PHILADELPHIA, July 22 /PRNewswire-FirstCall/ -- Sunoco Logistics
Partners L.P. (NYSE: SXL) (the "Partnership") today announced record
quarterly net income for the second quarter ended June 30, 2008 of $51.3
million, or $1.21 per limited partner unit on a diluted basis, compared
with $25.3 million, or $0.76 per limited partner unit on a diluted basis,
for the second quarter ended June 30, 2007. Operating income for the second
quarter ended June 30, 2008 increased by $24.6 million, or 71 percent, from
the prior year's second quarter. The improvement was driven by higher
margins and fees across all segments, stronger asset utilization in the
Western Pipeline system and additional tankage placed into service at the
Nederland terminal during 2007 and 2008. These improvements to operating
income were partially offset by lower volumes in the Eastern Pipeline and
Terminal systems. Decreased interest expense contributed further to the
$26.0 million increase in net income.
For the six months ended June 30, 2008, net income increased to $88.8
million compared to $47.6 million for the first six months of 2007.
Operating income for the first half of 2008 increased $38.9 million, or 59
percent, when compared to the prior year period. The increase was the
result of higher margins and fees across all segments, improved asset
utilization within the Western Pipeline system and additional tankage
placed into service at the Nederland terminal during 2007 and 2008. These
improvements to operating income were partially offset by lower volumes in
the Eastern Pipeline system and Terminal Facilities along with a $5.7
million non-cash impairment charge related to a cancelled project.
Decreased interest expense contributed further to the $41.2 million
increase in net income.
Sunoco Partners LLC, the general partner of Sunoco Logistics Partners
L.P., declared a cash distribution for the second quarter of 2008 of $0.935
per common partnership unit ($3.74 annualized) payable August 14, 2008 to
unit holders of record on August 7, 2008.
"The second quarter represents the second straight record quarter for
Sunoco Logistics Partners," said Deborah M. Fretz, President and Chief
Executive Officer. "Over the past year, we have improved the business with
solid, sustainable growth by capitalizing on market opportunities and
realizing higher value from our infrastructure in the current marketplace.
Since last year we have completed construction of four additional tanks at
our Nederland terminal, with six additional tanks at various stages of
completion. Our announced crude oil project for Motiva is expected to come
within our cost projections and the tankage will be completed early. Our
geographically diverse group of businesses has served us well in the
current market place and we expect to sustain and grow our future cash flow
and distributions. As a result, we increased the distribution to our unit
holders by $0.16 from $3.58 per unit to $3.74 per unit, which represents
the twentieth distribution increase in the past twenty-one quarters, an
11.7 percent increase over the second quarter 2007."
Segmented Second Quarter Results
Eastern Pipeline System
Operating income for the Eastern Pipeline system increased $3.8 million
to $14.6 million for the second quarter ended June 30, 2008 compared to the
prior year's second quarter. Sales and other operating revenue increased by
$1.0 million to $29.0 million due primarily to higher fees across the
Partnership's refined product and crude oil pipelines, partially offset by
decreased volumes. Other income decreased $0.8 million compared to the
prior year's second quarter due primarily to a decrease in equity income
associated with the Partnership's joint venture interests. Operating
expenses decreased by $3.6 million to $10.0 million due primarily to the
impact of increased crude oil and refined product prices on operating gains
and a decreased level of environmental charges. These changes were
partially offset by increased utility costs throughout the system.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $2.4
million to a record level of $17.9 million for the second quarter ended
June 30, 2008 compared to the prior year's second quarter. Sales and other
operating revenue increased by $4.0 million to $39.3 million due primarily
to the addition of tankage at the Nederland terminal, increased terminal
fees, sales of product overages which were favorably impacted by the
increased price of crude oil and increased product additive revenues. These
increases were partially offset by decreased throughput within the refinery
and refined product terminals. Other income increased $0.8 million from the
prior year's second quarter as a result of the final insurance recovery for
hurricane damage sustained during 2005 at the Partnership's Nederland
terminal. Cost of goods sold and operating expenses increased by $1.1
million to $13.9 million for the second quarter of 2008 due primarily to
increased product additive costs, higher utility costs and timing of
maintenance activity. Selling, general and administrative expenses
increased by $1.1 million to $4.2 million for the second quarter of 2008.
During 2007, expenses were reduced by $0.9 million in connection with an
insurance recovery.
Western Pipeline System
Operating income for the Western Pipeline system increased $18.5
million to a record level of $26.9 million for the second quarter of 2008
compared to the prior year's second quarter due primarily to improved asset
utilization resulting from the creation of a bi-directional pipeline
connection to the Partnership's Nederland terminal, increased pipeline
volumes and fees and higher lease acquisition margins. Other income
increased $1.1 million compared to the prior year's quarter due primarily
to a gain recognized on the insurance recovery discussed earlier.
Higher crude oil prices were a key driver of the overall increase in
total revenue, cost of products sold and operating expenses from the prior
year's quarters. The average price of West Texas Intermediate crude oil at
Cushing, Oklahoma increased to $124.00 per barrel for the second quarter of
2008 from $65.02 per barrel for the second quarter of 2007.
Segmented Six Month Results
Eastern Pipeline System
Operating income for the Eastern Pipeline system increased $4.8 million
to $25.3 million for the six months ended June 30, 2008 compared to the
prior year period. Sales and other operating revenue increased by $3.0
million to $57.8 million due primarily to higher fees across the
Partnership's refined product and crude oil pipelines, partially offset by
decreased volumes. Other income decreased $2.1 million compared to the
prior year period as a result of a decrease in equity income associated
with the Partnership's joint venture interests. Operating expenses
decreased by $3.6 million to $22.0 million due primarily to the impact of
increased crude oil and refined product prices on operating gains and a
decreased level of environmental charges. This decrease was partially
offset by increased utility costs throughout the system.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $1.3
million to $29.1 million for the six months ended June 30, 2008 compared to
the prior year period. Operating income was reduced during the first six
months of 2008 due to a $5.7 million non-cash impairment charge related to
the Partnership's decision to discontinue efforts to expand LPG storage
capacity at its Inkster, Michigan facility. Sales and other operating
revenue increased by $10.5 million to $78.7 million due primarily to the
addition of new tankage at the Nederland terminal, higher fees at the
Partnership's Nederland and refined products terminals, the sale of product
overages which were favorably impacted by the increased price of crude oil
and increased product additive revenues. The increases were partially
offset by decreased volumes in the Partnership's refinery and refined
products terminals. Other income increased $0.8 million from the first six
months of 2008 as a result of the insurance recovery discussed above. Cost
of goods sold and operating expenses increased by $2.3 million to $27.6
million for the period ended June 30, 2008 due primarily to increased
utility costs and timing of maintenance activity. Selling, general and
administrative expenses increased by $1.5 million to $9.1 million for the
six months ended June 30, 2008. During 2007, expenses were reduced by $0.9
million in connection with an insurance recovery.
Western Pipeline System
Operating income for the Western Pipeline system increased $32.8
million to $50.2 million for the first six months of 2008 compared to the
prior year period due primarily to improved asset utilization resulting
from creation of a bi-directional pipeline connection to the Partnership's
Nederland terminal, increased pipeline volumes and fees and higher lease
acquisition margins. Other income also contributed to the increased
profitability due to increased equity income associated with the
Partnership's joint venture interests and the gain on an insurance recovery
discussed above.
Higher crude oil prices were a key driver of the overall increase in
total revenue, cost of products sold and operating expenses from the prior
year period. The average price of West Texas Intermediate crude oil at
Cushing, Oklahoma increased to $110.98 per barrel for the first six months
of 2008 from $61.64 per barrel for the first six months of 2007.
Other Analysis
Financing Costs
Net interest expense decreased $2.4 million for the six months ended
June 30, 2008, compared to the prior year period. The decrease was due
primarily to decreased borrowings and lower interest rates related to the
Partnership's revolving credit facility along with an increase in
capitalized interest driven by the Partnership's expansion capital program.
As of June 30, 2008, the Partnership had total debt outstanding of $514.2
million, which consisted of $424.2 million of Senior Notes and $90.0
million of borrowings under the Partnership's credit facility as compared
to $515.1 million at December 31, 2007.
Capital Expenditures
Maintenance capital expenditures for the six months ended June 30, 2008
were $7.8 million. The Partnership continues to expect that maintenance
capital spending for 2008 will be approximately $26.0 million for the full
year.
Expansion capital expenditures for the six months ended June 30, 2008
were $44.5 million compared to $56.3 million for the first six months of
2007. Expansion capital for 2007 included the $13.4 million acquisition of
a 50 percent interest in the Syracuse, New York refined products terminal.
Expansion capital for 2008 includes construction in progress, in connection
with the Partnership's agreement with Motiva Enterprises LLC, of three
crude oil storage tanks at its Nederland Terminal and a crude oil pipeline
from Nederland to Motiva's Port Arthur, Texas refinery. Expansion capital
also includes construction of five additional crude oil storage tanks at
Nederland, of which two began construction during the second quarter of
2008. These five crude oil storage tanks will have a combined shell
capacity of approximately 3.0 million barrels.
Sunoco Logistics Partners L.P.
Financial Highlights
(in thousands, except units and per unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
Income Statement 2008 2007 2008 2007
Sales and other
operating revenue $3,315,421 $1,630,280 $5,709,810 $3,179,850
Other income 8,783 7,698 13,609 12,737
Total Revenues 3,324,204 1,637,978 5,723,419 3,192,587
Cost of products
sold and operating
expenses 3,240,861 1,580,330 5,564,111 3,079,588
Depreciation and
amortization 9,830 9,407 19,489 18,311
Selling, general
and administrative
expenses 14,126 13,487 29,557 29,006
Impairment Charge - - 5,674 -
Total costs and
expenses 3,264,817 1,603,224 5,618,831 3,126,905
Operating income 59,387 34,754 104,588 65,682
Interest cost and
debt expense, net 8,928 10,445 17,398 19,619
Capitalized interest (864) (945) (1,636) (1,498)
Net Income $51,323 $25,254 $ 88,826 $ 47,561
Calculation of Limited
Partners' interest:
Net Income $51,323 $25,254 $88,826 $47,561
Less: General
Partner's interest (16,565) (3,552) (26,219) (5,631)
Limited Partners'
interest in Net
Income $34,758 $21,702 $62,607 $41,930
Net Income per Limited
Partner unit
Basic $1.21 $0.76 $2.19 $1.47
Diluted $1.21 $0.76 $2.17 $1.46
Weighted average
Limited Partners'
units outstanding:
Basic 28,657,485 28,586,280 28,642,571 28,575,697
Diluted 28,840,262 28,723,884 28,823,146 28,713,365
Capital
Expenditure Data:
Maintenance capital
expenditures $4,449 $4,905 $7,771 $7,541
Expansion capital
expenditures 24,694 41,029 44,503 56,274
Total $29,143 $45,934 $52,274 $63,815
June 30, December 31,
2008 2007
Balance Sheet Data (at period end):
Cash and cash equivalents $2,000 $2,000
Total Debt 514,201 515,104
Total Partners' Capital 618,030 591,045
Sunoco Logistics Partners L.P.
Earnings Contribution by Business Segment
(in thousands, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Eastern Pipeline System:
Sales and other
operating revenue $28,951 $27,916 $57,843 $54,890
Other income 2,971 3,796 4,250 6,332
Total Revenues 31,922 31,712 62,093 61,222
Operating expenses 10,034 13,627 21,985 25,583
Depreciation and
amortization 2,465 2,249 4,879 4,556
Selling, general and
administrative expenses 4,866 5,021 9,936 10,580
Operating Income $14,557 $10,815 $25,293 $20,503
Terminal Facilities:
Sales and other operating
revenues $39,272 $35,279 $78,656 $68,159
Other Income 825 - 825 -
Total Revenues 40,097 35,279 79,481 68,159
Operating expenses 13,913 12,797 27,601 25,278
Depreciation and
amortization 4,056 3,815 7,993 7,490
Selling, general and
administrative expenses 4,218 3,139 9,093 7,608
Impairment Charge - - 5,674 -
Operating Income $17,910 $15,528 $29,120 $27,783
Western Pipeline System:
Sales and other
operating revenue $3,247,198 $1,567,078 $5,573,311 $3,056,786
Other income 4,987 3,909 8,534 6,420
Total Revenues 3,252,185 1,570,987 5,581,845 3,063,206
Cost of products sold
and operating expenses 3,216,914 1,553,906 5,514,525 3,028,727
Depreciation and
amortization 3,309 3,343 6,617 6,265
Selling, general and
administrative expenses 5,042 5,327 10,528 10,818
Operating Income $26,920 $8,411 $50,175 $17,396
Sunoco Logistics Partners L.P.
Operating Highlights
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Eastern Pipeline
System: (1)
Total shipments (barrel
miles per day) (2) 61,028,163 63,253,888 60,705,947 63,372,001
Revenue per barrel mile
(cents) 0.521 0.485 0.524 0.479
Terminal Facilities:
Terminal throughput
(bpd):
Refined product
terminals (3) 428,704 440,152 423,662 427,923
Nederland terminal 526,350 529,462 539,702 536,840
Refinery terminals (4) 622,011 715,462 648,604 664,768
Western Pipeline
System: (1)
Crude oil pipeline
throughput (bpd) 547,489 535,715 548,957 534,816
Crude oil purchases
at wellhead (bpd) 177,317 180,390 174,381 182,757
Gross margin per barrel
of pipeline
throughput (cents) (5) 54.1 20.2 52.3 22.5
(1) Excludes amounts attributable to equity ownership interests in
corporate joint ventures.
(2) Represents total average daily pipeline throughput multiplied by
the number of miles of pipeline through which each barrel has been shipped.
(3) Includes results from the Partnership's purchase of a 50% undivided
interest in a refined products terminal in Syracuse, New York in June 2007.
(4) Consists of the Partnership's Fort Mifflin Terminal Complex, the
Marcus Hook Tank Farm and the Eagle Point Dock.
(5) Represents total segment sales and other operating revenue minus
cost of products sold and operating expenses and depreciation and
amortization divided by crude oil pipeline throughput.
An investor call with management regarding the second-quarter results
is scheduled for Wednesday morning, July 23 at 9:00 am EDT. Those wishing
to listen can access the call by dialing (USA toll free) 1-877-297-3442;
International (USA toll) 1-706-643-1335 and request "Sunoco Logistics
Partners Earnings Call, Conference Code 54169985". This event may also be
accessed by a webcast, which will be available at http://www.sunocologistics.com.
A number of presentation slides will accompany the audio portion of the
call and will be available to be viewed and printed shortly before the call
begins. Individuals wishing to listen to the call on the Partnership's web
site will need Windows Media Player, which can be downloaded free of charge
from Microsoft or from Sunoco Logistics Partners' conference call page.
Please allow at least fifteen minutes to complete the download.
Audio replays of the conference call will be available for two weeks
after the conference call beginning approximately two hours following the
completion of the call. To access the replay, dial 1-800-642-1687.
International callers should dial 1-706-645-9291. Please enter Conference
ID #54169985.
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in
Philadelphia, is a master limited partnership formed to acquire, own and
operate refined product and crude oil pipelines and terminal facilities.
The Eastern Pipeline System consists of approximately 1,800 miles of
primarily refined product pipelines and interests in four refined products
pipelines, consisting of a 9.4 percent interest in Explorer Pipeline
Company, a 31.5 percent interest in Wolverine Pipe Line Company, a 12.3
percent interest in West Shore Pipe Line Company and a 14.0 percent
interest in Yellowstone Pipe Line Company. The Terminal Facilities consist
of 9.2 million shell barrels of refined products terminal capacity and 22.8
million shell barrels of crude oil terminal capacity (including
approximately 15.9 million shell barrels of capacity at the Texas Gulf
Coast Nederland Terminal). The Western Pipeline System consists of
approximately 3,700 miles of crude oil pipelines, located principally in
Oklahoma and Texas, a 55.3 percent interest in Mid-Valley Pipeline Company,
a 43.8 percent interest in the West Texas Gulf Pipe Line Company and a 37.0
percent interest in the Mesa Pipe Line System. For additional information
visit Sunoco Logistics' web site at http://www.sunocologistics.com.
Although Sunoco Logistics Partners L.P. believes that the assumptions
underlying these statements are reasonable, investors are cautioned that
such forward-looking statements are inherently uncertain and necessarily
involve risks that may affect the Partnership's business prospects and
performance causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of example
and not of limitation: whether or not the transactions described in the
foregoing news release will be cash flow accretive; increased competition;
changes in demand for crude oil and refined products that we store and
distribute; changes in operating conditions and costs; changes in the level
of environmental remediation spending; potential equipment malfunction;
potential labor issues; the legislative or regulatory environment; plant
construction/repair delays; nonperformance by major customers or suppliers;
and political and economic conditions, including the impact of potential
terrorist acts and international hostilities. These and other applicable
risks and uncertainties have been described more fully in the Partnership's
Form 10-Q filed with the Securities and Exchange Commission on April 30,
2008. The Partnership undertakes no obligation to update any
forward-looking statements in this release, whether as a result of new
information or future events.
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SOURCE Sunoco Logistics Partners L.P.
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Related links:
http://www.sunocologistics.com/
CONTACT:
Thomas Golembeski (media), +1-215-977-6298 or
Neal Murphy (investors), +1-866-248-4344, both of Sunoco
Logistics Partners L.P.
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