News Column

Oiltanking Partners Reports Financial Results

February 27, 2014

Oiltanking Partners reported fourth quarter 2013 net income of $34.5 million, or $0.69 per common unit, an increase of 127 percent over fourth quarter 2012 net income of $15.2 million, or $0.30 per unit.

In a release on February 24, the Company reported that net income for the full year of 2013 increased 87 percent to $117.1 million, or $2.45 per common unit, compared to net income for the full year of 2012 of $62.6 million, or $1.57 per unit.

Adjusted EBITDA increased 113 percent to $42.2 million for the fourth quarter of 2013, compared to $19.8 million for the fourth quarter of 2012. Adjusted EBITDA for the year 2013 increased 80 percent to $145.3 million compared to $80.6 million for 2012.

"The fourth quarter capped a year of records and milestones for the Partnership," said Anne-Marie Ainsworth, President and Chief Executive Officer of the Partnership's general partner. "In addition to across-the-board record results for revenues, net income, Adjusted EBITDA and distributable cash flow, we successfully achieved key operational milestones last year by increasing our storage capacity by 23 percent and exceeding one million barrels of throughput per day."

The Partnership's revenues increased by approximately $26.1 million, or 77 percent, to $60.2 million during the fourth quarter of 2013 compared to the same period in 2012, due to higher storage service fee revenues, throughput fee revenues and ancillary service fee revenues. Storage service fee revenue grew by $9.0 million due to new storage capacity of approximately 4.1 million barrels placed into service throughout 2013 and, to a lesser extent, higher contract rates.

Operating expenses during the fourth quarter of 2013 were $12.1 million, increasing by $2.7 million compared to the same period in 2012, primarily due to higher costs associated with operations personnel, repairs and maintenance, power and fuel, property taxes and insurance. Selling, general and administrative expenses during the fourth quarter of 2013 were $5.8 million, increasing by $1.0 million compared to the same period in 2012.

"In 2014, we expect to deliver continued growth by executing on our previously announced capital projects and capitalizing on our substantial organic growth opportunities," said Ainsworth. "As part of our ongoing Appelt expansion projects, we expect to add another 3.7 million barrels of storage in 2014 and 2015 to our nearly 22 million barrels of current capacity. In addition, we expect to complete the 24-inch pipeline to Crossroads Junction, providing our terminal customers access to the origination point of Shell Pipeline's Houston-to-Houma pipeline. Based on our current plans, we expect to spend between $230 million and $250 million on capital expenditures in 2014."

During 2014, construction will continue on the 36-inch pipeline to Crossroads Junction, which is expected to be completed by the end of the first quarter of 2015. We anticipate commencing construction on 3.1 million barrels of storage capacity as part of our Appelt III expansion project during the third quarter of 2014, after all relevant permits have been obtained. We expect to place the additional tanks into service during the fourth quarter of 2015 and first quarter of 2016. When the Appelt II and III expansion projects have been completed, the Partnership's total storage capacity is projected to be nearly 29 million barrels.

"We remain focused on expansion opportunities that will deliver continued growth in distributable cash flow per unit to our investors," added Ainsworth. "Our low leverage and robust distribution coverage give us substantial financial flexibility as we continue to evaluate more than $400 million in potential capital projects and acquisitions."

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