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Released August 14, 2013 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Independent U.S. downstream energy company Northern Tier Energy LP (NYSE:NTI) (Ridgefield, Connecticut), which serves the PADD II region with refining, retail and pipeline operations, reported weaker overall results in second-quarter 2013 as a planned turnaround reduced refinery output and price differentials for crude oil were squeezed. Net earnings were reported to be $63.9 million, compared with $245.6 million in second-quarter 2012.
Total revenues stood at $1.13 billion, a 2.08% decrease from the same period last year. Planned spring turnaround activities at Northern Tier's St. Paul Park Refinery (St. Paul Park, Minnesota) decreased sales and throughput volumes significantly, with throughput declining to 55,486 barrels per day (BBL/d) from 81,906 BBL/d in second-quarter 2012, and sales volumes falling to 68,395 BBL/d from 88,773 BBL/d. Tightened crude oil price differentials were a major factor in driving down refining gross product margins, which fell to $23.92 per barrel from $38.60 in the same period last year. However, retail operating income increased 66.66% to $8 million, based largely on stronger fuel margins.
Capital expenditures for the second quarter were reported to be $42.4 million, about $27 million of which was related to an expansion at the St. Paul Park Refinery.
As part of its North American Power Industry Database, Industrial Info is tracking several Northern Tier projects, including the planned $10 million upgrade of a fluid catalytic cracker unit (FCCU) at the St. Paul Park Refinery, the only unit to not be included in the earlier turnaround. The project involves enhancing the existing 28,500-BBL/d FCCU by replacing regenerator internals to improve reliability. The turnaround is expected to be performed in October this year.
"Our April maintenance activities marked the first major plant-wide turnaround performed at the St. Paul Park Refinery performed by Northern Tier Energy," said Hank Kuchta, the president and chief executive officer of Northern Tier, in a conference call. "We are proud to point out that we successfully completed the turnaround with zero loss-time injuries, despite some very poor weather conditions, which did impact our worker productivity. As a reminder, this was a full plant turnaround that affected every unit with the exception of the fluid catalytic cracker. This type of work is done once every five or six years; therefore, we do not expect to have another major turnaround that will affect our throughput to this degree until 2018."
Northern Tier executives estimate capital expenditures will be about $20 million in the third quarter and $17 million in the fourth quarter. About $8 is to be spent in each quarter on maintenance and replacement, and between $8 million and $9 million on wastewater treatment. Total throughput sales are estimated to be between 90,000 and 96,000 barrels per day.
In the conference call, Kuchta said the company will be producing more high-value distillate products in the coming year, while reducing production of lower-value product. He also highlighted Northern Tier's oil trucking business, which started up last year.
"The business continues to perform well, and allows us to source Bakken crude directly at the source, saving us the margins that would have been collected by a third party for trucking and pipeline transportation services," he said. "As of July, we were transporting approximately 20,000 barrels per day of Bakken oil through this business."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Total revenues stood at $1.13 billion, a 2.08% decrease from the same period last year. Planned spring turnaround activities at Northern Tier's St. Paul Park Refinery (St. Paul Park, Minnesota) decreased sales and throughput volumes significantly, with throughput declining to 55,486 barrels per day (BBL/d) from 81,906 BBL/d in second-quarter 2012, and sales volumes falling to 68,395 BBL/d from 88,773 BBL/d. Tightened crude oil price differentials were a major factor in driving down refining gross product margins, which fell to $23.92 per barrel from $38.60 in the same period last year. However, retail operating income increased 66.66% to $8 million, based largely on stronger fuel margins.
Capital expenditures for the second quarter were reported to be $42.4 million, about $27 million of which was related to an expansion at the St. Paul Park Refinery.
As part of its North American Power Industry Database, Industrial Info is tracking several Northern Tier projects, including the planned $10 million upgrade of a fluid catalytic cracker unit (FCCU) at the St. Paul Park Refinery, the only unit to not be included in the earlier turnaround. The project involves enhancing the existing 28,500-BBL/d FCCU by replacing regenerator internals to improve reliability. The turnaround is expected to be performed in October this year.
"Our April maintenance activities marked the first major plant-wide turnaround performed at the St. Paul Park Refinery performed by Northern Tier Energy," said Hank Kuchta, the president and chief executive officer of Northern Tier, in a conference call. "We are proud to point out that we successfully completed the turnaround with zero loss-time injuries, despite some very poor weather conditions, which did impact our worker productivity. As a reminder, this was a full plant turnaround that affected every unit with the exception of the fluid catalytic cracker. This type of work is done once every five or six years; therefore, we do not expect to have another major turnaround that will affect our throughput to this degree until 2018."
Northern Tier executives estimate capital expenditures will be about $20 million in the third quarter and $17 million in the fourth quarter. About $8 is to be spent in each quarter on maintenance and replacement, and between $8 million and $9 million on wastewater treatment. Total throughput sales are estimated to be between 90,000 and 96,000 barrels per day.
In the conference call, Kuchta said the company will be producing more high-value distillate products in the coming year, while reducing production of lower-value product. He also highlighted Northern Tier's oil trucking business, which started up last year.
"The business continues to perform well, and allows us to source Bakken crude directly at the source, saving us the margins that would have been collected by a third party for trucking and pipeline transportation services," he said. "As of July, we were transporting approximately 20,000 barrels per day of Bakken oil through this business."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
