Record refined products pipeline volumes and strong demand for crude transportation has resulted in Magellan Midstream Partners recording exceptional results.
The pipeline and storage operator reported a net income of $251.0 million for third quarter 2015, an increase of $52.4 million or 26% higher than the same period in 2014.
The crude oil operating margin was $94.7 million, an increase of $24.4 million. Transportation and terminals revenue increased $17.2 million primarily due to contributions from the 40-mile Houston crude oil pipeline that Magellan acquired in November 2014 as well as leases to BridgeTex pipeline, and new leased storage contracts.
The marine storage operating margin was $32.2 million, an increase of $4.6 million. Revenue increased slightly due to higher ancillary revenues, such as throughput fees from increased customer activity, and operating expenses were lower based on timing of asset integrity work.
Continued expansion opportunities
Magellan continues to pursue expansion opportunities, including organic growth construction projects and acquisitions. The partnership is increasing its expansion capital spending by $200 million to around $1.6 billion. The higher estimates include the recently-announced dock build and crude oil connectivity at the partnership’s Galena Park marine terminal in Texas.
Construction is well underway on the partnership’s largest projects.
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. Interest is still being measured for additional storage and dock capabilities on the partnership’s recently-acquired 100-acre tract of land in Corpus Christi/
Michael Mears, CEO, says: ‘Magellan generated exceptional results during the third quarter due to record refined products pipeline volumes and continued strong demand for our crude oil transportation and marine storage services.
‘Despite the current challenges facing the energy industry, Magellan’s fundamentals have remained strong, our disciplined, predominately fee-based business model continues to perform well and our solid investment-grade balance sheet provides financial strength for the future.’