Inergy LP Endures Tough 2012, Turns to Midstream Market with Major Projects in Pipeline

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Researched by Industrial Info Resources (Sugar Land, Texas)--Diversified energy infrastructure and distribution company Inergy LP (NASDAQ:NRGY) (Kansas City, Missouri) experienced a tumultuous 2012 as it repositioned itself as a purely midstream business. Net income was reported to be $540 million for the quarter, compared with a net loss of $50.2 million in fiscal fourth-quarter 2011, while net income for the full fiscal year was $554.9 million, compared with $17.6 million in the fiscal 2011. This includes the $589.5 million gain Inergy recorded in the fourth quarter after selling its retail propane operations to Suburban Propane Partners LP (NYSE:SPH) (Whippany, New Jersey).

Total revenues were reported to be $304.2 million for the quarter, a 32.19% decrease from the same period last year, and $2 billion for the year, a 6.83% decrease from fiscal 2011. Operating and administrative expenses were lower for the fourth quarter and full year at $53.7 million and $300.8 million, compared with $79.7 million and $323.3 million in fourth-quarter and full-year 2011, respectively.

"For the quarter, our operating results were right in line with budgeted expectations," said John Sherman, the chairman and chief executive officer of Inergy LP, in a conference call. "While our Texas natural gas business is relatively flat year-over-year, our NGL [natural gas liquids] business continues to experience solid growth. Bottom line, we're happy to have 2012 behind us. It was a long year, but we have executed well to transform the partnership for future growth and development."

Industrial Info is tracking more than $1.5 billion in active projects involving Inergy, including the $60 million construction of the MARC 1 hub line near Wyalusing, Pennsylvania. This part of the project involves installing 43 miles of 30-inch-diameter, bi-directional pipeline to transport up to 875 million standard cubic feet per day of natural gas between Inergy's Stagecoach South Lateral pipeline interconnection at the Tennessee Gas Pipeline's 300 Line to Transco's Leidy Line. Along with Inergy's North-South Project, this project will allow shippers to wheel or transport gas bi-directionally for about 75 miles. The pipeline is being built by Central New York Oil & Gas Company LLC, an indirect, wholly owned subsidiary of Inergy LP.

"The MARC 1 pipeline is in the final stages of testing, and is expected to be in service the week after next, on December 1," Sherman said in the conference call.

Inergy LP's now-sold-off retail propane operations showed the steepest profit losses for any of the company's major businesses:

• The retail propane operations business reported gross profit of $25.6 million for the quarter, a 51.88% decrease from fiscal fourth-quarter 2011, and $338.5 million for the year, a 25.77% decrease from fiscal 2011.
• The NGL marketing, supply and logistics business reported gross profit of $28.5 million for the quarter, compared with $14.9 million in the same period last year, and $85.7 million for the year, a 31.44% increase from last fiscal year.
• The storage and pipeline transportation business reported gross profit of $45.8 million for the quarter, a 1.78% increase from fiscal fourth-quarter 2011, and $186.4 million for the year, a 19.03% increase from fiscal 2011.

Inergy LP has a general partner interest and majority equity ownership interest in Inergy Midstream LP (NYSE:NRGM). Earlier this month, Inergy Midstream LP announced that it had agreed to purchase Rangeland Energy LLC (Sugar Land, Texas), the owner and operator of the COLT crude oil rail terminal, storage, and pipeline facilities, for $425 million. COLT is strategically located in the heart of the Bakken and Three Forks shale oil-producing areas, and provides producers, refiners and marketers with the largest open-access crude oil distribution hub in North Dakota. It has 720,000 barrels of crude oil storage and can move more than 120,000 barrels per day by rail. According to a press release from Inergy, COLT "has a first-mover advantage in the Bakken and should lead to incremental crude oil and NGL investments."

"We have passed through a challenging year, and as we look forward, we are encouraged by the significant transformation at [Inergy LP] and the continued execution of our growth plans at [Inergy Midstream LP]," said Michael J. Campbell, the senior vice president and chief financial officer of Inergy, in the conference call.

For more information, visit Industrial Info's North American Transmission Project Database and North American Production Project Database.

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.