US independent terminal and pipeline operator NuStar Energy has reported a net income of US$42 million for Q1 2021, despite dealing with the ongoing impacts of the COVID-19 pandemic.
This is a fall on the same quarter in 2020, which reported an adjusted net income of US$77 million, after a US$225 million non-cash goodwill impairment charge when the fair value of NuStar’s crude oil pipelines reporting unit fell below its carrying value due to the pandemic, was taken into account. However, NuStar president and CEO Brad Barron pointed out that EBITDA for Q1 2021, US$169 million, was in line with estimates, despite the impact of Winter Storm Uri, which caused widespread freezing temperatures and outages in Texas in February, and trimmed NuStar’s earning by US$11 million. Without this impact, earnings were comparable to Q4 2020.
NuStar is one of the largest independent liquid terminal and pipeline operators in the US, with 73 terminal and storage facilities and around 16,000 km of pipelines. Refined product demand in Q1 2021 was up to almost pre-pandemic levels before Storm Uri, before dropping slightly, then recovering to around 95% of pre-pandemic levels by the end of the quarter. Barron expects this to return to 100% for the rest of the year. The demand is also leading to higher crude prices.
‘Despite the lingering effects of the pandemic on the global economy and US exports, and a historically unprecedented severe winter weather event, I am pleased to report NuStar turned in a very solid quarter,” said Barron. ‘As America begins to recover from the impact of COVID-19 and begins returning to normal activity and growth, we are seeing signs of stabilisation and improvement across the US and in NuStar’s footprint. US refined product demand has improved as COVID vaccinations have continued to allow more and more Americans to return to normal day-to-day activities.’
NuStar’s renewable fuels distribution system on the US West Coast continues to grow, and Barron says it is an important part of the company’s future plans. In the first three quarters of 2020, the company handled 6% of California’s biodiesel volumes, 18% of its ethanol and 30% of its renewable diesel. Barron expects market share to rise as California continues to move towards renewable fuels.
‘Faced with the challenges of a global pandemic, we still moved more barrels and generated more adjusted EBITDA in 2020 than we did in 2019. And in 2021, even after layering in the impact of a historically unprecedented winter storm, NuStar remains solidly positioned to fund 100% of our 2021 spending (approximately US$140–170 million) from our internally generated cash flows. We also remain on track to generate EBITDA for 2021 comparable to 2020’s strong results, after taking into account our sale of the Texas City terminal in December of last year. And we see continuing signs of recovery on the horizon, as expectations for demand, utilization, and crude prices for 2021 have all improved,’ says Barron.