 | 119,706 | ||||||||
Product sales revenue | 1,323 | 1,538 | 6,013 | 8,309 | ||||||||
Less: Cost of product sales | 977 | 3,366 | 7,541 | 10,114 | ||||||||
Product margin | 346 | (1,828) | (1,528) | (1,805) | ||||||||
Operating margin | $ | 26,090 | $ | 30,661 | $ | 118,654 | $ | 117,901 | ||||
Segment operating margin | $ | 384,088 | $ | 509,757 | $ | 1,409,786 | $ | 1,647,994 | ||||
Add: Allocated corporate depreciation costs | 1,361 | 1,488 | 5,274 | 5,947 | ||||||||
Total operating margin | 385,449 | 511,245 | 1,415,060 | 1,653,941 | ||||||||
Less: | ||||||||||||
Depreciation, amortization and impairment expense | 50,527 | 103,351 | 196,630 | 265,077 | ||||||||
General and administrative expense | 44,841 | 47,048 | 165,717 | 194,283 | ||||||||
Total operating profit | $ | 290,081 | $ | 360,846 | $ | 1,052,713 | $ | 1,194,581 | ||||
Note: | Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
Three Months Ended | |||||||||||||
December 31, 2018 | |||||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||||
As reported | $ | 314,072 | $ | 1.38 | $ | 1.37 | |||||||
Unrealized derivative gains associated with future physical product sales(1) | (88,461) | ||||||||||||
Inventory valuation adjustments associated with future physical product transactions | 10,823 | ||||||||||||
Excluding commodity-related adjustments(2) | $ | 236,434 | $ | 1.04 | $ | 1.03 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,403 | ||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 229,052 | ||||||||||||
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | December 31, | 2019 | |||||||||||||||||
2017 | 2018 | 2017 | 2018 | Guidance | |||||||||||||||
Net income | $ | 237,895 | $ | 314,072 | $ | 869,531 | $ | 1,333,925 | $ | 870,000 | |||||||||
Interest expense, net | 50,657 | 46,793 | 193,718 | 200,514 | 194,000 | ||||||||||||||
Depreciation, amortization and impairment | 50,527 | 103,351 | 196,630 | 265,077 | 230,000 | ||||||||||||||
Equity-based incentive compensation(1) | 6,458 | 7,441 | 6,766 | 22,768 | 15,000 | ||||||||||||||
Loss on sale and retirement of assets(2) | 5,789 | 1,189 | 13,370 | 7,445 | 10,000 | ||||||||||||||
Gain on disposition of assets(3) | — | — | (18,505) | (351,215) | — | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(4) | 32,347 | (81,930) | 37,624 | (71,548) | |||||||||||||||
Derivative losses recognized in previous periods associated with product sales completed in the period(4) | (8,241) | (24,315) | (25,493) | (39,646) | |||||||||||||||
Inventory valuation adjustments(5) | (3,716) | 9,011 | 332 | 9,207 | |||||||||||||||
Total commodity-related adjustments | 20,390 | (97,234) | 12,463 | (101,987) | 60,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 5,697 | (1,523) | 25,216 | 15,584 | 38,000 | ||||||||||||||
Other(6) | — | — | 3,749 | 3,644 | 8,000 | ||||||||||||||
Adjusted EBITDA | 377,413 | 374,089 | 1,302,938 | 1,395,755 | 1,425,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization | (49,824) | (46,019) | (190,403) | (197,274) | (190,000) | ||||||||||||||
Maintenance capital(7) | (19,331) | (25,633) | (91,163) | (88,736) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 308,258 | $ | 302,437 | $ | 1,021,372 | $ | 1,109,745 | $ | 1,140,000 | |||||||||
(1) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The figures above include adjustments of $13.9 million and $9.3 million, respectively, for cash payments associated with the plan, which are primarily related to tax withholdings. |
(2) | Losses on sale and retirement of assets are excluded from DCF to the extent they represent a non-cash expense. |
(3) | In September 2018, the partnership recognized a $353.8 million gain from the sale of a portion of its interest in BridgeTex Pipeline Company, LLC, of which $351.2 million has been deducted from the calculation of DCF, as it is not related to the partnership's ongoing operations. The remaining $2.6 million represents a purchase price adjustment related to operations, and as such is included in DCF. |
In September 2017, the partnership recognized an $18.5 million gain in connection with the sale of an inactive terminal along the partnership's refined products pipeline system, which has been deducted from the calculation of DCF because it is not related to the partnership's ongoing operations. | |
(4) | Certain derivatives used by the partnership as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these hedges from its determination of DCF until the related products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in its determination of DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. Other adjustments in 2017 include payments received from HollyFrontier Corporation in conjunction with the February 2016 Osage Pipe Line Company, LLC ("Osage") exchange transaction. These payments replaced distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and DALLAS, Jan. 30, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) and Navigator Energy Services announced today an extension of the open season to solicit commitments from shippers for the potential new Voyager pipeline to transport various grades of light crude oil and condensate from Cushing, Oklahoma to Houston, Texas. Binding commitments are now due by 12:00 p.m. Central Time on March 29, 2019. Significant interest has been expressed from potential shippers, particularly those reaching Voyager from connecting carriers. The extension provides these potential shippers additional time to finalize their commitments across multiple pipelines.
The proposed Voyager pipeline would include construction of nearly 500 miles of 20- or 24-inch diameter pipeline from Magellan's terminal in Cushing to Magellan's terminal in East Houston. At the origin, the Voyager pipeline would provide shippers optionality to originate deliveries at Cushing from the Magellan-operated Saddlehorn pipeline serving the Rockies and Bakken production regions, Navigator's Glass Mountain pipeline serving the Mid-Continent basin as well as other connections within the strategic Cushing crude oil hub.
At the destination, Magellan's comprehensive Houston crude oil distribution system could further deliver the product to all refineries in the Houston and Texas City area or to crude oil export facilities, such as the terminal owned by Seabrook Logistics, LLC, which is owned 50% by Magellan.
The potential pipeline system is expected to have an initial capacity of at least 300,000 barrels per day with the ability to expand further if warranted by industry demand. Subject to receipt of sufficient customer commitments and all necessary permits and approvals, the proposed pipeline is planned to be operational in late 2020.
For customer inquiries or additional information about the Voyager pipeline open season, please contact Brant Easterling of Magellan at (918) 574-7665 or brant.easterling@magellanlp.com. More information about the open season is available at https://www.magellanlp.com/WhatWeDo/LiquidPipelineTariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Navigator Energy Services
Headquartered in Dallas, Navigator Energy Services provides oil and natural gas producers with comprehensive midstream services including crude oil and natural gas gathering, transportation, storage and natural gas compression and processing. Navigator is focused on domestic midstream opportunities in both developing and mature producing areas. More information is available at www.navigatorenergyservices.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Navigator Energy Services believe such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for crude oil and condensate; (4) the ability to establish and collect acceptable tariff rates for the Voyager pipeline or other rates or terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential pipeline. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission, including Magellan's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the companies in this release are based only on information currently known, and the companies undertake no obligation to revise any forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Navigator: | Meredith Howard, Media Relations | (210) 737-4478 |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 22, 2019 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 99.75 cents per unit for the period Oct. 1 through Dec. 31, 2018, representing the 67th distribution increase since its initial public offering in 2001.
The fourth-quarter 2018 distribution is 8% higher than the fourth-quarter 2017 distribution of 92 cents per unit and represents a 2% increase over the third-quarter 2018 distribution of 97.75 cents. For the year, Magellan declared distributions of $3.87 per unit for 2018, or 8% higher than distributions of $3.5875 per unit for 2017.
The new distribution, which equates to $3.99 per unit on an annualized basis, will be paid Feb. 14 to unitholders of record at the close of business on Feb. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 11, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 4.850% senior notes due 2049. The notes were priced at 99.371% of par to yield 4.890% to maturity. The partnership intends to use the net proceeds from this offering of approximately $491.7 million, after deducting underwriting discounts and estimated offering expenses, together with cash on hand, to redeem its 6.55% senior notes due 2019. Any remaining net proceeds will be used for general partnership purposes.
The offering is expected to close on Jan. 18, 2019 and is subject to the satisfaction of customary closing conditions. J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. are joint book-running managers for the debt offering, with Barclays Capital Inc., Citigroup Global Markets Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC acting as co-managers.
The offering may be made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 8, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for fourth quarter 2018 before the market opens on Thurs., Jan. 31. Management will discuss fourth-quarter 2018 earnings and annual guidance for 2019 during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 908-8951 and provide code 21912805. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Jan. 31 through midnight on Feb. 6. To access the replay, dial (800) 633-8284 and provide code 21912805. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-fourth-quarter-2018-financial-results-on-jan-31-300775188.html
SOURCE Magellan Midstream Partners, L.P.
DALLAS, Jan. 4, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® MLP High Income Index (the "Index") as part of normal index operations. After the markets close on January 11, 2019, the 30 constituents of the Index will be rebalanced, and the following changes will become effective on January 14, 2019:
Constituent added:
Noble Midstream Partners LP (NYSE: NBLX)
Constituent removed:
Magellan Midstream Partners, L.P. (NYSE: MMP)
ABOUT THE CUSHING® MLP HIGH INCOME INDEX
The Cushing® MLP High Income Index provides a benchmark that is designed to track the performance of 30 higher-yielding publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" an collectively, "Midstream Companies"). Constituents are chosen according to a three-tiered proprietary weighting system developed by Cushing® Asset Management, LP. The Cushing® MLP High Income Index is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPY".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of Midstream Companies and other natural resource companies.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
For additional information contact:
Judson Redmond
214-692-6334
http://www.cushingasset.com
The Cushing® MLP High Income Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing® Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to maintain and calculate the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing® Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones S&P nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-MLPY
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SOURCE Cushing Asset Management, LP
TULSA, Okla., Dec. 3, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to present at the Wells Fargo Midstream Symposium at 8:40 a.m. Eastern on Wed., Dec. 5 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-present-at-wells-fargo-midstream-symposium-300758709.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 20, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the Jefferies Energy Conference at 10:55 a.m. Central Time on Tues., Nov. 27 in Houston.
The session will be moderated by Chris Sighinolfi of Jefferies, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be meeting with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-jefferies-energy-conference-300753642.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 1, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $594.5 million for third quarter 2018 compared to $198.5 million for third quarter 2017. The 2018 results include a $353.8 million gain related to the sale of a portion of the partnership's ownership interest in BridgeTex Pipeline Company, LLC.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $281.8 million for third quarter 2018 compared to $235.2 million for third quarter 2017. The gain on asset sale has not been included in DCF because it is not related to the partnership's ongoing operations.
Diluted net income per limited partner unit was $2.60 in third quarter 2018 and 87 cents in third quarter 2017. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, was $2.65 for third quarter 2018, or $1.10 excluding the $1.55 favorable impact of the gain on asset sale. These results were higher than the $1.00 guidance provided by management in early August primarily due to stronger-than-expected crude oil pipeline shipments and condensate splitter results.
"Magellan continues to generate solid financial results from all of our operating segments, and our business fundamentals remain extremely strong," said Michael Mears, chief executive officer. "Further, our current slate of expansion spending represents a record $2.5 billion of attractive construction projects to expand our pipeline and storage capabilities and generate incremental distributable cash flow for our investors for years to come."
An analysis by segment comparing third quarter 2018 to third quarter 2017 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $214.7 million, an increase of $40.9 million, in part due to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Financial results from this segment's fee-based activities also increased between periods.
Transportation and terminals revenue increased $11.0 million driven by higher shipments from strong demand for refined products in large part due to higher distillate demand in crude oil production regions served by the partnership. The current period also benefited from higher average pipeline rates primarily due to the mid-year tariff adjustment of 4.4% on July 1, 2018.
Earnings of non-controlled entities improved due to higher margins and additional volume from Powder Springs Logistics, LLC, which is owned 50% by Magellan and began operations in 2017.
Operating expenses decreased $6.4 million primarily due to more favorable product overages (which reduce operating expenses), partially offset by higher property taxes from a favorable adjustment in the 2017 period and more integrity spending in the current year.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $19.4 million between periods primarily due to the recognition of lower unrealized losses in the current period on open futures contracts used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, declined slightly between periods.
Crude oil. Crude oil operating margin was $153.9 million, an increase of $38.1 million and a quarterly record for this segment. Transportation and terminals revenue increased $28.8 million primarily due to more spot shipments on the Longhorn pipeline from the favorable pricing differential between the Permian Basin and Houston, resulting in more volume at a higher average rate on Longhorn, as well as increased movements on the partnership's Houston distribution system. Overall, the average crude rate per barrel decreased between periods due to proportionately more volume on the Houston distribution system, which moves at a lower rate. The current period also benefited from higher contributions from the partnership's condensate splitter and revenues earned from new storage and ancillary services in conjunction with storage capacity Magellan now contracts from Seabrook Logistics, LLC, which is owned 50% by Magellan.
Earnings of non-controlled entities increased $18.2 million primarily due to higher earnings from BridgeTex, which was owned 50% by Magellan through Sept. 28, 2018 and 30% thereafter. The higher BridgeTex earnings were mainly attributable to new commitments that began in 2018 for recently-added pipeline capacity and more spot shipments due to the favorable pricing differential between the Permian Basin and Houston. The partnership also benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased shipments associated with a contractual step-up in committed volumes in Sept. 2017 and Sept. 2018 as well as higher earnings from Seabrook Logistics associated with new storage, pipeline and export capabilities Seabrook Logistics placed into service during third quarter 2018.
Operating expenses increased by $14.0 million primarily due to fees paid to Seabrook Logistics for contract storage and ancillary services that Magellan utilized to provide services to its shippers, higher environmental accruals and less favorable product overages.
Marine storage. Marine storage operating margin was $29.0 million, an increase of $3.1 million. Transportation and terminals revenue increased $2.0 million primarily due to higher average storage rates and more ancillary fees reflecting additional customer activity as the prior year was negatively impacted by Hurricane Harvey. Operating expenses declined slightly due to environmental accruals and clean-up work related to the hurricane that negatively impacted the 2017 period.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher personnel costs resulting from an increase in employee headcount as a result of the partnership's growth and higher incentive compensation expense due to company performance in 2018.
The 2018 period benefited from the $353.8 million gain on the sale of a 20% interest in BridgeTex whereas the 2017 period recognized an $18.5 million gain on the sale of an inactive terminal along the partnership's refined products pipeline system. Magellan does not typically seek to sell assets that are generating positive cash flow but takes advantage of opportunities to realize value from time-to-time.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending. As of Sept. 30, 2018, the partnership had $4.3 billion of debt outstanding, following repayment of $250 million of notes due in July 2018, and had $217.4 million of cash on hand with no borrowings outstanding on its commercial paper program.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to identify new opportunities for future growth. Based on the progress of $2.5 billion of expansion projects already underway, the partnership expects to spend approximately $800 million in 2018, $1.3 billion in 2019 and $400 million in 2020 to complete its current slate of construction projects. These spending estimates include the recently-announced Permian Gulf Coast joint pipeline with Energy Transfer LP, MPLX LP and Delek US Holdings, Inc. to construct a 600-mile pipeline system from the Permian Basin to the Texas Gulf Coast region to be operational in mid-2020. While the final scope is still being determined, as currently contemplated, Magellan is expected to spend approximately $500 million for its share of the joint project.
The final stages of construction activity are in progress for the initial 1 million barrels of storage at the partnership's joint-venture marine terminal in Pasadena, Texas. Pipeline and dock work are expected to be completed during the remainder of 2018, with this initial phase of Pasadena on target to be operational in January 2019. In addition, substantial progress has been made on the construction of an additional 4 million barrels of storage and supporting infrastructure at Pasadena, with an expected in-service date of January 2020.
Construction is currently underway for the partnership's East Houston-to-Hearne refined products pipeline, and construction is expected to commence by year-end for the partnership's Delaware Basin crude oil pipeline. Both of these pipelines are expected to be operational in mid-2019. Pipe steel has been ordered from domestic mills for the partnership's west Texas refined products pipeline expansion, which is expected to be operational in mid-2020.
In addition, Magellan continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Potential projects under development include a crude oil pipeline from Cushing, Oklahoma to Houston, a crude oil pipeline from Houston to Corpus Christi, Texas and a crude oil export terminal on Harbor Island in Corpus Christi capable of loading VLCCs, or very large crude carriers.
Financial guidance
As a result of continued strong financial performance to date and the partnership's expectations for the remainder of the year, management is increasing its annual DCF guidance by $20 million to $1.12 billion for 2018, or approximately 1.25 times the amount needed to pay projected cash distributions for 2018. Management remains committed to its stated goal of increasing annual cash distributions by approximately 8% for 2018.
Based on the continued favorable pricing differential between the Permian Basin and Houston that encourages spot shipments on the Longhorn and BridgeTex pipelines, current guidance assumes spot shipments occur on both pipelines through the remainder of 2018. As a result, volumes are still assumed to average 270,000 barrels per day (bpd) on the Longhorn pipeline and 370,000 bpd on the BridgeTex pipeline for 2018.
The initial term of the partnership's contracts for the Longhorn pipeline expired on Sept. 30, 2018. Effective Oct. 1, all existing committed shippers either elected to extend their contracts under expiring terms for an additional 2 years or executed new long-term contracts with lower incentive tariff rates and terms up to 10 years. Current guidance assumes an average committed rate of approximately $2 per barrel on the Longhorn pipeline beginning in the fourth quarter of 2018 with an average contract life of 5 years.
Including actual results so far this year, diluted net income per limited partner unit is estimated to be $5.70 for 2018, which results in fourth-quarter guidance of $1.24. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Looking further ahead, management continues to target annual DCF growth in the range of 5% to 8% for both 2019 and 2020. Management further intends to manage distribution growth consistent with its expectations for DCF growth for the foreseeable future while maintaining annual distribution coverage of at least 1.2 times, which correspondingly could result in annual distribution growth of 5% to 8% each year as well. Consistent with its historical approach, management plans to provide more specific details related to 2019 guidance early next year in conjunction with reporting year-end 2018 financial results.
Earnings call details
An analyst call with management to discuss third-quarter financial results, outlook for the remainder of 2018 and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (888) 220-8451 and provide code 4632297. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Nov. 7. To access the replay, dial (888) 203-1112 and provide code 4632297. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments and the gain associated with the asset sale, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, target, guidance, believe, estimate, expect, projected, future, may, intend, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Transportation and terminals revenue | $ | 446,935 | $ | 488,775 | $ | 1,272,845 | $ | 1,392,960 | |||||||
Product sales revenue | 121,010 | 144,403 | 548,634 | 552,792 | |||||||||||
Affiliate management fee revenue | 4,903 | 4,842 | 12,883 | 15,138 | |||||||||||
Total revenue | 572,848 | 638,020 | 1,834,362 | 1,960,890 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 165,368 | 172,115 | 442,254 | 475,256 | |||||||||||
Cost of product sales | 121,819 | 120,510 | 440,670 | 473,781 | |||||||||||
Depreciation and amortization | 49,909 | 56,228 | 146,103 | 161,726 | |||||||||||
General and administrative | 37,202 | 47,389 | 120,876 | 147,235 | |||||||||||
Total costs and expenses | 374,298 | 396,242 | 1,149,903 | 1,257,998 | |||||||||||
Earnings of non-controlled entities | 31,151 | 53,795 | 78,173 | 130,843 | |||||||||||
Operating profit | 229,701 | 295,573 | 762,632 | 833,735 | |||||||||||
Interest expense | 51,895 | 55,133 | 154,653 | 168,535 | |||||||||||
Interest capitalized | (3,424) | (3,099) | (10,804) | (13,354) | |||||||||||
Interest income | (240) | (501) | (788) | (1,460) | |||||||||||
Gain on sale of asset | (18,505) | (353,797) | (18,505) | (353,797) | |||||||||||
Other expense | 549 | 1,694 | 3,762 | 10,299 | |||||||||||
Income before provision for income taxes | 199,426 | 596,143 | 634,314 | 1,023,512 | |||||||||||
Provision for income taxes | 926 | 1,609 | 2,678 | 3,659 | |||||||||||
Net income | $ | 198,500 | $ | 594,534 | $ | 631,636 | $ | 1,019,853 | |||||||
Basic net income per limited partner unit | $ | 0.87 | $ | 2.60 | $ | 2.77 | $ | 4.47 | |||||||
Diluted net income per limited partner unit | $ | 0.87 | $ | 2.60 | $ | 2.77 | $ | 4.46 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,199 | 228,397 | 228,167 | 228,368 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,260 | 228,449 | 228,222 | 228,412 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.521 | $ | 1.600 | $ | 1.489 | $ | 1.524 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 75.8 | 73.4 | 218.7 | 219.0 | |||||||||||
Distillates | 41.0 | 45.6 | 119.6 | 132.7 | |||||||||||
Aviation fuel | 6.7 | 8.1 | 20.2 | 21.3 | |||||||||||
Liquefied petroleum gases | 3.9 | 4.4 | 9.6 | 10.4 | |||||||||||
Total volume shipped | 127.4 | 131.5 | 368.1 | 383.4 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.332 | $ | 1.266 | $ | 1.412 | $ | 1.325 | |||||||
Volume shipped (million barrels) | 48.4 | 62.8 | 137.0 | 168.4 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 14.9 | 16.0 | 15.5 | 16.1 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(1) | 25.7 | 36.5 | 66.4 | 100.0 | |||||||||||
Saddlehorn - volume shipped (million barrels)(2) | 4.4 | 6.7 | 12.1 | 18.5 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 22.5 | 22.6 | 23.4 | 22.6 |
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 289,030 | $ | 300,034 | $ | 808,818 | $ | 851,492 | |||||||
Affiliate management fee revenue | 353 | 351 | 1,035 | 1,000 | |||||||||||
Earnings (losses) of non-controlled entities | (700) | 3,393 | (167) | 5,614 | |||||||||||
Less: Operating expenses | 118,665 | 112,279 | 312,911 | 319,670 | |||||||||||
Transportation and terminals margin | 170,018 | 191,499 | 496,775 | 538,436 | |||||||||||
Product sales revenue | 107,175 | 129,926 | 509,068 | 513,634 | |||||||||||
Less: Cost of product sales | 103,391 | 106,756 | 396,292 | 434,632 | |||||||||||
Product margin | 3,784 | 23,170 | 112,776 | 79,002 | |||||||||||
Operating margin | $ | 173,802 | $ | 214,669 | $ | 609,551 | $ | 617,438 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 116,305 | $ | 145,118 | $ | 329,813 | $ | 409,329 | |||||||
Affiliate management fee revenue | 3,703 | 3,463 | 10,311 | 11,328 | |||||||||||
Earnings of non-controlled entities | 31,244 | 49,420 | 76,388 | 122,879 | |||||||||||
Less: Operating expenses | 31,163 | 45,195 | 89,991 | 109,963 | |||||||||||
Transportation and terminals margin | 120,089 | 152,806 | 326,521 | 433,573 | |||||||||||
Product sales revenue | 12,370 | 12,666 | 34,876 | 32,387 | |||||||||||
Less: Cost of product sales | 16,630 | 11,590 | 37,814 | 32,401 | |||||||||||
Product margin | (4,260) | 1,076 | (2,938) | (14) | |||||||||||
Operating margin | $ | 115,829 | $ | 153,882 | $ | 323,583 | $ | 433,559 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 42,501 | $ | 44,546 | $ | 136,702 | $ | 134,892 | |||||||
Affiliate management fee revenue | 847 | 1,028 | 1,537 | 2,810 | |||||||||||
Earnings of non-controlled entities | 607 | 982 | 1,952 | 2,350 | |||||||||||
Less: Operating expenses | 17,723 | 17,178 | 45,753 | 52,835 | |||||||||||
Transportation and terminals margin | 26,232 | 29,378 | 94,438 | 87,217 | |||||||||||
Product sales revenue | 1,465 | 1,811 | 4,690 | 6,771 | |||||||||||
Less: Cost of product sales | 1,798 | 2,164 | 6,564 | 6,748 | |||||||||||
Product margin | (333) | (353) | (1,874) | 23 | |||||||||||
Operating margin | $ | 25,899 | $ | 29,025 | $ | 92,564 | $ | 87,240 | |||||||
Segment operating margin | $ | 315,530 | $ | 397,576 | $ | 1,025,698 | $ | 1,138,237 | |||||||
Add: Allocated corporate depreciation costs | 1,282 | 1,614 | 3,913 | 4,459 | |||||||||||
Total operating margin | 316,812 | 399,190 | 1,029,611 | 1,142,696 | |||||||||||
Less: | |||||||||||||||
Depreciation and amortization expense | 49,909 | 56,228 | 146,103 | 161,726 | |||||||||||
General and administrative expense | 37,202 | 47,389 | 120,876 | 147,235 | |||||||||||
Total operating profit | $ | 229,701 | $ | 295,573 | $ | 762,632 | $ | 833,735 |
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
September 30, 2018 | |||||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||||
As reported | $ | 594,534 | $ | 2.60 | $ | 2.60 | |||||||
Unrealized derivative losses associated with future physical product sales(1) | 9,770 | ||||||||||||
Inventory valuation adjustments associated with future physical product transactions | 1,907 | ||||||||||||
Excluding commodity-related adjustments(2) | $ | 606,211 | $ | 2.65 | $ | 2.65 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,397 | ||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,449 |
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | 2018 | |||||||||||||||||
2017 | 2018 | 2017 | 2018 | Guidance | |||||||||||||||
Net income | $ | 198,500 | $ | 594,534 | $ | 631,636 | $ | 1,019,853 | $ | 1,302,000 | |||||||||
Interest expense, net | 48,231 | 51,533 | 143,061 | 153,721 | 202,000 | ||||||||||||||
Depreciation and amortization | 49,909 | 56,228 | 146,103 | 161,726 | 217,000 | ||||||||||||||
Equity-based incentive compensation(1) | 3,466 | 7,933 | 308 | 15,327 | 23,000 | ||||||||||||||
Loss on sale and retirement of assets | 2,250 | 1,670 | 7,581 | 6,256 | 10,000 | ||||||||||||||
Gain on sale of asset(2) | (18,505) | (351,215) | (18,505) | (351,215) | (351,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative losses recognized in the period associated with future product transactions(3) | 16,797 | 13,017 | 13,518 | 33,945 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period(3) | 4,033 | (14,993) | (25,493) | (38,894) | |||||||||||||||
Inventory valuation adjustments(4) | (875) | 456 | 4,048 | 196 | |||||||||||||||
Total commodity-related adjustments | 19,955 | (1,520) | (7,927) | (4,753) | (22,000) | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 8,635 | (506) | 19,519 | 17,107 | 25,000 | ||||||||||||||
Other(5) | 849 | — | 3,749 | 3,644 | 4,000 | ||||||||||||||
Adjusted EBITDA | 313,290 | 358,657 | 925,525 | 1,021,666 | 1,410,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization | (47,403) | (50,741) | (140,579) | (151,255) | (200,000) | ||||||||||||||
Maintenance capital(6) | (30,737) | (26,143) | (71,832) | (63,103) | (90,000) | ||||||||||||||
Distributable cash flow | $ | 235,150 | $ | 281,773 | $ | 713,114 | $ | 807,308 | $ | 1,120,000 |
(1) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The equity-based compensation adjustment for the nine months ended September 30, 2017 and 2018 was $14.2 million and $24.6 million, respectively. However, the figures above include adjustments of $13.9 million and $9.3 million, respectively, for cash payments associated with the equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) | In September 2018, the partnership recognized a $353.8 million gain from the sale of a portion of its interest in BridgeTex Pipeline Company, LLC, of which $351.2 million has been deducted from the calculation of DCF, as it is not related to the partnership's ongoing operations. The remaining $2.6 million represents a purchase price adjustment related to September operations, and as such is included in DCF. |
In September 2017, the partnership recognized an $18.5 million gain in connection with the sale of an inactive terminal along the partnership's refined products pipeline system, which has been deducted from the calculation of DCF because it is not related to the partnership's ongoing operations. | |
(3) | Certain derivatives used by the partnership as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these hedges from its determination of DCF until the related products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in its determination of DCF. |
(4) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(5) | Other adjustments in 2018 include a $3.6 million one-time adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. Other adjustments in 2017 include payments received from HollyFrontier Corporation in conjunction with the February 2016 Osage Pipe Line Company, LLC ("Osage") exchange transaction. These payments replaced distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(6) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-higher-third-quarter-financial-results-300741782.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 25, 2018 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 97.75 cents per unit for the period July 1 through Sept. 30, 2018, representing the 66th distribution increase since its initial public offering in 2001.
The third-quarter 2018 distribution is 8% higher than the third-quarter 2017 distribution of 90.5 cents per unit and represents a 2% increase over the second-quarter 2018 distribution of 95.75 cents.
The new distribution, which equates to $3.91 per unit on an annualized basis, will be paid Nov. 14 to unitholders of record at the close of business on Nov. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-increases-quarterly-cash-distribution-to-97-75-cents-300737925.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 2, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2018 before the market opens on Thurs., Nov. 1. Management will discuss third-quarter earnings, outlook for the remainder of 2018 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (888) 220-8451 and provide code 4632297. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Nov. 1 through midnight on Nov. 7. To access the replay, dial (888) 203-1112 and provide code 4632297. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2018-financial-results-on-nov-1-300723112.html
SOURCE Magellan Midstream Partners, L.P.
DALLAS and TULSA, Okla., and FINDLAY, Ohio, and BRENTWOOD, Tenn., Sept. 4, 2018 /PRNewswire/ -- Energy Transfer Partners, L.P. (NYSE: ETP) ("Energy Transfer"), Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), MPLX LP (NYSE: MPLX) ("MPLX") and Delek US Holdings, Inc. (NYSE: DK) ("Delek") announced today that they have received sufficient commitments to proceed with plans to construct a new 30-inch diameter common carrier pipeline to transport crude oil from the Permian Basin to the Texas Gulf Coast region, with the ability to increase the pipe diameter to expand the capacity based upon additional commitments received during the upcoming open season. An open season for additional shipper volume commitments on the new pipeline system will be launched this week.
The 600-mile pipeline system is expected to be operational in mid-2020 with multiple Texas origins, including Wink, Crane and Midland. The pipeline system will have the strategic capability to transport crude oil to both Energy Transfer's Nederland, Texas terminal and Magellan's East Houston, Texas terminal for ultimate delivery through their respective distribution systems.
The project is subject to receipt of customary regulatory and Board approvals of the respective entities.
About Energy Transfer Partners, L.P.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited partnership that owns and operates one of the largest and most diversified portfolios of energy assets in the United States. Strategically positioned in all of the major U.S. production basins, ETP owns and operates a geographically diverse portfolio of complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ETP's general partner is owned by Energy Transfer Equity, L.P. (ETE). More information is available at www.energytransfer.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About MPLX LP
MPLX LP (NYSE: MPLX) is a diversified, growth-oriented master limited partnership formed in 2012 by Marathon Petroleum Corporation (MPC) to own, operate, develop and acquire midstream energy infrastructure assets. MPLX is engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of NGLs; and the transportation, storage and distribution of crude oil and refined petroleum products through a marine fleet and approximately 10,000 miles of crude oil and light product pipelines. Headquartered in Findlay, Ohio, MPLX's assets consist of a network of crude oil and products pipelines and supporting assets, including storage facilities (tank farms) located in the Midwest and Gulf Coast regions of the United States; 62 light-product terminals with approximately 24 million barrels of storage capacity; storage caverns with approximately 2.8 million barrels of storage capacity; a barge dock facility with approximately 80,000 barrels per day of crude oil and product throughput capacity; and gathering and processing assets that include approximately 5.9 billion cubic feet per day of gathering capacity, 8.7 billion cubic feet per day of natural gas processing capacity and 610,000 barrels per day of fractionation capacity. More information is available at www.mplx.com.
About Delek US Holdings, Inc.
Delek US Holdings, Inc. (NYSE: DK) is a diversified downstream energy company with assets in petroleum refining, logistics, renewable fuels and convenience store retailing. The refining assets consist of refineries operated in Tyler and Big Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a combined nameplate crude throughput capacity of 302,000 barrels per day. The logistics operations primarily consist of Delek Logistics Partners, LP. Delek US Holdings, Inc. and its affiliates own approximately 63% (including the 2 percent general partner interest) of Delek Logistics Partners, LP. Delek Logistics Partners, LP (DKL) is a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets. The convenience store retail business is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores in central and west Texas and New Mexico. More information is available at www.delekus.com.
This press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements relate to, among other things, statements with respect to forecasts regarding capacity and timing for becoming operational for the opportunities discussed above. You can identify forward-looking statements by words such as "anticipate," "believe," "design," "estimate," "expect," "forecast," "intend," "plan," "project," "potential," "could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of the companies and are difficult to predict. Although management of Energy Transfer Partners, L.P., Magellan Midstream Partners, L.P., MPLX LP and Delek US Holdings, Inc. (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on completion of the project and construction of the pipeline or the pipeline's and the companies' results of operations and financial condition are: (1) the ability of the companies to negotiate and enter into definitive agreements and to obtain all required rights-of-way, permits and other approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in the pipeline's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this project. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for all companies. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
SOURCE MPLX LP
TULSA, Okla., Aug. 28, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, president and chief executive officer, is scheduled to present at the Barclays CEO Energy-Power Conference at 3:05 p.m. Eastern Time on Wed., Sept. 5 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-present-at-barclays-ceo-energy-power-conference-300703609.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 2, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $214.4 million for second quarter 2018 compared to $210.4 million for second quarter 2017.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $266.6 million for second quarter 2018 compared to $250.4 million for second quarter 2017.
Diluted net income per limited partner unit was 94 cents in second quarter 2018 and 92 cents in second quarter 2017. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, of $1.05 for second quarter 2018 was higher than the 95-cent guidance provided by management in early May primarily due to stronger-than-expected refined products pipeline shipments and earlier recognition of commodity profits than previously assumed.
"Magellan continues to generate strong financial results bolstered by increased demand for our refined products and crude oil infrastructure," said Michael Mears, chief executive officer. "In addition to solid demand for our current services, we remain committed to developing attractive expansion projects to meet our customers' needs while generating attractive returns for our investors for years to come."
An analysis by segment comparing second quarter 2018 to second quarter 2017 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $191.4 million, a decrease of $23.1 million related to lower commodity profits, in part due to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Otherwise, financial results from this segment's fee-based activities were essentially flat between periods.
Transportation and terminals revenue increased $13.2 million between periods driven by record shipments from strong demand for refined products in large part due to higher distillate demand in crude oil production regions served by the partnership. The current period also benefited from higher storage and other ancillary service fees along Magellan's refined products pipeline system associated with increased customer activity.
Operating expenses increased $12.6 million due to higher personnel costs, more integrity spending, additional environmental accruals and higher property taxes due to a favorable adjustment that benefited the 2017 period.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $23.1 million between periods due in part to the recognition of unrealized losses on open futures contracts used to economically hedge the partnership's commodity-related activities in the current period compared to unrealized gains in second quarter 2017. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, also declined between periods due to lower butane blending volumes and higher butane costs.
Crude oil. Crude oil operating margin was $152.0 million, an increase of $46.2 million and a quarterly record for this segment. Transportation and terminals revenue increased $29.5 million primarily due to contributions from the partnership's condensate splitter in Corpus Christi that began commercial operations in June 2017. The current period also benefited from more spot shipments on the Longhorn pipeline due to the favorable pricing differential between the Permian Basin and Houston, resulting in more volume at a higher average rate. Operating expenses were essentially unchanged between periods.
Earnings of non-controlled entities increased $17.4 million primarily due to higher earnings from BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan. The higher BridgeTex earnings were mainly attributable to new commitments that began in first quarter 2018 for recently-added pipeline capacity and more spot shipments due to the favorable pricing differential between the Permian Basin and Houston. The partnership also benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased shipments associated with a contractual step-up in committed volumes in Sept. 2017.
Marine storage. Marine storage operating margin was $28.3 million, a decrease of $3.9 million. Transportation and terminals revenue declined $3.6 million primarily due to lower utilization, resulting from the timing of maintenance work and the ongoing impact of tanks damaged by Hurricane Harvey that are still under repair. Operating expenses increased $2.3 million due to less favorable product overages (which reduce operating expenses), higher personnel costs and demolition costs incurred in connection with the expansion of the partnership's Galena Park, Texas dock facilities.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher personnel costs resulting from an increase in employee headcount as a result of the partnership's growth and higher incentive compensation expense due to company performance in 2018. Other (income) expense was favorable primarily due to a payment received in second quarter 2018 related to a 2016 asset transfer.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending. As of June 30, 2018, the partnership had $4.7 billion of debt outstanding, including $120 million of borrowings outstanding on its commercial paper program.
Expansion capital projects
Magellan continues to identify new opportunities for future growth, such as the two projects announced earlier this week to further expand the partnership's West Texas refined products pipeline system and to build additional tankage and another dock for expanded crude oil marine export capabilities at its Seabrook Logistics joint venture. Based on the progress of $2 billion of expansion projects already underway, the partnership expects to spend approximately $900 million in both 2018 and 2019 and $200 million in 2020 to complete its current slate of construction projects. These spending estimates also include approximately $50 million for the construction of a new 8-mile, 20-inch diameter refined products pipeline between the partnership's Galena Park and East Houston facilities, supported by new volume commitments to markets in East Texas.
Magellan's other large expansion projects remain on-time and on-budget, with steady progress continuing. Export capabilities recently commenced at Seabrook Logistics, supported by 2.4 million barrels of crude oil and condensate storage, an Aframax dock with up to a 45-foot draft and 300,000 barrels per day (bpd) of dock capacity and a new connection to Magellan's Houston crude oil distribution system. This week's announcement for an additional expansion will significantly increase the export capabilities of the Seabrook Logistics facility.
Construction activities continue for the addition of incremental dock capacity at the partnership's Galena Park marine terminal, which is expected to be fully operational by the end of 2018.
Significant construction progress continues on the partnership's joint-venture marine terminal in Pasadena, Texas. The initial 1 million barrels of storage is substantially complete, and the facility is expected to begin service in January 2019 after the pipe connectivity and dock work are finished later this year. The additional 4 million barrels of storage under construction at Pasadena is expected to come online by January 2020, with substantially all steel already ordered from domestic mills.
Material has been received for the partnership's East Houston-to-Hearne refined products pipeline, with pipeline construction expected to commence next month for a mid-2019 service date. Delivery of the steel ordered for the Delaware Basin crude oil pipeline is expected during fourth quarter, also with a mid-2019 targeted in-service date. Magellan continues to assess the potential optimization of the Delaware Basin project through a joint venture or undivided joint interest arrangement with a third party to best utilize this future asset.
In addition, Magellan continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Active discussions with potential customers continue to further develop the partnership's joint-venture marine terminal in Pasadena and its Seabrook Logistics crude oil joint venture. Discussions also continue regarding new infrastructure investments in Texas for both crude oil and refined products service, including potential opportunities for additional pipeline, storage and export capabilities.
Financial guidance
As a result of continued strong financial performance to date and the partnership's expectations for the remainder of the year, management is increasing its annual DCF guidance by $20 million to $1.1 billion for 2018, or more than 1.2 times the amount needed to pay projected cash distributions for 2018. Management remains committed to its stated goal of increasing annual cash distributions by approximately 8% for 2018.
Based on the continued favorable pricing differential between the Permian Basin and Houston that encourages spot shipments on the Longhorn and BridgeTex pipelines, current guidance assumes spot shipments occur on both pipelines through the remainder of 2018. As a result, volumes are now assumed to average 270,000 bpd on the Longhorn pipeline and 370,000 bpd on the BridgeTex pipeline for 2018.
All existing Longhorn customers have now either elected to extend their initial contracts under current terms for an additional two years, as allowed by the expiring agreements, or have executed new long-term contracts with lower incentive tariff rates and terms up to 10 years to be effective October 1, 2018. Magellan remains in active discussions with those shippers that have not yet executed long-term contracts and has a process currently underway through Aug. 15 for shippers to make commitments. Based on the lower rates offered for these longer-term contracts, average tariff rates on the Longhorn pipeline are expected to decline beginning in the fourth quarter of 2018. Once the current commitment process has been finalized, the partnership will be able to more accurately quantify the new average tariff rate.
Including actual results so far this year, net income per limited partner unit is estimated to be $4.10 for 2018, with third-quarter guidance of $1.00. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Looking further ahead, management continues to target annual DCF growth in the range of 5% to 8% for both 2019 and 2020. Management further intends to manage distribution growth consistent with its expectations for DCF growth for the foreseeable future while maintaining annual distribution coverage of 1.2 times, which correspondingly could result in annual distribution growth of 5% to 8% each year as well.
Earnings call details
An analyst call with management to discuss second-quarter financial results, outlook for the remainder of 2018 and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (866) 548-4713 and provide code 5629960. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 5629960. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, target, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2017 |
2018 |
2017 |
2018 | ||||||||||||
Transportation and terminals revenue |
$ |
433,239 |
$ |
472,248 |
$ |
825,910 |
$ |
904,185 |
|||||||
Product sales revenue |
182,004 |
166,797 |
427,624 |
408,389 |
|||||||||||
Affiliate management fee revenue |
4,197 |
5,046 |
7,980 |
10,296 |
|||||||||||
Total revenue |
619,440 |
644,091 |
1,261,514 |
1,322,870 |
|||||||||||
Costs and expenses: |
|||||||||||||||
Operating |
145,294 |
159,845 |
276,886 |
303,141 |
|||||||||||
Cost of product sales |
145,975 |
153,679 |
318,851 |
353,271 |
|||||||||||
Depreciation and amortization |
48,896 |
53,619 |
96,194 |
105,498 |
|||||||||||
General and administrative |
43,393 |
53,290 |
83,674 |
99,846 |
|||||||||||
Total costs and expenses |
383,558 |
420,433 |
775,605 |
861,756 |
|||||||||||
Earnings of non-controlled entities |
25,576 |
42,510 |
47,022 |
77,048 |
|||||||||||
Operating profit |
261,458 |
266,168 |
532,931 |
538,162 |
|||||||||||
Interest expense |
51,546 |
56,750 |
102,758 |
113,402 |
|||||||||||
Interest capitalized |
(3,183) |
(5,608) |
(7,380) |
(10,255) |
|||||||||||
Interest income |
(256) |
(380) |
(548) |
(959) |
|||||||||||
Other (income) expense |
2,043 |
(119) |
3,213 |
8,605 |
|||||||||||
Income before provision for income taxes |
211,308 |
215,525 |
434,888 |
427,369 |
|||||||||||
Provision for income taxes |
908 |
1,116 |
1,752 |
2,050 |
|||||||||||
Net income |
$ |
210,400 |
$ |
214,409 |
$ |
433,136 |
$ |
425,319 |
|||||||
Basic net income per limited partner unit |
$ |
0.92 |
$ |
0.94 |
$ |
1.90 |
$ |
1.86 |
|||||||
Diluted net income per limited partner unit |
$ |
0.92 |
$ |
0.94 |
$ |
1.90 |
$ |
1.86 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,192 |
228,387 |
228,151 |
228,354 |
|||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,245 |
228,425 |
228,202 |
228,393 |
|||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2017 |
2018 |
2017 |
2018 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.481 |
$ |
1.503 |
$ |
1.472 |
$ |
1.485 |
|||||||
Volume shipped (million barrels): |
|||||||||||||||
Gasoline |
76.7 |
78.0 |
142.9 |
145.6 |
|||||||||||
Distillates |
40.7 |
44.1 |
78.6 |
87.1 |
|||||||||||
Aviation fuel |
7.6 |
6.9 |
13.5 |
13.2 |
|||||||||||
Liquefied petroleum gases |
4.6 |
4.9 |
5.7 |
6.0 |
|||||||||||
Total volume shipped |
129.6 |
133.9 |
240.7 |
251.9 |
|||||||||||
Crude oil: |
|||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.380 |
$ |
1.492 |
$ |
1.456 |
$ |
1.360 |
|||||||
Volume shipped (million barrels) |
47.3 |
49.9 |
88.6 |
105.6 |
|||||||||||
Crude oil terminal average utilization (million barrels per month) |
15.2 |
16.6 |
15.9 |
16.1 |
|||||||||||
Select joint venture pipelines: |
|||||||||||||||
BridgeTex - volume shipped (million barrels)(1) |
21.8 |
35.2 |
40.7 |
63.5 |
|||||||||||
Saddlehorn - volume shipped (million barrels)(2) |
3.7 |
6.0 |
7.7 |
11.8 |
|||||||||||
Marine storage: |
|||||||||||||||
Marine terminal average utilization (million barrels per month) |
23.9 |
22.6 |
24.0 |
22.6 |
|||||||||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2017 |
2018 |
2017 |
2018 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation and terminals revenue |
$ |
277,883 |
$ |
291,064 |
$ |
519,788 |
$ |
551,458 |
|||||||
Affiliate management fee revenue |
353 |
352 |
682 |
649 |
|||||||||||
Earnings (losses) of non-controlled entities |
422 |
(97) |
533 |
2,221 |
|||||||||||
Less: Operating expenses |
100,713 |
113,342 |
194,246 |
207,391 |
|||||||||||
Transportation and terminals margin |
177,945 |
177,977 |
326,757 |
346,937 |
|||||||||||
Product sales revenue |
161,723 |
150,934 |
401,893 |
383,708 |
|||||||||||
Less: Cost of product sales |
125,220 |
137,543 |
292,901 |
327,876 |
|||||||||||
Product margin |
36,503 |
13,391 |
108,992 |
55,832 |
|||||||||||
Operating margin |
$ |
214,448 |
$ |
191,368 |
$ |
435,749 |
$ |
402,769 |
|||||||
Crude oil: |
|||||||||||||||
Transportation and terminals revenue |
$ |
108,455 |
$ |
137,953 |
$ |
213,508 |
$ |
264,211 |
|||||||
Affiliate management fee revenue |
3,474 |
3,849 |
6,608 |
7,865 |
|||||||||||
Earnings of non-controlled entities |
24,494 |
41,851 |
45,144 |
73,459 |
|||||||||||
Less: Operating expenses |
31,410 |
31,177 |
58,828 |
64,768 |
|||||||||||
Transportation and terminals margin |
105,013 |
152,476 |
206,432 |
280,767 |
|||||||||||
Product sales revenue |
19,403 |
13,282 |
22,506 |
19,721 |
|||||||||||
Less: Cost of product sales |
18,607 |
13,761 |
21,184 |
20,811 |
|||||||||||
Product margin |
796 |
(479) |
1,322 |
(1,090) |
|||||||||||
Operating margin |
$ |
105,809 |
$ |
151,997 |
$ |
207,754 |
$ |
279,677 |
|||||||
Marine storage: |
|||||||||||||||
Transportation and terminals revenue |
$ |
47,794 |
$ |
44,146 |
$ |
94,201 |
$ |
90,346 |
|||||||
Affiliate management fee revenue |
370 |
845 |
690 |
1,782 |
|||||||||||
Earnings of non-controlled entities |
660 |
756 |
1,345 |
1,368 |
|||||||||||
Less: Operating expenses |
15,375 |
17,693 |
28,030 |
35,657 |
|||||||||||
Transportation and terminals margin |
33,449 |
28,054 |
68,206 |
57,839 |
|||||||||||
Product sales revenue |
878 |
2,581 |
3,225 |
4,960 |
|||||||||||
Less: Cost of product sales |
2,148 |
2,375 |
4,766 |
4,584 |
|||||||||||
Product margin |
(1,270) |
206 |
(1,541) |
376 |
|||||||||||
Operating margin |
$ |
32,179 |
$ |
28,260 |
$ |
66,665 |
$ |
58,215 |
|||||||
Segment operating margin |
$ |
352,436 |
$ |
371,625 |
$ |
710,168 |
$ |
740,661 |
|||||||
Add: Allocated corporate depreciation costs |
1,311 |
1,452 |
2,631 |
2,845 |
|||||||||||
Total operating margin |
353,747 |
373,077 |
712,799 |
743,506 |
|||||||||||
Less: |
|||||||||||||||
Depreciation and amortization expense |
48,896 |
53,619 |
96,194 |
105,498 |
|||||||||||
General and administrative expense |
43,393 |
53,290 |
83,674 |
99,846 |
|||||||||||
Total operating profit |
$ |
261,458 |
$ |
266,168 |
$ |
532,931 |
$ |
538,162 |
|||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2018 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
|||||||||||
As reported |
$ |
214,409 |
$ |
0.94 |
$ |
0.94 |
|||||||
Unrealized derivative losses associated with future physical product sales(1) |
24,732 |
||||||||||||
Inventory valuation adjustments associated with future physical product transactions |
1,729 |
||||||||||||
Excluding commodity-related adjustments(2) |
$ |
240,870 |
$ |
1.05 |
$ |
1.05 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,387 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,425 |
||||||||||||
(1) |
Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) |
Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
June 30, |
2018 | |||||||||||||||||
2017 |
2018 |
2017 |
2018 |
Guidance | |||||||||||||||
Net income |
$ |
210,400 |
$ |
214,409 |
$ |
433,136 |
$ |
425,319 |
$ |
936,000 |
|||||||||
Interest expense, net |
48,107 |
50,762 |
94,830 |
102,188 |
212,000 |
||||||||||||||
Depreciation and amortization |
48,896 |
53,619 |
96,194 |
105,498 |
214,000 |
||||||||||||||
Equity-based incentive compensation(1) |
6,570 |
10,047 |
(3,158) |
7,394 |
23,000 |
||||||||||||||
Loss on sale and retirement of assets |
1,870 |
2,589 |
5,331 |
4,586 |
10,000 |
||||||||||||||
Commodity-related adjustments: |
|||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(2) |
(5,955) |
29,318 |
(7,312) |
35,828 |
|||||||||||||||
Derivative losses recognized in previous periods associated with product sales completed in the period(2) |
(137) |
(23,358) |
(25,493) |
(38,801) |
|||||||||||||||
Inventory valuation adjustments(3) |
1,983 |
838 |
4,923 |
(260) |
|||||||||||||||
Total commodity-related adjustments |
(4,109) |
6,798 |
(27,882) |
(3,233) |
(35,000) |
||||||||||||||
Cash distributions received from non-controlled entities in excess of earnings |
10,725 |
397 |
10,884 |
17,613 |
36,000 |
||||||||||||||
Other(4) |
1,450 |
— |
2,900 |
3,644 |
4,000 |
||||||||||||||
Adjusted EBITDA |
323,909 |
338,621 |
612,235 |
663,009 |
1,400,000 |
||||||||||||||
Interest expense, net, excluding debt issuance cost amortization |
(47,279) |
(49,928) |
(93,176) |
(100,514) |
(210,000) |
||||||||||||||
Maintenance capital(5) |
(26,266) |
(22,100) |
(41,095) |
(36,960) |
(90,000) |
||||||||||||||
Distributable cash flow |
$ |
250,364 |
$ |
266,593 |
$ |
477,964 |
$ |
525,535 |
$ |
1,100,000 |
|||||||||
(1) |
Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The equity-based compensation adjustment for the six months ended June 30, 2017 and 2018 was $10.7 million and $16.7 million, respectively. However, the figures above include adjustments of $13.9 million and $9.3 million, respectively, for cash payments associated with the equity-based incentive compensation plan, which primarily include tax withholdings. | |
(2) |
Certain derivatives used by the partnership as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these hedges from its determination of DCF until the related products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in its determination of DCF. | |
(3) |
The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. | |
(4) |
Other adjustments in 2018 include a $3.6 million one-time adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. Other adjustments in 2017 include payments received from HollyFrontier Corporation in conjunction with the February 2016 Osage Pipe Line Company, LLC ("Osage") exchange transaction. These payments replaced distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. | |
(5) |
Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-higher-second-quarter-financial-results-300690848.html
SOURCE Magellan Midstream Partners, L.P.
DALLAS, Aug. 1, 2018 /PRNewswire/ -- Alerian reported index linked product positions of $15.0 billion as of June 30, 2018. Linked products include exchange-traded funds, exchange-traded notes, return of capital notes, variable insurance portfolios, and mutual funds.
Below is a full list of energy master limited partnership (MLP) positions, as of June 30, 2018, in products linked to the Alerian Index Series.
Ticker |
Exposure in |
Exposure in |
Ticker |
Exposure in |
Exposure in | |
AM |
305,257,484 |
10,340,701 |
HEP |
151,911,915 |
5,375,510 | |
AMGP |
1,164,270 |
61,732 |
MMP |
1,501,453,809 |
21,735,000 | |
ANDX |
446,822,576 |
10,506,056 |
MPLX |
1,162,174,520 |
34,041,433 | |
APU |
58,778,057 |
1,392,185 |
NBLX |
22,166,701 |
434,130 | |
ARLP |
25,591,033 |
1,394,607 |
NGL |
165,162,738 |
13,213,019 | |
BPL |
604,497,037 |
17,197,640 |
NS |
210,933,016 |
9,312,716 | |
BPMP |
20,189,424 |
961,859 |
NSH |
239,822 |
19,340 | |
BWP |
170,678,160 |
14,688,310 |
PAA |
1,177,071,579 |
49,791,522 | |
CEQP |
183,499,246 |
5,779,504 |
PAGP |
3,213,393 |
134,395 | |
CQP |
173,601,824 |
4,828,980 |
PSXP |
318,554,875 |
6,238,834 | |
CVRR |
20,028,626 |
896,135 |
RMP |
147,346,450 |
8,657,253 | |
DCP |
421,401,442 |
10,654,904 |
SEP |
341,382,494 |
9,638,128 | |
DM |
13,475,016 |
990,810 |
SHLX |
322,823,077 |
14,554,692 | |
EEP |
277,227,481 |
25,363,905 |
SMLP |
12,744,536 |
827,567 | |
ENBL |
176,973,526 |
10,343,280 |
SPH |
28,830,596 |
1,227,356 | |
ENLC |
853,859 |
51,906 |
SUN |
27,065,571 |
1,084,358 | |
ENLK |
303,905,691 |
19,568,943 |
TCP |
165,868,659 |
6,391,856 | |
EPD |
1,503,782,388 |
54,347,032 |
TEGP |
386,005,955 |
17,419,041 | |
EQGP |
355,540 |
15,123 |
TGP |
18,444,324 |
1,094,619 | |
EQM |
356,373,011 |
6,907,792 |
USAC |
16,751,289 |
995,323 | |
ETE |
6,023,303 |
349,177 |
VLP |
17,131,051 |
449,988 | |
ETP |
1,481,856,983 |
77,828,623 |
VNOM |
25,953,041 |
813,320 | |
GEL |
281,851,288 |
12,864,048 |
WES |
571,788,034 |
11,816,244 | |
GLOP |
14,609,467 |
612,556 |
WGP |
826,761 |
23,126 | |
GMLP |
15,169,006 |
981,178 |
WPZ |
1,218,967,796 |
30,031,234 | |
HCLP |
18,789,000 |
1,592,288 |
||||
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of June 30, 2018, over $15 billion is directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-june-30-2018-index-linked-product-positions-300690263.html
SOURCE Alerian
TULSA, Okla. and MECHELEN, Belgium, Aug. 1, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and LBC Tank Terminals, LLC ("LBC") are further expanding the infrastructure of Seabrook Logistics, LLC ("Seabrook Logistics"), owned 50/50 by subsidiaries of Magellan and LBC, by increasing Seabrook Logistics' crude oil and condensate storage and dock capabilities in the Houston Gulf Coast area.
Seabrook Logistics plans to construct nearly 700,000 barrels (111,000 cubic meters) of additional crude oil and condensate storage in Seabrook, Texas as well as a new Suezmax dock with up to a 45-foot draft (14 meters) and approximately 400,000 barrels per day ("bpd") of dock capacity.
Following completion of today's announced expansion, Seabrook Logistics will own approximately 3.1 million barrels (490,000 cubic meters) of storage, deep water access through an Aframax dock and a Suezmax dock and connectivity to Magellan's Houston crude oil distribution system, providing it access to multiple inbound crude oil pipelines.
This latest expansion is estimated to cost approximately $120 million, shared equally by Magellan and LBC, and is expected to be operational by late 2019, subject to receipt of all permits and approvals.
"With increased crude oil production in the Permian Basin and other prolific regions, demand for crude oil storage and export capabilities continues to grow in the Houston Gulf Coast area," said Michael Mears, Magellan's chief executive officer. "We are pleased to expand our services to meet this growing industry need."
"With the expansion of the Panama Canal and the growing role of the U.S. in increased flows of oil, this is an important development for our project and for the success of our customers," said John Grimes, LBC's group chief operating officer. "Seabrook Logistics is committed to providing our customers with industry-leading infrastructure and service and this is another step in that direction."
Export capabilities recently commenced for Seabrook Logistics, which currently operates 2.4 million barrels (380,000 cubic meters) of crude oil and condensate storage and an Aframax dock with up to a 45-foot draft (14 meters) and 300,000 bpd of dock capacity. The Seabrook Logistics' facility is also connected to Magellan's Houston crude oil distribution system via a new 24-inch (61-centimeter) diameter bi-directional pipeline.
If the facility were fully built out, Seabrook Logistics would have up to 5.5 million barrels (870,000 cubic meters) of storage capacity and a total dock capacity of at least 700,000 bpd, with options to further increase dock throughput capacity.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About LBC Tank Terminals
LBC Tank Terminals is one of the largest global operators of bulk liquid storage facilities for chemical petroleum products and base oil products. LBC owns and operates a global network of terminals at key locations in the United States, Europe and China, while offering loading / unloading services for all modes of transportation. More information is available at www.lbctt.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and LBC Tank Terminals, LLC believe such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors associated with the project that may have a direct impact on its operating and financial results are: (1) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis; (2) price fluctuations and overall demand for crude oil and refined products; (3) changes in tariff rates or other terms as required by state or federal regulatory authorities; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this expansion. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission. Forward-looking statements made in this release are based only on information currently known, and the companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Magellan: |
Paula Farrell, Investor Relations |
(918) 574-7650 |
|
Bruce Heine, Media Relations |
(918) 574-7010 |
| |
LBC: |
Corporate Head Office |
+32 15 287 310 |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-and-lbc-to-further-expand-seabrook-logistics-crude-oil-and-condensate-marine-terminal-300689949.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 30, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an additional expansion of the western leg of its refined petroleum products pipeline system in Texas. Magellan had previously announced its plans to expand the capacity of this line segment to approximately 150,000 barrels per day (bpd) from its current capacity of 100,000 bpd. Based on additional committed volume received as part of its recent supplemental open season, the partnership now plans to expand this pipe capacity to 175,000 bpd.
The expanded capacity will handle incremental shipments of gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas and New Mexico. The pipeline system can also access markets in Arizona and Mexico via connections to other pipelines.
Supported by long-term customer commitments, the expansion will be accomplished by a combination of increased pipeline diameter along the partnership's existing route and construction of 140 miles of new pipe from Hearne to Alexander, Texas. Connectivity to the ExxonMobil Pipeline Company's terminal in Wink, Texas will also be added as part of the expansion.
"Magellan's expansion of our refined products pipeline system into West Texas provides our customers with continued flexibility to meet growing demand for gasoline and diesel fuel in the region with supply from our Gulf Coast and Mid-Continent origins," said Michael Mears, chief executive officer. "Further, construction of the new pipeline segment between Hearne and Alexander has the strategic advantage of providing additional capacity along our extensive pipeline network to satisfy strong demand for refined products destined for the Dallas-Fort Worth metropolitan area."
Magellan now expects to spend approximately $500 million on this project, with the expanded capacity available mid-2020, subject to receipt of all permits and approvals.
Construction of new refined products terminals in both Midland and the Delaware Basin remain under review.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) price fluctuations and overall demand for refined petroleum products; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) the occurrence of an operational hazard or unforeseen interruption; (5) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (6) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-further-expand-western-leg-of-texas-refined-petroleum-products-pipeline-system-300688042.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 26, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2018 before the market opens on Thurs., Aug. 2. Management will discuss second-quarter earnings, outlook for the remainder of 2018 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (866) 548-4713 and provide code 5629960. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Aug. 2 through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 5629960. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-second-quarter-2018-financial-results-on-aug-2-300672365.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 13, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the 2018 J.P. Morgan Energy Conference at 9:20 a.m. Eastern on Tues., June 19 in New York City.
The session will be moderated by Jeremy Tonet of J.P. Morgan, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be meeting with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-jp-morgan-energy-conference-300665971.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 4, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today a new open season to solicit additional commitments from shippers to potentially further expand the western leg of its refined petroleum products pipeline system in Texas. Binding commitments are due from interested customers by 5:00 p.m. Central Time on July 11, 2018.
Magellan previously announced it is expanding the capacity of the western leg of its Texas refined products pipeline system to approximately 150,000 barrels per day (bpd) from its current capacity of 100,000 bpd.
Subject to the results of the supplemental open season launched today, the partnership is considering the addition of another 35,000 bpd of capacity, for a total capacity up to 185,000 bpd. In addition, construction of a new refined products terminal in Midland remains under review.
All of the expanded capacity will handle incremental shipments of gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas and New Mexico. The pipeline system can also access markets in Arizona and Mexico via connections to other pipelines.
Magellan currently expects the expanded capacity to be available mid-2020, subject to receipt of all permits and approvals.
For customer inquiries about the open season, please contact Tony Wysocki at (918) 574-7174 or tony.wysocki@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 21, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that following a successful open season, it plans to expand the western leg of its refined petroleum products pipeline system in Texas to handle incremental shipments of gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas and New Mexico. The pipeline system can also access markets in Arizona and Mexico via connections to other pipelines.
Fully supported by long-term customer commitments, Magellan is expanding the capacity of the western leg of its Texas refined products pipeline system to approximately 150,000 barrels per day (bpd) from its current capacity of 100,000 bpd. The expanded capacity will be accomplished by increasing the pipeline size along the partnership's existing route. Connectivity to the ExxonMobil Pipeline Company's terminal in Wink, Texas will also be added as part of the expansion.
"Magellan's extensive refined products pipeline system provides significant optionality for our customers, including the ability to access supply from multiple Gulf Coast and Mid-Continent refineries," said Michael Mears, chief executive officer. "We are pleased to expand the western leg of our Texas pipeline to serve increasing demand for refined petroleum products in West Texas and New Mexico, as well as surrounding markets in Arizona and Mexico via third-party pipeline connections."
Magellan currently expects to spend approximately $300 million on this project, with the expanded capacity available mid-2020, subject to receipt of all necessary permits and approvals.
The pipeline system's capacity could be expanded by another 20,000 bpd, up to 170,000 bpd. Given the strong interest expressed during the initial open season, the partnership plans to conduct a supplemental open season for additional commitments in the near future for a possible further expansion. In addition, construction of a new refined products terminal in Midland remains under consideration.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily
transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) price fluctuations and overall demand for refined petroleum products; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) the occurrence of an operational hazard or unforeseen interruption; (5) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (6) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-expand-western-leg-of-texas-refined-petroleum-products-pipeline-system-300651307.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 3, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $210.9 million for first quarter 2018 compared to $222.7 million for first quarter 2017.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $258.9 million for first quarter 2018 compared to $227.6 million for first quarter 2017. First-quarter 2018 net income and DCF were negatively impacted by a $16.0 million expense related to a one-time cumulative adjustment to correct an error made by the partnership's third-party actuary for pension valuation estimates, dating back to 2010.
Diluted net income per limited partner unit was 92 cents in first quarter 2018 and 98 cents in first quarter 2017. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, was 98 cents for first quarter 2018, or $1.05 excluding the 7-cent unfavorable impact of the one-time pension correction. These results were higher than the 95-cent guidance provided by management in early February primarily due to stronger-than-expected refined products and crude oil shipments on the partnership's pipeline systems.
"Magellan kicked off the year 2018 with solid financial results and strong demand for our fee-based transportation and terminals services," said Michael Mears, chief executive officer. "Our outlook for the remainder of 2018 has strengthened based on favorable market conditions for refined products and crude oil pipeline shipments combined with an improved commodity pricing environment. Looking beyond the current year, we remain optimistic about a number of potential expansion projects in advanced stages of review that could further benefit Magellan's future results."
An analysis by segment comparing first quarter 2018 to first quarter 2017 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $211.4 million, a decrease of $9.9 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Otherwise, financial results from this segment's fee-based activities increased between periods.
Transportation and terminals revenue increased $18.5 million between periods driven by strong demand for refined products in large part due to higher distillate demand in crude oil production regions served by the partnership. The current period also benefited from higher storage and other ancillary service fees along Magellan's refined products pipeline system associated with increased customer activity.
Operating expenses increased slightly as higher personnel costs from the pension correction and higher power costs associated with moving incremental volume were largely offset by lower environmental accruals and lower asset retirements during the current period.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $30.0 million between periods due in part to the recognition of lower unrealized gains on open futures contracts used to economically hedge the partnership's commodity-related activities during the current period. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, also declined between periods due to lower butane blending volumes and higher butane costs.
Crude oil. Crude oil operating margin was $127.7 million, an increase of $25.7 million. Transportation and terminals revenue increased $21.2 million primarily due to contributions from the partnership's recently-constructed splitter in Corpus Christi that began commercial operations in June 2017. The current period also benefited from higher average rates on the Longhorn pipeline and significantly more volume on the partnership's Houston distribution system, resulting in a lower overall average rate per barrel due to the substantially lower tariff related to these shorter-haul movements.
Earnings of non-controlled entities increased $11.0 million primarily due to higher earnings from BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan. The higher BridgeTex earnings were mainly attributable to new commitments that began in first quarter 2018 for recently-added pipeline capacity, volumes from BridgeTex's Eaglebine origin that began service in second quarter 2017 and more spot shipments. The partnership also benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased shipments associated with a step-up in committed volumes in Sept. 2017.
Operating expenses increased $6.2 million primarily due to higher costs associated with the partnership's new condensate splitter that began commercial operations in June 2017, higher power costs for more pipeline movements and higher personnel costs due to the pension correction.
Marine storage. Marine storage operating margin was $30.0 million, a decrease of $4.5 million. Transportation and terminals revenue was essentially flat as lower utilization, resulting from the timing of maintenance work and tanks damaged by Hurricane Harvey that are still under repair, was mostly offset by higher storage rates during the current period. Operating expenses increased $5.3 million due to less favorable product overages (which reduce operating expenses), higher personnel costs resulting from the pension correction and increased integrity spending due to timing of maintenance work.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher personnel costs resulting from the pension correction and an increase in employee headcount due to the partnership's growth. Other expense also increased due to the non-service component of the pension correction.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending. As of March 31, 2018, the partnership had $4.6 billion of debt outstanding, with no borrowings outstanding on its commercial paper program and $74.2 million of cash on hand.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to develop incremental investment opportunities expected to generate attractive returns. Based on the progress of expansion projects already underway, the partnership expects to spend approximately $950 million in 2018 and $425 million in 2019 to complete its current slate of construction projects. This spending profile is $100 million higher than previous estimates primarily due to the recently-launched project to construct a new fractionator in Frost, Texas that is expected to be operational in late 2019.
Magellan continues to make significant progress on its other construction projects. Expansion of the Seabrook Logistics joint venture, which includes the addition of 1.7 million barrels of storage and connectivity to Magellan's Houston crude oil distribution system, is nearing completion and is expected to commence operations in early third quarter. Further, construction activities continue for the addition of new dock capacity at the partnership's Galena Park marine terminal, which is expected to be fully operational by late 2018.
Tank construction is underway at the partnership's joint-venture marine terminal in Pasadena, Texas. The initial 1 million barrels of storage is still targeted to be in-service by Jan. 2019, with an additional 4 million barrels of storage expected to come online by Jan. 2020. The pipeline steel has been ordered and permit and right-of-way work are in progress for the Delaware Basin crude oil pipeline and East Houston-to-Hearne refined products pipeline, with both expected to be operational in mid-2019. As indicated during the partnership's recent analyst day, Magellan is currently evaluating optimization of the Delaware Basin project through a joint venture or undivided joint interest arrangement with a third party.
Magellan also continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Active discussions with potential customers continue to further develop the partnership's joint-venture marine terminal in Pasadena and its Seabrook Logistics crude oil joint venture.
Discussions also continue regarding new infrastructure investments in West Texas and other regions of Texas for both crude oil and refined products service. An open season is currently underway to assess customer interest for the potential expansion of the partnership's western leg of its refined products pipeline system in Texas. Significant interest has been expressed from potential shippers for this proposed pipeline expansion, with the open season recently extended by one week to May 16 to provide interested shippers additional time to finalize their commitments.
Financial guidance
As a result of strong financial performance to date and the partnership's expectations for the remainder of the year, management is increasing its annual DCF guidance by $30 million to $1.08 billion for 2018, which would represent a record year for Magellan and 1.2 times the amount needed to pay projected cash distributions for 2018. Management remains committed to its stated goal of increasing annual cash distributions by 8% for 2018.
Based on the recent favorable pricing differential between the Permian Basin and Houston that encourages spot shipments on the Longhorn and BridgeTex pipelines, current guidance assumes spot shipments occur on both pipelines through the third quarter of 2018, generating additional DCF for Magellan. As a result, volumes are now assumed to average 265,000 barrels per day (bpd) on the Longhorn pipeline and 350,000 bpd on the BridgeTex pipeline for 2018.
Although almost all existing Longhorn customers have now extended their contracts under current terms for an additional two years as allowed by the expiring agreements, Magellan remains in active discussions with shippers to extend the length of their contracts. While demand for space on the Longhorn pipeline is strong, the current pricing environment for long-term commitments on crude oil pipelines originating from the Permian Basin is competitive. As a result, DCF guidance continues to assume average tariff rates for the Longhorn pipeline will likely be lower beginning in the fourth quarter of 2018 after the current contracts expire on Sept. 30.
Including actual results so far this year, net income per limited partner unit is estimated to be $4.10 for 2018, with second-quarter guidance of 95 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Looking further ahead, management continues to target annual DCF growth in the range of 5% to 8% for both 2019 and 2020. Management has indicated its intention to manage distribution growth consistent with its expectations for DCF growth for the foreseeable future while maintaining annual distribution coverage of 1.2 times, which correspondingly could result in annual distribution growth of 5% to 8% each year as well.
Earnings call details
An analyst call with management to discuss first-quarter financial results, outlook for the remainder of 2018 and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (877) 260-1479 and provide code 9386289. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on May 9. To access the replay, dial (888) 203-1112 and provide code 9386289. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments and the one-time pension correction, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments (and did not anticipate the one-time pension correction), a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, target, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands, except per unit amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2017 |
2018 | ||||||
Transportation and terminals revenue |
$ |
392,671 |
$ |
431,937 |
|||
Product sales revenue |
245,620 |
241,592 |
|||||
Affiliate management fee revenue |
3,783 |
5,250 |
|||||
Total revenue |
642,074 |
678,779 |
|||||
Costs and expenses: |
|||||||
Operating |
131,592 |
143,296 |
|||||
Cost of product sales |
172,876 |
199,592 |
|||||
Depreciation and amortization |
47,298 |
51,879 |
|||||
General and administrative |
40,281 |
46,556 |
|||||
Total costs and expenses |
392,047 |
441,323 |
|||||
Earnings of non-controlled entities |
21,446 |
34,538 |
|||||
Operating profit |
271,473 |
271,994 |
|||||
Interest expense |
51,212 |
56,652 |
|||||
Interest capitalized |
(4,197) |
(4,647) |
|||||
Interest income |
(292) |
(579) |
|||||
Other expense |
1,170 |
8,724 |
|||||
Income before provision for income taxes |
223,580 |
211,844 |
|||||
Provision for income taxes |
844 |
934 |
|||||
Net income |
$ |
222,736 |
$ |
210,910 |
|||
Basic net income per limited partner unit |
$ |
0.98 |
$ |
0.92 |
|||
Diluted net income per limited partner unit |
$ |
0.98 |
$ |
0.92 |
|||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,109 |
228,320 |
|||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,159 |
228,360 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2017 |
2018 | ||||||
Refined products: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.461 |
$ |
1.464 |
|||
Volume shipped (million barrels): |
|||||||
Gasoline |
66.2 |
67.6 |
|||||
Distillates |
37.9 |
43.0 |
|||||
Aviation fuel |
5.9 |
6.3 |
|||||
Liquefied petroleum gases |
1.1 |
1.1 |
|||||
Total volume shipped |
111.1 |
118.0 |
|||||
Crude oil: |
|||||||
Magellan 100%-owned assets: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.543 |
$ |
1.241 |
|||
Volume shipped (million barrels) |
41.3 |
55.7 |
|||||
Crude oil terminal average utilization (million barrels per month) |
16.5 |
16.0 |
|||||
Select joint venture pipelines: |
|||||||
BridgeTex - volume shipped (million barrels)(1) |
18.9 |
28.3 |
|||||
Saddlehorn - volume shipped (million barrels)(2) |
4.0 |
5.8 |
|||||
Marine storage: |
|||||||
Marine terminal average utilization (million barrels per month) |
24.0 |
22.6 |
|||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||
(Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2017 |
2018 | ||||||
Refined products: |
|||||||
Transportation and terminals revenue |
$ |
241,905 |
$ |
260,394 |
|||
Affiliate management fee revenue |
329 |
297 |
|||||
Earnings of non-controlled entities |
111 |
2,318 |
|||||
Less: Operating expenses |
93,533 |
94,049 |
|||||
Transportation and terminals margin |
148,812 |
168,960 |
|||||
Product sales revenue |
240,170 |
232,774 |
|||||
Less: Cost of product sales |
167,681 |
190,333 |
|||||
Product margin |
72,489 |
42,441 |
|||||
Operating margin |
$ |
221,301 |
$ |
211,401 |
|||
Crude oil: |
|||||||
Transportation and terminals revenue |
$ |
105,053 |
$ |
126,258 |
|||
Affiliate management fee revenue |
3,134 |
4,016 |
|||||
Earnings of non-controlled entities |
20,650 |
31,608 |
|||||
Less: Operating expenses |
27,418 |
33,591 |
|||||
Transportation and terminals margin |
101,419 |
128,291 |
|||||
Product sales revenue |
3,103 |
6,439 |
|||||
Less: Cost of product sales |
2,577 |
7,050 |
|||||
Product margin |
526 |
(611) |
|||||
Operating margin |
$ |
101,945 |
$ |
127,680 |
|||
Marine storage: |
|||||||
Transportation and terminals revenue |
$ |
46,407 |
$ |
46,200 |
|||
Affiliate management fee revenue |
320 |
937 |
|||||
Earnings of non-controlled entities |
685 |
612 |
|||||
Less: Operating expenses |
12,655 |
17,964 |
|||||
Transportation and terminals margin |
34,757 |
29,785 |
|||||
Product sales revenue |
2,347 |
2,379 |
|||||
Less: Cost of product sales |
2,618 |
2,209 |
|||||
Product margin |
(271) |
170 |
|||||
Operating margin |
$ |
34,486 |
$ |
29,955 |
|||
Segment operating margin |
$ |
357,732 |
$ |
369,036 |
|||
Add: Allocated corporate depreciation costs |
1,320 |
1,393 |
|||||
Total operating margin |
359,052 |
370,429 |
|||||
Less: |
|||||||
Depreciation and amortization expense |
47,298 |
51,879 |
|||||
General and administrative expense |
40,281 |
46,556 |
|||||
Total operating profit |
$ |
271,473 |
$ |
271,994 |
|||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, 2018 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
|||||||||||
As reported |
$ |
210,910 |
$ |
0.92 |
$ |
0.92 |
|||||||
Unrealized derivative losses associated with future physical product sales(1) |
13,833 |
0.06 |
0.06 |
||||||||||
Inventory valuation adjustments associated with future physical product transactions |
574 |
— |
— |
||||||||||
Excluding commodity-related adjustments(2) |
$ |
225,317 |
$ |
0.98 |
$ |
0.98 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,320 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,360 |
||||||||||||
(1) |
Includes unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) |
Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||
(Unaudited, in thousands) | |||||||||||
Three Months Ended |
|||||||||||
March 31, |
2018 | ||||||||||
2017 |
2018 |
Guidance | |||||||||
Net income |
$ |
222,736 |
$ |
210,910 |
$ |
936,000 |
|||||
Interest expense, net |
46,723 |
51,426 |
215,000 |
||||||||
Depreciation and amortization |
47,298 |
51,879 |
208,000 |
||||||||
Equity-based incentive compensation(1) |
(9,728) |
(2,653) |
17,000 |
||||||||
Loss on sale and retirement of assets |
3,461 |
1,997 |
10,000 |
||||||||
Commodity-related adjustments: |
|||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(2) |
(6,705) |
11,479 |
|||||||||
Derivative losses recognized in previous periods associated with product sales completed in the period(2) |
(20,008) |
(20,412) |
|||||||||
Inventory valuation adjustments(3) |
2,940 |
(1,098) |
|||||||||
Total commodity-related adjustments |
(23,773) |
(10,031) |
(40,000) |
||||||||
Cash distributions received from non-controlled entities in excess of earnings |
159 |
17,216 |
30,000 |
||||||||
Other(4) |
1,450 |
3,644 |
4,000 |
||||||||
Adjusted EBITDA |
288,326 |
324,388 |
1,380,000 |
||||||||
Interest expense, net, excluding debt issuance cost amortization |
(45,897) |
(50,586) |
(210,000) |
||||||||
Maintenance capital(5) |
(14,829) |
(14,860) |
(90,000) |
||||||||
Distributable cash flow |
$ |
227,600 |
$ |
258,942 |
$ |
1,080,000 |
|||||
(1) |
Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The equity-based compensation adjustment for the three months ended March 31, 2017 and 2018 was $4.2 million and $6.6 million, respectively. However, the figures above include adjustments of $13.9 million and $9.3 million, respectively, for cash payments associated with the equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) |
Certain derivatives used by the partnership as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these hedges from its determination of DCF until the related products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in its determination of DCF. |
(3) |
The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(4) |
Other adjustments in 2018 include a $3.6 million one-time adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. Other adjustments in 2017 include payments received from HollyFrontier Corporation in conjunction with the February 2016 Osage Pipe Line Company, LLC ("Osage") exchange transaction. These payments replaced distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(5) |
Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-first-quarter-2018-financial-results-300641873.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 2, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an increased scope and extension of the open season to solicit commitments from shippers for the potential expansion of the western leg of its refined products pipeline system in Texas. Binding commitments are now due by 5:00 p.m. Central Time on May 16, 2018. Significant interest has been expressed from potential shippers, and the one-week extension provides interested shippers additional time to finalize their commitments.
The proposed expansion would increase Magellan's capability to transport refined petroleum products, such as gasoline and diesel fuel, to demand centers in Abilene, Midland/Odessa and El Paso, Texas, with further optionality to access markets in the states of New Mexico and Arizona, as well as international markets in Mexico via connections to other pipelines owned by Magellan and third parties. Magellan's extensive refined products pipeline system provides shippers with significant optionality, including connectivity to multiple Gulf Coast refineries and terminals as well as various midcontinent refinery connections, all of which are available supply alternatives for shippers interested in accessing these markets.
The pipeline's current capacity of 100,000 barrels per day (bpd) could increase to 145,000 bpd following the expansion, or 5,000 bpd more than initially anticipated. If supported by sufficient commitments, the pipeline capacity could be expanded further.
Magellan is also considering the construction of a new refined products terminal in Midland on 100 acres of recently-acquired land if warranted by customer demand.
Subject to the results of this open season and receipt of all necessary permits and approvals, the expanded capacity and Midland terminal could be operational by mid-2020.
For customer inquiries about the open season, please contact Tony Wysocki at (918) 574-7174 or tony.wysocki@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-increases-scope-and-extends-open-season-for-potential-expansion-of-western-leg-of-texas-refined-products-pipeline-system-300640928.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 26, 2018 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 93.75 cents per unit for the period Jan. 1 through March 31, 2018, representing the 64th distribution increase since its initial public offering in 2001.
The first-quarter 2018 distribution is 7% higher than the first-quarter 2017 distribution of 87.25 cents per unit and represents a 2% increase over the fourth-quarter 2017 distribution of 92 cents. Magellan remains committed to its stated goal of increasing annual cash distributions by 8% for 2018.
The new distribution, which equates to $3.75 per unit on an annualized basis, will be paid May 15 to unitholders of record at the close of business on May 8.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-increases-quarterly-cash-distribution-to-93-75-cents-300637290.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 12, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2018 before the market opens on Thurs., May 3. Management will discuss first-quarter earnings, outlook for the remainder of 2018 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (877) 260-1479 and provide code 9386289. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on May 3 through midnight on May 9. To access the replay, dial (888) 203-1112 and provide code 9386289. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-first-quarter-2018-financial-results-on-may-3-300629060.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., March 9, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it is considering an expansion of the western leg of its refined products pipeline system in Texas and has launched an open season to assess customer interest. Interested customers must submit binding commitments by 5:00 p.m. Central Time on May 9, 2018.
The proposed expansion would increase Magellan's capability to transport refined petroleum products, such as gasoline and diesel fuel, from Gulf Coast refineries to demand centers in Abilene, Midland/Odessa and El Paso, Texas, with further optionality to access markets in the states of New Mexico and Arizona, as well as international markets in Mexico via connections to other pipelines owned by Magellan and third parties. The pipeline's current capacity of 100,000 barrels per day (bpd) could increase to 140,000 bpd following the expansion.
Subject to the results of this open season and receipt of all necessary permits and approvals, the expanded capacity could be operational by mid-2020.
For customer inquiries about the open season, please contact Tony Wysocki at (918) 574-7174 or tony.wysocki@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-announces-open-season-for-potential-expansion-of-western-leg-of-texas-refined-products-pipeline-system-300611282.html
SOURCE Magellan Midstream Partners, L.P.
DALLAS, Feb. 21, 2018 /PRNewswire/ -- Alerian reported index linked product positions of $16.3 billion as of December 31, 2017. Linked products include exchange-traded funds, exchange-traded notes, return of capital notes, variable insurance portfolios, and mutual funds.
Below is a full list of energy master limited partnership (MLP) positions, as of December 31, 2017, in products linked to the Alerian Index Series.
Ticker |
Exposure in |
Exposure in |
Ticker |
Exposure in |
Exposure in | |
AM |
318,072,149 |
10,952,898 |
MMP |
1,644,568,414 |
23,182,526 | |
AMGP |
754,587 |
38,265 |
MPLX |
1,279,929,181 |
36,084,837 | |
ANDX |
516,099,522 |
11,173,404 |
NBLX |
21,404,873 |
428,097 | |
APU |
76,556,528 |
1,655,992 |
NGL |
195,952,022 |
13,946,763 | |
ARLP |
20,166,275 |
1,023,669 |
NS |
296,565,295 |
9,902,013 | |
BPL |
908,164,717 |
18,328,249 |
NSH |
236,356 |
15,055 | |
BWP |
201,509,203 |
15,608,769 |
PAA |
1,085,692,515 |
52,601,382 | |
CEQP |
30,317,020 |
1,175,078 |
PAGP |
3,567,709 |
162,538 | |
CQP |
30,774,953 |
1,038,291 |
PSXP |
303,822,210 |
5,803,672 | |
DCP |
411,714,791 |
11,332,639 |
RMP |
197,598,050 |
9,203,449 | |
DM |
186,044,367 |
6,109,831 |
SEP |
397,826,315 |
10,061,364 | |
EEP |
372,358,764 |
26,962,981 |
SHLX |
369,468,507 |
12,389,957 | |
ENBL |
30,305,242 |
2,131,170 |
SMLP |
20,113,987 |
981,170 | |
ENLC |
1,134,945 |
64,485 |
SPH |
35,347,307 |
1,459,426 | |
ENLK |
317,615,016 |
20,664,607 |
SUN |
36,559,156 |
1,287,294 | |
EPD |
1,672,410,145 |
63,086,011 |
TCP |
350,896,258 |
6,608,216 | |
EQGP |
315,059 |
11,712 |
TEGP |
1,533,669 |
59,583 | |
EQM |
536,502,790 |
7,339,299 |
TEP |
269,478,027 |
5,877,383 | |
ETE |
6,574,648 |
380,918 |
TGP |
26,220,374 |
1,301,259 | |
ETP |
1,669,396,449 |
93,158,284 |
VLP |
23,823,578 |
535,361 | |
GEL |
300,264,393 |
13,434,648 |
VNOM |
20,179,418 |
864,956 | |
GLOP |
17,814,465 |
719,776 |
WES |
604,184,334 |
12,563,617 | |
GMLP |
26,442,305 |
1,159,750 |
WGP |
664,201 |
17,874 | |
HEP |
168,157,229 |
5,175,661 |
WPZ |
1,231,920,496 |
31,766,903 |
About Alerian
Alerian equips investors to make informed decisions about Master Limited Partnerships (MLPs) and energy infrastructure. Its benchmarks, including the flagship Alerian MLP Index (AMZ), are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of December 31, 2017, over $16 billion was directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-december-31-2017-index-linked-product-positions-300602316.html
SOURCE Alerian
TULSA, Okla., Feb. 1, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $237.9 million for fourth quarter 2017 compared to $213.3 million for fourth quarter 2016.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $308.3 million for fourth quarter 2017, representing a quarterly record for the partnership, compared to $277.2 million for fourth quarter 2016.
Diluted net income per limited partner unit was $1.04 in fourth quarter 2017 and 93 cents in fourth quarter 2016. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, of $1.19 for fourth quarter 2017 was higher than the $1.15 guidance provided by management in early November primarily due to more favorable product overages and stronger-than-expected distillate demand on the partnership's refined products pipeline.
"Magellan closed out 2017 with strong operating and financial results, delivering quarterly records for refined products transportation volumes, crude oil transportation volumes and distributable cash flow," said Michael Mears, chief executive officer. "Magellan's business fundamentals remain strong and the company is well-positioned for future growth, with solid demand for our fee-based transportation and terminals services, a disciplined investment philosophy and an investment-grade financial profile. We expect to generate record distributable cash flow again in 2018 while increasing cash distributions to our investors by 8% and maintaining a healthy 1.2 times annual distribution coverage."
An analysis by segment comparing fourth quarter 2017 to fourth quarter 2016 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $216.2 million, an increase of $24.8 million. Transportation and terminals revenue also increased $24.8 million between periods driven by an 11% increase in refined products shipments due to record demand for gasoline and distillate in the markets served by the partnership. The average tariff rate slightly declined between periods as the benefit from the overall 3% tariff increase implemented on July 1, 2017 was more than offset by additional short-haul movements within South Texas, which ship at a lower rate than the partnership's other pipeline segments. Additionally, the current period benefited from higher storage and other ancillary service fees along Magellan's refined products pipeline system associated with increased distillate and gasoline volumes and higher ammonia transportation shipments due to downtime on the system in the fourth quarter of 2016.
Operating expenses decreased $13.0 million primarily due to more favorable product overages (which reduce operating expenses) and lower environmental accruals, partially offset by additional asset integrity spending related to the timing of maintenance work and higher personnel costs due to the timing of increased annual bonus accruals for 2017.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $12.1 million between periods due in part to the recognition of more unrealized losses on open futures contracts used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, also declined between periods due to higher butane costs, resulting in compressed butane blending margins, and lower value of product overages sold during the current period.
Crude oil. Crude oil operating margin was $141.8 million, an increase of $30.0 million and a quarterly record for this segment. Transportation and terminals revenue increased $24.0 million primarily due to contributions from the partnership's recently-constructed splitter in Corpus Christi that began commercial operations in 2017 and record crude oil transportation volumes. Magellan's Longhorn pipeline benefited from increased volumes and higher average rates primarily due to more spot shipments during the current period. Volume on the partnership's Houston distribution system also increased significantly, resulting in a lower overall average rate per barrel due to the substantially lower tariff related to these shorter-haul movements.
Earnings of non-controlled entities increased $16.7 million primarily due to higher earnings from BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan. The higher BridgeTex earnings were mainly attributable to incremental spot shipments in the current period and additional volume from BridgeTex's new Eaglebine origin that began service in second quarter 2017. The partnership also benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan, due to increased shipments associated with a step-up in committed volumes in Sept. 2017 and condensate shipments under a recently-filed tariff.
Operating expenses increased $8.6 million primarily due to higher costs associated with the partnership's new condensate splitter that began commercial operations in June 2017, additional asset integrity spending related to the timing of maintenance work and higher personnel costs due to the timing of increased annual bonus accruals for 2017.
Product margin decreased $2.9 million due to the recognition of unrealized losses on open futures contracts mainly used to economically hedge the partnership's future sale of product overages and increased crude oil transportation charges in the current period.
Marine storage. Marine storage operating margin was $26.1 million, a decrease of $9.0 million. Transportation and terminals revenue decreased $4.9 million primarily due to the ongoing impact of Hurricane Harvey, which struck the Gulf Coast during the third quarter of 2017 and resulted in lower storage fees from tanks damaged by the hurricane that are still under repair and less ancillary fees reflecting decreased customer activities. Operating expenses increased $3.8 million due to additional environmental remediation accruals and clean-up costs related to the hurricane.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher personnel costs due to the timing of increased annual bonus accruals for 2017.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending and lower interest capitalized for construction projects in the current period. As of Dec. 31, 2017, the partnership had $4.6 billion of debt outstanding, with no borrowings outstanding on its commercial paper program and $176.1 million of cash on hand following its Oct. 2017 issuance of $500 million of 4.2% senior notes due 2047.
Annual results
For the year ended Dec. 31, 2017, net income grew to $869.5 million compared to $802.8 million in 2016 primarily related to increased fee-based activities due to strong demand for refined products and crude oil transportation services and contributions from recently-completed growth projects such as the Little Rock and Saddlehorn pipelines and the partnership's condensate splitter. Full-year diluted net income per limited partner unit was $3.81 in 2017 and $3.52 in 2016. Annual DCF was a record $1,021.4 million in 2017, or 1.25 times the amount needed to pay distributions related to 2017, compared to $947.5 million in 2016.
Expansion capital projects
Magellan remains focused on expansion opportunities, spending more than $540 million on organic growth construction projects during 2017. Based on the progress of expansion projects already underway, the partnership expects to spend $900 million in 2018 and $375 million in 2019 to complete its current slate of construction projects. These spending estimates include a variety of new projects, including reactivation of a jet fuel pipeline to the George Bush Intercontinental Airport in Houston, Texas, additional butane blending opportunities and other enhancements at the partnership's independent terminals and terminals along its refined products pipeline system.
Magellan continues to make significant progress on its other construction projects. The new 24-inch diameter crude oil pipeline constructed from the partnership's East Houston terminal to Holland Avenue is now operational to help facilitate incremental crude oil shipments within the Houston and Texas City region.
The expansion of the Seabrook Logistics joint venture, which includes the addition of 1.7 million barrels of storage and connectivity to Magellan's Houston crude oil distribution system, is under construction and remains on target for a mid-2018 start-up. Further, construction activities continue for the addition of new dock capacity at the partnership's Galena Park marine terminal, which is expected to be fully operational by late 2018.
Tank construction is underway at the partnership's joint-venture marine terminal in Pasadena, Texas. The initial 1 million barrels of storage is still targeted for an in-service date of early 2019, with an additional 4 million barrels of storage expected to come online in early 2020. Permit and right-of-way work and pipeline procurement are in progress for both the Wink crude oil pipeline and Houston-to-Hearne refined products pipeline, with both expected to be operational in mid-2019.
Magellan also continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Active discussions with potential customers continue to further develop the partnership's new Pasadena marine terminal joint venture. Discussions also continue regarding new infrastructure investments in West Texas and Corpus Christi, including the potential construction of a crude oil and condensate pipeline from the Permian and Eagle Ford Basins to Corpus Christi and Houston. Significant interest has been expressed from potential shippers for this proposed pipeline, with the open season recently extended to March 1 to provide these potential shippers additional time to finalize their commitments.
Financial guidance for 2018 - 2020
Management remains committed to its previously-stated goal of increasing annual cash distributions by 8% for 2018 and currently expects to generate annual DCF of $1.05 billion in 2018, resulting in approximately 1.2 times the amount needed to pay cash distributions for 2018. Current DCF guidance assumes throughput will equal minimum volume commitments on the Longhorn pipeline and be slightly above minimum commitment levels on the BridgeTex pipeline. DCF guidance also assumes volumes on the Longhorn pipeline will continue at historical levels once current contracts expire in the fourth quarter of 2018, but at lower tariff rates due to the increased competition in the Permian Basin. However, both BridgeTex and Longhorn pipelines have available capacity for spot shipments, which if utilized during 2018 could result in higher 2018 DCF up to $1.08 billion.
Looking further ahead, management is targeting annual DCF growth in the range of 5% to 8% for both 2019 and 2020. Magellan intends to manage distribution growth consistent with its expectations for DCF growth for the foreseeable future while maintaining annual distribution coverage of 1.2 times, which correspondingly could result in annual distribution growth of 5% to 8% each year, as well. Guidance specific to 2019 and 2020 has not been provided previously.
"Magellan's management understands the investment community's continued desire for solid distribution coverage," said Michael Mears, chief executive officer. "Magellan remains committed to our conservative financial profile and believes our stated goal of increasing annual distributions by 8% for 2018 and managing our distribution policy thereafter in-line with a 1.2 times annual distribution coverage ratio will provide a healthy mix of distribution growth and coverage for our investors, while also preserving our strong financial position."
Net income per limited partner unit is estimated to be $4.00 for 2018, with first-quarter guidance of 95 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to believe the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with commodity-related activities contributing less than 15% of the partnership's operating margin.
Earnings call details
An analyst call with management to discuss fourth-quarter financial results, 2018 guidance and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 281-7973 and provide code 3233087. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Feb. 7. To access the replay, dial (888) 203-1112 and provide code 3233087. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, target, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||||||||
(In thousands, except per unit amounts) | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended |
Year Ended | |||||||||||||||||||||||||||||||
December 31, |
December 31, | |||||||||||||||||||||||||||||||
2016 |
2017 |
2016 |
2017 | |||||||||||||||||||||||||||||
Transportation and terminals revenue |
$ |
415,371 |
$ |
458,930 |
$ |
1,591,119 |
$ |
1,731,775 |
||||||||||||||||||||||||
Product sales revenue |
195,995 |
209,572 |
599,602 |
758,206 |
||||||||||||||||||||||||||||
Affiliate management fee revenue |
3,549 |
4,797 |
14,689 |
17,680 |
||||||||||||||||||||||||||||
Total revenue |
614,915 |
673,299 |
2,205,410 |
2,507,661 |
||||||||||||||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||||||||||
Operating |
136,661 |
135,724 |
528,672 |
577,978 |
||||||||||||||||||||||||||||
Cost of product sales |
165,808 |
194,947 |
493,338 |
635,617 |
||||||||||||||||||||||||||||
Depreciation and amortization |
44,005 |
50,527 |
178,142 |
196,630 |
||||||||||||||||||||||||||||
General and administrative |
36,351 |
44,841 |
147,165 |
165,717 |
||||||||||||||||||||||||||||
Total costs and expenses |
382,825 |
426,039 |
1,347,317 |
1,575,942 |
||||||||||||||||||||||||||||
Earnings of non-controlled entities |
27,153 |
42,821 |
78,696 |
120,994 |
||||||||||||||||||||||||||||
Operating profit |
259,243 |
290,081 |
936,789 |
1,052,713 |
||||||||||||||||||||||||||||
Interest expense |
51,614 |
56,045 |
194,187 |
210,698 |
||||||||||||||||||||||||||||
Interest income |
(335) |
(627) |
(1,402) |
(1,415) |
||||||||||||||||||||||||||||
Interest capitalized |
(6,232) |
(4,761) |
(27,375) |
(15,565) |
||||||||||||||||||||||||||||
Gain on sale of asset |
— |
— |
— |
(18,505) |
||||||||||||||||||||||||||||
Gain on exchange of interest in non-controlled entity |
— |
— |
(28,144) |
— |
||||||||||||||||||||||||||||
Other (income) expense |
(19) |
377 |
(6,466) |
4,139 |
||||||||||||||||||||||||||||
Income before provision for income taxes |
214,215 |
239,047 |
805,989 |
873,361 |
||||||||||||||||||||||||||||
Provision for income taxes |
924 |
1,152 |
3,218 |
3,830 |
||||||||||||||||||||||||||||
Net income |
$ |
213,291 |
$ |
237,895 |
$ |
802,771 |
$ |
869,531 |
||||||||||||||||||||||||
Basic net income per limited partner unit |
$ |
0.94 |
$ |
1.04 |
$ |
3.52 |
$ |
3.81 |
||||||||||||||||||||||||
Diluted net income per limited partner unit |
$ |
0.93 |
$ |
1.04 |
$ |
3.52 |
$ |
3.81 |
||||||||||||||||||||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,963 |
228,203 |
227,926 |
228,176 |
||||||||||||||||||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,385 |
228,682 |
228,057 |
228,338 |
||||||||||||||||||||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||||||
OPERATING STATISTICS | |||||||||||||||||||||||
Three Months Ended |
Year Ended | ||||||||||||||||||||||
December 31, |
December 31, | ||||||||||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||||||||||
Refined products: |
|||||||||||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.538 |
$ |
1.512 |
$ |
1.473 |
$ |
1.495 |
|||||||||||||||
Volume shipped (million barrels): |
|||||||||||||||||||||||
Gasoline |
70.5 |
76.8 |
275.4 |
295.5 |
|||||||||||||||||||
Distillates |
40.2 |
46.6 |
150.2 |
166.2 |
|||||||||||||||||||
Aviation fuel |
6.1 |
6.3 |
25.7 |
26.5 |
|||||||||||||||||||
Liquefied petroleum gases |
0.5 |
0.3 |
10.4 |
9.9 |
|||||||||||||||||||
Total volume shipped |
117.3 |
130.0 |
461.7 |
498.1 |
|||||||||||||||||||
Crude oil: |
|||||||||||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.309 |
$ |
1.199 |
$ |
1.321 |
$ |
1.348 |
|||||||||||||||
Volume shipped (million barrels) |
47.5 |
59.4 |
187.0 |
196.4 |
|||||||||||||||||||
Crude oil terminal average utilization (million barrels per month) |
15.8 |
15.0 |
15.0 |
15.3 |
|||||||||||||||||||
Select joint venture pipelines: |
|||||||||||||||||||||||
BridgeTex - volume shipped (million barrels)(1) |
20.3 |
32.0 |
79.0 |
98.4 |
|||||||||||||||||||
Saddlehorn - volume shipped (million barrels)(2) |
4.0 |
6.9 |
5.2 |
19.0 |
|||||||||||||||||||
Marine storage: |
|||||||||||||||||||||||
Marine terminal average utilization (million barrels per month) |
24.3 |
22.1 |
23.8 |
23.1 |
|||||||||||||||||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan and began operations in September 2016. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||||||||||||||||||||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | ||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended |
Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
December 31, |
December 31, | |||||||||||||||||||||||||||||||||||||||||||||
2016 |
2017 |
2016 |
2017 | |||||||||||||||||||||||||||||||||||||||||||
Refined products: |
||||||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals revenue |
$ |
262,437 |
$ |
287,222 |
$ |
1,002,368 |
$ |
1,096,040 |
||||||||||||||||||||||||||||||||||||||
Affiliate management fee revenue |
343 |
353 |
765 |
1,388 |
||||||||||||||||||||||||||||||||||||||||||
Losses of non-controlled entities |
(616) |
(1,465) |
(968) |
(1,632) |
||||||||||||||||||||||||||||||||||||||||||
Less: Operating expenses |
100,525 |
87,528 |
380,347 |
400,439 |
||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals margin |
161,639 |
198,582 |
621,818 |
695,357 |
||||||||||||||||||||||||||||||||||||||||||
Product sales revenue(1) |
189,698 |
208,072 |
561,759 |
717,140 |
||||||||||||||||||||||||||||||||||||||||||
Less: Cost of product sales(1) |
159,980 |
190,459 |
459,989 |
586,751 |
||||||||||||||||||||||||||||||||||||||||||
Product margin |
29,718 |
17,613 |
101,770 |
130,389 |
||||||||||||||||||||||||||||||||||||||||||
Operating margin |
$ |
191,357 |
$ |
216,195 |
$ |
723,588 |
$ |
825,746 |
||||||||||||||||||||||||||||||||||||||
Crude oil: |
||||||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals revenue |
$ |
104,656 |
$ |
128,642 |
$ |
407,837 |
$ |
458,455 |
||||||||||||||||||||||||||||||||||||||
Affiliate management fee revenue |
2,847 |
3,639 |
12,533 |
13,950 |
||||||||||||||||||||||||||||||||||||||||||
Earnings of non-controlled entities |
27,102 |
43,785 |
76,972 |
120,173 |
||||||||||||||||||||||||||||||||||||||||||
Less: Operating expenses |
22,300 |
30,929 |
88,528 |
120,920 |
||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals margin |
112,305 |
145,137 |
408,814 |
471,658 |
||||||||||||||||||||||||||||||||||||||||||
Product sales revenue(1) |
4,705 |
177 |
31,170 |
35,053 |
||||||||||||||||||||||||||||||||||||||||||
Less: Cost of product sales(1) |
5,188 |
3,511 |
31,657 |
41,325 |
||||||||||||||||||||||||||||||||||||||||||
Product margin |
(483) |
(3,334) |
(487) |
(6,272) |
||||||||||||||||||||||||||||||||||||||||||
Operating margin |
$ |
111,822 |
$ |
141,803 |
$ |
408,327 |
$ |
465,386 |
||||||||||||||||||||||||||||||||||||||
Marine storage: |
||||||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals revenue |
$ |
48,884 |
$ |
43,981 |
$ |
181,721 |
$ |
180,683 |
||||||||||||||||||||||||||||||||||||||
Affiliate management fee revenue |
359 |
805 |
1,391 |
2,342 |
||||||||||||||||||||||||||||||||||||||||||
Earnings of non-controlled entities |
667 |
501 |
2,692 |
2,453 |
||||||||||||||||||||||||||||||||||||||||||
Less: Operating expenses |
15,751 |
19,543 |
65,559 |
65,296 |
||||||||||||||||||||||||||||||||||||||||||
Transportation and terminals margin |
34,159 |
25,744 |
120,245 |
120,182 |
||||||||||||||||||||||||||||||||||||||||||
Product sales revenue(1) |
1,592 |
1,323 |
6,673 |
6,013 |
||||||||||||||||||||||||||||||||||||||||||
Less: Cost of product sales(1) |
640 |
977 |
1,692 |
7,541 |
||||||||||||||||||||||||||||||||||||||||||
Product margin |
952 |
346 |
4,981 |
(1,528) |
||||||||||||||||||||||||||||||||||||||||||
Operating margin |
$ |
35,111 |
$ |
26,090 |
$ |
125,226 |
$ |
118,654 |
||||||||||||||||||||||||||||||||||||||
Segment operating margin |
$ |
338,290 |
$ |
384,088 |
$ |
1,257,141 |
$ |
1,409,786 |
||||||||||||||||||||||||||||||||||||||
Add: Allocated corporate depreciation costs |
1,309 |
1,361 |
4,955 |
5,274 |
||||||||||||||||||||||||||||||||||||||||||
Total operating margin |
339,599 |
385,449 |
1,262,096 |
1,415,060 |
||||||||||||||||||||||||||||||||||||||||||
Less: |
||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense |
44,005 |
50,527 |
178,142 |
196,630 |
||||||||||||||||||||||||||||||||||||||||||
General and administrative expense |
36,351 |
44,841 |
147,165 |
165,717 |
||||||||||||||||||||||||||||||||||||||||||
Total operating profit |
$ |
259,243 |
$ |
290,081 |
$ |
936,789 |
$ |
1,052,713 |
||||||||||||||||||||||||||||||||||||||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs. |
(1) Includes gains and losses on related exchange-traded futures contracts. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | ||||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | ||||||||||||||
(Unaudited, in thousands except per unit amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
December 31, 2017 | ||||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
||||||||||||
As reported |
$ |
237,895 |
$ |
1.04 |
$ |
1.04 |
||||||||
Unrealized derivative (gains) losses associated with future physical product sales |
32,347 |
0.14 |
0.14 |
|||||||||||
Inventory valuation adjustments associated with future physical product transactions |
1,961 |
0.01 |
0.01 |
|||||||||||
Excluding commodity-related adjustments* |
$ |
272,203 |
$ |
1.19 |
$ |
1.19 |
||||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,203 |
|||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,682 |
|||||||||||||
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | ||||||||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||||||
December 31, |
December 31, |
2018 | ||||||||||||||||||||
2016 |
2017 |
2016 |
2017 |
Guidance | ||||||||||||||||||
Net income |
$ |
213,291 |
$ |
237,895 |
$ |
802,771 |
$ |
869,531 |
$ |
915,000 |
||||||||||||
Interest expense, net |
45,047 |
50,657 |
165,410 |
193,718 |
219,000 |
|||||||||||||||||
Depreciation and amortization |
44,005 |
50,527 |
178,142 |
196,630 |
208,000 |
|||||||||||||||||
Equity-based incentive compensation(1) |
4,622 |
6,458 |
4,982 |
6,766 |
13,000 |
|||||||||||||||||
Loss on sale and retirement of assets |
5,793 |
5,789 |
11,190 |
13,370 |
10,000 |
|||||||||||||||||
Gain on sale of asset(2) |
— |
— |
— |
(18,505) |
— |
|||||||||||||||||
Gain on exchange of interest in non-controlled entity(3) |
— |
— |
(28,144) |
— |
— |
|||||||||||||||||
Commodity-related adjustments: |
||||||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(5) |
23,943 |
32,347 |
21,837 |
37,624 |
||||||||||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period(5) |
(5,600) |
(8,241) |
45,218 |
(25,493) |
||||||||||||||||||
Inventory valuation adjustments(6) |
— |
(3,716) |
(2,798) |
332 |
||||||||||||||||||
Total commodity-related adjustments |
18,343 |
20,390 |
64,257 |
12,463 |
(35,000) |
|||||||||||||||||
Cash distributions received from non-controlled entities in excess of earnings |
6,290 |
5,697 |
9,293 |
25,216 |
25,000 |
|||||||||||||||||
Other(4) |
1,450 |
— |
5,341 |
3,749 |
— |
|||||||||||||||||
Adjusted EBITDA |
338,841 |
377,413 |
1,213,242 |
1,302,938 |
1,355,000 |
|||||||||||||||||
Interest expense, net, excluding debt issuance cost amortization |
(44,222) |
(49,824) |
(162,251) |
(190,403) |
(215,000) |
|||||||||||||||||
Maintenance capital(7) |
(17,404) |
(19,331) |
(103,507) |
(91,163) |
(90,000) |
|||||||||||||||||
Distributable cash flow |
$ |
277,215 |
$ |
308,258 |
$ |
947,484 |
$ |
1,021,372 |
$ |
1,050,000 |
||||||||||||
(1) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the year ended December 31, 2016 and 2017 was $19.4 million and $20.6 million, respectively. However, the figures above include adjustments of $14.4 million and $13.9 million in 2016 and 2017, respectively, for cash payments associated with its equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) |
In September 2017, the partnership recognized an $18.5 million gain in connection with the sale of an inactive terminal along the partnership's refined products pipeline system, which has been deducted from the calculation of DCF because it is not related to the partnership's ongoing operations. |
(3) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $28.1 million non-cash gain in relation to this transaction. |
(4) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. The partnership recorded a receivable in the amount of $8.3 million in relation to this transaction, which was fully collected as of September 30, 2017. The purpose of these payments was to replace distributions the partnership would have received had the Osage transaction not occurred and, therefore, these payments are included in its calculation of DCF. |
(5) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(6) |
The partnership adjusts DCF for lower of cost or net realizable value adjustments related to inventory and firm purchase commitments and valuations of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(7) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-higher-financial-results-for-fourth-quarter-2017-300591644.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 31, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an extension of the open season to solicit commitments from shippers for a new pipeline to transport various grades of crude oil and condensate from the Permian and Eagle Ford Basins to multiple destinations in the Corpus Christi and Houston, Texas markets, including Magellan's existing crude oil terminals in these markets. Binding commitments are now due by 5:00 p.m. Central Time on March 1, 2018. Significant interest has been expressed from potential shippers, and the extension provides these potential shippers additional time to finalize their commitments.
The proposed project would include construction of an approximately 375-mile, 24-inch diameter pipeline from Crane to a location near Three Rivers, Texas, providing shippers the option to ultimately deliver crude oil and condensate from the Three Rivers area to the Houston area via a new 200-mile pipeline or to the Corpus Christi area via a new 70-mile pipeline. The potential pipeline system is expected to have an initial capacity of at least 350,000 barrels per day (bpd) with the ability to expand up to 600,000 bpd for each destination, if warranted by industry demand.
Additional pipeline extensions are being considered for Midland and Orla, Texas in the Permian Basin and Gardendale and Helena, Texas in the Eagle Ford Basin. Magellan previously announced the construction of a 60-mile, 24-inch Delaware Basin pipeline to deliver crude oil and condensate from Wink to Crane, Texas, and construction of the Wink pipeline is currently underway.
Subject to receipt of all necessary permits and approvals, the proposed pipeline could be operational by the end of 2019.
For customer inquiries about the open season, please contact Brant Easterling at (918) 574-7665 or brant.easterling@magellanlp.com. More information about the open season is available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for crude oil and condensate; (4) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential pipeline. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-extends-open-season-for-proposed-crude-oil-pipeline-from-the-permian-and-eagle-ford-basins-to-corpus-christi-and-houston-300590912.html
SOURCE Magellan Midstream Partners, L.P.
DALLAS, Jan. 3, 2018 /PRNewswire/ -- Alerian announced today the real-time launch of the Alerian Energy Infrastructure Capital Strength Select Index, a composite of North American midstream, refining, and utility companies chosen for their ownership of pipeline transportation assets, leverage profile, and above-market dividend payments. The index is disseminated real-time on a price-return basis (AMCS) and on a total-return basis (AMCST).
"The AMCS was designed with the understanding that the portion of the North American energy value chain from midstream to distribution has become increasingly integrated," said Alerian President and CEO Kenny Feng. "The composition of this index also seeks to address growing investor focus on strengthening balance sheets and improving corporate governance."
Constituents as of January 2, 2018
Name |
Ticker |
AltaGas Ltd |
ALA |
Antero Midstream Partners LP |
AM |
Andeavor |
ANDV |
Buckeye Partners LP |
BPL |
Boardwalk Pipeline Partners LP |
BWP |
CenterPoint Energy Inc |
CNP |
Cheniere Energy Partners LP Holdings LLC |
CQH |
Dominion Energy Inc |
D |
Enbridge Inc |
ENB |
EnLink Midstream LLC |
ENLC |
Enterprise Products Partners LP |
EPD |
EQT GP Holdings LP |
EQGP |
Gibson Energy Inc |
GEI |
HollyFrontier Corp |
HFC |
Inter Pipeline Ltd |
IPL |
Keyera Corp |
KEY |
Kinder Morgan Inc |
KMI |
Macquarie Infrastructure Corp |
MIC |
Magellan Midstream Partners LP |
MMP |
Marathon Petroleum Corp |
MPC |
OGE Energy Corp |
OGE |
ONEOK Inc |
OKE |
Plains GP Holdings LP |
PAGP |
Pembina Pipeline Corp |
PPL |
Phillips 66 |
PSX |
Sempra Energy |
SRE |
Tallgrass Energy GP LP |
TEGP |
TransCanada Corp |
TRP |
Valero Energy Corp |
VLO |
Western Gas Equity Partners LP |
WGP |
The Williams Companies Inc |
WMB |
About Alerian
Alerian equips investors to make informed decisions about Master Limited Partnerships (MLPs) and energy infrastructure. Its benchmarks, including the flagship Alerian MLP Index (AMZ), are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of December 31, 2017, over $16 billion is directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
View original content:http://www.prnewswire.com/news-releases/alerian-announces-real-time-launch-of-the-alerian-energy-infrastructure-capital-strength-select-index-300576838.html
SOURCE Alerian
TULSA, Okla., Dec. 20, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for fourth quarter 2017 before the market opens on Thurs., Feb. 1, 2018. Management will discuss fourth-quarter 2017 earnings and annual guidance for 2018 during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 281-7973 and provide code 3233087. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Feb. 1 through midnight on Feb. 7. To access the replay, dial (888) 203-1112 and provide code 3233087. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-fourth-quarter-2017-financial-results-on-feb-1-300573964.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 1, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to participate in the following investor conferences during December:
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-upcoming-dec-investor-conferences-300565288.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 1, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it intends to develop a new pipeline and has launched an open season to assess customer interest to transport various grades of crude oil and condensate from the Permian and Eagle Ford Basins to multiple destinations in the Corpus Christi and Houston, Texas markets, including Magellan's existing crude oil terminals in these markets. All potential customers must submit binding commitments by 5:00 p.m. Central Time on Feb. 1, 2018.
The proposed project would include construction of an approximately 375-mile, 24-inch diameter pipeline from Crane to a location near Three Rivers, Texas, providing shippers the option to ultimately deliver crude oil and condensate from the Three Rivers area to the Houston area via a new 200-mile pipeline or to the Corpus Christi area via a new 70-mile pipeline. The potential pipeline system is expected to have an initial capacity of at least 350,000 barrels per day (bpd) with the ability to expand up to 600,000 bpd for each destination, if warranted by industry demand.
Additional pipeline extensions are being considered for Midland and Orla, Texas in the Permian Basin and Gardendale and Helena, Texas in the Eagle Ford Basin. Magellan previously announced the construction of a 60-mile, 24-inch Delaware Basin pipeline to deliver crude oil and condensate from Wink to Crane.
Subject to receipt of all necessary permits and approvals, the proposed pipeline could be operational by the end of 2019.
For customer inquiries about the open season, please contact Brant Easterling at (918) 574-7665 or brant.easterling@magellanlp.com. More information about the open season is available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for crude oil and condensate; (4) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential pipeline. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-launches-open-season-for-proposed-crude-oil-pipeline-from-the-permian-and-eagle-ford-basins-to-corpus-christi-and-houston-300565116.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and HOUSTON, Nov. 30, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") announced today that BridgeTex Pipeline Company, LLC ("BridgeTex"), owned 50/50 by Magellan and Plains, plans to further expand the capacity of the BridgeTex pipeline and has launched a supplemental open season to assess customer interest for the expanded capacity. All potential customers must submit binding commitments by 5:00 p.m. Central Time on Dec. 30, 2017.
The BridgeTex pipeline was recently expanded from 300,000 barrels per day ("bpd") to a capacity of 400,000 bpd to deliver Permian Basin crude oil from Midland and Colorado City, Texas to the Houston Gulf Coast area. BridgeTex is expanding the pipeline system again, for a new capacity of approximately 440,000 bpd. The additional 40,000 bpd of capacity is expected to be operational in early 2019.
For customer inquiries about the open season, please contact Brett Hunter of Magellan at (918) 574-7477 or brett.hunter@magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles over 5 million barrels per day of crude oil and NGL in its Transportation segment. More information is available at www.plainsallamerican.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Plains All American Pipeline, L.P. (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the companies' results of operations and financial condition are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in the BridgeTex pipeline's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to the BridgeTex pipeline. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for both companies. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contacts: |
||
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com | |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | ||
Plains: |
Brett Magill, Investor Relations (866) 809-1291 | |
Brad Leone, Media Relations (866) 809-1290 |
View original content:http://www.prnewswire.com/news-releases/bridgetex-pipeline-to-further-expand-launches-supplemental-open-season-for-additional-capacity-300564764.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 20, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, president and chief executive officer, is scheduled to present at the Jefferies Energy Conference at 1:15 p.m. Central Time on Tues., Nov. 28 in Houston.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-present-at-jefferies-energy-conference-300559480.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 2, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $198.5 million for third quarter 2017 compared to $194.6 million for third quarter 2016. The 2017 results include an $18.5 million gain related to the sale of an inactive terminal along the partnership's refined products pipeline system.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $235.2 million for third quarter 2017 compared to $243.9 million for third quarter 2016.
Diluted net income per limited partner unit was 87 cents in third quarter 2017 and 85 cents in third quarter 2016. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, was 97 cents for third quarter 2017, or 89 cents excluding the 8-cent favorable impact of the gain on asset sale. These results were similar to the 90-cent guidance provided by management in early August as better-than-expected financial results from the partnership's operations mainly overcame the 4-cent negative impact of Hurricane Harvey.
During the third quarter of 2017, Hurricane Harvey hit the Texas Gulf Coast, disrupting the partnership's operations located in the Houston and Corpus Christi areas for a limited time. No significant asset damage occurred, and the impacted facilities are now operational. Magellan currently estimates the total negative DCF impact of Hurricane Harvey to be approximately $20 million, net of expected insurance reimbursements. Of the total, approximately $10 million reduced third-quarter DCF ($8 million of which negatively impacted third-quarter net income) with the remainder associated with clean-up and repair activities to be completed in future periods.
"Magellan generated financial results during the third quarter of 2017 that were consistent with our expectations despite Hurricane Harvey, which negatively impacted the operations of each of our business segments for a period of time," said Michael Mears, chief executive officer. "Magellan's employees stepped up to the challenge and worked together as a true enterprise-wide team to safely resume operations as soon as possible while doing our best to limit the impact to our customers and the markets we serve. Further, the third quarter of 2017 was also notable because we launched three new large-scale construction projects for fee-based refined products and crude oil pipeline and storage assets that increased our expansion capital spending by $600 million, helping to solidify Magellan's future growth."
An analysis by segment comparing third quarter 2017 to third quarter 2016 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $173.8 million, a decrease of $10.0 million. Transportation and terminals revenue increased $21.7 million between periods primarily due to operating results from the partnership's Little Rock pipeline that commenced commercial operations in July 2016 as well as 4% higher shipments on other segments of the partnership's pipeline system driven by stronger demand for refined products in large part due to higher distillate demand in crude oil production regions. Additionally, the current period benefited from a one-time customer payment associated with a dispute settlement and higher storage and other ancillary service fees along Magellan's refined products pipeline system.
Operating expenses increased $23.1 million primarily due to less favorable product overages (which reduce operating expenses), higher asset integrity spending related to the timing of maintenance work and higher environmental accruals for historical remediation sites.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $8.3 million between periods due in part to the recognition of more unrealized losses on open futures contracts used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, also declined between periods due to higher butane costs, resulting in compressed butane blending margins.
Crude oil. Crude oil operating margin was $115.8 million, an increase of $17.0 million and a quarterly record for this segment. Transportation and terminals revenue increased $16.2 million primarily due to contributions from the partnership's recently-constructed condensate splitter in Corpus Christi that began commercial operations in June 2017. Magellan also benefited from higher volumes on its Longhorn pipeline as the 2016 period was negatively impacted by shippers utilizing historical credits (earned by shipping in excess of their minimum commitments in the past) that were set to expire in the third quarter of 2016.
Earnings of non-controlled entities increased $13.1 million primarily due to higher earnings from BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan. The higher BridgeTex earnings were mainly attributable to incremental spot shipments in the current period and additional volume from BridgeTex's new Eaglebine origin that began service in second quarter 2017. The partnership also benefited from higher earnings from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan and began operations in Sept. 2016.
Operating expenses increased $6.6 million primarily due to higher costs associated with the partnership's new condensate splitter that began commercial operations in June 2017 and higher power costs for pipeline movements. Product margin decreased $4.9 million due to transportation charges Magellan paid to BridgeTex in connection with crude oil marketing activities in the current period. Overall, Magellan benefits from this crude oil marketing activity as it receives earnings contributions from BridgeTex as a result of higher volumes as described above.
Marine storage. Marine storage operating margin was $25.9 million, a decrease of $7.4 million. Revenue decreased $3.7 million primarily due to the impact of Hurricane Harvey, which resulted in less ancillary fees reflecting decreased customer activities and lower storage fees due to delayed maintenance projects and some tank damage in third quarter 2017. Operating expenses increased slightly due to higher environmental remediation accruals and clean-up costs related to Hurricane Harvey, and product margin declined due to the sale of less product overages inventory in the current period.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher prospecting costs for potential expansion projects. Other expense was unfavorable between periods primarily due to the 2016 period benefiting from a break-up fee related to a potential acquisition. As previously mentioned, the 2017 results also include an $18.5 million gain associated with the sale of an inactive terminal along the partnership's refined products pipeline system.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending and lower interest capitalized for construction projects in the current period. As of Sept. 30, 2017, the partnership had $4.3 billion of debt outstanding, including $269.0 million outstanding under its commercial paper program. During Oct. 2017, Magellan issued $500 million of 4.2% notes due 2047 to repay borrowings outstanding under its commercial paper program and to fund future expansion capital needs.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to identify new opportunities for future growth. Based on the progress of expansion projects already underway, the partnership expects to spend $600 million in 2017, $800 million in 2018 and $350 million in 2019 to complete its current slate of construction projects. These spending estimates include the partnership's recently announced projects to expand its Pasadena, Texas marine storage terminal, to build a crude oil and condensate pipeline from the Delaware Basin to the origin of the Longhorn pipeline in Crane, Texas and to expand Magellan's refined products pipeline system in Texas. Further, these spending estimates include the construction of an incremental 1.5 million barrels of crude oil storage in Cushing, Oklahoma and Corpus Christi on a combined basis, which is supported by customer commitments.
The Cheyenne extension of the Saddlehorn pipeline commenced operations in early October, and the new connection of Magellan's Little Rock pipeline segment to a third-party pipeline is now complete, providing customers the option to ultimately transport refined products to the greater Memphis, Tennessee market.
Magellan continues to make significant progress on its other construction projects. The new 24-inch diameter crude oil pipeline being constructed from the partnership's East Houston terminal to Holland Avenue is now expected to be operational in early 2018 to help facilitate incremental crude oil shipments within the Houston and Texas City region. The expansion of the Seabrook Logistics joint venture, which includes the addition of 1.7 million barrels of storage and connectivity to Magellan's Houston crude oil distribution system, remains on target for a mid-2018 start-up.
Magellan also continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Active discussions with potential customers continue to further develop the partnership's new Pasadena marine terminal, to construct a crude oil and condensate pipeline from the Permian Basin to Corpus Christi and to develop other infrastructure investments in West Texas, among many other potential opportunities under consideration.
Financial guidance for 2017
Management reaffirms its annual DCF guidance of $1.02 billion for 2017, representing a record year for Magellan and 1.25 times the amount needed to pay projected cash distributions for 2017. Management remains committed to its goal of increasing annual cash distributions by 8% for both 2017 and 2018 while maintaining distribution coverage of 1.2 times each year.
Including actual results so far this year, net income per limited partner unit is estimated to be $3.92 for 2017, which results in fourth-quarter guidance of $1.15. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Consistent with its historical approach, management plans to provide more specific details related to 2018 guidance early next year in conjunction with reporting year-end 2017 financial results.
Earnings call details
An analyst call with management to discuss third-quarter financial results, outlook for the remainder of 2017 and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (866) 564-2842 and provide code 2203241. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Nov. 8. To access the replay, dial (888) 203-1112 and provide code 2203241. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments and the gain associated with the asset sale, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Transportation and terminals revenue |
$ |
413,433 |
$ |
446,935 |
$ |
1,175,748 |
$ |
1,272,845 |
|||||||
Product sales revenue |
133,356 |
121,010 |
403,607 |
548,634 |
|||||||||||
Affiliate management fee revenue |
4,993 |
4,903 |
11,140 |
12,883 |
|||||||||||
Total revenue |
551,782 |
572,848 |
1,590,495 |
1,834,362 |
|||||||||||
Costs and expenses: |
|||||||||||||||
Operating |
134,915 |
165,368 |
392,011 |
442,254 |
|||||||||||
Cost of product sales |
118,242 |
121,819 |
327,530 |
440,670 |
|||||||||||
Depreciation and amortization |
47,081 |
49,909 |
134,137 |
146,103 |
|||||||||||
General and administrative |
35,584 |
37,202 |
110,814 |
120,876 |
|||||||||||
Total costs and expenses |
335,822 |
374,298 |
964,492 |
1,149,903 |
|||||||||||
Earnings of non-controlled entities |
18,576 |
31,151 |
51,543 |
78,173 |
|||||||||||
Operating profit |
234,536 |
229,701 |
677,546 |
762,632 |
|||||||||||
Interest expense |
50,163 |
51,895 |
142,573 |
154,653 |
|||||||||||
Interest income |
(302) |
(240) |
(1,067) |
(788) |
|||||||||||
Interest capitalized |
(7,877) |
(3,424) |
(21,143) |
(10,804) |
|||||||||||
Gain on sale of asset |
— |
(18,505) |
— |
(18,505) |
|||||||||||
Gain on exchange of interest in non-controlled entity |
— |
— |
(28,144) |
— |
|||||||||||
Other (income) expense |
(2,737) |
549 |
(6,447) |
3,762 |
|||||||||||
Income before provision for income taxes |
195,289 |
199,426 |
591,774 |
634,314 |
|||||||||||
Provision for income taxes |
738 |
926 |
2,294 |
2,678 |
|||||||||||
Net income |
$ |
194,551 |
$ |
198,500 |
$ |
589,480 |
$ |
631,636 |
|||||||
Basic net income per limited partner unit |
$ |
0.85 |
$ |
0.87 |
$ |
2.59 |
$ |
2.77 |
|||||||
Diluted net income per limited partner unit |
$ |
0.85 |
$ |
0.87 |
$ |
2.59 |
$ |
2.77 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,960 |
228,199 |
227,913 |
228,167 |
|||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,999 |
228,260 |
227,947 |
228,222 |
|||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.503 |
$ |
1.521 |
$ |
1.451 |
$ |
1.489 |
|||||||
Volume shipped (million barrels): |
|||||||||||||||
Gasoline |
72.7 |
75.8 |
204.9 |
218.7 |
|||||||||||
Distillates |
37.3 |
41.0 |
110.0 |
119.6 |
|||||||||||
Aviation fuel |
7.2 |
6.7 |
19.6 |
20.2 |
|||||||||||
Liquefied petroleum gases |
4.1 |
3.9 |
9.9 |
9.6 |
|||||||||||
Total volume shipped |
121.3 |
127.4 |
344.4 |
368.1 |
|||||||||||
Crude oil: |
|||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.189 |
$ |
1.332 |
$ |
1.325 |
$ |
1.412 |
|||||||
Volume shipped (million barrels) |
50.7 |
48.4 |
139.5 |
137.0 |
|||||||||||
Crude oil terminal average utilization (million barrels per month) |
14.8 |
14.9 |
14.7 |
15.5 |
|||||||||||
Select joint venture pipelines: |
|||||||||||||||
BridgeTex - volume shipped (million barrels)(1) |
20.6 |
25.7 |
58.7 |
66.4 |
|||||||||||
Saddlehorn - volume shipped (million barrels)(2) |
1.2 |
4.4 |
1.2 |
12.1 |
|||||||||||
Marine storage: |
|||||||||||||||
Marine terminal average utilization (million barrels per month) |
24.3 |
22.5 |
23.6 |
23.4 |
|||||||||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan and began operations in September 2016. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation and terminals revenue |
$ |
267,339 |
$ |
289,030 |
$ |
739,931 |
$ |
808,818 |
|||||||
Affiliate management fee revenue |
218 |
353 |
422 |
1,035 |
|||||||||||
Losses of non-controlled entities |
(272) |
(700) |
(352) |
(167) |
|||||||||||
Less: Operating expenses |
95,535 |
118,665 |
279,822 |
312,911 |
|||||||||||
Transportation and terminals margin |
171,750 |
170,018 |
460,179 |
496,775 |
|||||||||||
Product sales revenue(1) |
105,834 |
107,175 |
372,061 |
509,068 |
|||||||||||
Less: Cost of product sales(1) |
93,761 |
103,391 |
300,009 |
396,292 |
|||||||||||
Product margin |
12,073 |
3,784 |
72,052 |
112,776 |
|||||||||||
Operating margin |
$ |
183,823 |
$ |
173,802 |
$ |
532,231 |
$ |
609,551 |
|||||||
Crude oil: |
|||||||||||||||
Transportation and terminals revenue |
$ |
100,113 |
$ |
116,305 |
$ |
303,181 |
$ |
329,813 |
|||||||
Affiliate management fee revenue |
4,416 |
3,703 |
9,686 |
10,311 |
|||||||||||
Earnings of non-controlled entities |
18,180 |
31,244 |
49,870 |
76,388 |
|||||||||||
Less: Operating expenses |
24,547 |
31,163 |
66,228 |
89,991 |
|||||||||||
Transportation and terminals margin |
98,162 |
120,089 |
296,509 |
326,521 |
|||||||||||
Product sales revenue(1) |
24,750 |
12,370 |
26,465 |
34,876 |
|||||||||||
Less: Cost of product sales(1) |
24,108 |
16,630 |
26,469 |
37,814 |
|||||||||||
Product margin |
642 |
(4,260) |
(4) |
(2,938) |
|||||||||||
Operating margin |
$ |
98,804 |
$ |
115,829 |
$ |
296,505 |
$ |
323,583 |
|||||||
Marine storage: |
|||||||||||||||
Transportation and terminals revenue |
$ |
46,182 |
$ |
42,501 |
$ |
132,837 |
$ |
136,702 |
|||||||
Affiliate management fee revenue |
359 |
847 |
1,032 |
1,537 |
|||||||||||
Earnings of non-controlled entities |
668 |
607 |
2,025 |
1,952 |
|||||||||||
Less: Operating expenses |
16,325 |
17,723 |
49,808 |
45,753 |
|||||||||||
Transportation and terminals margin |
30,884 |
26,232 |
86,086 |
94,438 |
|||||||||||
Product sales revenue(1) |
2,772 |
1,465 |
5,081 |
4,690 |
|||||||||||
Less: Cost of product sales(1) |
373 |
1,798 |
1,052 |
6,564 |
|||||||||||
Product margin |
2,399 |
(333) |
4,029 |
(1,874) |
|||||||||||
Operating margin |
$ |
33,283 |
$ |
25,899 |
$ |
90,115 |
$ |
92,564 |
|||||||
Segment operating margin |
$ |
315,910 |
$ |
315,530 |
$ |
918,851 |
$ |
1,025,698 |
|||||||
Add: Allocated corporate depreciation costs |
1,291 |
1,282 |
3,646 |
3,913 |
|||||||||||
Total operating margin |
317,201 |
316,812 |
922,497 |
1,029,611 |
|||||||||||
Less: |
|||||||||||||||
Depreciation and amortization expense |
47,081 |
49,909 |
134,137 |
146,103 |
|||||||||||
General and administrative expense |
35,584 |
37,202 |
110,814 |
120,876 |
|||||||||||
Total operating profit |
$ |
234,536 |
$ |
229,701 |
$ |
677,546 |
$ |
762,632 |
|||||||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs. | |
(1) Includes gains and losses on related exchange-traded futures contracts. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
September 30, 2017 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
|||||||||||
As reported |
$ |
198,500 |
$ |
0.87 |
$ |
0.87 |
|||||||
Unrealized derivative (gains) losses associated with future physical product sales |
16,797 |
0.07 |
0.07 |
||||||||||
Inventory valuation adjustments associated with future physical product transactions |
6,728 |
0.03 |
0.03 |
||||||||||
Excluding commodity-related adjustments* |
$ |
222,025 |
$ |
0.97 |
$ |
0.97 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,199 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,260 |
||||||||||||
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
September 30, |
September 30, |
2017 | |||||||||||||||||
2016 |
2017 |
2016 |
2017 |
Guidance | |||||||||||||||
Net income |
$ |
194,551 |
$ |
198,500 |
$ |
589,480 |
$ |
631,636 |
$ |
895,000 |
|||||||||
Interest expense, net |
41,984 |
48,231 |
120,363 |
143,061 |
194,000 |
||||||||||||||
Depreciation and amortization |
47,081 |
49,909 |
134,137 |
146,103 |
198,000 |
||||||||||||||
Equity-based incentive compensation(1) |
4,677 |
3,466 |
360 |
308 |
4,000 |
||||||||||||||
Loss on sale and retirement of assets |
2,134 |
2,250 |
5,397 |
7,581 |
12,000 |
||||||||||||||
Gain on sale of asset(2) |
— |
(18,505) |
— |
(18,505) |
(18,000) |
||||||||||||||
Gain on exchange of interest in non-controlled entity(3) |
— |
— |
(28,144) |
— |
— |
||||||||||||||
Commodity-related adjustments: |
|||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(5) |
12,272 |
16,797 |
10,071 |
13,518 |
|||||||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period(5) |
5,871 |
4,033 |
38,642 |
(25,493) |
|||||||||||||||
Inventory valuation adjustments(6) |
(1,083) |
(875) |
(2,798) |
4,048 |
|||||||||||||||
Total commodity-related adjustments |
17,060 |
19,955 |
45,915 |
(7,927) |
(13,000) |
||||||||||||||
Cash distributions received from non-controlled entities in excess of earnings |
2,948 |
8,635 |
3,003 |
19,519 |
30,000 |
||||||||||||||
Other(4) |
1,315 |
849 |
3,891 |
3,749 |
4,000 |
||||||||||||||
Adjusted EBITDA |
311,750 |
313,290 |
874,402 |
925,525 |
1,306,000 |
||||||||||||||
Interest expense, net, excluding debt issuance cost amortization |
(41,171) |
(47,403) |
(118,029) |
(140,579) |
(191,000) |
||||||||||||||
Maintenance capital(7) |
(26,657) |
(30,737) |
(86,103) |
(71,832) |
(95,000) |
||||||||||||||
Distributable cash flow |
$ |
243,922 |
$ |
235,150 |
$ |
670,270 |
$ |
713,114 |
$ |
1,020,000 |
|||||||||
(1) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the nine months ended September 30, 2016 and 2017 was $14.7 million and $14.2 million, respectively. However, the figures above include adjustments of $14.4 million and $13.9 million in 2016 and 2017, respectively, for cash payments associated with its equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) |
In September 2017, the partnership recognized an $18.5 million gain in connection with the sale of an inactive terminal along the partnership's refined products pipeline system, which has been deducted from the calculation of DCF because it is not related to the partnership's ongoing operations. |
(3) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $28.1 million non-cash gain in relation to this transaction. |
(4) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. These payments replace distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(5) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(6) |
The partnership adjusts the amount of lower-of-cost-or-market adjustments related to inventory and firm purchase commitments and valuations of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(7) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-third-quarter-2017-financial-results-300548077.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 19, 2017 /PRNewswire/ -- The board of directors of the general partner of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 90.5 cents per unit for the period July 1 through Sept. 30, 2017, representing the 62nd distribution increase since its initial public offering in 2001.
The third-quarter 2017 distribution is 8% higher than the third-quarter 2016 distribution of 83.75 cents per unit and represents a 2% increase over the second-quarter 2017 distribution of 89 cents.
The new distribution, which equates to $3.62 per unit on an annualized basis, will be paid Nov. 14 to unitholders of record at the close of business on Nov. 2.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-increases-quarterly-cash-distribution-to-905-cents-300539791.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 5, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2017 before the market opens on Thurs., Nov. 2. Management will discuss third-quarter earnings, outlook for the remainder of 2017 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (866) 564-2842 and provide code 2203241. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Nov. 2 through midnight on Nov. 8. To access the replay, dial (888) 203-1112 and provide code 2203241. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2017-financial-results-on-nov-2-300531847.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 26, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 4.20% senior notes due 2047. The notes were priced at 99.341% of par to yield 4.239% to maturity. The partnership intends to use the net proceeds from this offering of approximately $491.6 million, after deducting underwriting discounts and estimated offering expenses, to repay borrowings outstanding under its commercial paper program. Any remaining net proceeds may be used for general partnership purposes, which may include capital expenditures.
The offering is expected to close on Oct. 3, 2017 and is subject to the satisfaction of customary closing conditions. Barclays Capital Inc., SunTrust Robinson Humphrey, Inc., Wells Fargo Securities, LLC, Citigroup Global Markets Inc., PNC Capital Markets LLC and SMBC Nikko Securities America, Inc. are joint book-running managers for the debt offering, with J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC and U.S. Bancorp Investments, Inc. acting as co-managers.
The offering may be made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-prices-500-million-debt-offering-300526188.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and SAN ANTONIO, Sept. 14, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) (Magellan) and Valero Energy Corporation (NYSE: VLO) (Valero) announced today the expansion and joint development of the marine storage facility currently under construction along the Houston Ship Channel in Pasadena, Texas. The Pasadena facility, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero and will initially include 5 million barrels of storage, truck loading facilities and 2 proprietary ship docks.
As previously announced in July 2016, phase 1 of this facility is already under construction, which includes approximately 1 million barrels of storage and a new marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. This first phase will now be owned by the jointly-owned company.
Further, this facility will be expanded by an incremental 4 million barrels of storage, a 3-bay truck rack and a second marine dock capable of handling Aframax-sized vessels with up to a 45-foot draft (phase 2). After completion of this expansion, the Pasadena facility will be connected via pipeline to Valero's refineries in Houston and Texas City, Texas and the Colonial and Explorer pipelines in addition to the already planned connection to Magellan's Galena Park terminal facility.
Combined, phases 1 and 2 of the Pasadena marine terminal are currently estimated to cost approximately $820 million, which will be funded equally by capital contributions from Magellan and Valero. With the new arrangement, Magellan's incremental capital spending will be approximately $75 million more than its previous spending estimates of $335 million for phase 1 alone. Both phases are fully contracted with long-term customer commitments.
Magellan currently serves as construction manager and will serve as operator once construction is complete. Phase 1 of the new terminal is expected to be operational in early 2019, with phase 2 expected to come on-line in early 2020, subject to receipt of necessary permits and regulatory approvals.
"Magellan is pleased to join forces with Valero to combine our extensive pipeline and terminals capabilities with their world-renowned refining and marketing expertise to further expand the state-of-the-art marine facility being constructed in Pasadena," said Michael Mears, Magellan's chairman, president and chief executive officer. "Demand for refined products from the Gulf Coast continues to grow, and together, we are well-positioned to continue expanding our marine capabilities to meet this demand from both domestic and international markets."
"Valero is excited about this opportunity to work with an exceptional organization like Magellan to jointly develop this flexible and well-positioned terminal," said Joe Gorder, Valero's chairman, president and chief executive officer. "This project provides another example of our commitment to growing our portfolio of logistics capabilities to support our long-term strategy of expanding and extending our supply chain."
If warranted by additional demand, the new Pasadena facility could be expanded to include an incremental 5 million barrels of storage, another 3 docks and expanded truck loading capacity, for a maximum footprint of up to 10 million barrels of total storage and up to 5 docks. All future expansions are expected to be owned by the jointly-owned company.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Valero
Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels and other petrochemical products. Valero, a Fortune 50 company based in San Antonio, Texas, with approximately 10,000 employees, is an independent petroleum refiner and ethanol producer, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 11 ethanol plants with a combined production capacity of 1.4 billion gallons per year. The petroleum refineries are located in the United States (U.S.), Canada and the United Kingdom (U.K.), and the ethanol plants are located in the Mid-Continent region of the U.S. In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP, a midstream master limited partnership. Valero sells its products in both the wholesale rack and bulk markets, and approximately 7,400 outlets carry Valero's brand names in the U.S., Canada, the U.K. and Ireland. Please visit www.valero.com for more information.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Valero Energy Corporation (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the companies' results of operations and financial condition are: (1) the ability to obtain required rights-of-way, permits and other approvals on a timely basis; (2) the ability to complete construction of the projects on time and at expected costs; (3) price fluctuations and overall demand for refined petroleum products; (4) the occurrence of an operational hazard or unforeseen interruption; (5) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (6) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for both companies. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contacts: | ||
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com | |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | ||
Valero: |
John Locke, Investor Relations (210) 345-3077, john.locke@valero.com | |
Lillian Riojas, Media Relations (210) 345-5002, lillian.riojas@valero.com |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-and-valero-form-joint-venture-to-expand-pasadena-marine-terminal-300519397.html
SOURCE Magellan Midstream Partners, L.P.; Valero Energy Corporation
TULSA, Okla., Sept. 6, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today plans to expand its refined petroleum products pipeline system to handle incremental demand for transportation of gasoline, diesel fuel and jet fuel to central and north Texas markets.
Supported by long-term customer commitments, Magellan plans to build an approximately 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, Texas. Magellan will own the newly-constructed pipeline from East Houston to Hearne via an undivided joint interest agreement with Valero Energy Corporation (NYSE: VLO). Magellan's ownership interest in this new pipe will provide the ability to deliver additional product north to Temple, Waco and Dallas as well as Magellan's Midcontinent markets, including Little Rock, Arkansas. Magellan plans to reverse an existing pipeline which will connect to the new pipeline segment, providing Magellan an incremental 85,000 barrels per day of refined products capacity originating from the Houston area, for an increase of nearly 50% to service Magellan's Texas, Midcontinent and Little Rock markets.
In addition, Magellan will make a number of enhancements to its existing pipeline and terminal infrastructure, including construction of 1 million barrels of refined products storage on a combined basis at its facilities in Dallas, East Houston and Hearne, and additional connections to third-party refineries, pipelines and terminals within the Houston Gulf Coast region, including Magellan's new Pasadena, Texas marine terminal that is currently under construction and expected to be operational in early 2019.
Magellan currently expects to spend approximately $375 million for its share of the project, with the expanded capacity available in mid-2019, subject to receipt of necessary permits and regulatory approvals.
"Demand for refined petroleum products remains strong along Magellan's extensive pipeline system," said Michael Mears, chief executive officer. "Magellan is pleased to meet the industry's need for pipeline capacity serving the Dallas market and other important demand centers along our refined products pipeline system with an attractive investment supported by long-term commitments from well-known, strong creditworthy customers."
If warranted by additional customer demand, Magellan's pipeline capacity originating in the Houston area could be further increased.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes could be materially different. Among the key risk factors that may have a direct impact on the statements made in this news release are: (1) the ability to obtain required rights-of-way, permits and other approvals on a timely basis; (2) price fluctuations and overall demand for refined petroleum products; (3) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-expand-texas-refined-petroleum-products-pipeline-system-300514168.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 5, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today it is commencing construction of a new Delaware Basin pipeline originating in Wink, Texas to handle crude oil and condensate.
Magellan will build an approximately 60-mile, 24-inch pipeline from Wink to Crane, Texas, which serves as an origin to its Longhorn pipeline. The new Wink pipeline will have an initial capacity of 250,000 barrels per day (bpd) with the ability to expand to more than 600,000 bpd if warranted by industry demand. The project also includes construction of a new terminal at Wink which will offer broad inbound and outbound pipeline access to parties that connect to the facility.
Magellan currently expects the project to cost approximately $150 million and to be operational in mid-2019, subject to receipt of any necessary permits and regulatory approvals.
"Magellan is known in the industry for its independent service provider business model and is ideally situated to meet growing industry demand for a crude oil and condensate pipeline system with access to customers originating from the Delaware Basin," said Michael Mears, chief executive officer.
The new pipeline segment will offer direct service from the Delaware Basin to the Crane origin of Magellan's Longhorn pipeline, which provides crude oil and condensate transportation service to the Houston and Texas City refining complex and marine export facilities. In addition, this pipeline segment will be able to provide service from the Delaware Basin to the new crude oil and condensate line to Corpus Christi, Texas that has been proposed by Magellan as well as others in the industry.
Magellan plans to conduct an open season for commitments on the new pipeline system at a later time; however, construction of the new pipeline does not depend on the results of the open season. In addition, the partnership is assessing additional pipeline and terminal investments in West Texas to strengthen and enhance its overall crude oil service offerings.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes could be materially different. Among the key risk factors that may have a direct impact on the statements made in this news release are: (1) the ability to obtain required rights-of-way, permits and other approvals on a timely basis; (2) price fluctuations and overall demand for crude oil and condensate; (3) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-construct-delaware-basin-crude-oil-and-condensate-pipeline-300513298.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 1, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that significant progress has been made at its facilities in Houston and Corpus Christi, Texas following the impact of Hurricane Harvey, with no significant asset damage found.
First and foremost, Magellan has over 200 employees that work at the partnership's Houston and Corpus Christi facilities, and we are pleased to report that all employees and their families impacted by this storm are safe.
Following the record rainfall in the Houston area, Magellan employees and contractors have been working around the clock to remove floodwater, assess electrical service and inspect all assets to evaluate their integrity.
Refined products pipeline service has now resumed at the partnership's East Houston terminal to deliver gasoline, diesel fuel and jet fuel to the Dallas and West Texas areas. Until those markets can be adequately resupplied, Magellan will continue to deliver refined products from its reversed pipeline segment that provides transportation services from Oklahoma refineries into the Dallas / Ft. Worth and West Texas markets.
Inspections continue for the partnership's crude oil pipelines, including Longhorn and BridgeTex, with operations currently expected to resume over the weekend once these assessments are complete.
Clean-up work and inspections continue at the partnership's Galena Park marine facility, but a restart timetable is not yet available.
Concerning Corpus Christi, storage and distribution services have commenced at this facility. The partnership currently expects to restart its condensate splitter mid-next week following a thorough review of all electronic devices that is currently underway.
"We are thankful for our dedicated workforce who have worked tirelessly to evaluate the integrity of our assets and restart operation of our assets in a safe and timely manner, all while many endure personal hardships from this recent storm," said Michael Mears, chief executive officer.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially those under the heading "Risk Factors."
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-advises-operational-impact-of-hurricane-harvey-300513140.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 2, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $210.4 million for second quarter 2017 compared to $187.9 million for second quarter 2016.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $250.4 million for second quarter 2017 compared to $221.0 million for second quarter 2016.
Diluted net income per limited partner unit was 92 cents in second quarter 2017 and 82 cents in second quarter 2016. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, of 91 cents for second quarter 2017 was higher than the 85-cent guidance provided by management in early May primarily due to stronger-than-expected distillate demand and higher crude oil shipments on the BridgeTex pipeline.
"Magellan continues to generate strong financial results, with higher contributions generated from each of our operating segments again this quarter. During the second quarter of 2017, we commenced commercial operations for our recently-constructed condensate splitter and benefited from record refined products pipeline volumes," said Michael Mears, chief executive officer. "Demand for Magellan's fee-based pipeline and terminal services remains solid, and based on active discussions with potential customers, we remain optimistic about the future development of additional growth opportunities to further benefit our company."
An analysis by segment comparing second quarter 2017 to second quarter 2016 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $214.4 million, an increase of $37.1 million. Transportation and terminals revenue increased $30.1 million between periods primarily due to operating results from the partnership's Little Rock pipeline that commenced commercial operations in July 2016 as well as 7% higher shipments on other segments of the partnership's pipeline system driven by stronger demand for refined products in large part due to higher distillate demand in crude oil production regions and higher average tariffs from the partnership's mid-2016 tariff adjustment, which resulted in a 2% average increase over all the partnership's markets.
Operating expenses increased slightly as higher asset integrity costs related to timing of maintenance work and incremental costs associated with operation of the Little Rock pipeline were mainly offset by more favorable product overages in the current period (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $8.6 million between periods due to the timing of recognizing gains on futures contracts used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, declined between periods due to higher butane costs, resulting in compressed butane blending margins.
Crude oil. Crude oil operating margin was $105.8 million, an increase of $8.9 million. Transportation and terminals revenue increased $7.1 million primarily due to contributions from the partnership's recently constructed condensate splitter in Corpus Christi, Texas that began commercial operations in June 2017 and higher deficiency revenue for volume committed but not moved on the partnership's Houston distribution system.
Earnings of non-controlled entities increased $9.8 million due to contributions from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan and began operations in Sept. 2016, and higher earnings from BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan, attributable to incremental shipments in the current period, including additional volume from BridgeTex's new Eaglebine origin that began service in second quarter 2017.
Operating expenses increased $10.9 million primarily due to higher compensation and other costs associated with the partnership's new condensate splitter that began commercial operations in June 2017 and less favorable product overages.
Marine storage. Marine storage operating margin was $32.2 million, an increase of $3.3 million. Revenue increased $4.7 million due to increased storage utilization, higher storage rates and overall increased customer activity in the current period. Operating expenses decreased slightly due to favorable product overages in the current period.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, and G&A expense increased because of higher employee headcount mainly as a result of expansion projects and more equity-based compensation expense due to timing of accrual adjustments. Other expense was unfavorable between periods related to less favorable non-cash MTM results for hedged crude oil tank bottom inventory owned by the partnership and higher costs for pension settlements.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending and lower interest capitalized for construction projects in the current period. As of June 30, 2017, the partnership had $4.2 billion of debt outstanding, including $197.0 million outstanding under its commercial paper program, and $5.5 million of cash on hand.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to identify new opportunities for future growth. Based on the progress of expansion projects already underway, the partnership expects to spend $600 million in 2017 and $400 million in 2018 to complete its current slate of construction projects.
The expansion of the BridgeTex pipeline from 300,000 barrels per day (bpd) to a new capacity of 400,000 bpd is now complete, and BridgeTex currently has an open season in process to solicit commitments for the incremental space. If warranted by customer demand, BridgeTex may further expand the capacity of the pipeline system up to approximately 440,000 bpd.
The Cheyenne extension of the Saddlehorn pipeline is in the final stages of construction and is expected to commence service during late third quarter 2017.
In addition, the partnership continues to make steady progress on its longer-term construction projects, such as the new dock at its Galena Park, Texas marine terminal, with an expected in-service date of late 2018. Further, Magellan still expects its new marine facility in Pasadena, Texas to become operational in early 2019. Permitting work is now complete, with construction activities underway at this time.
Magellan continues to evaluate well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. In fact, active discussions with potential customers continue to further develop the partnership's to-be-constructed Pasadena marine terminal, to expand its refined products pipeline system in Texas and to construct a crude oil and condensate pipeline from the Permian Basin to Corpus Christi, among other potential opportunities under consideration.
Financial guidance for 2017
As a result of strong financial performance to date, management is increasing its annual DCF guidance by $20 million to $1.02 billion for 2017, representing a record year for Magellan and 1.2 times the amount needed to pay projected cash distributions for 2017. Management remains committed to its goal of increasing annual cash distributions by 8% in both 2017 and 2018 while maintaining distribution coverage of 1.2 times each year.
Including actual results so far this year, net income per limited partner unit is estimated to be $3.85 for 2017, with third-quarter guidance of 90 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss second-quarter financial results, outlook for the remainder of 2017 and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (866) 548-4713 and provide code 8349495. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 8349495. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Transportation and terminals revenue |
$ |
392,240 |
$ |
433,239 |
$ |
762,315 |
$ |
825,910 |
|||||||
Product sales revenue |
123,689 |
182,004 |
270,251 |
427,624 |
|||||||||||
Affiliate management fee revenue |
2,968 |
4,197 |
6,147 |
7,980 |
|||||||||||
Total revenue |
518,897 |
619,440 |
1,038,713 |
1,261,514 |
|||||||||||
Costs and expenses: |
|||||||||||||||
Operating |
134,183 |
145,294 |
257,096 |
276,886 |
|||||||||||
Cost of product sales |
95,703 |
145,975 |
209,288 |
318,851 |
|||||||||||
Depreciation and amortization |
43,302 |
48,896 |
87,056 |
96,194 |
|||||||||||
General and administrative |
34,554 |
43,393 |
75,230 |
83,674 |
|||||||||||
Total costs and expenses |
307,742 |
383,558 |
628,670 |
775,605 |
|||||||||||
Earnings of non-controlled entities |
15,339 |
25,576 |
32,967 |
47,022 |
|||||||||||
Operating profit |
226,494 |
261,458 |
443,010 |
532,931 |
|||||||||||
Interest expense |
48,686 |
51,546 |
92,410 |
102,758 |
|||||||||||
Interest income |
(404) |
(256) |
(765) |
(548) |
|||||||||||
Interest capitalized |
(7,130) |
(3,183) |
(13,266) |
(7,380) |
|||||||||||
Gain on exchange of interest in non-controlled entity |
(1,244) |
— |
(28,144) |
— |
|||||||||||
Other (income) expense |
(1,958) |
2,043 |
(3,710) |
3,213 |
|||||||||||
Income before provision for income taxes |
188,544 |
211,308 |
396,485 |
434,888 |
|||||||||||
Provision for income taxes |
685 |
908 |
1,556 |
1,752 |
|||||||||||
Net income |
$ |
187,859 |
$ |
210,400 |
$ |
394,929 |
$ |
433,136 |
|||||||
Basic net income per limited partner unit |
$ |
0.82 |
$ |
0.92 |
$ |
1.73 |
$ |
1.90 |
|||||||
Diluted net income per limited partner unit |
$ |
0.82 |
$ |
0.92 |
$ |
1.73 |
$ |
1.90 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,952 |
228,192 |
227,889 |
228,151 |
|||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,983 |
228,245 |
227,921 |
228,202 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.427 |
$ |
1.481 |
$ |
1.422 |
$ |
1.472 |
|||||||
Volume shipped (million barrels): |
|||||||||||||||
Gasoline |
71.1 |
76.7 |
132.2 |
142.9 |
|||||||||||
Distillates |
36.4 |
40.7 |
72.7 |
78.6 |
|||||||||||
Aviation fuel |
6.9 |
7.6 |
12.4 |
13.5 |
|||||||||||
Liquefied petroleum gases |
4.2 |
4.6 |
5.8 |
5.7 |
|||||||||||
Total volume shipped |
118.6 |
129.6 |
223.1 |
240.7 |
|||||||||||
Crude oil: |
|||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.360 |
$ |
1.380 |
$ |
1.403 |
$ |
1.456 |
|||||||
Volume shipped (million barrels) |
45.1 |
47.3 |
88.8 |
88.6 |
|||||||||||
Crude oil terminal average utilization (million barrels per month) |
14.7 |
15.2 |
14.6 |
15.9 |
|||||||||||
Select joint venture pipelines: |
|||||||||||||||
BridgeTex - volume shipped (million barrels)(1) |
19.3 |
21.8 |
38.1 |
40.7 |
|||||||||||
Saddlehorn - volume shipped (million barrels)(2) |
— |
3.7 |
— |
7.7 |
|||||||||||
Marine storage: |
|||||||||||||||
Marine terminal average utilization (million barrels per month) |
23.0 |
23.9 |
23.2 |
24.0 |
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan and began operations in September 2016. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation and terminals revenue |
$ |
247,842 |
$ |
277,883 |
$ |
472,592 |
$ |
519,788 |
|||||||
Affiliate management fee revenue |
124 |
353 |
204 |
682 |
|||||||||||
Earnings (losses) of non-controlled entities |
(38) |
422 |
(80) |
533 |
|||||||||||
Less: Operating expenses |
98,513 |
100,713 |
184,287 |
194,246 |
|||||||||||
Transportation and terminals margin |
149,415 |
177,945 |
288,429 |
326,757 |
|||||||||||
Product sales revenue(1) |
122,311 |
161,723 |
266,227 |
401,893 |
|||||||||||
Less: Cost of product sales(1) |
94,392 |
125,220 |
206,248 |
292,901 |
|||||||||||
Product margin |
27,919 |
36,503 |
59,979 |
108,992 |
|||||||||||
Operating margin |
$ |
177,334 |
$ |
214,448 |
$ |
348,408 |
$ |
435,749 |
|||||||
Crude oil: |
|||||||||||||||
Transportation and terminals revenue |
$ |
101,340 |
$ |
108,455 |
$ |
203,068 |
$ |
213,508 |
|||||||
Affiliate management fee revenue |
2,486 |
3,474 |
5,270 |
6,608 |
|||||||||||
Earnings of non-controlled entities |
14,711 |
24,494 |
31,690 |
45,144 |
|||||||||||
Less: Operating expenses |
20,555 |
31,410 |
41,681 |
58,828 |
|||||||||||
Transportation and terminals margin |
97,982 |
105,013 |
198,347 |
206,432 |
|||||||||||
Product sales revenue(1) |
(28) |
19,403 |
1,715 |
22,506 |
|||||||||||
Less: Cost of product sales(1) |
1,016 |
18,607 |
2,361 |
21,184 |
|||||||||||
Product margin |
(1,044) |
796 |
(646) |
1,322 |
|||||||||||
Operating margin |
$ |
96,938 |
$ |
105,809 |
$ |
197,701 |
$ |
207,754 |
|||||||
Marine storage: |
|||||||||||||||
Transportation and terminals revenue |
$ |
43,058 |
$ |
47,794 |
$ |
86,655 |
$ |
94,201 |
|||||||
Affiliate management fee revenue |
358 |
370 |
673 |
690 |
|||||||||||
Earnings of non-controlled entities |
666 |
660 |
1,357 |
1,345 |
|||||||||||
Less: Operating expenses |
16,278 |
15,375 |
33,483 |
28,030 |
|||||||||||
Transportation and terminals margin |
27,804 |
33,449 |
55,202 |
68,206 |
|||||||||||
Product sales revenue(1) |
1,406 |
878 |
2,309 |
3,225 |
|||||||||||
Less: Cost of product sales(1) |
295 |
2,148 |
679 |
4,766 |
|||||||||||
Product margin |
1,111 |
(1,270) |
1,630 |
(1,541) |
|||||||||||
Operating margin |
$ |
28,915 |
$ |
32,179 |
$ |
56,832 |
$ |
66,665 |
|||||||
Segment operating margin |
$ |
303,187 |
$ |
352,436 |
$ |
602,941 |
$ |
710,168 |
|||||||
Add: Allocated corporate depreciation costs |
1,163 |
1,311 |
2,355 |
2,631 |
|||||||||||
Total operating margin |
304,350 |
353,747 |
605,296 |
712,799 |
|||||||||||
Less: |
|||||||||||||||
Depreciation and amortization expense |
43,302 |
48,896 |
87,056 |
96,194 |
|||||||||||
General and administrative expense |
34,554 |
43,393 |
75,230 |
83,674 |
|||||||||||
Total operating profit |
$ |
226,494 |
$ |
261,458 |
$ |
443,010 |
$ |
532,931 |
Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs. |
(1) Includes gains and losses on related exchange-traded futures contracts. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | ||||||||||||
EXCLUDING MARK-TO-MARKET COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | ||||||||||||
(Unaudited, in thousands except per unit amounts) | ||||||||||||
Three Months Ended | ||||||||||||
June 30, 2017 | ||||||||||||
Net Income |
Basic Net Income |
Diluted Net | ||||||||||
As reported |
$ |
210,400 |
$ |
0.92 |
$ |
0.92 |
||||||
Unrealized derivative (gains) losses associated with future physical product sales |
(5,955) |
(0.03) |
(0.03) |
|||||||||
Lower-of-cost-or-market adjustments associated with future physical product transactions |
4,178 |
0.02 |
0.02 |
|||||||||
Excluding commodity-related adjustments* |
$ |
208,623 |
$ |
0.91 |
$ |
0.91 |
||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,192 |
|||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,245 |
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
June 30, |
2017 | |||||||||||||||||
2016 |
2017 |
2016 |
2017 |
Guidance | |||||||||||||||
Net income |
$ |
187,859 |
$ |
210,400 |
$ |
394,929 |
$ |
433,136 |
$ |
878,000 |
|||||||||
Interest expense, net |
41,152 |
48,107 |
78,379 |
94,830 |
200,000 |
||||||||||||||
Depreciation and amortization |
43,302 |
48,896 |
87,056 |
96,194 |
200,000 |
||||||||||||||
Equity-based incentive compensation(1) |
3,409 |
6,570 |
(4,317) |
(3,158) |
3,000 |
||||||||||||||
Loss on sale and retirement of assets |
1,004 |
1,870 |
3,263 |
5,331 |
10,000 |
||||||||||||||
Gain on exchange of interest in non-controlled entity(2) |
(1,244) |
— |
(28,144) |
— |
— |
||||||||||||||
Commodity-related adjustments: |
|||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions(4) |
(997) |
(5,955) |
(5,675) |
(7,312) |
|||||||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period(4) |
17,820 |
(137) |
36,245 |
(25,493) |
|||||||||||||||
Lower-of-cost-or-market adjustments(5) |
— |
1,983 |
(1,715) |
4,923 |
|||||||||||||||
Total commodity-related adjustments |
16,823 |
(4,109) |
28,855 |
(27,882) |
(27,000) |
||||||||||||||
Cash distributions received from non-controlled entities in excess of earnings |
(1,825) |
10,725 |
55 |
10,884 |
40,000 |
||||||||||||||
Other(3) |
2,040 |
1,450 |
2,576 |
2,900 |
3,000 |
||||||||||||||
Adjusted EBITDA |
292,520 |
323,909 |
562,652 |
612,235 |
1,307,000 |
||||||||||||||
Interest expense, net, excluding debt issuance cost amortization |
(40,345) |
(47,279) |
(76,858) |
(93,176) |
(197,000) |
||||||||||||||
Maintenance capital(6) |
(31,164) |
(26,266) |
(59,446) |
(41,095) |
(90,000) |
||||||||||||||
Distributable cash flow |
$ |
221,011 |
$ |
250,364 |
$ |
426,348 |
$ |
477,964 |
$ |
1,020,000 |
(1) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the six months ended June 30, 2016 and 2017 was $10.1 million and $10.7 million, respectively. However, the figures above include adjustments of $14.4 million and $13.9 million in 2016 and 2017, respectively, for cash payments associated with its equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $28.1 million non-cash gain in relation to this transaction. |
(3) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. These payments replace distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(4) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(5) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments recognized in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(6) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-reports-12-higher-second-quarter-net-income-300498031.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 20, 2017 /PRNewswire/ -- The board of directors of the general partner of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 89 cents per unit for the period March 1 through June 30, 2017, representing the 61st distribution increase since its initial public offering in 2001.
The second-quarter 2017 distribution is 9% higher than the second-quarter 2016 distribution of 82 cents per unit and represents a 2% increase over the first-quarter 2017 distribution of 87.25 cents.
The new distribution, which equates to $3.56 per unit on an annualized basis, will be paid Aug. 14 to unitholders of record at the close of business on July 31.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially those under the heading "Risk Factors."
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-increases-quarterly-cash-distribution-to-89-cents-300491541.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 11, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2017 before the market opens on Wed., Aug. 2. Management will discuss second-quarter earnings, outlook for the remainder of 2017 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (866) 548-4713 and provide code 8349495. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Aug. 2 through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 8349495. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
View original content:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-second-quarter-2017-financial-results-on-aug-2-300486076.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., and HOUSTON, July 6, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") announced today that BridgeTex Pipeline Company, LLC ("BridgeTex"), owned 50/50 by Magellan and Plains, has launched an open season to assess customer interest for expanded capacity and a new origin in Midland, Texas. All potential customers must submit binding commitments by 5:00 p.m. Central Time on Aug. 4, 2017.
The BridgeTex pipeline was recently expanded from 300,000 barrels per day ("bpd") to a capacity of 400,000 bpd to deliver Permian Basin crude oil from Colorado City, Texas to the Houston Gulf Coast area. If warranted by customer demand, BridgeTex may further expand the capacity of the pipeline system up to approximately 440,000 bpd.
For customer inquiries about the open season, please contact JoeBill Rehder of Magellan at (918) 574-7563 or joebill.rehder@magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles over 4.7 million barrels per day of crude oil and NGL in its Transportation segment. More information is available at www.plainsallamerican.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Plains All American Pipeline, L.P. (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the companies' results of operations and financial condition are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in the BridgeTex pipeline's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to the BridgeTex pipeline. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for both companies. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contacts:
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | |
Plains: |
Brett Magill, Investor Relations (866) 809-1291 |
Brad Leone, Media Relations (866) 809-1290 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 21, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Aaron Milford, chief financial officer, is scheduled to present at the J.P. Morgan Energy Equity Conference at 9:20 a.m. Eastern on Tues., June 27 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 26, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Aaron Milford, chief financial officer, is scheduled to participate in a question and answer session about Magellan at the 2017 Investor Conference hosted by the Master Limited Partnership Association at 1:40 p.m. Eastern on Thurs., June 1 in Orlando, Florida.
The session will be moderated by Rick Gross of Barclays Capital, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 3, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $222.7 million for first quarter 2017 compared to $207.1 million for first quarter 2016.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $227.6 million for first quarter 2017 compared to $205.3 million for first quarter 2016.
Diluted net income per limited partner unit was 98 cents in first quarter 2017 and 91 cents in first quarter 2016. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, of 96 cents for first quarter 2017 was higher than the 90-cent guidance provided by management in early February primarily due to more favorable product overages and timing of operating expenses that are now expected to occur later in the year.
"Magellan reported solid financial results in the first quarter of 2017, with higher contributions generated from each of our operating segments. In addition, we recently commenced operations for a number of our joint venture projects, including Seabrook Logistics, which will serve as Magellan's solution to meet the industry's growing need for crude oil marine terminal infrastructure," said Michael Mears, chief executive officer. "We remain focused on operating our business in a safe and financially sound manner while continuing to develop additional opportunities to grow our company."
An analysis by segment comparing first quarter 2017 to first quarter 2016 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $221.3 million, an increase of $50.2 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Financial results from this segment's fee-based activities also increased between periods.
Transportation and terminals revenue increased $17.1 million between periods primarily due to operating results from the partnership's Little Rock pipeline that commenced commercial operations in July 2016, 4% higher shipments on other segments of the partnership's pipeline system driven by stronger demand for refined products and higher average tariffs from the partnership's mid-2016 tariff adjustment, which resulted in a 2% average increase over all the partnership's markets.
Operating expenses increased $7.7 million primarily due to higher asset integrity costs related to timing of maintenance work and incremental costs associated with operation of the Little Rock pipeline, partially offset by more favorable product overages in the current period (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $40.4 million between periods due to the timing of recognizing gains on futures contracts used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, was essentially flat between periods.
Crude oil. Crude oil operating margin was $101.9 million, an increase of $1.1 million. Transportation and terminals revenue increased primarily due to additional leased storage contracts at Magellan's East Houston, Texas terminal and higher transportation revenues. Lower shipments mainly on the partnership's Houston distribution system were more than offset by higher average rates primarily resulting from deficiency revenue for volume committed but not moved.
Earnings of non-controlled entities increased due to contributions from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan and began operations in Sept. 2016. Operating expenses increased primarily due to less favorable product overages.
Marine storage. Marine storage operating margin was $34.5 million, an increase of $6.6 million. Revenue increased due to new storage tanks at the partnership's Corpus Christi, Texas facility and overall increased customer activity in the current period. Operating expenses decreased due to favorable product overages in the current period.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures. The 2016 period benefited from a $26.9 million non-cash gain related to the transfer of the partnership's 50% interest in Osage Pipe Line Company, LLC to HollyFrontier Corporation in exchange for long-term refined products commercial agreements. Other expense was unfavorable between periods related to less favorable non-cash MTM adjustments for hedged crude oil tank bottom inventory owned by the partnership and higher costs for pension settlements.
Net interest expense increased as a result of additional borrowings to finance expansion capital spending and lower interest capitalized for construction projects in the current period. As of March 31, 2017, the partnership had $4.2 billion of debt outstanding, including $167.0 million outstanding under its commercial paper program, and $7.1 million of cash on hand.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to identify new opportunities for future growth. Based on the progress of expansion projects already underway, the partnership expects to spend $600 million in 2017 and $350 million in 2018 to complete its current slate of construction projects. These estimates include an incremental $50 million of spending for new growth projects, primarily related to construction of 1.2 million barrels of crude oil storage at the partnership's East Houston terminal for contract storage, and as previously announced, 300,000 barrels of storage in Corpus Christi to support the condensate splitter.
Significant progress has been made on the partnership's joint venture construction projects, with a number of these projects becoming operational recently. For instance, the Powder Springs butane blending joint venture commenced operations during March, along with the Carr-to-Platteville segment of the Saddlehorn pipeline. The Cheyenne extension of the Saddlehorn pipeline is expected to commence service during the third quarter of 2017.
Seabrook Logistics is now operational following the construction of more than 700,000 barrels of crude oil and condensate storage and a new 18-inch diameter pipeline to transport crude oil to a Houston-area refinery. As previously announced, Seabrook Logistics is also building an incremental 1.7 million barrels of storage and connecting its facility to Magellan's Houston crude oil distribution system by constructing a 24-inch diameter bi-directional pipeline between Seabrook Logistics' facility and Genoa Junction, both of which are expected to be operational in mid-2018.
The newly-constructed Bryan, Texas origin for the BridgeTex pipeline is now operational to accept crude oil shipments from the Eaglebine region for delivery to Houston. In addition, expansion of the BridgeTex pipeline from 300,000 barrels per day (bpd) to a new capacity of approximately 400,000 bpd is expected to be complete by the end of the second quarter, with an additional evaluation underway to further expand the BridgeTex pipeline to 475,000 bpd.
As previously announced, the partnership has entered into a new fee-based, take-or-pay agreement with Trafigura Trading LLC for the exclusive use of Magellan's recently-constructed condensate splitter in Corpus Christi, with commercial operations expected to begin during late second quarter 2017.
In addition, the partnership continues to make steady progress on its longer-term construction projects, such as the new dock at its Galena Park, Texas marine terminal, with an expected in-service date of late 2018, and its new marine facility in Pasadena, Texas, which remains on target for early 2019.
Magellan is actively evaluating well in excess of $500 million of potential organic growth projects in earlier stages of development as well as acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Examples of potential construction projects include further development of the partnership's to-be-constructed Pasadena marine terminal, expansion of its refined products pipeline system in Texas and construction of a crude oil and condensate pipeline from the Permian Basin to Corpus Christi.
Financial guidance for 2017
Management reaffirms its annual DCF guidance of $1.0 billion for 2017, representing a record year for Magellan. While the partnership expects to begin generating revenue from the condensate splitter during the second half of 2017, this benefit is projected to be offset by lower commodity margins based on recent contractions in the commodity pricing curves.
Further, management remains committed to its goal of increasing annual cash distributions by 8% in both 2017 and 2018, which would result in an expected distribution coverage of 1.2 times the amount needed to pay cash distributions each year.
Including actual results so far this year, net income per limited partner unit is estimated to be $3.75 for 2017, with second-quarter guidance of 85 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss first-quarter results, 2017 guidance and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (888) 500-6960 and provide code 4711716. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on May 9. To access the replay, dial (888) 203-1112 and provide code 4711716. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, guidance, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands, except per unit amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2016 |
2017 | ||||||
Transportation and terminals revenue |
$ |
370,075 |
$ |
392,671 |
|||
Product sales revenue |
146,562 |
245,620 |
|||||
Affiliate management fee revenue |
3,179 |
3,783 |
|||||
Total revenue |
519,816 |
642,074 |
|||||
Costs and expenses: |
|||||||
Operating |
122,913 |
131,592 |
|||||
Cost of product sales |
113,585 |
172,876 |
|||||
Depreciation and amortization |
43,754 |
47,298 |
|||||
General and administrative |
40,676 |
40,281 |
|||||
Total costs and expenses |
320,928 |
392,047 |
|||||
Earnings of non-controlled entities |
17,628 |
21,446 |
|||||
Operating profit |
216,516 |
271,473 |
|||||
Interest expense |
43,724 |
51,212 |
|||||
Interest income |
(361) |
(292) |
|||||
Interest capitalized |
(6,136) |
(4,197) |
|||||
Gain on exchange of interest in non-controlled entity |
(26,900) |
— |
|||||
Other (income) expense |
(1,752) |
1,170 |
|||||
Income before provision for income taxes |
207,941 |
223,580 |
|||||
Provision for income taxes |
871 |
844 |
|||||
Net income |
$ |
207,070 |
$ |
222,736 |
|||
Basic net income per limited partner unit |
$ |
0.91 |
$ |
0.98 |
|||
Diluted net income per limited partner unit |
$ |
0.91 |
$ |
0.98 |
|||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,826 |
228,109 |
|||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,849 |
228,159 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2016 |
2017 | ||||||
Refined products: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.416 |
$ |
1.461 |
|||
Volume shipped (million barrels): |
|||||||
Gasoline |
61.1 |
66.2 |
|||||
Distillates |
36.3 |
37.9 |
|||||
Aviation fuel |
5.5 |
5.9 |
|||||
Liquefied petroleum gases |
1.6 |
1.1 |
|||||
Total volume shipped |
104.5 |
111.1 |
|||||
Crude oil: |
|||||||
Magellan 100%-owned assets: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.447 |
$ |
1.543 |
|||
Volume shipped (million barrels) |
43.7 |
41.3 |
|||||
Crude oil terminal average utilization (million barrels per month) |
14.4 |
16.5 |
|||||
Select joint venture pipelines: |
|||||||
BridgeTex - volume shipped (million barrels) (1) |
18.8 |
18.9 |
|||||
Saddlehorn - volume shipped (million barrels) (2) |
— |
4.0 |
|||||
Marine storage: |
|||||||
Marine terminal average utilization (million barrels per month) |
23.5 |
24.0 |
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
(2) |
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan and began operations in September 2016. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||
(Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2016 |
2017 | ||||||
Refined products: |
|||||||
Transportation and terminals revenue |
$ |
224,750 |
$ |
241,905 |
|||
Affiliate management fee revenue |
80 |
329 |
|||||
Earnings (losses) of non-controlled entities |
(42) |
111 |
|||||
Less: Operating expenses |
85,774 |
93,533 |
|||||
Transportation and terminals margin |
139,014 |
148,812 |
|||||
Product sales revenue(1) |
143,916 |
240,170 |
|||||
Less: Cost of product sales(1) |
111,856 |
167,681 |
|||||
Product margin |
32,060 |
72,489 |
|||||
Operating margin |
$ |
171,074 |
$ |
221,301 |
|||
Crude oil: |
|||||||
Transportation and terminals revenue |
$ |
101,728 |
$ |
105,053 |
|||
Affiliate management fee revenue |
2,784 |
3,134 |
|||||
Earnings of non-controlled entities |
16,979 |
20,650 |
|||||
Less: Operating expenses |
21,126 |
27,418 |
|||||
Transportation and terminals margin |
100,365 |
101,419 |
|||||
Product sales revenue(1) |
1,743 |
3,103 |
|||||
Less: Cost of product sales(1) |
1,345 |
2,577 |
|||||
Product margin |
398 |
526 |
|||||
Operating margin |
$ |
100,763 |
$ |
101,945 |
|||
Marine storage: |
|||||||
Transportation and terminals revenue |
$ |
43,597 |
$ |
46,407 |
|||
Affiliate management fee revenue |
315 |
320 |
|||||
Earnings of non-controlled entities |
691 |
685 |
|||||
Less: Operating expenses |
17,205 |
12,655 |
|||||
Transportation and terminals margin |
27,398 |
34,757 |
|||||
Product sales revenue(1) |
903 |
2,347 |
|||||
Less: Cost of product sales(1) |
384 |
2,618 |
|||||
Product margin |
519 |
(271) |
|||||
Operating margin |
$ |
27,917 |
$ |
34,486 |
|||
Segment operating margin |
$ |
299,754 |
$ |
357,732 |
|||
Add: Allocated corporate depreciation costs |
1,192 |
1,320 |
|||||
Total operating margin |
300,946 |
359,052 |
|||||
Less: |
|||||||
Depreciation and amortization expense |
43,754 |
47,298 |
|||||
General and administrative expense |
40,676 |
40,281 |
|||||
Total operating profit |
$ |
216,516 |
$ |
271,473 |
Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs. |
(1) Includes gains and losses on related exchange-traded futures contracts. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT EXCLUDING MARK-TO-MARKET COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, 2017 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
|||||||||||
As reported |
$ |
222,736 |
$ |
0.98 |
$ |
0.98 |
|||||||
Unrealized derivative (gains) losses associated with future physical product sales |
(6,705) |
(0.03) |
(0.03) |
||||||||||
Lower-of-cost-or-market adjustments associated with future physical product transactions |
2,940 |
0.01 |
0.01 |
||||||||||
Excluding commodity-related adjustments* |
$ |
218,971 |
$ |
0.96 |
$ |
0.96 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
228,109 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,159 |
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||
(Unaudited, in thousands) | |||||||||||
Three Months Ended |
|||||||||||
March 31, |
2017 | ||||||||||
2016 |
2017 |
Guidance | |||||||||
Net income |
$ |
207,070 |
$ |
222,736 |
$ |
855,000 |
|||||
Interest expense, net |
37,227 |
46,723 |
200,000 |
||||||||
Depreciation and amortization |
43,754 |
47,298 |
202,000 |
||||||||
Equity-based incentive compensation (1) |
(7,726) |
(9,728) |
3,000 |
||||||||
Loss on sale and retirement of assets |
2,259 |
3,461 |
10,000 |
||||||||
Gain on exchange of interest in non-controlled entity(2) |
(26,900) |
— |
— |
||||||||
Commodity-related adjustments: |
|||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions (4) |
(7,954) |
(6,705) |
|||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period (4) |
21,701 |
(20,008) |
|||||||||
Lower-of-cost-or-market adjustments (5) |
(1,715) |
2,940 |
|||||||||
Total commodity-related adjustments |
12,032 |
(23,773) |
(26,000) |
||||||||
Cash distributions received from non-controlled entities in excess of earnings |
2,416 |
159 |
40,000 |
||||||||
Other(3) |
— |
1,450 |
3,000 |
||||||||
Adjusted EBITDA |
270,132 |
288,326 |
1,287,000 |
||||||||
Interest expense, net, excluding debt issuance cost amortization |
(36,513) |
(45,897) |
(197,000) |
||||||||
Maintenance capital (6) |
(28,282) |
(14,829) |
(90,000) |
||||||||
Distributable cash flow |
$ |
205,337 |
$ |
227,600 |
$ |
1,000,000 |
(1) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the three months ended March 31, 2016 and 2017 was $6.7 million and $4.2 million, respectively. However, the figures above include adjustments of $14.4 million and $13.9 million in 2016 and 2017, respectively, for cash payments associated with its equity-based incentive compensation plan, which primarily include tax withholdings. |
(2) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $26.9 million non-cash gain in relation to this transaction. |
(3) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. These payments replace distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(4) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(5) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments recognized in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(6) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 20, 2017 /PRNewswire/ -- The board of directors of the general partner of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 87.25 cents per unit for the period Jan. 1 through March 31, 2017, representing the 60th distribution increase since its initial public offering in 2001.
The first-quarter 2017 distribution is 9% higher than the first-quarter 2016 distribution of 80.25 cents per unit and represents a 2% increase over the fourth-quarter 2016 distribution of 85.5 cents.
The new distribution, which equates to $3.49 per unit on an annualized basis, will be paid May 15 to unitholders of record at the close of business on May 1.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 4, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2017 before the market opens on Wed., May 3. Management will discuss first-quarter earnings, outlook for the remainder of 2017 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (888) 500-6960 and provide code 4711716. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on May 3 through midnight on May 9. To access the replay, dial (888) 203-1112 and provide code 4711716. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., March 21, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has entered into a new fee-based, take-or-pay agreement with Trafigura Trading LLC for the exclusive use of Magellan's condensate splitter in Corpus Christi, Texas. Magellan recently completed construction of the splitter, which is capable of processing 50,000 barrels per day of condensate and is fully supported by the long-term commitment from Trafigura. Based on the new agreement, Magellan expects to begin commercial operation of the splitter during late second quarter 2017.
In conjunction with the new agreement, Magellan will build an additional 300,000 barrels of storage (for a total of 1.5 million barrels of storage to support the condensate splitter) and make other minor modifications to the splitter, increasing the expected capital spending for the project to $330 million from the prior estimate of $300 million. Based on the new spending estimates for the splitter, Magellan expects to generate a 7 times EBITDA multiple on its investment.
The new agreement was entered into as part of an amicable resolution of the dispute between the parties under the previous contract. Magellan has dismissed its lawsuit against Trafigura as part of such resolution.
Further, Magellan reaffirms its annual distributable cash flow (DCF) guidance of $1.0 billion for 2017. Although the partnership's initial 2017 guidance conservatively assumed no revenue generated from the splitter, commodity margins have recently contracted, resulting in management's reaffirmed guidance of $1.0 billion DCF for full-year 2017. Management also remains committed to its goal of increasing annual cash distributions by 8% in both 2017 and 2018, which would result in an expected distribution coverage of 1.2 times the amount needed to pay cash distributions each year.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 24, 2017 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 85.5 cents per unit for the period Oct. 1 through Dec. 31, 2016, representing the 59th distribution increase since its initial public offering in 2001.
The fourth-quarter 2016 distribution is 9% higher than the fourth-quarter 2015 distribution of 78.5 cents per unit and represents a 2% increase over the third-quarter 2016 distribution of 83.75 cents. For the year, Magellan declared distributions of $3.315 per unit for 2016, or 10% higher than distributions of $3.005 per unit for 2015.
The new distribution, which equates to $3.42 per unit on an annualized basis, will be paid Feb. 14 to unitholders of record at the close of business on Feb. 3.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and HOUSTON, Jan. 24, 2017 /PRNewswire/ -- BridgeTex Pipeline Company, LLC ("BridgeTex"), owned 50/50 by Magellan Midstream Partners, L.P. (NYSE: MMP) and Plains All American Pipeline, L.P. (NYSE: PAA), announced today that it is expanding the BridgeTex pipeline's current capacity from the Permian Basin of 300,000 barrels per day ("bpd") to a new capacity of approximately 400,000 bpd. The expanded capacity is expected to be available in the second quarter of 2017 following enhancements to existing pumps and related equipment.
The 20-inch BridgeTex pipeline system currently transports Permian Basin crude oil from Colorado City, Texas to the Houston Gulf Coast area. Beginning early in the second quarter of this year, a newly-constructed origin point at Bryan, Texas, which is located 100 miles northwest of Houston, also will begin operations to accept shipments from the Eaglebine region for delivery to Houston.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles over 4.6 million barrels per day of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Plains All American Pipeline, L.P. (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the companies' results of operations and financial condition are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in the BridgeTex pipeline's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to the BridgeTex pipeline. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for both companies. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contacts: |
||
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com | |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | ||
Plains: |
Ryan Smith, Investor Relations (866) 809-1291 | |
Brad Leone, Media Relations (866) 809-1290 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 4, 2017 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for fourth quarter 2016 before the market opens on Thurs., Feb. 2. Management will discuss fourth-quarter 2016 earnings and annual guidance for 2017 during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 768-6544 and provide code 8285621. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Feb. 2 through midnight on Feb. 8. To access the replay, dial (888) 203-1112 and provide code 8285621. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and MECHELEN, Belgium, Dec. 6, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and LBC Tank Terminals, LLC ("LBC") are expanding the infrastructure of Seabrook Logistics, LLC ("Seabrook Logistics"), owned 50/50 by subsidiaries of Magellan and LBC, by increasing its crude oil and condensate storage and pipeline assets in the Houston Gulf Coast area.
Seabrook Logistics is constructing 1.7 million barrels (270,000 cubic meters) of additional crude oil and condensate storage adjacent to LBC's existing terminal in Seabrook, Texas. In addition, Seabrook Logistics is connecting its facility to Magellan's Houston crude oil distribution system by constructing a 24-inch (61-centimeter) diameter bi-directional pipeline between the Seabrook Logistics' facility and Genoa Junction and investing in a new Aframax dock with up to a 45-foot draft. The expansion is currently estimated to cost $250 million and be operational during mid-2018, subject to receipt of necessary permits and regulatory approvals.
Further, in anticipation of incremental volume on Magellan's Houston crude oil distribution system, Magellan is enhancing its infrastructure by separately investing an additional $70 million to build a new 24-inch diameter pipeline from its East Houston terminal to Holland Avenue. Magellan's new crude oil pipeline segment is also expected to be operational during mid-2018.
If warranted by market demand, Seabrook Logistics could construct an additional 3 million barrels (480,000 cubic meters) of storage, a second 24-inch diameter pipeline between the Seabrook Logistics' facility and Magellan's Houston crude oil distribution system and a second Aframax ship dock, which may be expanded to a Suezmax-capable ship dock. Subject to receipt of necessary permits and regulatory approvals, portions of these additional assets could be operational beginning late 2018.
Seabrook Logistics is currently in the final stages of constructing more than 700,000 barrels (111,000 cubic meters) of new crude oil and condensate storage and a new 18-inch (46-centimeter) diameter pipeline, which will connect to an existing third party pipeline to ultimately transport crude oil to a Houston-area refinery beginning in the first quarter of 2017. If the facility were fully built as proposed, Seabrook Logistics would provide deep-water access through two industry-standard Aframax docks with up to a 45-foot draft, more than 5 million barrels (795,000 cubic meters) of new storage capacity and pipeline connectivity with refineries and terminals throughout the Houston Ship Channel and Texas City.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About LBC Tank Terminals
LBC Tank Terminals is one of the largest global operators of bulk liquid storage facilities for chemical petroleum products and base oil products. LBC owns and operates a global network of terminals at key locations in the United States, Europe and China, while offering loading / unloading services for all modes of transportation. More information is available at www.lbctt.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and LBC Tank Terminals, LLC believe any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors associated with the project that may have a direct impact on its operating and financial results are: (1) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis; (2) price fluctuations and overall demand for crude oil and refined products; (3) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Magellan: |
Paula Farrell, Investor Relations |
(918) 574-7650 |
|
Bruce Heine, Media Relations |
(918) 574-7010 |
||
LBC: |
Christina Schosser |
+32 15 287 329 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 1, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, president and chief executive officer, is scheduled to present at the Wells Fargo Annual Pipeline and MLP Symposium at 8:40 a.m. Eastern on Tues., Dec. 6 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 2, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $194.6 million for third quarter 2016 compared to $251.0 million for third quarter 2015. The decrease in current year net income was driven by reduced profits from the partnership's commodity-related activities due to mark-to-market (MTM) pricing adjustments for related hedging positions, partially offset by higher contributions from Magellan's core fee-based transportation and terminal activities.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $243.9 million for third quarter 2016 compared to $230.0 million for third quarter 2015.
Diluted net income per limited partner unit was 85 cents in third quarter 2016 and $1.10 in third quarter 2015. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-GAAP financial measure, of 91 cents for third quarter 2016 was higher than the 80-cent guidance provided by management in early August primarily due to stronger-than-expected crude oil transportation volumes and higher product overage values.
"Magellan continues to deliver solid financial results while maintaining our focus on developing opportunities to grow our business in a disciplined manner," said Michael Mears, chief executive officer. "During the third quarter of 2016, we successfully started operation of the Little Rock and Saddlehorn pipelines, representing key infrastructure projects to deliver refined petroleum products and crude oil to important demand centers."
An analysis by segment comparing third quarter 2016 to third quarter 2015 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $183.6 million, a decrease of $58.0 million primarily related to the impact of MTM adjustments for New York Mercantile Exchange (NYMEX) positions used to hedge the partnership's commodity-related activities. Transportation and terminals revenue increased $3.2 million between periods primarily due to higher average tariffs from the partnership's mid-2016 tariff adjustment, which resulted in a 2% average increase over all the partnership's markets. Shipments decreased slightly compared to the previous year due to refinery turnarounds that favorably impacted demand on the partnership's system during third quarter 2015, partially offset by volumes from recent growth projects, including the Little Rock pipeline that commenced commercial operations in July 2016.
Operating expenses decreased $13.2 million primarily due to lower integrity spending for tank maintenance in the current period related to timing of project work, reduced environmental accruals for historical remediation sites and more favorable product overages in the current period (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $74.4 million between periods due to unrealized losses recognized in third quarter 2016 on NYMEX contracts used to economically hedge the partnership's commodity-related activities compared to unrealized gains during the third quarter of 2015. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, was relatively flat between periods.
Crude oil. Crude oil operating margin was $98.7 million, an increase of $4.1 million. Transportation and terminals revenue decreased slightly primarily due to lower pipeline volumes, partially offset by new leased storage contracts at the partnership's East Houston, Texas terminal. Shipments declined on the Longhorn pipeline as customers utilized credits set to expire during third quarter 2016 that had been earned by moving volume in excess of minimum commitments in the past. Affiliate management fee revenue increased primarily due to a one-time start-up fee associated with the Saddlehorn pipeline.
Earnings of non-controlled entities increased $3.3 million due to contributions from Saddlehorn Pipeline Company, LLC, which is owned 40% by Magellan and began operations in Sept. 2016, and higher shipments on the pipeline owned by BridgeTex Pipeline Company, LLC, which is owned 50% by Magellan, as customers moved additional volume to BridgeTex due to operational issues on a competing pipeline. Operating expenses were essentially unchanged between periods as lower power costs were offset by expenses associated with incremental headcount to support the crude segment.
Marine storage. Marine storage operating margin was $33.2 million, an increase of $1.0 million and a quarterly record for this segment. Revenue increased slightly primarily due to higher average rates from contract renewals and escalations in the current period. Operating expenses increased due to the timing of maintenance work, and product margin grew from the sale of incremental product.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures and impairment of an inactive refined products pipeline terminal, whereas G&A expense decreased primarily due to lower payout estimates for the partnership's annual bonus accrual. Other income was favorable between periods related to the one-time break-up fee for a potential acquisition that did not close and more favorable non-cash MTM adjustments for hedged crude oil tank bottom inventory owned by the partnership.
Net interest expense increased due to additional borrowings to finance expansion capital spending, partially offset by more interest capitalized for construction projects in the current period. As of Sept. 30, 2016, the partnership had $4.3 billion of debt outstanding, including $34.9 million outstanding under its commercial paper program. Further, the partnership had $291.1 million of cash on hand at the end of third quarter 2016 following the partnership's $500 million debt offering in Sept. 2016, with $250 million of the proceeds subsequently used to repay notes that matured in Oct. 2016.
Expansion capital projects
Magellan remains focused on expansion opportunities and continues to identify new opportunities for future growth. Based on the progress of expansion projects already underway, the partnership expects to spend $850 million in 2016, $300 million in 2017 and $250 million in 2018 to complete its current slate of construction projects. These estimates include an incremental $100 million of spending for new growth projects, such as construction of additional storage at the partnership's Galena Park, Texas terminal and along Magellan's refined products pipeline system as well as a new Wyoming origin for the Saddlehorn pipeline.
As previously mentioned, the Little Rock pipeline began operations in July 2016 and the Platteville-to-Cushing segment of the Saddlehorn pipeline became operational during September. Pipeline installation continues for the Carr-to-Platteville segment of Saddlehorn, with this pipe extension expected to be operational in early 2017.
Construction is nearing completion for Magellan's Corpus Christi condensate splitter, with commissioning of the facility underway. The splitter is currently expected to be commercially operational late in the fourth quarter of 2016.
Significant progress has been made on the partnership's HoustonLink and Seabrook Logistics joint ventures, with both projects expected to become operational during the first quarter of 2017.
Magellan continues to evaluate additional investment opportunities, including further development of the partnership's recently-announced project to build a new Pasadena, Texas marine terminal and expansion of its Seabrook Logistics joint venture, as well as the potential development of a joint venture refined petroleum products pipeline between Corpus Christi and Brownsville, Texas. In addition, Magellan is evaluating well in excess of $500 million of other potential growth projects in earlier stages of development and acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time.
Financial guidance for 2016
As a result of strong financial performance to date, management is increasing its 2016 DCF guidance by $15 million to $925 million, resulting in 1.2 times the amount needed to pay projected cash distributions for 2016. Management remains committed to its goal of increasing annual cash distributions by 10% for 2016 and at least 8% for 2017 while maintaining distribution coverage of at least 1.2 times each year.
Including actual results so far this year, net income per limited partner unit is estimated to be $3.50 for 2016, which results in fourth-quarter guidance of 91 cents. Guidance excludes future MTM adjustments related to the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss third-quarter results, 2016 guidance and the status of significant expansion projects is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 768-6490 and provide code 3790125. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Nov. 8. To access the replay, dial (888) 203-1112 and provide code 3790125. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses NYMEX futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these NYMEX contracts do not qualify for hedge accounting treatment. However, because these NYMEX contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized NYMEX gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation or storage of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines owned and operated by third parties and connected to the partnership's terminals or pipelines; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or if the partnership becomes subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015 and subsequent reports on Forms 8-K and 10-Q. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Transportation and terminals revenue |
$ |
410,387 |
$ |
413,433 |
$ |
1,149,100 |
$ |
1,175,748 |
|||||||
Product sales revenue |
172,731 |
133,356 |
455,827 |
403,607 |
|||||||||||
Affiliate management fee revenue |
3,557 |
4,993 |
10,478 |
11,140 |
|||||||||||
Total revenue |
586,675 |
551,782 |
1,615,405 |
1,590,495 |
|||||||||||
Costs and expenses: |
|||||||||||||||
Operating |
147,349 |
135,286 |
396,374 |
392,681 |
|||||||||||
Cost of product sales |
85,522 |
118,242 |
316,208 |
327,530 |
|||||||||||
Depreciation and amortization |
42,043 |
47,081 |
124,180 |
134,137 |
|||||||||||
General and administrative |
37,612 |
35,800 |
111,052 |
111,216 |
|||||||||||
Total costs and expenses |
312,526 |
336,409 |
947,814 |
965,564 |
|||||||||||
Earnings of non-controlled entities |
15,521 |
18,576 |
49,653 |
51,543 |
|||||||||||
Operating profit |
289,670 |
233,949 |
717,244 |
676,474 |
|||||||||||
Interest expense |
40,419 |
50,163 |
118,009 |
142,573 |
|||||||||||
Interest income |
(310) |
(302) |
(993) |
(1,067) |
|||||||||||
Interest capitalized |
(3,984) |
(7,877) |
(9,037) |
(21,143) |
|||||||||||
Gain on exchange of interest in non-controlled entity |
— |
— |
— |
(28,144) |
|||||||||||
Other (income) expense |
1,706 |
(3,324) |
(4,554) |
(7,519) |
|||||||||||
Income before provision for income taxes |
251,839 |
195,289 |
613,819 |
591,774 |
|||||||||||
Provision for income taxes |
867 |
738 |
1,820 |
2,294 |
|||||||||||
Net income |
$ |
250,972 |
$ |
194,551 |
$ |
611,999 |
$ |
589,480 |
|||||||
Basic net income per limited partner unit |
$ |
1.10 |
$ |
0.85 |
$ |
2.69 |
$ |
2.59 |
|||||||
Diluted net income per limited partner unit |
$ |
1.10 |
$ |
0.85 |
$ |
2.69 |
$ |
2.59 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,580 |
227,960 |
227,540 |
227,913 |
|||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,945 |
227,999 |
227,702 |
227,947 |
|||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.476 |
$ |
1.503 |
$ |
1.417 |
$ |
1.451 |
|||||||
Volume shipped (million barrels): |
|||||||||||||||
Gasoline |
73.9 |
72.7 |
203.3 |
204.9 |
|||||||||||
Distillates |
38.8 |
37.3 |
112.0 |
110.0 |
|||||||||||
Aviation fuel |
5.6 |
7.2 |
16.1 |
19.6 |
|||||||||||
Liquefied petroleum gases |
3.5 |
4.1 |
9.3 |
9.9 |
|||||||||||
Total volume shipped |
121.8 |
121.3 |
340.7 |
344.4 |
|||||||||||
Crude oil: |
|||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.148 |
$ |
1.189 |
$ |
1.104 |
$ |
1.325 |
|||||||
Volume shipped (million barrels) |
53.6 |
50.7 |
157.4 |
139.5 |
|||||||||||
Crude oil terminal average utilization (million barrels per month) |
13.5 |
14.8 |
13.0 |
14.7 |
|||||||||||
Select joint venture pipelines: |
|||||||||||||||
BridgeTex - volume shipped (million barrels) (1) |
18.5 |
20.6 |
57.2 |
58.7 |
|||||||||||
Marine storage: |
|||||||||||||||
Marine terminal average utilization (million barrels per month) |
24.3 |
24.3 |
24.1 |
23.6 |
|||||||||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation and terminals revenue |
$ |
264,156 |
$ |
267,339 |
$ |
723,156 |
$ |
739,931 |
|||||||
Affiliate management fee revenue |
— |
218 |
— |
422 |
|||||||||||
Less: |
|||||||||||||||
Operating expenses |
108,972 |
95,776 |
288,265 |
280,261 |
|||||||||||
Losses of non-controlled entities |
48 |
272 |
146 |
352 |
|||||||||||
Transportation and terminals margin |
155,136 |
171,509 |
434,745 |
459,740 |
|||||||||||
Product sales revenue |
171,775 |
105,834 |
453,737 |
372,061 |
|||||||||||
Less: Cost of product sales |
85,341 |
93,761 |
315,301 |
300,009 |
|||||||||||
Product margin |
86,434 |
12,073 |
138,436 |
72,052 |
|||||||||||
Operating margin |
$ |
241,570 |
$ |
183,582 |
$ |
573,181 |
$ |
531,792 |
|||||||
Crude oil: |
|||||||||||||||
Transportation and terminals revenue |
$ |
101,122 |
$ |
100,113 |
$ |
294,023 |
$ |
303,181 |
|||||||
Affiliate management fee revenue |
3,211 |
4,416 |
9,449 |
9,686 |
|||||||||||
Earnings of non-controlled entities |
14,906 |
18,180 |
47,735 |
49,870 |
|||||||||||
Less: Operating expenses |
24,572 |
24,628 |
65,032 |
66,370 |
|||||||||||
Transportation and terminals margin |
94,667 |
98,081 |
286,175 |
296,367 |
|||||||||||
Product sales revenue |
— |
24,750 |
— |
26,465 |
|||||||||||
Less: Cost of product sales |
— |
24,108 |
— |
26,469 |
|||||||||||
Product margin |
— |
642 |
— |
(4) |
|||||||||||
Operating margin |
$ |
94,667 |
$ |
98,723 |
$ |
286,175 |
$ |
296,363 |
|||||||
Marine storage: |
|||||||||||||||
Transportation and terminals revenue |
$ |
45,109 |
$ |
46,182 |
$ |
131,921 |
$ |
132,837 |
|||||||
Affiliate management fee revenue |
346 |
359 |
1,029 |
1,032 |
|||||||||||
Earnings of non-controlled entities |
663 |
668 |
2,064 |
2,025 |
|||||||||||
Less: Operating expenses |
14,700 |
16,374 |
45,916 |
49,897 |
|||||||||||
Transportation and terminals margin |
31,418 |
30,835 |
89,098 |
85,997 |
|||||||||||
Product sales revenue |
956 |
2,772 |
2,090 |
5,081 |
|||||||||||
Less: Cost of product sales |
181 |
373 |
907 |
1,052 |
|||||||||||
Product margin |
775 |
2,399 |
1,183 |
4,029 |
|||||||||||
Operating margin |
$ |
32,193 |
$ |
33,234 |
$ |
90,281 |
$ |
90,026 |
|||||||
Segment operating margin |
$ |
368,430 |
$ |
315,539 |
$ |
949,637 |
$ |
918,181 |
|||||||
Add: Allocated corporate depreciation costs |
895 |
1,291 |
2,839 |
3,646 |
|||||||||||
Total operating margin |
369,325 |
316,830 |
952,476 |
921,827 |
|||||||||||
Less: |
|||||||||||||||
Depreciation and amortization expense |
42,043 |
47,081 |
124,180 |
134,137 |
|||||||||||
General and administrative expense |
37,612 |
35,800 |
111,052 |
111,216 |
|||||||||||
Total operating profit |
$ |
289,670 |
$ |
233,949 |
$ |
717,244 |
$ |
676,474 |
|||||||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to inter-segment eliminations and allocated corporate depreciation costs |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING MARK-TO-MARKET COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
September 30, 2016 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net |
|||||||||||
As reported |
$ |
194,551 |
$ |
0.85 |
$ |
0.85 |
|||||||
Unrealized derivative (gains) losses associated with future physical product sales |
12,272 |
0.06 |
0.06 |
||||||||||
Excluding commodity-related adjustments* |
$ |
206,823 |
$ |
0.91 |
$ |
0.91 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,960 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,999 |
||||||||||||
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
September 30, |
September 30, |
2016 | |||||||||||||||||
2015 |
2016 |
2015 |
2016 |
Guidance | |||||||||||||||
Net income |
$ |
250,972 |
$ |
194,551 |
$ |
611,999 |
$ |
589,480 |
$ |
798,000 |
|||||||||
Interest expense, net(1) |
36,125 |
41,984 |
107,979 |
120,363 |
166,000 |
||||||||||||||
Depreciation and amortization |
42,043 |
47,081 |
124,180 |
134,137 |
180,000 |
||||||||||||||
Equity-based incentive compensation (2) |
4,687 |
4,677 |
(2,558) |
360 |
5,000 |
||||||||||||||
Loss on sale and retirement of assets |
2,294 |
2,134 |
4,378 |
5,397 |
9,000 |
||||||||||||||
Gain on exchange of interest in non-controlled entity(3) |
— |
— |
— |
(28,144) |
(28,000) |
||||||||||||||
Commodity-related adjustments: |
|||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions (5) |
(54,958) |
12,272 |
(54,182) |
10,071 |
|||||||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period (5) |
(315) |
5,871 |
96,084 |
38,642 |
|||||||||||||||
Lower-of-cost-or-market adjustments (6) |
488 |
(1,083) |
(38,676) |
(2,798) |
|||||||||||||||
Total commodity-related adjustments |
(54,785) |
17,060 |
3,226 |
45,915 |
43,000 |
||||||||||||||
Cash distributions received from non-controlled entities in excess of (less than) earnings for the period |
9,814 |
2,948 |
7,540 |
3,003 |
15,000 |
||||||||||||||
Other(4) |
— |
1,315 |
— |
3,891 |
5,000 |
||||||||||||||
Adjusted EBITDA |
291,150 |
311,750 |
856,744 |
874,402 |
1,193,000 |
||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(1) |
(35,485) |
(41,171) |
(106,112) |
(118,029) |
(163,000) |
||||||||||||||
Maintenance capital (7) |
(25,661) |
(26,657) |
(64,675) |
(86,103) |
(105,000) |
||||||||||||||
Distributable cash flow |
$ |
230,004 |
$ |
243,922 |
$ |
685,957 |
$ |
670,270 |
$ |
925,000 |
|||||||||
(1) |
In 2015, the partnership adopted Accounting Standards Update No. 2015-03, Interest: Simplifying the Presentation of Debt Issuance Costs. Under this new accounting standard, debt issuance cost amortization expense has been reclassified as interest expense. For the purposes of calculating DCF, the partnership has excluded debt issuance cost amortization from interest expense of $0.7 million and $1.9 million for the three and nine months ended September 30, 2015 and $0.8 million and $2.3 million for the three and nine months ended September 30, 2016. |
(2) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation program with the issuance of limited partner units, expenses related to this program generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the nine months ended September 30, 2015 and 2016 was $15.2 million and $14.7 million, respectively. However, the figures above include an adjustment for minimum statutory tax withholdings paid by the partnership in 2015 and 2016 of $17.8 million and $14.4 million, respectively, for equity-based incentive compensation units that vested on the previous year end, which reduce DCF. |
(3) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $28.1 million non-cash gain in relation to this transaction. |
(4) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. These payments replace distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(5) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(6) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments recognized in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(7) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 20, 2016 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 83.75 cents per unit for the period July 1 through Sept. 30, 2016, representing the 58th distribution increase since its initial public offering in 2001.
The third-quarter 2016 distribution is 10% higher than the third-quarter 2015 distribution of 76.25 cents per unit and represents a 2% increase over the second-quarter 2016 distribution of 82 cents.
The new distribution, which equates to $3.35 per unit on an annualized basis, will be paid Nov. 14 to unitholders of record at the close of business on Oct. 31.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 4, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2016 before the market opens on Wed., Nov. 2. Management will discuss third-quarter earnings, outlook for the remainder of 2016 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 768-6490 and provide code 3790125. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Nov. 2 through midnight on Nov. 8. To access the replay, dial (888) 203-1112 and provide code 3790125. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 6, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 4.25% senior notes due 2046. The notes were priced at 98.762% of par to yield 4.324% to maturity. The partnership intends to use the net proceeds from this offering of approximately $488.7 million, after deducting underwriting discounts and estimated offering expenses, to repay its 5.65% senior notes when due in Oct. 2016 and to repay borrowings outstanding under its commercial paper program. Any remaining proceeds may be used for general partnership purposes, which may include capital expenditures.
The offering is expected to close on Sept. 13, 2016 and is subject to customary closing conditions. J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Mizuho Securities USA Inc. and RBC Capital Markets, LLC are joint book-running managers for the debt offering, with Barclays Capital Inc., PNC Capital Markets LLC, SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC acting as co-managers.
The offering may be made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained from:
Electronic copies of the prospectus supplement and accompanying base prospectus are also available from the Securities and Exchange Commission's website at www.sec.gov.
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 1, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, will present at the Barclays CEO Energy-Power Conference at approximately 4:25 p.m. Eastern on Wed., Sept. 7 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 2, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $187.9 million for second quarter 2016 compared to $177.4 million for second quarter 2015.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $221.0 million for second quarter 2016 compared to $222.8 million for second quarter 2015.
Diluted net income per limited partner unit was 82 cents in second quarter 2016 and 78 cents in second quarter 2015. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, was also 82 cents for second quarter 2016, exceeding the 72-cent guidance provided by management in early May primarily due to timing of operating expenses and higher value of product overages.
"Despite the challenging backdrop within the energy industry, Magellan continues to produce sound financial results while delivering growth opportunities to strengthen our future," said Michael Mears, chief executive officer. "We are pleased to have started commercial operations during early July for our new pipeline system to deliver refined petroleum products to the Little Rock market, and we recently began linefill activities for the Saddlehorn pipeline and expect to begin delivering crude oil from the DJ Basin to Cushing by the end of August. Magellan has also recently announced plans to build a new refined products marine terminal in Pasadena, Texas, advancing our marine strategy while providing critical energy infrastructure for our nation."
An analysis by segment comparing second quarter 2016 to second quarter 2015 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $177.3 million, an increase of $29.1 million. Transportation and terminals revenue increased $9.5 million between periods primarily due to 4% higher shipments driven by strong demand for gasoline largely attributable to the current lower pricing environment and higher average tariffs from the partnership's 4.6% tariff increase in mid-2015. Operating expenses decreased $6.6 million primarily due to lower environmental accruals in 2016 and more favorable product overages in the current period (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $12.9 million between periods due to reduced losses recognized in second quarter 2016 from changes in the New York Mercantile Exchange (NYMEX) positions used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, decreased slightly between periods primarily due to lower commodity prices.
Crude oil. Crude oil operating margin was $96.9 million, a decrease of $10.0 million, primarily related to lower earnings from the partnership's joint ventures. Transportation and terminals revenue decreased slightly as the 2015 period benefited from a customer buying out of its remaining storage contract. The current period benefited from incremental shipments and higher average rates on the partnership's Longhorn pipeline and new leased storage contracts, which were partially offset by lower revenues in the current period from tender deduct barrels largely due to lower commodity prices. Overall crude oil shipments declined and average rate per barrel increased due to fewer barrels moving under the partnership's separate lower-priced Houston distribution system tariff structure, with customers instead utilizing space available on the partnership's capacity lease for shipments from BridgeTex pipeline to their ultimate destination.
Earnings of non-controlled entities decreased $9.2 million due to lower shipments on the BridgeTex pipeline, which is owned 50% by Magellan, as customers shipped their minimum commitments during the current period. Operating expenses decreased between periods primarily due to lower power costs during 2016.
Marine storage. Marine storage operating margin was $28.9 million, a decrease of $1.3 million. Revenue decreased slightly due to lower fees resulting from reduced ancillary customer activity. Otherwise, revenue from leased storage was relatively unchanged as higher contract rates offset lower utilization, in part due to timing of project work to convert tanks to crude oil service at Galena Park in 2016. Operating expenses increased slightly due to the timing of maintenance work, and product margin increased related to the timing of product sales.
Other items. Depreciation and amortization increased due to recent expansion capital expenditures, whereas G&A expense decreased primarily due to lower accruals for the partnership's equity-based incentive compensation program. Other income declined between periods related to less favorable non-cash MTM adjustments for hedged crude oil tank bottom inventory owned by the partnership.
Net interest expense increased due to additional borrowings to finance expansion capital spending, partially offset by more interest capitalized for construction projects in the current period. As of June 30, 2016, the partnership had $3.8 billion of debt outstanding, including $23.9 million outstanding under its commercial paper program, and $34.3 million of cash on hand.
Expansion capital projects
Magellan continues to make significant progress on its current expansion projects and to identify new opportunities for future growth. Based on the progress of expansion projects already underway, the partnership expects to spend $850 million in 2016, $250 million in 2017 and $200 million in 2018 to complete its current slate of construction projects. The new estimates include $335 million of spending for the partnership's recently-announced marine terminal to be built in Pasadena, Texas and expected to be operational in early 2019 as well as a number of other smaller expansion projects, including construction of additional crude oil storage at the partnership's terminal in East Houston, Texas.
The partnership's newly-constructed Little Rock pipeline began operations in early July to deliver up to 75,000 barrels per day of refined petroleum products to Little Rock, Arkansas, providing this market access to refined products from Mid-Continent and Gulf Coast refineries via the partnership's extensive pipeline system.
Construction is complete for the Platteville-to-Cushing segment of the Saddlehorn pipeline. Linefill commenced last week, with this pipeline segment expected to be fully operational by the end of August. Pipeline installation is underway for the Carr-to-Platteville segment of Saddlehorn, with this pipe extension expected to be operational by the end of 2016. Based on favorable costs to date, Magellan's share of spending for the Saddlehorn pipeline is now expected to be approximately $230 million.
Construction is nearing completion for Magellan's Corpus Christi condensate splitter, with commissioning to commence next month. The splitter is currently expected to be commercially operational late in the fourth quarter of 2016 with a total project cost of approximately $300 million.
Magellan also continues to evaluate well in excess of $500 million of potential growth projects in earlier stages of development and acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Examples of potential opportunities include additional options to increase Magellan's Gulf Coast marine capabilities, including further development of the partnership's new Pasadena marine terminal and its Seabrook Logistics joint venture, as well as the potential development of a joint venture refined petroleum products pipeline between Corpus Christi and Brownsville, Texas.
Financial guidance for 2016
Management reaffirms its 2016 DCF guidance of $910 million and remains committed to its goal of increasing annual cash distributions by 10% for 2016 and at least 8% for 2017 while maintaining distribution coverage of at least 1.2 times each year.
For DCF purposes, operating results from the Saddlehorn pipeline will not impact 2016, with the initial DCF benefit expected to occur in 2017 due to the timing of the pipeline's start-up and cash distribution payments from the joint venture to Magellan, which are expected to be paid in arrears on a quarterly basis.
Including actual results so far this year, net income per limited partner unit is estimated to be $3.45 for 2016, with third-quarter guidance of 80 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss second-quarter results and 2016 guidance is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 768-6490 and provide code 2132254. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 2132254. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses NYMEX futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these NYMEX contracts do not qualify for hedge accounting treatment. However, because these NYMEX contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized NYMEX gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation or storage of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines owned and operated by third parties and connected to the partnership's terminals or pipelines; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or if the partnership becomes subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015 and subsequent reports on Forms 8-K and 10-Q. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Transportation and terminals revenue |
$ |
384,901 |
$ |
392,240 |
$ |
738,713 |
$ |
762,315 | |||||||
Product sales revenue |
109,969 |
123,689 |
283,096 |
270,251 | |||||||||||
Affiliate management fee revenue |
3,558 |
2,968 |
6,921 |
6,147 | |||||||||||
Total revenue |
498,428 |
518,897 |
1,028,730 |
1,038,713 | |||||||||||
Costs and expenses: |
|||||||||||||||
Operating |
142,318 |
134,162 |
249,025 |
257,395 | |||||||||||
Cost of product sales |
94,507 |
95,703 |
230,686 |
209,288 | |||||||||||
Depreciation and amortization |
40,440 |
43,302 |
82,137 |
87,056 | |||||||||||
General and administrative |
37,942 |
34,542 |
73,440 |
75,416 | |||||||||||
Total costs and expenses |
315,207 |
307,709 |
635,288 |
629,155 | |||||||||||
Earnings of non-controlled entities |
24,542 |
15,339 |
34,132 |
32,967 | |||||||||||
Operating profit |
207,763 |
226,527 |
427,574 |
442,525 | |||||||||||
Interest expense |
40,396 |
48,686 |
77,590 |
92,410 | |||||||||||
Interest income |
(334) |
(404) |
(683) |
(765) | |||||||||||
Interest capitalized |
(2,946) |
(7,130) |
(5,053) |
(13,266) | |||||||||||
Gain on exchange of interest in non-controlled entity |
— |
(1,244) |
— |
(28,144) | |||||||||||
Other income |
(6,539) |
(1,925) |
(6,260) |
(4,195) | |||||||||||
Income before provision for income taxes |
177,186 |
188,544 |
361,980 |
396,485 | |||||||||||
Provision for income taxes |
(205) |
685 |
953 |
1,556 | |||||||||||
Net income |
$ |
177,391 |
$ |
187,859 |
$ |
361,027 |
$ |
394,929 | |||||||
Basic net income per limited partner unit |
$ |
0.78 |
$ |
0.82 |
$ |
1.59 |
$ |
1.73 | |||||||
Diluted net income per limited partner unit |
$ |
0.78 |
$ |
0.82 |
$ |
1.59 |
$ |
1.73 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,631 |
227,952 |
227,578 |
227,889 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,631 |
227,983 |
227,578 |
227,921 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.398 |
$ |
1.427 |
$ |
1.384 |
$ |
1.422 | |||||||
Volume shipped (million barrels): |
|||||||||||||||
Gasoline |
67.2 |
71.1 |
129.4 |
132.2 | |||||||||||
Distillates |
36.3 |
36.4 |
73.2 |
72.7 | |||||||||||
Aviation fuel |
5.3 |
6.9 |
10.5 |
12.4 | |||||||||||
Liquefied petroleum gases |
4.8 |
4.2 |
5.8 |
5.8 | |||||||||||
Total volume shipped |
113.6 |
118.6 |
218.9 |
223.1 | |||||||||||
Crude oil: |
|||||||||||||||
Magellan 100%-owned assets: |
|||||||||||||||
Transportation revenue per barrel shipped |
$ |
1.052 |
$ |
1.360 |
$ |
1.081 |
$ |
1.403 | |||||||
Volume shipped (million barrels) |
53.8 |
45.1 |
103.8 |
88.8 | |||||||||||
Crude oil terminal average utilization (million barrels per month) |
12.8 |
14.7 |
12.7 |
14.6 | |||||||||||
Select joint venture pipelines: |
|||||||||||||||
BridgeTex - volume shipped (million barrels) (1) |
23.7 |
19.3 |
38.7 |
38.1 | |||||||||||
Marine storage: |
|||||||||||||||
Marine terminal average utilization (million barrels per month) |
24.3 |
23.0 |
23.9 |
23.2 | |||||||||||
(1) These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
June 30, |
June 30, | ||||||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||||||
Refined products: |
|||||||||||||||
Transportation and terminals revenue |
$ |
238,317 |
$ |
247,842 |
$ |
459,000 |
$ |
472,592 | |||||||
Affiliate management fee revenue |
— |
124 |
— |
204 | |||||||||||
Less: |
|||||||||||||||
Operating expenses |
105,081 |
98,500 |
179,293 |
184,485 | |||||||||||
Losses of non-controlled entities |
43 |
38 |
98 |
80 | |||||||||||
Transportation and terminals margin |
133,193 |
149,428 |
279,609 |
288,231 | |||||||||||
Product sales revenue(1) |
109,323 |
122,311 |
281,962 |
266,227 | |||||||||||
Less: Cost of product sales(1) |
94,326 |
94,392 |
229,960 |
206,248 | |||||||||||
Product margin |
14,997 |
27,919 |
52,002 |
59,979 | |||||||||||
Operating margin |
$ |
148,190 |
$ |
177,347 |
$ |
331,611 |
$ |
348,210 | |||||||
Crude oil: |
|||||||||||||||
Transportation and terminals revenue |
$ |
102,035 |
$ |
101,340 |
$ |
192,901 |
$ |
203,068 | |||||||
Affiliate management fee revenue |
3,211 |
2,486 |
6,238 |
5,270 | |||||||||||
Earnings of non-controlled entities |
23,905 |
14,711 |
32,829 |
31,690 | |||||||||||
Less: Operating expenses |
22,293 |
20,550 |
40,460 |
41,742 | |||||||||||
Transportation and terminals margin |
106,858 |
97,987 |
191,508 |
198,286 | |||||||||||
Product sales revenue(1) |
— |
(28) |
— |
1,715 | |||||||||||
Less: Cost of product sales(1) |
— |
1,016 |
— |
2,361 | |||||||||||
Product margin |
— |
(1,044) |
— |
(646) | |||||||||||
Operating margin |
$ |
106,858 |
$ |
96,943 |
$ |
191,508 |
$ |
197,640 | |||||||
Marine storage: |
|||||||||||||||
Transportation and terminals revenue |
$ |
44,549 |
$ |
43,058 |
$ |
86,812 |
$ |
86,655 | |||||||
Affiliate management fee revenue |
347 |
358 |
683 |
673 | |||||||||||
Earnings of non-controlled entities |
680 |
666 |
1,401 |
1,357 | |||||||||||
Less: Operating expenses |
15,881 |
16,275 |
31,216 |
33,523 | |||||||||||
Transportation and terminals margin |
29,695 |
27,807 |
57,680 |
55,162 | |||||||||||
Product sales revenue(1) |
646 |
1,406 |
1,134 |
2,309 | |||||||||||
Less: Cost of product sales(1) |
181 |
295 |
726 |
679 | |||||||||||
Product margin |
465 |
1,111 |
408 |
1,630 | |||||||||||
Operating margin |
$ |
30,160 |
$ |
28,918 |
$ |
58,088 |
$ |
56,792 | |||||||
Segment operating margin |
$ |
285,208 |
$ |
303,208 |
$ |
581,207 |
$ |
602,642 | |||||||
Add: Allocated corporate depreciation costs |
937 |
1,163 |
1,944 |
2,355 | |||||||||||
Total operating margin |
286,145 |
304,371 |
583,151 |
604,997 | |||||||||||
Less: |
|||||||||||||||
Depreciation and amortization expense |
40,440 |
43,302 |
82,137 |
87,056 | |||||||||||
General and administrative expense |
37,942 |
34,542 |
73,440 |
75,416 | |||||||||||
Total operating profit |
$ |
207,763 |
$ |
226,527 |
$ |
427,574 |
$ |
442,525 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to inter-segment eliminations and allocated corporate depreciation costs. |
(1) Includes gains (losses) on related NYMEX contracts. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING MARK-TO-MARKET COMMODITY-RELATED PRICING AND LOWER-OF-COST-OR-MARKET | |||||||||||||
INVENTORY ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2016 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net Income |
|||||||||||
As reported |
$ |
187,859 |
$ |
0.82 |
$ |
0.82 |
|||||||
Unrealized derivative gains associated with future physical product sales |
(997) |
— |
— |
||||||||||
Excluding commodity-related adjustments* |
$ |
186,862 |
$ |
0.82 |
$ |
0.82 |
|||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,952 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,983 |
||||||||||||
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
June 30, |
2016 | |||||||||||||||||
2015 |
2016 |
2015 |
2016 |
Guidance | |||||||||||||||
Net income |
$ |
177,391 |
$ |
187,859 |
$ |
361,027 |
$ |
394,929 |
$ |
786,000 | |||||||||
Interest expense, net(1) |
37,116 |
41,152 |
71,854 |
78,379 |
166,000 | ||||||||||||||
Depreciation and amortization |
40,440 |
43,302 |
82,137 |
87,056 |
180,000 | ||||||||||||||
Equity-based incentive compensation (2) |
5,788 |
3,409 |
(7,245) |
(4,317) |
6,000 | ||||||||||||||
Loss on sale and retirement of assets |
2,087 |
1,004 |
2,084 |
3,263 |
8,000 | ||||||||||||||
Gain on exchange of interest in non-controlled entity(3) |
— |
(1,244) |
— |
(28,144) |
(28,000) | ||||||||||||||
Commodity-related adjustments: |
|||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions (5) |
9,556 |
(997) |
5,590 |
(5,675) |
|||||||||||||||
Derivative gains recognized in previous periods associated with product sales completed in the period (5) |
26,682 |
17,820 |
91,585 |
36,245 |
|||||||||||||||
Lower-of-cost-or-market adjustments (6) |
(10,102) |
— |
(39,164) |
(1,715) |
|||||||||||||||
Total commodity-related adjustments |
26,136 |
16,823 |
58,011 |
28,855 |
38,000 | ||||||||||||||
Cash distributions received from non-controlled entities in excess of (less than) earnings for the period |
(7,140) |
(1,825) |
(2,274) |
55 |
12,000 | ||||||||||||||
Other(4) |
— |
2,040 |
— |
2,576 |
5,000 | ||||||||||||||
Adjusted EBITDA |
281,818 |
292,520 |
565,594 |
562,652 |
1,173,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(1) |
(36,476) |
(40,345) |
(70,627) |
(76,858) |
(163,000) | ||||||||||||||
Maintenance capital (7) |
(22,513) |
(31,164) |
(39,014) |
(59,446) |
(100,000) | ||||||||||||||
Distributable cash flow |
$ |
222,829 |
$ |
221,011 |
$ |
455,953 |
$ |
426,348 |
$ |
910,000 | |||||||||
(1) |
In 2015, the partnership adopted Accounting Standards Update No. 2015-03, Interest: Simplifying the Presentation of Debt Issuance Costs. Under this new accounting standard, debt issuance cost amortization expense has been reclassified as interest expense. For the purposes of calculating DCF, the partnership has added back debt issuance cost amortization expense included in interest expense of $0.6 million and $1.2 million for the three and six months ended June 30, 2015 and $0.8 million and $1.5 million for the three and six months ended June 30, 2016. |
(2) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation program with the issuance of limited partner units, expenses related to this program generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the six months ended June 30, 2015 and 2016 was $10.6 million and $10.1 million, respectively. However, the figures above include an adjustment for minimum statutory tax withholdings paid by the partnership in 2015 and 2016 of $17.8 million and $14.4 million, respectively, for equity-based incentive compensation units that vested on the previous year end, which reduces DCF. |
(3) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC ("Osage") to an affiliate of HollyFrontier Corporation ("HFC"). In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HFC, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $28.1 million non-cash gain in relation to this transaction. |
(4) |
In conjunction with the February 2016 Osage transaction, HFC agreed to make certain payments to the partnership until HFC completes a connection to the partnership's El Paso terminal. These payments replace distributions the partnership would have received had the Osage transaction not occurred and are, therefore, included in the partnership's calculation of DCF. |
(5) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(6) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments recognized in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(7) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 21, 2016 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 82 cents per unit for the period April 1 through June 30, 2016, representing the 57th distribution increase since its initial public offering in 2001.
The second-quarter 2016 distribution is 11% higher than the second-quarter 2015 distribution of 74 cents per unit and represents a 2% increase over the first-quarter 2016 distribution of 80.25 cents.
The new distribution, which equates to $3.28 per unit on an annualized basis, will be paid Aug. 12 to unitholders of record at the close of business on Aug. 1.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 14, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today its plans to construct a new high-capacity marine terminal along the Houston Ship Channel in Pasadena, Texas to handle refined petroleum products, including various grades of gasoline and diesel fuel, and renewable fuels. The new terminal will be built on nearly 200 acres of recently-acquired land.
Supported by a long-term customer commitment, Magellan initially plans to build approximately 1 million barrels of refined products and ethanol storage and a new marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. Magellan is also constructing a 36-inch pipeline between the partnership's existing Galena Park, Texas terminal and this new Pasadena terminal to enhance connectivity and distribution options for both facilities. In addition, Magellan is connecting its existing 18-inch Texas City-to-Pasadena pipeline to the new facility. Magellan is developing opportunities for additional connections to third-party refineries, pipelines and terminals within the Gulf Coast region.
The project is currently estimated to cost approximately $335 million, including the acquisition of land. Subject to receipt of necessary permits and regulatory approval, Magellan expects its new Pasadena terminal to be operational in early 2019.
"Demand for refined products export capabilities from the Gulf Coast continues to grow, and Magellan is well-positioned to take advantage of these opportunities due to our extensive pipeline and terminals network," said Michael Mears, chief executive officer. "We are pleased to expand our marine storage capabilities to meet the strong industry demand for both domestic and international exports while solidifying our strategic position as a key provider of storage and transportation services in the Gulf Coast region."
If warranted by additional demand, the new Pasadena facility could be expanded to include up to 10 million barrels of storage and up to 5 docks, including the potential for Aframax-sized vessels with a draft up to 45 feet.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes could be materially different. Among the key risk factors that may have a direct impact on the statements made in this news release are: (1) the ability to obtain required rights-of-way, permits and other approvals on a timely basis; (2) price fluctuations and overall demand for refined petroleum products; (3) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015 and subsequent reports on Form 8-K and 10-Q. The partnership undertakes no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contact: |
Investors: |
Media: |
Paula Farrell |
Bruce Heine | |
(918) 574-7650 |
(918) 574-7010 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 6, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2016 before the market opens on Tues., Aug. 2. Management will discuss second-quarter earnings, outlook for the remainder of 2016 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 768-6490 and provide code 2132254. Investors also may listen to the call via the partnership's website at www.magellanlp.com/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on Aug. 2 through midnight on Aug. 8. To access the replay, dial (888) 203-1112 and provide code 2132254. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 16, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that its board of directors has elected Lori A. Gobillot and Edward J. Guay as independent board members effective June 15, 2016.
Gobillot currently serves on the board of directors of Bristow Group, Inc. and is a member of its compensation and corporate governance and nominating committees. She is a founding partner of InVista Advisors LLC, which offers project management and consulting services. Previously, she served in various roles during her 13-year career with United Continental Holdings, Inc. and Continental Airlines, including vice president of integration management following the United / Continental merger. Before joining Continental Airlines in 1999, she was an attorney in the public finance area with the law firm of Vinson & Elkins. Gobillot received a bachelor's degree and a juris doctorate from the University of Texas, graduating with high honors.
Guay has 22 years of investment banking experience in the energy industry, including head of midstream investment banking for Tudor, Pickering, Holt & Co., LLC from 2007 to 2012 and managing director and vice president at Goldman, Sachs & Co. from 1998 to 2006. Prior to Goldman Sachs, he worked at Salomon Smith Barney in the global energy and power group and at Wertheim Schroder & Co. Following his investment banking career, Guay spent four years working directly for midstream companies, first as chief financial officer of Saddle Butte Pipeline, LLC, and then as chief executive officer of BOE Midstream, LLC. Guay received a bachelor's degree in mathematical economic analysis and biochemistry from Rice University.
"We are very pleased that Lori and Ed have agreed to join Magellan's board," said Michael Mears, chief executive officer. "They both bring important and unique skillsets to our board of directors, with Lori's extensive legal and project management experience and Ed's investment banking background specifically related to the energy industry. We know they will be valuable additions to our board of directors and look forward to working alongside them to mold Magellan's future."
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and MECHELEN, Belgium, May 31, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and LBC Tank Terminals, LLC ("LBC") announced today that they have entered into a letter of intent for Seabrook Logistics, LLC ("Seabrook Logistics"), owned 50/50 by Magellan and LBC, to expand its crude oil and condensate storage, marine capacity and pipeline infrastructure in the Houston Gulf Coast area.
As contemplated by the letter of intent, Seabrook Logistics proposes to construct up to 4 million barrels (636,000 cubic meters) of additional storage for a total of nearly 5 million barrels (795,000 cubic meters) adjacent to LBC's existing terminal in Seabrook, Texas. Further, Seabrook Logistics plans to connect this storage to Magellan's Houston crude oil distribution system with to-be-constructed 24-inch (61-centimeter) diameter pipelines. Seabrook Logistics also intends to construct one ship dock in addition to the recently constructed ship dock and two barge docks. Both ship docks will be able to handle industry standard Aframax vessels with up to a 45-foot (13.7-meter) draft, providing efficient marine access with flexible loading and unloading services at the Seabrook Logistics facility.
The proposed expansion, which has been approved by the board of directors of both Magellan and LBC, is subject to receipt of necessary permits, regulatory approvals and completion of binding agreements. A portion of the additional new storage and pipeline assets could be operational by the end of 2017.
Seabrook Logistics is currently in the process of building infrastructure adjacent to LBC's existing Seabrook facility, including over 700,000 barrels (111,000 cubic meters) of new crude oil storage and a new 18-inch (46-centimeter) diameter pipeline, which will connect to an existing third party pipeline to ultimately transport crude oil to a Houston-area refinery.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About LBC Tank Terminals
LBC Tank Terminals is one of the largest global operators of bulk liquid storage facilities for chemical petroleum products and base oil products. LBC owns and operates a global network of terminals at key locations in the United States, Europe and China, while offering loading / unloading services for all modes of transportation. More information is available at www.lbctt.com.
Portions of this document constitute forward-looking statements as defined by U.S. federal law. Although management of Magellan Midstream Partners, L.P. and LBC Tank Terminals, LLC believe any such statements are based on reasonable assumptions, actual outcomes may be materially different. Key risk factors associated with the proposed project include without limitation: (1) the ability to negotiate and sign definitive agreements between the Seabrook Logistics members and with potential customers; (2) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis and (3) further evaluation of the viability of the potential project once additional necessary engineering and commercial assessments are complete. Additional risk factors are listed in Magellan's reports with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015 and subsequent reports on Form 8-K and 10-Q. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Magellan: |
Paula Farrell, Investor Relations |
(918) 574-7650 |
|
Bruce Heine, Media Relations |
(918) 574-7010 |
||
LBC: |
Christina Schosser |
(281) 474-4433 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 26, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, will present at the 2016 Investor Conference hosted by the Master Limited Partnership Association at 8:00 a.m. Eastern on Thurs., June 2 in Orlando, Florida.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 4, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $207.1 million for first quarter 2016 compared to $183.6 million for first quarter 2015. The 2016 results include a $26.9 million non-cash gain related to the transfer of the partnership's 50% interest in Osage Pipe Line Company, LLC (Osage).
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $205.3 million for first quarter 2016 compared to $233.1 million for first quarter 2015. The decline between periods was due to reduced contributions from the partnership's commodity-related activities resulting from the lower petroleum pricing environment and timing of maintenance capital spending within the calendar year.
Diluted net income per limited partner unit was 91 cents in first quarter 2016 and 81 cents in first quarter 2015. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-GAAP financial measure, was 87 cents for first quarter 2016, or 75 cents excluding the 12-cent favorable impact of the non-cash gain. These results exceeded the 70-cent guidance provided by management in early Feb. primarily due to higher refined products and crude oil transportation revenues.
"Magellan's assets continue to generate solid financial results despite the overall lower commodity price environment, emphasizing the stability and consistency of our conservative, fee-based business model," said Michael Mears, chief executive officer. "We remain committed to our disciplined financial policy, our focus on operational safety and our execution on strategic growth projects to benefit Magellan's future."
An analysis by segment comparing first quarter 2016 to first quarter 2015 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $170.9 million, a decrease of $12.5 million. Transportation and terminals revenue increased $4.1 million between periods primarily due to higher average tariffs from the partnership's 4.6% tariff increase in mid-2015. Operating expenses increased $11.8 million due to less favorable product overages (which reduce operating expenses), higher environmental accruals, more product handling costs related to the receipt of off-spec product in the current period and increased asset retirement expense.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $4.9 million between periods as lower commodity prices were primarily offset by the gains recognized from changes in the New York Mercantile Exchange (NYMEX) positions used to economically hedge the partnership's commodity-related activities. Details of these MTM commodity-related and other inventory adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, also decreased between periods primarily due to lower commodity prices.
Crude oil. Crude oil operating margin was $100.7 million, an increase of $16.0 million. Transportation and terminals revenue increased $10.8 million primarily due to higher average rates and more shipments on the partnership's Longhorn pipeline system and new leased storage contracts. Overall crude oil shipments declined and average rate per barrel increased due to fewer barrels moving under the partnership's lower-priced Houston distribution system tariff structure to their ultimate destination. Instead, customers utilized space available on the partnership's capacity lease for shipments from BridgeTex pipeline or the longer-haul committed tariffs for Longhorn pipeline movements. Earnings of non-controlled entities increased $8.1 million due to higher shipments on the BridgeTex and Double Eagle pipeline systems, which are owned 50% by Magellan. Operating expenses increased $3.0 million between periods due to higher product handling costs related to the receipt of off-spec product and increased personnel costs, partially offset by more favorable product overages.
Marine storage. Marine storage operating margin was unchanged between periods at $27.9 million. Increased revenues from higher average storage rates were offset by more asset integrity spending in the current period due to timing of tank maintenance work.
Other items. Depreciation and amortization increased primarily due to recent expansion capital expenditures, and G&A expense was higher primarily due to additional headcount and increased payout expectations for the partnership's equity-based incentive compensation program. Other income increased $2.5 million related to a favorable non-cash MTM adjustment for hedged crude oil tank bottom inventory owned by the partnership. As discussed previously, the 2016 results include a $26.9 million non-cash gain related to the transfer of the partnership's 50% interest in Osage to an affiliate of HollyFrontier Corporation in exchange for long-term refined products commercial agreements from this customer.
Net interest expense increased due to additional borrowings to finance expansion capital spending, partially offset by more interest capitalized for construction projects in the current period. As of March 31, 2016, the partnership had $3.8 billion of debt outstanding, with no borrowings outstanding under its commercial paper program or revolving credit facility and $210.0 million of cash on hand.
Expansion capital projects
Magellan continues to pursue expansion opportunities, including organic growth construction projects and acquisitions. Based on the progress of expansion projects already underway, the partnership expects to spend $800 million in 2016 and $150 million thereafter to complete its current slate of construction projects. The new estimates include spending for additional storage along the partnership's refined products pipeline system and new crude oil storage capabilities, primarily at its East Houston terminal.
The partnership is making significant progress on its current growth projects. Construction of the Little Rock pipeline is substantially complete, with operations expected to begin in early July. Regarding the Saddlehorn pipeline, all pipe has been installed with hydrostatic testing underway for the Platteville-to-Cushing segment, which is expected to begin linefill in early third quarter and be fully operational during Sept. For the Carr-to-Platteville segment of the Saddlehorn pipeline, right-of-way acquisition and permitting work are in the final stages and pipe production is complete with installation expected to begin in June. The Carr-to-Platteville segment is still expected to be operational by the end of 2016. Construction is nearing completion for Magellan's Corpus Christi condensate splitter, with testing to commence during the third quarter and commercial operations to begin in the fourth quarter of 2016.
Magellan also continues to evaluate well in excess of $500 million of potential growth projects in earlier stages of development and acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. Examples of potential opportunities include multiple options to increase Magellan's Gulf Coast marine capabilities, including additional storage in the Houston Ship Channel area and further development of its Seabrook Logistics joint venture, as well as the potential development of a joint venture refined petroleum products pipeline between Corpus Christi and Brownsville, Texas.
Financial guidance for 2016
Management is increasing its 2016 DCF guidance by $10 million to $910 million, resulting in 1.2 times the amount needed to pay cash distributions for 2016. The higher DCF guidance primarily reflects solid financial results to date and higher commodity prices than initially expected for the year. Management remains committed to its goal of increasing annual cash distributions by 10% for 2016 and at least 8% for 2017 while maintaining distribution coverage of at least 1.2 times each year.
Including actual results generated during the first quarter, net income per limited partner unit is estimated to be $3.37 for 2016, with second-quarter guidance of 72 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss first-quarter results and 2016 guidance is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 524-8950 and provide code 2140161. Investors also may listen to the call via the partnership's website at www.magellanlp.com/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on May 10. To access the replay, dial (888) 203-1112 and provide code 2140161. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF, net income per unit excluding MTM commodity-related pricing adjustments and net income per unit excluding MTM commodity-related pricing adjustments and the non-cash gain related to the Osage transfer, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses NYMEX futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these NYMEX contracts do not qualify for hedge accounting treatment. However, because these NYMEX contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized NYMEX gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation or storage of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines owned and operated by third parties and connected to the partnership's terminals or pipelines; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or if the partnership becomes subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015 and subsequent reports on Form 8-K. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands, except per unit amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2015 |
2016 | ||||||
Transportation and terminals revenue |
$ |
353,812 |
$ |
370,075 | |||
Product sales revenue |
173,127 |
146,562 | |||||
Affiliate management fee revenue |
3,363 |
3,179 | |||||
Total revenue |
530,302 |
519,816 | |||||
Costs and expenses: |
|||||||
Operating |
106,707 |
123,233 | |||||
Cost of product sales |
136,179 |
113,585 | |||||
Depreciation and amortization |
41,697 |
43,754 | |||||
General and administrative |
35,498 |
40,874 | |||||
Total costs and expenses |
320,081 |
321,446 | |||||
Earnings of non-controlled entities |
9,590 |
17,628 | |||||
Operating profit |
219,811 |
215,998 | |||||
Interest expense |
37,194 |
43,724 | |||||
Interest income |
(349) |
(361) | |||||
Interest capitalized |
(2,107) |
(6,136) | |||||
Gain on exchange of interest in non-controlled entity |
— |
(26,900) | |||||
Other expense (income) |
279 |
(2,270) | |||||
Income before provision for income taxes |
184,794 |
207,941 | |||||
Provision for income taxes |
1,158 |
871 | |||||
Net income |
$ |
183,636 |
$ |
207,070 | |||
Basic net income per limited partner unit |
$ |
0.81 |
$ |
0.91 | |||
Diluted net income per limited partner unit |
$ |
0.81 |
$ |
0.91 | |||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,525 |
227,826 | |||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,525 |
227,849 | |||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2015 |
2016 | ||||||
Refined products: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.369 |
$ |
1.416 | |||
Volume shipped (million barrels): |
|||||||
Gasoline |
62.2 |
61.1 | |||||
Distillates |
36.9 |
36.3 | |||||
Aviation fuel |
5.2 |
5.5 | |||||
Liquefied petroleum gases |
1.0 |
1.6 | |||||
Total volume shipped |
105.3 |
104.5 | |||||
Crude oil: |
|||||||
Magellan 100%-owned assets: |
|||||||
Transportation revenue per barrel shipped |
$ |
1.112 |
$ |
1.447 | |||
Volume shipped (million barrels) |
50.0 |
43.7 | |||||
Crude oil terminal average utilization (million barrels per month) |
12.6 |
14.4 | |||||
Select joint venture pipelines: |
|||||||
BridgeTex - volume shipped (million barrels) (1) |
15.0 |
18.8 | |||||
Marine storage: |
|||||||
Marine terminal average utilization (million barrels per month) |
23.6 |
23.5 | |||||
(1) |
These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||
(Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2015 |
2016 | ||||||
Refined products: |
|||||||
Transportation and terminals revenue |
$ |
220,683 |
$ |
224,750 | |||
Affiliate management fee revenue |
— |
80 | |||||
Less: |
|||||||
Operating expenses |
74,212 |
85,985 | |||||
Losses of non-controlled entities |
55 |
42 | |||||
Transportation and terminals margin |
146,416 |
138,803 | |||||
Product sales revenue |
172,639 |
143,916 | |||||
Less: Cost of product sales |
135,634 |
111,856 | |||||
Product margin |
37,005 |
32,060 | |||||
Operating margin |
$ |
183,421 |
$ |
170,863 | |||
Crude oil: |
|||||||
Transportation and terminals revenue |
$ |
90,866 |
$ |
101,728 | |||
Affiliate management fee revenue |
3,027 |
2,784 | |||||
Earnings of non-controlled entities |
8,924 |
16,979 | |||||
Less: Operating expenses |
18,167 |
21,192 | |||||
Transportation and terminals margin |
84,650 |
100,299 | |||||
Product sales revenue |
— |
1,743 | |||||
Less: Cost of product sales |
— |
1,345 | |||||
Product margin |
— |
398 | |||||
Operating margin |
$ |
84,650 |
$ |
100,697 | |||
Marine storage: |
|||||||
Transportation and terminals revenue |
$ |
42,263 |
$ |
43,597 | |||
Affiliate management fee revenue |
336 |
315 | |||||
Earnings of non-controlled entities |
721 |
691 | |||||
Less: Operating expenses |
15,335 |
17,248 | |||||
Transportation and terminals margin |
27,985 |
27,355 | |||||
Product sales revenue |
488 |
903 | |||||
Less: Cost of product sales |
545 |
384 | |||||
Product margin |
(57) |
519 | |||||
Operating margin |
$ |
27,928 |
$ |
27,874 | |||
Segment operating margin |
$ |
295,999 |
$ |
299,434 | |||
Add: Allocated corporate depreciation costs |
1,007 |
1,192 | |||||
Total operating margin |
297,006 |
300,626 | |||||
Less: |
|||||||
Depreciation and amortization expense |
41,697 |
43,754 | |||||
General and administrative expense |
35,498 |
40,874 | |||||
Total operating profit |
$ |
219,811 |
$ |
215,998 | |||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to inter-segment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING MARK-TO-MARKET COMMODITY-RELATED PRICING AND LOWER-OF-COST-OR-MARKET | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, 2016 | |||||||||||||
Net Income |
Basic Net Income |
Diluted Net | |||||||||||
As reported |
$ |
207,070 |
$ |
0.91 |
$ |
0.91 | |||||||
Unrealized derivative gains associated with future physical product sales |
(7,954) |
(0.04) |
(0.04) | ||||||||||
Excluding commodity-related adjustments* |
$ |
199,116 |
$ |
0.87 |
$ |
0.87 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,826 |
||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
227,849 |
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||
(Unaudited, in thousands) | |||||||||||
Three Months Ended |
|||||||||||
March 31, |
2016 | ||||||||||
2015 |
2016 |
Guidance | |||||||||
Net income |
$ |
183,636 |
$ |
207,070 |
$ |
768,000 | |||||
Interest expense, net(1) |
34,738 |
37,227 |
169,000 | ||||||||
Depreciation and amortization |
41,697 |
43,754 |
180,000 | ||||||||
Equity-based incentive compensation (2) |
(13,033) |
(7,726) |
6,000 | ||||||||
Loss on sale and retirement of assets |
(3) |
2,259 |
8,000 | ||||||||
Gain on exchange of interest in non-controlled entity(3) |
— |
(26,900) |
(27,000) | ||||||||
Commodity-related adjustments: |
|||||||||||
Derivative (gains) losses recognized in the period associated with future product transactions (4) |
4,537 |
(7,954) |
|||||||||
Derivative gains recognized in previous periods associated with product sales completed in the period (4) |
56,400 |
21,701 |
|||||||||
Lower-of-cost-or-market adjustments (5) |
(29,062) |
(1,715) |
|||||||||
Total commodity-related adjustments |
31,875 |
12,032 |
42,000 | ||||||||
Cash distributions received from non-controlled entities in excess of earnings for the period |
4,866 |
2,416 |
20,000 | ||||||||
Adjusted EBITDA |
283,776 |
270,132 |
1,166,000 | ||||||||
Interest expense, net, excluding debt issuance cost amortization(1) |
(34,151) |
(36,513) |
(166,000) | ||||||||
Maintenance capital (6) |
(16,501) |
(28,282) |
(90,000) | ||||||||
Distributable cash flow |
$ |
233,124 |
$ |
205,337 |
$ |
910,000 | |||||
Distributable cash flow per limited partner unit receiving distributions related to this period |
$ |
1.03 |
$ |
0.90 |
$ |
4.00 | |||||
Weighted average number of limited partner units receiving distributions related to this period |
227,426 |
227,784 |
227,784 | ||||||||
(1) |
In 2015, the partnership adopted Accounting Standards Update No. 2015-03, Interest: Simplifying the Presentation of Debt Issuance Costs. Under this new accounting standard, debt issuance cost amortization expense has been reclassified as interest expense. The partnership has added back debt issuance cost amortization expense included in interest expense of $0.6 million and $0.7 million for purposes of calculating DCF for the three months ended March 31, 2015 and 2016, respectively. |
(2) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation program with the issuance of limited partner units, expenses related to this program generally are deemed non-cash and added back for DCF purposes. Total equity-based incentive compensation expense for the three months ended March 31, 2015 and 2016 was $4.8 million and $6.7 million, respectively. However, the figures above include an adjustment for minimum statutory tax withholdings paid by the partnership in 2015 and 2016 of $17.8 million and $14.4 million, respectively, for equity-based incentive compensation units that vested on the previous year end, which reduce DCF. |
(3) |
In February 2016, the partnership transferred its 50% membership interest in Osage Pipe Line Company, LLC to an affiliate of HollyFrontier Corporation. In conjunction with this transaction, the partnership entered into several commercial agreements with affiliates of HollyFrontier Corporation, which were recorded as intangible assets and other receivables in its consolidated balance sheets. The partnership recorded a $26.9 million non-cash gain in relation to this transaction. |
(4) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives used to hedge its crude oil tank bottoms and linefill assets as fair value hedges, and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(5) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments recognized in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(6) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 21, 2016 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 80.25 cents per unit for the period Jan. 1 through March 31, 2016, representing the 56th distribution increase since its initial public offering in 2001.
The first-quarter 2016 distribution is 12% higher than the first-quarter 2015 distribution of 71.75 cents per unit and represents a 2% increase over the fourth-quarter 2015 distribution of 78.5 cents.
The new distribution, which equates to $3.21 per unit on an annualized basis, will be paid May 13 to unitholders of record at the close of business on May 2.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 6, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2016 before the market opens on Wed., May 4. Management will discuss first-quarter earnings, outlook for the remainder of 2016 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 524-8950 and provide code 2140161. Investors also may listen to the call via the partnership's website at www.magellanlp.com/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern on May 4 through midnight on May 10. To access the replay, dial (888) 203-1112 and provide code 2140161. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and DENVER, April 4, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) and TransMontaigne Partners L.P. (NYSE: TLP) announced today they are jointly assessing the development of a new refined products pipeline in South Texas.
The potential project would include construction of an approximately 150-mile, 16-inch diameter pipeline capable of transporting 150,000 barrels per day (bpd) of gasoline, diesel fuel, propane and condensate from Magellan's Corpus Christi, Texas terminal to TransMontaigne's Brownsville, Texas terminal to meet market demand in Brownsville and other South Texas markets or for ultimate delivery to Mexico via truck, rail or connections to pipelines owned by TransMontaigne and third parties. If warranted by additional demand, the pipeline capacity could be expanded to 250,000 bpd.
Subject to receipt of necessary permits, regulatory approvals and sufficient customer demand, the potential pipeline could be operational by the end of 2018.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About TransMontaigne Partners L.P.
TransMontaigne Partners L.P. (NYSE: TLP) is a terminaling and transportation company based in Denver, Colorado with operations primarily in the United States along the Gulf Coast, in the Midwest, in Houston and Brownsville, Texas, along the Mississippi and Ohio Rivers and in the Southeast. TransMontaigne provides integrated terminaling, storage, transportation and related services for customers engaged in the distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. TransMontaigne does not purchase or market products that they handle or transport. More information is available at www.transmontaignepartners.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and TransMontaigne Partners L.P. believe any such statements are based on reasonable assumptions, actual outcomes may be materially different. Key risk factors associated with the potential project include without limitation: (1) the ability to negotiate and sign definitive agreements between the project sponsors and with potential customers; (2) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis and (3) further evaluation of the viability of the potential project once additional necessary engineering and commercial assessments are complete. Additional risk factors are listed in the companies' reports filed with the Securities and Exchange Commission. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Magellan: |
Paula Farrell, Investor Relations |
(918) 574-7650 |
|
Bruce Heine, Media Relations |
(918) 574-7010 |
||
TransMontaigne: |
Robert Fuller, CFO |
(303) 626-8200 |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., March 29, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to host a meeting with research analysts and institutional investors beginning at 9:00 a.m. Eastern on Thurs., March 31 in New York City.
Michael Mears, president and chief executive officer, and other members of senior management will discuss the partnership's current business, growth projects and financial position.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/webcasts.aspx. A replay of the webcast also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Feb. 22, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $650 million of its 5.00% senior notes due 2026. The notes were priced at 99.875% of par to yield 5.016% to maturity. The partnership intends to use the net proceeds from this offering of approximately $644.5 million, after deducting underwriting discounts and estimated offering expenses, for general partnership purposes and to repay borrowings outstanding under its revolving credit facilities, if any, and its commercial paper program.
The offering is expected to close on Feb. 29, 2016 and is subject to customary closing conditions. Barclays Capital Inc., U.S. Bancorp Investments, Inc., Wells Fargo Securities, LLC, PNC Capital Markets LLC and SMBC Nikko Securities America, Inc. are joint book-running managers for the debt offering, with Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., RBC Capital Markets, LLC and SunTrust Robinson Humphrey, Inc. acting as co-managers.
The offering may be made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained from:
Electronic copies of the prospectus supplement and accompanying base prospectus are also available from the Securities and Exchange Commission's website at www.sec.gov.
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Feb. 4, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $207.1 million for fourth quarter 2015 compared to $252.1 million for fourth quarter 2014. The decrease in current year net income was driven by reduced profits from the partnership's commodity-related activities, due to lower realized commodity prices on these activities and mark-to-market (MTM) pricing adjustments for the related hedging positions, partially offset by higher contributions from Magellan's core fee-based transportation and terminal activities.
Distributable cash flow (DCF), a non-generally accepted accounting principles (non-GAAP) financial measure that represents the amount of cash generated during the period that is available to pay distributions, was a record $256.9 million for fourth quarter 2015 compared to $248.1 million for fourth quarter 2014.
Diluted net income per limited partner unit was 91 cents in fourth quarter 2015 and $1.10 in fourth quarter 2014. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-GAAP financial measure, of 86 cents for fourth quarter 2015 was slightly higher than the 84-cent guidance provided by management in early Nov. 2015.
"Despite the downturn in energy markets, Magellan generated record distributable cash flow for both the fourth quarter and the full-year 2015, driven by the benefit of recently-completed expansion capital projects and continued strong demand for our fee-based refined products and crude oil pipeline and terminal services," said Michael Mears, chief executive officer. "Magellan's business fundamentals remain sound, with our stable business model, investment-grade balance sheet and attractive slate of growth projects positioning us well to remain strong in the current energy environment with a stated goal to increase annual cash distributions to our investors by 10% for 2016 and at least 8% for 2017."
Beginning with the fourth quarter of 2015, the partnership adjusted the presentation of tender deductions received from customers on its refined products and crude oil pipelines from operating expense to revenue. Historical financial results have been adjusted to conform to this new presentation. Net income and DCF were not impacted by this change.
An analysis by segment comparing fourth quarter 2015 to fourth quarter 2014 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before general and administrative (G&A) expense and depreciation and amortization:
Refined products. Refined products operating margin was $203.8 million, a decrease of $48.1 million primarily related to the impact of lower commodity prices on the partnership's commodity-related activities, including MTM adjustments for New York Mercantile Exchange (NYMEX) positions. Transportation and terminals revenue increased $5.4 million between periods primarily due to higher average tariffs from the partnership's 4.6% tariff increase on July 1, 2015, higher terminalling revenue (in part due to the recently-acquired Atlanta terminal) and higher revenue from additional leased storage along the pipeline system, partially offset by lower transportation volumes. Overall refined pipeline volumes declined 4% due to continued lower distillate demand, in part due to reduced drilling activities in areas served by the partnership's assets, and regional refinery issues that resulted in less volume moving on Magellan's system during the quarter. On an annual basis, refined pipeline volumes were relatively flat between periods as higher gasoline volumes offset lower distillate demand.
Operating expenses increased $3.1 million due to higher asset integrity spending based on timing of maintenance work and less favorable product overages (which reduce operating expenses) resulting from lower commodity prices.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $50.4 million between periods primarily due to a $32.7 million unfavorable variance associated with MTM adjustments for NYMEX positions used to economically hedge the partnership's commodity-related activities and other inventory adjustments. Details of these items can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that settled during the quarter, also decreased between periods primarily due to lower commodity prices.
Crude oil. Crude oil operating margin was $95.2 million, an increase of $6.4 million. Transportation and terminals revenue increased $10.0 million primarily due to contributions from the 40-mile Houston crude oil pipeline that Magellan acquired in Nov. 2014, more shipments on the partnership's Longhorn pipeline system and new leased storage contracts. Affiliate management fee revenue declined $3.3 million due to lower construction management fees now that the BridgeTex pipeline is operational. Earnings of non-controlled entities increased $1.5 million primarily due to higher shipments on the Double Eagle condensate pipeline system, which is owned 50% by Magellan. Operating expenses increased $2.1 million between periods due to higher asset integrity spending based on timing of maintenance work and accruals for remediation costs.
Marine storage. Marine storage operating margin was $29.2 million, a decrease of $2.1 million. Revenue declined $1.8 million primarily due to a one-time customer contract buy-out that benefited fourth-quarter 2014, partially offset by higher average storage rates in the 2015 period.
Other items. Depreciation and amortization increased primarily due to recent expansion capital expenditures, and G&A expense was higher primarily due to an increase in Magellan's unit price during the fourth quarter of 2015, which impacts deferred board of director fees. Other expense decreased $5.0 million related to a lower non-cash MTM adjustment for hedged crude oil tank bottom inventory owned by the partnership.
Net interest expense increased due to additional borrowings to finance expansion capital spending, partially offset by more interest capitalized for construction projects in the current period. As of Dec. 31, 2015, the partnership had $3.4 billion of debt outstanding, including $280.0 million outstanding under its commercial paper program, and $28.7 million of cash on hand.
Annual results
For the year ended Dec. 31, 2015, net income was $819.1 million compared to $839.5 million in 2014 primarily related to MTM adjustments and overall lower prices for the partnership's commodity-related activities. Otherwise, Magellan's fee-based activities increased significantly between years primarily due to higher refined products pipeline tariffs, increased shipments on the Longhorn and BridgeTex crude oil pipeline systems and the full-year benefit from the 40-mile Houston crude oil pipeline that Magellan acquired in late 2014. Full-year diluted net income per limited partner unit was $3.59 in 2015 and $3.69 in 2014. Annual DCF was a record $942.9 million in 2015, or 1.4 times the amount needed to pay distributions related to 2015, compared to $880.5 million in 2014.
Expansion capital projects
Magellan remains focused on expansion opportunities, making significant progress on its current slate of projects with $666 million spent during 2015 on organic growth construction projects and $81 million spent to acquire an additional Atlanta terminal and a 100-acre tract of land in Corpus Christi, Texas for future development. Based on the progress of expansion projects already underway, the partnership expects to spend $800 million in 2016 and $100 million thereafter to complete its current slate of construction projects. The new estimates include spending for Magellan's share of the recently-announced HoustonLink pipeline connection and new origin for the BridgeTex pipeline as well as the addition of jet fuel service for the Little Rock pipeline.
Significant progress continues for Magellan's largest construction projects. Construction of the Little Rock pipeline is nearing completion, with start-up expected in mid-2016. Pipeline installation is 75% complete for the Platteville-to-Cushing segment of the Saddlehorn pipeline, with this segment expected to be fully operational during third quarter. Right-of-way acquisition continues for the Carr-to-Platteville segment of the Saddlehorn pipeline, which is still expected to be operational by the end of 2016. Further, construction continues for Magellan's condensate splitter and related infrastructure in Corpus Christi, which are expected to be operational during the second half of 2016.
Magellan continues to evaluate well in excess of $500 million of potential growth projects in earlier stages of development as well as additional acquisition opportunities, all of which have been excluded from the partnership's spending estimates. For instance, Magellan continues to evaluate multiple options to increase its Gulf Coast marine capabilities, including additional storage at its Galena Park, Texas marine terminal and further development of its Seabrook Logistics joint venture and its recently-acquired land in Corpus Christi.
Financial guidance for 2016
Management remains committed to its goal of increasing annual cash distributions by 10% for 2016 and currently expects to generate annual DCF of $900 million in 2016, resulting in 1.2 times the amount needed to pay cash distributions for 2016. Current DCF guidance assumes an average crude oil price of approximately $35 per barrel for 2016, with each $1 change in the price of crude oil estimated to impact Magellan's 2016 financial results by approximately $3 million, primarily related to the partnership's butane blending activities and the value of its pipeline tender deductions and product overages.
Management is targeting annual distribution growth of at least 8% for 2017 while maintaining distribution coverage of at least 1.2 times the amount needed to pay cash distributions for 2017. Distribution growth guidance specific to 2017 has not been provided previously.
"With the current challenges facing the energy industry, we have heard very clearly from our long-term investors that distribution coverage has become exceedingly important at this time," said Michael Mears, chief executive officer. "Magellan's goal of increasing annual distributions by 10% for 2016 and at least 8% for 2017 while maintaining distribution coverage of at least 1.2 provides a healthy mix of distribution growth and coverage for our investors."
Net income per limited partner unit is estimated to be $3.20 for 2016, with first-quarter guidance of 70 cents. Guidance excludes future NYMEX MTM adjustments on the partnership's commodity-related activities.
Management continues to believe the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with commodity-related activities contributing less than 15% of the partnership's operating margin.
Earnings call details
An analyst call with management to discuss fourth-quarter results and 2016 guidance is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (888) 378-0320 and provide code 5364236. Investors also may listen to the call via the partnership's website at www.magellanlp.com/webcasts.aspx.
Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Feb. 10. To access the replay, dial (888) 203-1112 and provide code 5364236. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before G&A expense and depreciation and amortization. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses NYMEX futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities and its crude oil tank bottom inventory. Most of these NYMEX contracts do not qualify for hedge accounting treatment. However, because these NYMEX contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized NYMEX gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation or storage of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines owned and operated by third parties and connected to the partnership's terminals or pipelines; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or if the partnership becomes subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2014 and subsequent reports on Forms 8-K and 10-Q. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: |
Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | ||||||||||||
Three Months Ended |
Year Ended | |||||||||||
December 31, |
December 31, | |||||||||||
2014 |
2015 |
2014 |
2015 | |||||||||
Transportation and terminals revenue |
$ |
382,039 |
$ |
395,646 |
$ |
1,459,267 |
$ |
1,544,746 | ||||
Product sales revenue |
289,389 |
174,009 |
878,974 |
629,836 | ||||||||
Affiliate management fee revenue |
6,765 |
3,393 |
22,111 |
13,871 | ||||||||
Total revenue |
678,193 |
573,048 |
2,360,352 |
2,188,453 | ||||||||
Costs and expenses: |
||||||||||||
Operating |
124,637 |
129,528 |
500,901 |
525,902 | ||||||||
Cost of product sales |
195,851 |
131,065 |
594,585 |
447,273 | ||||||||
Depreciation and amortization |
39,279 |
42,632 |
161,741 |
166,812 | ||||||||
General and administrative |
38,667 |
40,277 |
148,288 |
151,329 | ||||||||
Total costs and expenses |
398,434 |
343,502 |
1,405,515 |
1,291,316 | ||||||||
Earnings of non-controlled entities |
15,328 |
16,830 |
19,394 |
66,483 | ||||||||
Operating profit |
295,087 |
246,376 |
974,231 |
963,620 | ||||||||
Interest expense |
35,421 |
40,886 |
145,862 |
158,895 | ||||||||
Interest income |
(369) |
(283) |
(1,540) |
(1,276) | ||||||||
Interest capitalized |
(1,445) |
(5,405) |
(22,803) |
(14,442) | ||||||||
Other expense (income) |
8,573 |
3,539 |
8,573 |
(1,015) | ||||||||
Income before provision for income taxes |
252,907 |
207,639 |
844,139 |
821,458 | ||||||||
Provision for income taxes |
822 |
516 |
4,620 |
2,336 | ||||||||
Net income |
$ |
252,085 |
$ |
207,123 |
$ |
839,519 |
$ |
819,122 | ||||
Basic net income per limited partner unit |
$ |
1.11 |
$ |
0.91 |
$ |
3.69 |
$ |
3.60 | ||||
Diluted net income per limited partner unit |
$ |
1.10 |
$ |
0.91 |
$ |
3.69 |
$ |
3.59 | ||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,316 |
227,583 |
227,260 |
227,550 | ||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,232 |
228,439 |
227,626 |
227,888 | ||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS | ||||||||||||
Three Months Ended |
Year Ended | |||||||||||
December 31, |
December 31, | |||||||||||
2014 |
2015 |
2014 |
2015 | |||||||||
Refined products: |
||||||||||||
Transportation revenue per barrel shipped |
$ |
1.420 |
$ |
1.505 |
$ |
1.399 |
$ |
1.439 | ||||
Volume shipped (million barrels): |
||||||||||||
Gasoline |
66.4 |
64.8 |
256.1 |
268.1 | ||||||||
Distillates |
43.5 |
40.5 |
163.1 |
152.5 | ||||||||
Aviation fuel |
5.5 |
5.1 |
23.0 |
21.2 | ||||||||
Liquefied petroleum gases |
0.4 |
0.4 |
9.9 |
9.7 | ||||||||
Total volume shipped |
115.8 |
110.8 |
452.1 |
451.5 | ||||||||
Crude oil: |
||||||||||||
Magellan 100%-owned assets: |
||||||||||||
Transportation revenue per barrel shipped |
$ |
1.116 |
$ |
1.161 |
$ |
1.192 |
$ |
1.118 | ||||
Volume shipped (million barrels) |
52.8 |
52.5 |
185.5 |
209.9 | ||||||||
Crude oil terminal average utilization (million barrels per month) |
12.0 |
13.6 |
12.2 |
13.1 | ||||||||
Select joint venture pipelines: |
||||||||||||
BridgeTex - volume shipped (million barrels) (1) |
18.1 |
18.0 |
18.3 |
75.2 | ||||||||
Marine storage: |
||||||||||||
Marine terminal average utilization (million barrels per month) |
23.3 |
24.0 |
22.9 |
24.0 | ||||||||
(1) These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 50% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||||||
Three Months Ended |
Year Ended | ||||||||||
December 31, |
December 31, | ||||||||||
2014 |
2015 |
2014 |
2015 | ||||||||
Refined products: |
|||||||||||
Transportation and terminals revenue |
$ |
245,976 |
$ |
251,349 |
$ |
946,612 |
$ |
974,505 | |||
Less: Operating expenses |
86,453 |
89,507 |
356,057 |
377,772 | |||||||
Losses of non-controlled entities |
— |
(47) |
— |
(193) | |||||||
Transportation and terminals margin |
159,523 |
161,795 |
590,555 |
596,540 | |||||||
Product sales revenue |
287,359 |
169,365 |
872,537 |
623,102 | |||||||
Less: Cost of product sales |
194,907 |
127,320 |
592,887 |
442,621 | |||||||
Product margin |
92,452 |
42,045 |
279,650 |
180,481 | |||||||
Operating margin |
$ |
251,975 |
$ |
203,840 |
$ |
870,205 |
$ |
777,021 | |||
Crude oil: |
|||||||||||
Transportation and terminals revenue |
$ |
90,050 |
$ |
100,075 |
$ |
341,915 |
$ |
394,098 | |||
Affiliate management fee revenue |
6,391 |
3,046 |
20,790 |
12,495 | |||||||
Earnings of non-controlled entities |
14,642 |
16,183 |
16,309 |
63,918 | |||||||
Less: Operating expenses |
22,317 |
24,423 |
83,184 |
89,455 | |||||||
Transportation and terminals margin |
88,766 |
94,881 |
295,830 |
381,056 | |||||||
Product sales revenue |
— |
3,587 |
— |
3,587 | |||||||
Less: Cost of product sales |
— |
3,278 |
— |
3,278 | |||||||
Product margin |
— |
309 |
— |
309 | |||||||
Operating margin |
$ |
88,766 |
$ |
95,190 |
$ |
295,830 |
$ |
381,365 | |||
Marine storage: |
|||||||||||
Transportation and terminals revenue |
$ |
46,013 |
$ |
44,222 |
$ |
170,740 |
$ |
176,143 | |||
Affiliate management fee revenue |
374 |
347 |
1,321 |
1,376 | |||||||
Earnings of non-controlled entities |
686 |
694 |
3,085 |
2,758 | |||||||
Less: Operating expenses |
16,852 |
16,610 |
65,173 |
62,526 | |||||||
Transportation and terminals margin |
30,221 |
28,653 |
109,973 |
117,751 | |||||||
Product sales revenue |
2,030 |
1,057 |
6,437 |
3,147 | |||||||
Less: Cost of product sales |
944 |
467 |
1,698 |
1,374 | |||||||
Product margin |
1,086 |
590 |
4,739 |
1,773 | |||||||
Operating margin |
$ |
31,307 |
$ |
29,243 |
$ |
114,712 |
$ |
119,524 | |||
Segment operating margin |
$ |
372,048 |
$ |
328,273 |
$ |
1,280,747 |
$ |
1,277,910 | |||
Add: Allocated corporate depreciation costs |
985 |
1,012 |
3,513 |
3,851 | |||||||
Total operating margin |
373,033 |
329,285 |
1,284,260 |
1,281,761 | |||||||
Less: |
|||||||||||
Depreciation and amortization expense |
39,279 |
42,632 |
161,741 |
166,812 | |||||||
General and administrative expense |
38,667 |
40,277 |
148,288 |
151,329 | |||||||
Total operating profit |
$ |
295,087 |
$ |
246,376 |
$ |
974,231 |
$ |
963,620 | |||
Note: Amounts may not sum to figures shown on the consolidated statement of income due to inter-segment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT EXCLUDING MARK-TO-MARKET COMMODITY-RELATED PRICING AND LOWER-OF-COST-OR-MARKET (Unaudited, in thousands except per unit amounts) | |||||||||
Three Months Ended | |||||||||
December 31, 2015 | |||||||||
Net Income |
Basic Net Income |
Diluted Net | |||||||
As reported |
$ |
207,123 |
$ |
0.91 |
$ |
0.91 | |||
Unrealized derivative gains associated with future physical product sales |
(14,674) |
(0.07) |
(0.07) | ||||||
Lower-of-cost-or-market adjustments associated with future physical product transactions |
4,360 |
0.02 |
0.02 | ||||||
Excluding commodity-related adjustments* |
$ |
196,809 |
$ |
0.86 |
$ |
0.86 | |||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation |
227,583 |
||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation |
228,439 |
||||||||
* Please see Distributable Cash Flow Reconciliation to Net Income for further descriptions of the commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | ||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||
December 31, |
December 31, |
2016 | ||||||||||||
2014 |
2015 |
2014 |
2015 |
Guidance | ||||||||||
Net income |
$ |
252,085 |
$ |
207,123 |
$ |
839,519 |
$ |
819,122 |
$ |
730,000 | ||||
Interest expense, net |
33,607 |
35,198 |
121,519 |
143,177 |
167,000 | |||||||||
Depreciation and amortization |
39,279 |
42,632 |
161,741 |
166,812 |
177,000 | |||||||||
Equity-based incentive compensation (1) |
9,553 |
9,019 |
12,471 |
6,461 |
5,000 | |||||||||
Loss on sale and retirement of assets |
2,393 |
3,493 |
7,223 |
7,871 |
8,000 | |||||||||
Commodity-related adjustments: |
||||||||||||||
Derivative gains recognized in the period associated with future product transactions (2) |
(75,939) |
(14,674) |
(87,511) |
(47,780) |
||||||||||
Derivative gains (losses) recognized in previous periods associated with product sales completed in the period (3) |
17,120 |
21,076 |
(8,086) |
96,084 |
||||||||||
Lower-of-cost-or-market adjustments (4) |
36,856 |
4,360 |
39,309 |
(34,316) |
||||||||||
Total commodity-related adjustments |
(21,963) |
10,762 |
(56,288) |
13,988 |
47,000 | |||||||||
Cash distributions received from non-controlled entities in excess of/(less than) earnings for the period |
(12,217) |
7,032 |
(8,724) |
14,572 |
20,000 | |||||||||
Adjusted EBITDA |
302,737 |
315,259 |
1,077,461 |
1,172,003 |
1,154,000 | |||||||||
Interest expense, net, excluding debt issuance cost amortization(5) |
(33,041) |
(34,352) |
(119,186) |
(140,464) |
(164,000) | |||||||||
Maintenance capital (6) |
(21,641) |
(24,010) |
(77,806) |
(88,685) |
(90,000) | |||||||||
Distributable cash flow |
$ |
248,055 |
$ |
256,897 |
$ |
880,469 |
$ |
942,854 |
$ |
900,000 | ||||
Distributable cash flow per limited partner unit receiving distributions related to this period |
$ |
1.09 |
$ |
1.13 |
$ |
3.88 |
$ |
4.14 |
$ |
3.95 | ||||
Weighted average number of limited partner units receiving distributions related to this period |
227,426 |
227,781 |
227,158 |
227,516 |
227,781 | |||||||||
(1) |
Because the partnership intends to satisfy vesting of units under its equity-based incentive compensation program with the issuance of limited partner units, expenses related to this program generally are deemed non-cash and added back for distributable cash flow ("DCF") purposes. Total equity-based incentive compensation expense for the year ended December 31, 2014 and 2015 was $27.3 million and $24.3 million, respectively. However, the figures above include an adjustment for minimum statutory tax withholdings paid by the partnership in 2014 and 2015 of $14.8 million and $17.8 million, respectively, for equity-based incentive compensation units that vested on the previous year end, which reduce DCF. |
(2) |
Certain derivatives the partnership uses as economic hedges have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in earnings. In addition, the partnership has designated certain derivatives it uses to hedge its crude oil tank bottoms and linefill assets as fair value hedges and the change in the differential between the current spot price and forward price on these hedges is recognized currently in earnings. The partnership excludes the net impact of both of these adjustments from its determination of DCF until the hedged products are physically sold. In the period in which these hedged products are physically sold, the net impact of the associated hedges is included in the partnership's determination of DCF. |
(3) |
When the partnership physically sells products that it has economically hedged (but were not designated as hedges for accounting purposes), the partnership includes in its DCF calculations the full amount of the gain or loss realized on the economic hedges in the period that the underlying product sales occur. |
(4) |
The partnership adds the amount of lower-of-cost-or-market ("LCM") adjustments on inventory and firm purchase commitments it recognizes in each applicable period to determine DCF as these are non-cash charges against income. In subsequent periods when the partnership physically sells or purchases the related products, it deducts the LCM adjustments previously recognized to determine DCF. |
(5) |
In 2015, the partnership adopted Accounting Standards Update No. 2015-03, Interest: Simplifying the Presentation of Debt Issuance Costs. Under this new accounting standard, the partnership has reclassified debt issuance cost amortization expense as interest expense. The partnership has added back debt issuance cost amortization expense included in interest expense for purposes of calculating DCF as follows: For the three months ended December 31, 2014 and 2015, $0.6 million and $0.8 million, respectively, and for the twelve months ended December 31, 2014 and 2015, $2.3 million and $2.7 million, respectively. |
(6) |
Maintenance capital expenditure projects maintain the partnership's existing assets and do not generate incremental DCF (i.e. incremental returns to the partnership's unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and HOUSTON, Feb. 1, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") announced today that BridgeTex Pipeline Company, LLC ("BridgeTex"), owned 50/50 by Magellan and Plains, has extended its open season to assess additional customer interest in a new origin in Grimes County, Texas for the BridgeTex pipeline to accept Eaglebine crude oil and condensate shipments. While sufficient commitments have been received to proceed with the project, the extension provides other potential shippers additional time to make commitments. Binding commitments are now due by 5:00 p.m. Central Time on Feb. 15, 2016.
The new origin, to be located approximately 100 miles northwest of Houston, is expected to be operational in mid-2017.
The BridgeTex pipeline currently has a capacity of 300,000 barrels per day ("bpd") to deliver Permian Basin crude oil from Colorado City, Texas to the Houston Gulf Coast area. If warranted by customer demand, BridgeTex will expand the capacity of the pipeline system by approximately 35,000 bpd to provide transportation services from the new Grimes County origin to the Houston Gulf Coast area.
For customer inquiries or additional information about the open season, please contact Mark Daggett of Magellan at (918) 574-7022 or mark.daggett@magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles over 4.4 million barrels per day of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and Plains All American Pipeline, L.P. (the "companies") believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the companies' results of operations and financial condition are: (1) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in the BridgeTex pipeline's tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts the companies' abilities to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to the BridgeTex pipeline. Additional information about issues that could lead to material changes in performance is contained in filings with the Securities and Exchange Commission for both companies. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
Contacts: | |
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | |
Plains: |
Ryan Smith, Investor Relations (866) 809-1291 |
Brad Leone, Media Relations (866) 809-1290 |
SOURCE Magellan Midstream Partners, L.P.; Plains All American Pipeline, L.P.
TULSA, Okla., Jan. 26, 2016 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to 78.5 cents per unit for the period Oct. 1 through Dec. 31, 2015, representing the 55th distribution increase since its initial public offering in 2001.
The fourth-quarter 2015 distribution is 13% higher than the fourth-quarter 2014 distribution of 69.5 cents per unit and represents a 3% increase over the third-quarter 2015 distribution of 76.25 cents. For the year, Magellan declared distributions of $3.005 per unit for 2015, or 15% higher than distributions of $2.615 per unit for 2014.
The new distribution, which equates to $3.14 per unit on an annualized basis, will be paid Feb. 12 to unitholders of record at the close of business on Feb. 5.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: |
Paula Farrell |
(918) 574-7650 | |
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla. and HOUSTON, Jan. 13, 2016 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan") and TransCanada Corporation (TSX, NYSE: TRP) ("TransCanada") announced today definitive plans to connect TransCanada's Houston tank terminal to Magellan's East Houston terminal. HoustonLink Pipeline Company, LLC ("HoustonLink"), a new company owned 50/50 by Magellan and TransCanada, will construct, own and operate a nine-mile, 24-inch diameter crude oil pipeline connecting the terminals. The new pipeline will provide TransCanada's Keystone and Marketlink customers access to Magellan's Houston and Texas City crude oil distribution system.
The joint project, first announced in April 2015, is estimated to cost approximately US$50 million. In addition, Magellan and TransCanada plan to develop additional infrastructure at their respective Houston-area terminals to accommodate shipments from the new pipeline. Magellan will serve as construction manager and operator for HoustonLink.
The HoustonLink pipeline is expected to be operational during the first half of 2017, subject to the receipt of all necessary rights-of-way, permits and regulatory approvals.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
FORWARD-LOOKING INFORMATION
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on Magellan's results of operations and financial condition are: (1) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis; (2) the ability to complete construction of the project on time and at expected costs; (3) price fluctuations and overall demand for crude oil; (4) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (5) the occurrence of an operational hazard or unforeseen interruption; (6) disruption in the debt and equity markets that negatively impacts Magellan's ability to finance capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this project. Additional information about issues that could lead to material changes in performance is contained in Magellan's filings with the Securities and Exchange Commission. Magellan undertakes no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today's date.
About TransCanada Corporation
With more than 65 years' experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and liquids pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 68,000 kilometres (42,100 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with 368 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in over 11,500 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest liquids delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. Visit TransCanada.com and our blog to learn more, or connect with us on social media and 3BL Media.
FORWARD-LOOKING INFORMATION
This publication contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). Forward-looking statements in this document are intended to provide TransCanada security holders and potential investors with information regarding TransCanada and its subsidiaries, including management's assessment of TransCanada's and its subsidiaries' future plans and financial outlook. All forward-looking statements reflect TransCanada's beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release, and not to use future-oriented information or financial outlooks for anything other than their intended purpose. TransCanada undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the Quarterly Report to Shareholders dated November 2, 2015 and 2014 Annual Report filed under TransCanada's profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
Contacts: |
||
Magellan: |
Paula Farrell, Investor Relations (918) 574-7650, paula.farrell@magellanlp.com | |
Bruce Heine, Media Relations (918) 574-7010, bruce.heine@magellanlp.com | ||
TransCanada: |
David Moneta / Stuart Kampel, Investor Relations (403) 920-7911 or (800) 361-6522 | |
Mark Cooper / Terry Cunha, Media Relations (403) 920-7859 or (800) 608-7859 |
SOURCE Magellan Midstream Partners, L.P.
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