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8-K - SUNOCO LOGISTICS PARTNERS LP--FORM 8-K - Energy Transfer Operating, L.P. | d8k.htm |
EX-99.2 - SLIDE PRESENTATION - Energy Transfer Operating, L.P. | dex992.htm |
Exhibit 99.1
News Release Sunoco Logistics Partners L.P. 1818 Market Street Philadelphia, Pa. 19103-3615 | ||
For further information contact: Thomas Golembeski (media) 215-977-6298 Peter Gvazdauskas (investors) 215-977-6322 |
For release: Immediately |
No. 2
Sunoco Logistics Partners L.P. Increases Distribution and Reports
Earnings for Fourth Quarter 2010
PHILADELPHIA, January 27, 2011 Sunoco Logistics Partners L.P. (NYSE: SXL) (the Partnership) today announced net income attributable to owners for the fourth quarter 2010 of $59 million ($1.42 per unit diluted), compared with $54 million ($1.30 per unit diluted) for the fourth quarter 2009. Highlights of the fourth quarter 2010 include:
| Distributable cash flow of $69 million for the quarter compared to $50 million for the prior year period |
| Recognized contango inventory profits of approximately $10 million in the fourth quarter 2010 |
| Finished 2010 with a Debt to EBITDA ratio of 3.4x |
Sunoco Partners LLC, the general partner of the Partnership, declared a cash distribution for the fourth quarter 2010 of $1.18 per limited partnership unit ($4.72 annualized) to be paid on February 14, 2011 to unitholders of record on February 8, 2011. This represents the twenty-third consecutive quarterly distribution increase and provides 1.4 times coverage of the quarterly cash distribution.
2010 was a record year for Sunoco Logistics, said Lynn L. Elsenhans, Chairman and Chief Executive Officer. We set all-time highs in capital investment and EBITDA generation. Excluding market-related earnings, our ratable EBITDA was up approximately 15 % versus 2009. This is a reflection of our continuing organic growth program, recent acquisitions, and our strong operating base.
Entering 2011, we continue to build upon our diverse asset base with near-term emphasis on expanding our marketing terminal blending services and working toward optimizing our assets in the Marcellus Shale region with Project Mariner. We are projecting $100 to $150 million for our 2011 expansion capital program, excluding major projects and acquisitions, and we expect $45 million of maintenance capital spending. Our balance sheet remains strong and should provide the opportunity to grow beyond our base capital program.
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DETAILS OF FOURTH QUARTER SEGMENT RESULTS
Three Months Ended December 31, | ||||||||||||
2010 | 2009 | Variance | ||||||||||
(in millions) | ||||||||||||
Refined Products Pipeline System |
$ | 10 | $ | 10 | $ | | ||||||
Terminal Facilities |
21 | 21 | | |||||||||
Crude Oil Pipeline System |
52 | 35 | 17 | |||||||||
Operating Income |
$ | 83 | $ | 66 | $ | 17 | ||||||
Interest expense, net |
19 | 12 | 7 | |||||||||
Provision for income taxes |
4 | | 4 | |||||||||
Net Income |
$ | 60 | $ | 54 | $ | 6 | ||||||
Net income attributable to noncontrolling interests |
1 | | 1 | |||||||||
Net income attributable to Sunoco Logistics Partners L.P. |
$ | 59 | $ | 54 | $ | 5 | ||||||
Refined Products Pipeline System
Operating income for the fourth quarter 2010 was unchanged from the prior year period. Lower pipeline volumes resulted in reduced revenues compared to the prior years quarter. Higher equity income from the Partnerships joint venture interests, along with reduced utility and tax expenses offset the reduced level of pipeline volumes.
Terminal Facilities
Operating income was unchanged from the prior year period. Improvements from the prior period related to higher volumes and fees at the refined products terminals, additional volumes at the Nederland terminal facility and cash contributions from butane blending operations. These improvements were offset by increased depreciation and amortization expense related to organic projects and acquisitions, along with a non-cash impairment charge of $3 million related to the cancellation of a construction project. Reduced refinery terminal volumes driven by the permanent shut-down of Sunocos Eagle Point refinery and higher operating expenses related to the new tankage at the Partnerships Nederland facility further offset the improved operating results.
Crude Oil Pipeline System
The increase in operating income was due to increased pipeline volumes and incremental earnings associated with the Partnerships acquisitions of additional joint venture interests. Higher lease acquisition results driven primarily by increased contango profits in 2010 further improved operating results.
Financing Update
The increase in net interest expense was primarily attributable to the offering of $500 million of Senior Notes completed during the first quarter of 2010. At December 31, 2010, the Partnerships total debt balance was $1.2 billion, including $31 million of borrowings under its revolving credit facilities and a $100 million promissory note from Sunoco which was used to partially finance the Partnerships butane blending business acquisition.
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CAPITAL EXPENDITURES
Twelve Months Ended December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Maintenance capital expenditures |
$ | 37 | $ | 32 | ||||
Expansion capital expenditures |
389 | 194 | ||||||
Total |
$ | 426 | $ | 226 | ||||
Expansion capital for 2010 includes approximately $243 million for acquisitions of a butane blending business and additional ownership interests in three joint venture pipelines previously held by the Partnership. Expansion capital for 2010 also includes projects to expand services at the Partnerships refined products terminals, increase tankage at the Nederland facility and expand upon the Partnerships refined products platform in the southwest United States. The Partnership expects to invest $100 to $150 million in expansion capital for 2011, excluding major acquisitions and capital related to Project Mariner. Additionally, the Partnerships expects its maintenance capital spending for 2011 to be approximately $45 million.
INVESTOR CALL
An investor call with management regarding our fourth quarter results is scheduled for Thursday evening, January 27 at 5:00 pm ET. Those wishing to listen can access the call by dialing (USA toll free) 1-888-889-4955; International (USA toll) 1-312-470-0130 and request Sunoco Logistics Partners Earnings Call, Conference CodeSunoco Logistics. This event may also be accessed by a webcast, which will be available at 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 Partnerships 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 1-800-947-6258. International callers should dial 1-402-220-3482.
ABOUT SUNOCO LOGISTICS
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia, is a master limited partnership that owns and operates refined products and crude oil pipelines and terminal facilities. The Refined Products Pipeline System consists of approximately 2,200 miles of refined products pipelines located in the northeast, midwest and southwest United States and equity interests in four refined products pipelines. The Terminal Facilities consist of approximately 10 million shell barrels of refined products terminal capacity and approximately 23 million shell barrels of crude oil terminal capacity (including approximately 20 million shell barrels of capacity at the Nederland Terminal on the Gulf Coast of Texas). The Crude Oil Pipeline System consists of approximately 5,400 miles of crude oil pipelines, located principally in Oklahoma and Texas.
Portions of this document constitute forward-looking statements as defined by federal law. 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 Partnerships 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 Partnerships Form 10-Q filed with the Securities and Exchange Commission on November 4, 2010. 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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Sunoco Logistics Partners L.P.
Financial Highlights
(unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2010(1) | 2009 | 2010(1) | 2009 | |||||||||||||
(in millions) |
||||||||||||||||
Income Statement: |
||||||||||||||||
Sales and other operating revenue |
$ | 2,223 | $ | 1,661 | $ | 7,808 | $ | 5,402 | ||||||||
Other income |
5 | 7 | 30 | 28 | ||||||||||||
Total revenues |
2,228 | 1,668 | 7,838 | 5,430 | ||||||||||||
Cost of products sold and operating expenses |
2,103 | 1,573 | 7,398 | 5,023 | ||||||||||||
Depreciation and amortization expense |
19 | 13 | 64 | 48 | ||||||||||||
Selling, general and administrative expenses |
20 | 16 | 72 | 64 | ||||||||||||
Impairment charge |
3 | | 3 | | ||||||||||||
Total costs and expenses |
2,145 | 1,602 | 7,537 | 5,135 | ||||||||||||
Operating income |
83 | 66 | 301 | 295 | ||||||||||||
Interest cost and debt expense |
21 | 13 | 78 | 49 | ||||||||||||
Capitalized interest |
(2 | ) | (1 | ) | (5 | ) | (4 | ) | ||||||||
Gain on investments in affiliates |
| | 128 | | ||||||||||||
Income before provision for income taxes |
64 | 54 | 356 | 250 | ||||||||||||
Provision for income taxes |
4 | | 8 | | ||||||||||||
Net Income |
$ | 60 | $ | 54 | $ | 348 | $ | 250 | ||||||||
Net income attributable to noncontrolling interests |
1 | | 2 | | ||||||||||||
Net Income attributable to Sunoco Logistics Partners L.P. |
$ | 59 | $ | 54 | $ | 346 | $ | 250 | ||||||||
Calculation of Limited Partners interest: |
||||||||||||||||
Net Income attributable to Sunoco Logistics Partners L.P. |
$ | 59 | $ | 54 | $ | 346 | $ | 250 | ||||||||
Less: General Partners interest |
(12 | ) | (14 | ) | (48 | ) | (52 | ) | ||||||||
Limited Partners interest in Net Income |
$ | 47 | $ | 40 | $ | 298 | $ | 198 | ||||||||
Net Income per Limited Partner unit: |
||||||||||||||||
Basic |
$ | 1.42 | $ | 1.31 | $ | 9.40 | $ | 6.52 | ||||||||
Diluted |
$ | 1.42 | $ | 1.30 | $ | 9.34 | $ | 6.48 | ||||||||
Weighted Average Limited Partners units outstanding: |
||||||||||||||||
Basic |
33.0 | 31.0 | 31.7 | 30.3 | ||||||||||||
Diluted |
33.2 | 31.2 | 31.9 | 30.5 | ||||||||||||
(1) | Acquiring a controlling interest in the Mid-Valley Pipeline Company and the West Texas Gulf Pipe Line Company required the Partnership to consolidate results of these entities beginning in the third quarter 2010. Consolidated results from these acquisitions have been included from the acquisition date. |
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Sunoco Logistics Partners L.P.
Earnings Contribution by Business Segment
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in millions) | ||||||||||||||||
Refined Products Pipeline System: |
||||||||||||||||
Sales and other operating revenue |
$ | 29 | $ | 33 | $ | 120 | $ | 128 | ||||||||
Other income |
5 | 3 | 16 | 12 | ||||||||||||
Total revenues |
34 | 36 | 136 | 140 | ||||||||||||
Operating expenses |
15 | 16 | 54 | 60 | ||||||||||||
Depreciation and amortization expense |
3 | 4 | 15 | 13 | ||||||||||||
Selling, general and administrative expenses |
6 | 6 | 23 | 22 | ||||||||||||
Operating income |
$ | 10 | $ | 10 | $ | 44 | $ | 45 | ||||||||
Terminal Facilities: |
||||||||||||||||
Sales and other operating revenue |
$ | 92 | $ | 52 | $ | 264 | $ | 191 | ||||||||
Other income |
| 1 | 1 | 2 | ||||||||||||
Total revenues |
92 | 53 | 265 | 193 | ||||||||||||
Cost of products sold and operating expenses |
52 | 23 | 116 | 71 | ||||||||||||
Depreciation and amortization expense |
8 | 4 | 26 | 19 | ||||||||||||
Selling, general and administrative expenses |
8 | 5 | 25 | 19 | ||||||||||||
Impairment charge |
3 | | 3 | | ||||||||||||
Operating income |
$ | 21 | $ | 21 | $ | 95 | $ | 84 | ||||||||
Crude Oil Pipeline System: |
||||||||||||||||
Sales and other operating revenue |
$ | 2,102 | $ | 1,576 | $ | 7,424 | $ | 5,083 | ||||||||
Other income |
| 3 | 13 | 14 | ||||||||||||
Total revenues |
2,102 | 1,579 | 7,437 | 5,097 | ||||||||||||
Cost of products sold and operating expenses |
2,036 | 1,534 | 7,228 | 4,892 | ||||||||||||
Depreciation and amortization expense |
8 | 5 | 23 | 16 | ||||||||||||
Selling, general and administrative expenses |
6 | 5 | 24 | 23 | ||||||||||||
Operating income |
$ | 52 | $ | 35 | $ | 162 | $ | 166 | ||||||||
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Sunoco Logistics Partners L.P.
Financial Highlights
(unaudited)
Three Months
Ended December 31, |
Twelve Months
Ended December 31, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in millions) | ||||||||||||||||
Capital Expenditure Data: |
||||||||||||||||
Maintenance capital expenditures |
$ | 12 | $ | 17 | $ | 37 | $ | 32 | ||||||||
Expansion capital expenditures |
58 | 50 | 389 | 194 | ||||||||||||
Total |
$ | 70 | $ | 67 | $ | 426 | $ | 226 | ||||||||
December
31, 2010 |
December
31, 2009 |
|||||||||||||||
(in millions, at period end) | ||||||||||||||||
Balance Sheet Data: |
||||||||||||||||
Cash and cash equivalents |
$ | 2 | $ | 2 | ||||||||||||
Revolving credit facilities(1) |
$ | 31 | $ | 269 | ||||||||||||
Note from affiliatedue May 2013 |
100 | | ||||||||||||||
Senior Notes |
1,098 | 599 | ||||||||||||||
Total Long-term Debt |
$ | 1,229 | $ | 868 | ||||||||||||
Sunoco Logistics Partners L.P. Partners equity |
$ | 965 | $ | 862 | ||||||||||||
Noncontrolling interests |
77 | | ||||||||||||||
Total Equity |
$ | 1,042 | $ | 862 | ||||||||||||
(1) | As of December 31, 2010, the Partnership had unutilized borrowing capacity of $427 million under its revolving credit facilities. |
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Sunoco Logistics Partners L.P.
Financial and Operating Statistics
(unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in millions) | ||||||||||||||||
Operating Income |
||||||||||||||||
Refined Products Pipeline System |
$ | 10 | $ | 10 | $ | 44 | $ | 45 | ||||||||
Terminal Facilities |
21 | 21 | 95 | 84 | ||||||||||||
Crude Oil Pipeline System |
52 | 35 | 162 | 166 | ||||||||||||
Total Operating Income |
$ | 83 | $ | 66 | $ | 301 | $ | 295 | ||||||||
Operating Highlights |
||||||||||||||||
Refined Products Pipeline System: |
||||||||||||||||
Total shipments (barrel miles per day)(1)(2) |
49,290,093 | 56,540,785 | 50,758,293 | 57,741,323 | ||||||||||||
Revenue per barrel mile (cents) |
0.643 | 0.636 | 0.645 | 0.606 | ||||||||||||
Terminal Facilities: |
||||||||||||||||
Terminal throughput (bpd): |
||||||||||||||||
Refined products terminals |
501,917 | 466,167 | 488,490 | 462,219 | ||||||||||||
Nederland terminal |
724,048 | 531,405 | 728,491 | 597,144 | ||||||||||||
Refinery terminals |
434,049 | 573,344 | 465,349 | 591,180 | ||||||||||||
Crude Oil Pipeline System: |
||||||||||||||||
Crude oil pipeline throughput (bpd)(2)(3) |
1,495,174 | 687,095 | 1,138,824 | 657,991 | ||||||||||||
Crude oil purchases at wellhead (bpd) |
192,489 | 177,164 | 188,966 | 181,564 | ||||||||||||
Gross margin per barrel of pipeline throughput (cents)(3)(4) |
42.4 | 60.4 | 41.8 | 73.0 | ||||||||||||
Average crude oil price (per barrel) |
$ | 85.18 | $ | 76.17 | $ | 79.55 | $ | 61.93 |
(1) | Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped. |
(2) | Excludes amounts attributable to equity ownership interests which are not consolidated. |
(3) | Reflects total throughput by Mid-Valley Pipeline Company and West Texas Gulf Pipe Line Company from the dates of acquisition, over the total number of days in each period. From the dates of acquisition, these pipelines had actual throughput of 575 thousand bpd and 585 thousand bpd for the three and twelve months ended December 31, 2010. |
(4) | 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. Gross margin and throughput volumes for Mid-Valley Pipeline Company and West Texas Gulf Pipe Line Company have been included from the acquisition date. |
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Sunoco Logistics Partners L.P.
Non-GAAP Financial Measures
(unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in millions) | ||||||||||||||||
Net Income attributable to Sunoco Logistics Partners L.P. |
$ | 59 | $ | 54 | $ | 346 | $ | 250 | ||||||||
Add: Interest expense, net |
19 | 12 | 73 | 45 | ||||||||||||
Add: Depreciation and amortization |
19 | 13 | 64 | 48 | ||||||||||||
Add: Impairment charge |
3 | | 3 | | ||||||||||||
Add: Provision for income taxes |
4 | | 8 | | ||||||||||||
Less: Gain on investments in affiliates |
| | (128 | ) | | |||||||||||
EBITDA(1) |
104 | 79 | 366 | 343 | ||||||||||||
Less: Interest expense, net |
(19 | ) | (12 | ) | (73 | ) | (45 | ) | ||||||||
Less: Maintenance capital expenditures |
(12 | ) | (17 | ) | (37 | ) | (32 | ) | ||||||||
Less: Provision for income taxes |
(4 | ) | | (8 | ) | | ||||||||||
Distributable cash flow(1) |
$ | 69 | $ | 50 | $ | 248 | $ | 266 | ||||||||
(1) | Management of the Partnership believes EBITDA and distributable cash flow information enhances an investors understanding of a business ability to generate cash for payment of distributions and other purposes. EBITDA and distributable cash flow do not represent and should not be considered an alternative to net income or cash flows from operating activities as determined under United States generally accepted accounting principles (GAAP) and may not be comparable to other similarly titled measures of other businesses. Reconciliations of these measures to the comparable GAAP measure are provided in the tables accompanying this release. |
Adjusted Net Income Attributable to Sunoco Logistics Partners L.P.
Twelve Months Ended December 31, 2010 |
||||
(in millions) | ||||
Net Income attributable to Sunoco Logistics Partners L.P. |
$ | 346 | ||
Less: Gain on investments in affiliates |
(128 | ) | ||
Adjusted Net Income attributable to Sunoco Logistics Partners L.P. |
$ | 218 | ||
Less: General Partners interest |
(45 | ) | ||
Limited Partners interest in Net Income |
$ | 173 | ||
Net Income per Limited Partner unit: |
||||
Basic |
$ | 5.46 | ||
Diluted |
$ | 5.42 | ||
Weighted Average Limited Partners units outstanding: |
||||
Basic |
31.7 | |||
Diluted |
31.9 | |||
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