US terminal and pipeline company NuStar Energy has reported what it describes as ‘solid’ Q2 2022 results supported by record volumes of 522,000 bpd in its Permian crude system.
These crude volumes represent an increase of 16% compared to Q2 2021 volumes, and are up 2% compared to Q1 of 2022. The company says this is testament to its producers and shows the strength of its assets. NuStar expects volumes to increase to 560,000–570,000 bpd by the end of the year, 10% higher than 2021.
Net income of US$59 million is now slightly from US$63 million in Q2 2021, while EBITDA is also slightly down compared to the US$189 million reported in Q2 2021, at US$175 million. However, NuStar president and CEO Brad Barron says that this was largely due to selling the eastern US terminals in October 2021, and that like-for-like, Q2 2022 EBITDA is comparable to 2021. The figures were also affected by customer transitions and tank maintenance at the St James terminal and minimum volume commitment settlements at the Corpus Christi North Beach terminal.
NuStar has lowered its debt balance, and at the end of Q2 2022 had a debt-to-EBITDA ratio of 3.93, compared to 4.27 at the end of Q2 2021. This was partly to do with the recent divestments.
Refined volumes continue to track at pre-pandemic levels, and have increased compared to Q2 2021. Barron says this reflects the strength of the company’s assets and the stability of demand, despite some short-term operational issues at customer refineries.
‘In addition, our Northern Mexico refined products supply system continues to perform well, with volumes above our average for 2021, and second quarter 2022 throughput up 20 percent compared to the second quarter of 2021,’ he says.
NuStar’s West Coast Renewable Fuels Network also continues to grow, and the company has recently brought into service two new projects which increased the renewable diesel storage capacity and ethanol transportation logistics capabilities at the Stockton, California facility. NuStar now handles 87% of California’s sustainable aviation fuel, 21% of its renewable diesel volumes, 13% percent of its ethanol and 5% of its biodiesel.
The final highlight from Barron was an 18-month extension of NuStar’s contract with Trafigura for transport, storage and export services on the Corpus Christi crude system, to 31 December 2024.
‘Iin 2019 we completed projects that made NuStar one of the early movers transporting Permian Basin WTI from Cactus II and Grey Oak through our systems in South Texas for Trafigura, for regional supply and for export from Corpus Christi. By extending this contract, we are building on an established relationship that facilitates production of the refined products on the Gulf Coast and provides export of the US crude oil to supply locations around the globe,’ says Barron.
NuStar executive vice president and chief financial officer Tom Shoaf says that he expects full-year 2022 net income in the range of US$193 million to US$226 million and EBITDA of US$700 million to $750 million. The company will spend up to US$145 million on strategic capital.
‘We still expect to allocate about US$60 million to growing our Permian system and plan to spend about $10 million to expand our West Coast Renewable Fuels Network,’ says Shoaf. ‘In addition, we continue to expect to spend between US$35 million and US$45 million on reliability in 2022.’