Blueknight Energy Partners’ asphalt and crude oil terminalling segments have both posted strong financial results despite a challenging market.
The company’s EBITDA was $14.1 million for the fourth quarter of 2015 compared to $18.2 million for the same period in 2014. Overall for 2015, adjusted EBITDA was $70.1 million compared to $66.6 million for the same period in 2014.
CEO Mark Hurley says: ‘The current crude oil and overall economic market is one of the most challenging in recent memory. Crude oil prices have plunged 70% since 2014, and the number of drilling rigs is down 57% year over year reflecting continued weakness as energy exploration and production companies dramatically cut their capital budgets. The uncertainty on the political and economic fronts are weighing on the market as well.
‘Our well-balanced business model has proven to be resilient in today’s challenging market.’
The company’s asphalt terminalling services segment swelled operating margins by 17% year over year on strong throughputs. The crude oil terminalling and storage business reversed its declining operating margin trend as storage rates strengthened.
Hurley adds: ‘We aggressively managed costs and exited lower margin businesses. With the beginning of the decline in crude oil prices in late 2014, and the change in the slope of the crude oil market curve from backwardated to contango, our transported volumes started declining.
‘As crude oil prices continued their decline into 2015, and producers dramatically decreased drilling rig activity, particularly in the shale-play areas, crude oil trucking in West Texas became extremely competitive as under-utilised transportation equipment flooded into West Texas from more severely depressed production areas. This practice, coupled with increased pipeline transportation takeaway capacity negatively impacted margins as additional truck and pipeline transportation capacity completed for the same or less production volume. As a result, we reduced costs and made the difficult decision to exit the West Texas trucking business in the fourth quarter of 2015.
‘We continue to provide crude tracking transportation services in areas where we have a physical asset presence.’
He adds that looking to 2016, the company will continue to focus on growth and pursue acquisitions and organic projects.