Terminal Acquisition, Pipeline Expansion Propel NuStar Energy's Quarterly Profits

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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy liquids pipelines and terminals operator NuStar Energy LP (NYSE:NS) (San Antonio, Texas) reported $114.5 million in first-quarter 2015 net income, up from $28.1 million in the same quarter a year earlier. The increase was largely due to NuStar's acquisition of the remaining 50% ownership in a refined products terminal in Linden, New Jersey. Without the acquisition, NuStar Energy said its first-quarter net income would have been $59.4 million. Increased pipeline throughput in South Texas also contributed to the earnings results.

NuStar Energy has 8,643 miles of pipeline and 81 terminal and storage facilities.

Also, NuStar GP Holdings LLC (NYSE:NSH) (San Antonio), which owns a 2% general partner interest, a 12.9% limited partner interest and the incentive distribution rights in NuStar Energy, reported $26.8 million in net income for the first quarter of 2015, compared with $13.6 million in the first quarter of 2014.

Industrial Info is tracking 34 active projects related to NuStar Energy and NuStar GP Holdings, with a combined worth of nearly $138 million. This includes 31 projects, valued at $78 million, which are under construction; and three projects, valued at $60 million, which are in the planning phases, where a variety of factors could alter their timing or outcome.

NuStar is performing a market analysis for a grassroot crude-by-rail transloading terminal at Point Tupper, Nova Scotia. To be located at an existing 7 million-barrel terminal, the project has a total investment value of $50 million. Construction kickoff is slated for third-quarter 2015, with completion in second-quarter 2016.

Tom Shoaf, chief financial officer for NuStar Energy, said during the company's earnings conference call that he expects strategic capital spending will total $400 million to $420 million for the year, while reliability capital spending will be $45 million to $55 million. The company has a $1 billion project backlog, company executives indicated.

NuStar Energy's revenue for the quarter ended March 31 was nearly $555 million, compared with $849 million in the same quarter a year earlier.

First-quarter segment operating income for NuStar Energy's Pipeline segment was $68.6 million, compared with $52.9 million in the year-earlier quarter.

Brad Barron, president and chief executive officer of NuStar Energy and NuStar GP Holdings, said the expansion of the South Texas Crude Oil Pipeline led to higher-than-anticipated Eagle Ford throughputs of about 290,000 barrels per day for the quarter. As a result, NuStar Energy's Pipeline segment earnings before interest, taxes, depreciation and amortization (EBITDA) for 2015 is now expected to be $35 million to $55 million higher than 2014, or up by $10 million from the previous forecast.

NuStar's Storage and Fuels Marketing segments also saw operating income gains during the quarter.

For the second quarter, a customer's 30-day refinery turnaround will have a negative impact on results, Shoaf said. Also, the Fuels Marketing segment is expected to report lower earnings for the second quarter, he said.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, 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.