Oct. 26, 2009 (PR Newswire) --
PHILADELPHIA, Oct. 26 /PRNewswire-FirstCall/ -- Sunoco Logistics Partners L.P. (NYSE: SXL) (the "Partnership") today announced net income for the third quarter ended September 30, 2009 of $48.5 million, or $1.13 per limited partner unit on a diluted basis, compared with $50.3 million, or $1.41 per limited partner unit on a diluted basis, for the third quarter ended September 30, 2008. Operating income for the third quarter ended September 30, 2009 increased by $2.0 million from the prior year's third quarter. Distributable cash flow ("DCF"), which represents the cash generated during the quarter which is available to pay distributions, increased $1.9 million to $54.4 million compared to the third quarter of 2008.
For the nine months ended September 30, 2009, net income increased 40.9 percent to $196.0 million compared to the same period in 2008. Operating income for this period increased $66.2 million, or 40.8 percent, when compared to the prior year period. DCF for the first nine months of 2009 increased 34.6 percent to $216.0 million compared to the prior year period.
Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P., declared a cash distribution for the third quarter of 2009 of $1.065 per common partnership unit ($4.26 annualized), which is an 10.4 percent increase over the third quarter of 2008 and a 2.4 percent increase over the prior quarter. The distribution is payable November 13, 2009 to unit holders of record on November 6, 2009.
"Distributable cash flow for the third quarter continues to be strong and is an excellent indicator of the health of our business," said Deborah M. Fretz, President and Chief Executive Officer. "Quarterly net income was negatively impacted by timing of contango crude oil inventory positions and will reverse in the next two quarters."
"The addition of two acquisitions during the quarter, the Excel crude oil pipeline in Oklahoma and the refined products terminal in Romulus, Michigan, will provide additional opportunities for cash flow growth. In addition, we completed construction on a new pipeline from our Nederland terminal to Motiva's Port Arthur refinery, as well as new tanks at the Nederland terminal. We continue to invest in organic growth opportunities across our system which will translate to growing cash flows. The increase in our distribution continues to affirm our confidence in the future of the business. This is the twenty-fifth distribution increase in the past twenty-six quarters."
Segmented Third Quarter Results
Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $3.8 million to $13.3 million for the third quarter ended September 30, 2009 compared to the prior year's third quarter. Sales and other operating revenue increased by $6.3 million to $32.0 million due primarily to results from the Partnership's acquisition of the MagTex refined products pipeline and terminals system in November 2008 and increased pipeline fees. Other income increased $1.6 million due primarily to increased income associated with the Partnership's joint venture interests. Operating expenses increased $3.3 million to $14.4 million for the third quarter 2009 due primarily to the MagTex acquisition and a reduction in refined product operating gains. Depreciation and amortization expense increased for the three months ended September 30, 2009 primarily due to the MagTex acquisition.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $7.0 million to $20.7 million for the third quarter ended September 30, 2009 compared to the prior year's third quarter. Sales and other operating revenue increased by $5.6 million to $46.2 million due primarily to increased throughput, higher fees and additional tankage at the Nederland terminal facility. Results from the MagTex refined products terminals further contributed to the increase in revenues. Cost of goods sold and operating expenses decreased by $2.2 million to $15.7 million for the third quarter of 2009 due to absence of charges associated with hurricane damages recognized in 2008, which was partially offset by cost associated with the MagTex acquisition. Depreciation and amortization expense increased to $5.2 million for the third quarter of 2009 due to increased tankage at the Nederland facility and the MagTex acquisition.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system decreased $8.8 million to $26.0 million for the third quarter of 2009 compared to the prior year's third quarter due to lower lease acquisition results and lower operating gains. Lower lease acquisition income resulted from minimal income during the quarter from the contango market structure due to timing of inventory accounting. However, contango inventory positions put in place during the quarter will result in $10.0 million of additional income which is expected to be recognized over the next two quarters. Other income increased $0.9 million compared to the prior year's quarter due primarily to increased equity income associated with the Partnership's joint venture interests.
Lower crude oil prices were a key driver of the overall decrease in total revenue, cost of products sold and operating expenses from the prior year's quarter. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma decreased to $68.29 per barrel for the third quarter of 2009 from $118.13 per barrel for the third quarter of 2008.
Segmented Nine Month Results
Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $9.7 million to $34.4 million for the nine months ended September 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $21.1 million to $94.6 million due primarily to results from the MagTex acquisition described above, along with increased pipeline fees. Other income increased $2.7 million compared to the prior year period as a result of an increase in equity income associated with the Partnership's joint venture interests. Operating expenses increased by $10.1 million to $43.7 million due primarily to the MagTex acquisition, a reduction in refined products operating gains and increased environmental remediation expenses. Depreciation and amortization expense increased $2.9 million during the first nine months of 2009 due primarily to the MagTex acquisition.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $20.3 million to $63.1 million for the nine months ended September 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $20.1 million to $139.4 million due primarily to increased terminal fees, additional tankage at the Nederland terminal facility, along with the MagTex acquisition. Other income increased $0.6 million from the first nine months of 2009 as a result of an insurance recovery associated with the Partnership's refinery terminals. Cost of goods sold and operating expenses increased by $2.9 million to $48.4 million for the period ended September 30, 2009 due primarily to the MagTex acquisition partially offset by reduced expenses associated with hurricane damages noted above. Depreciation and amortization expense increased to $14.5 million for the first nine months of 2009 due to the MagTex acquisition and increased tankage at the Nederland facility. During 2008, a $5.7 million non-cash impairment charge was recognized related to the Partnership's decision to discontinue efforts to expand LPG storage capacity at its Inkster, Michigan facility.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system increased $36.2 million to $131.1 million for the first nine months of 2009 compared to the prior year period due primarily to significantly higher lease acquisition earnings primarily as a result of the contango market structure and increased pipeline fees, which were partially offset by a reduction in pipeline operating gains. Other income decreased $1.8 million compared to the prior year's quarter due primarily to decreased equity income associated with the Partnership's joint venture interests and an insurance gain recognized in 2008.
Lower crude oil prices were a key driver of the overall decrease in total revenue, cost of products sold and operating expenses from the prior year period.
