HOUSTON, Aug. 6, 2020 - BP Midstream Partners LP (“BPMP” or the “Partnership”) today reported financial results for the second quarter 2020.
Commenting on the results, CEO Rip Zinsmeister said: “We have delivered a solid result for the second quarter - a testament to our portfolio’s ability to generate stable and resilient cash flows, even during a tough quarter where we saw the continuation of a volatile and challenging environment. We remain focused – unwavering on our core value of safety through the COVID-19 pandemic, as well as ensuring the financial strength of the Partnership – to continue delivering financial stability for our unitholders. Our operational and financial stability during the second quarter, notwithstanding the environment conditions, clearly demonstrate our operating resilience and the benefits of a high quality balanced portfolio. Our full year 2020 guidance is unchanged – we are on track to build cash while delivering full year distribution growth of 5% compared to 2019. Uncertainties remain though, and we will continue to monitor and take actions to mitigate these risks wherever possible.”
The Partnership has maintained a strong financial position, with a conservative financial framework and a strong liquidity position.
At the end of the second quarter 2020, the Partnership had:
During the second quarter, total pipeline gross throughput was approximately 1.6 million barrels of oil equivalent per day. Set against a backdrop of significant product demand destruction across the US, industry-wide we saw reduced refinery utilization during the quarter. However, notwithstanding these conditions, our total gross throughput was only around 10% lower than the first quarter of 2020.
Throughput on the onshore pipelines was around 14% lower compared to the first quarter. Reduced volumes on BP2 reflected lower refinery utilization and feedstock optimization as a result of demand destruction from COVID-19. Throughput on River Rouge was lower driven by refined product demand destruction – throughput on this pipeline was better than expected, with a faster recovery in the latter part of the quarter. Throughput on Diamondback was consistent with the historical average for the second quarter, driven by seasonally lower diluent demand and reduced Canadian heavy oil production.
Throughput on the offshore pipelines was around 8% lower compared to the first quarter reflecting the impacts of maintenance activities of offshore producers, tropical storm Cristobal and offshore producer constraints due to COVID-19 and lower crude price.
Even through total gross throughput declined during the quarter, earnings and cash flow remained resilient.
* Adjusted EBITDA and cash available for distribution are Non-GAAP supplemental financial measures. See reconciliation tables later in this press release.
Net income attributable to the Partnership for the second quarter was $40.6 million, only 3% lower compared with the first quarter of 2020, and around 9% higher than the same period in 2019. This is a solid result given the second quarter macro conditions and lower throughput. Compared with the first quarter 2020, the result reflected:
These two favorable impacts were offset by:
Adjusted EBITDA attributable to the Partnership for the second quarter was $47.4 million, broadly flat compared with the first quarter of 2020, and around 4% higher than the same period in 2019. This was also a resilient result, notwithstanding the environment.
Cash available for distribution for the second quarter was $43.2 million, only 2% lower compared with the first quarter of 2020 and around 1% higher than the same period in 2019.
Full year 2020 guidance is unchanged.
A webcast and conference call will be held at 9:00 a.m. CDT on August 6, 2020, hosted by Robert Zinsmeister, chief executive officer; Craig Coburn, chief financial officer; and Brian Sullivan, vice president investor relations, to discuss BPMP’s performance in the second quarter 2020. Interested parties may listen to the presentation at www.bpmidstreampartners.com, by clicking on the “2020 Second Quarter Results Webcast” link, found in the "Events & Presentations" section under the Investor Relations menu option. A replay of the webcast will be available following the live event. The Partnership has also posted an investor presentation to its website. Information on the Partnership's website does not constitute a portion of this press release.
BPMP is a fee-based, growth-oriented master limited partnership formed by BP Pipelines (North America), Inc. (“BP Pipelines”) to own, operate, develop and acquire pipelines and other midstream assets. BPMP’s assets consist of interests in entities that own crude oil, natural gas, refined products and diluent pipelines, and refined product terminals, serving as key infrastructure for BP and other customers to transport onshore crude oil production to BP’s Whiting Refinery and offshore crude oil and natural gas production to key refining markets and trading and distribution hubs. Certain of BPMP’s assets deliver refined products and diluent from the Whiting Refinery and other U.S. supply hubs to major demand centers.
For more information on BPMP and the assets owned by BPMP, please visit www.bpmidstreampartners.com.
Certain statements contained in this news release constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements concerning management’s expectations, beliefs, estimates, forecasts, projections and assumptions. You can identify our forward-looking statements by words such as “anticipate”, “believe”, “estimate”, “budget”, “continue”, “potential”, “guidance”, “effort”, “expect”, “forecast”, “goals”, “objectives”, “outlook”, “intend”, “plan”, “predict”, “project”, “seek”, “target”, “begin”, “could”, “may”, “should” or “would” or other similar expressions that convey the uncertainty of future events or outcomes. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in forward-looking statements. In particular, expressed or implied statements concerning future growth, future actions, the continued effects of the global COVID-19 pandemic on demand, the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, volumes, capital requirements, conditions or events, future operating results or the ability to generate sales, the potential exposure of the Partnership to market risks, and statements relating to the expected amount of cash available for distribution and level of distributions are forward-looking statements. These forward-looking statements represent BPMP’s expectations or beliefs concerning future events, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of BPMP’s control. These risks include, but are not limited to, the following:
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, BPMP does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for BPMP to predict all such factors.
This press release includes the terms Adjusted EBITDA and cash available for distribution. Adjusted EBITDA and cash available for distribution are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
We believe that the presentation of Adjusted EBITDA and cash available for distribution provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and cash available for distribution are net income and net cash provided by operating activities, respectively. Adjusted EBITDA and cash available for distribution should not be considered as an alternative to GAAP net income or net cash provided by operating activities.
Adjusted EBITDA and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA or cash available for distribution in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and cash available for distribution may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
References to Adjusted EBITDA refer to net income before net interest expense, income taxes, gain or loss from disposition of property, plant and equipment and depreciation and amortization, plus cash distributed to the Partnership from equity method investments for the applicable period, less income from equity method investments. We define Adjusted EBITDA attributable to the Partnership as Adjusted EBITDA less Adjusted EBITDA attributable to non-controlling interests. We define cash available for distribution as Adjusted EBITDA attributable to the Partnership plus net adjustments from volume deficiency agreements and maintenance capital recovery less maintenance capital expenditures, net interest paid/received, cash reserves, and income taxes paid. Cash available for distribution does not reflect changes in working capital balances.
The Partnership is unable to provide financial guidance for projected net income or net cash provided by operating activities without unreasonable effort, and, therefore, is unable to provide a reconciliation of its Adjusted EBITDA and cash available for distributions projections to net income or net cash provided by operating activities, the most comparable financial measures calculated in accordance with GAAP.
The Partnership has not included a reconciliation of projected cash available for distribution to the nearest GAAP financial measure for 2020 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise.
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