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San Antonio-based publicly traded partnership, NuStar Energy LP (NS - Analyst Report) announced weak first-quarter earnings, mainly due to lower contribution from storage business.

NuStar reported earnings per unit (EPU) – from continuing operations – of 6 cents. The earnings were well below the Zacks Consensus Estimate of 45 cents and the year-ago profit from continuing operation of 39 cents.  

Revenues of $999.7 million were 37.9% below the year-ago level but comfortably above the Zacks Consensus Estimate of $899.0 million.

Quarterly Distribution

NuStar announced a quarterly distribution of $1.095 per unit ($4.38 per unit annualized), which remains unchanged from the year-ago and previous-quarter distributions. The distribution will be paid on May 10 to unitholders of record as on May 6, 2013.

Distributable cash flow (DCF) available to limited partners for the first quarter was $54.7 million or 70 cents per unit (providing 0.64x distribution coverage), compared with $51.1million or 72 cents per unit in the year-earlier quarter.  

Segmental Performance

Pipeline: Total quarterly throughput volumes in the Pipeline segment were almost in line with the first-quarter 2012 figure.

The throughput volumes in the crude oil pipelines increased by 6.4% from the year-ago quarter to 351,193 barrels per day. The improvement is based on the gains from the completion of several organic growth projects in the Eagle Ford shale.  

The increased throughput in the crude oil pipelines boosted the segment’s operating income by 7.2% year over year to $39.9 million. Operating revenues increased 19.9% to $93.3 million.

Storage: Throughput volumes in the Storage segment fell 9.4% year over year to 669,604 barrels per day. Additionally, revenues were down slightly by 0.8% to $144.3 million compared to the first quarter of the previous year. The drop is primarily due to the fall in demand for storage at some of the NuStar’s terminal facilities.

Quarterly operating income reached $51.2 million (down 8.9% year-over-year), lowered by higher operating expenses.

Fuels marketing: The unit has reported a loss of $1.6 million against the year-ago quarter loss of $5.4 million. The segment suffers a loss in this quarter due to weak demand for fuel oil and bunker.

Other Stocks to Consider

NuStar currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

In addition to NuStar, one can look at other firms in the energy sector like Harvest Natural Resources Inc. (HNR - Snapshot Report), Lehigh Gas Partners LP (LGP - Snapshot Report) and Kosmos Energy Ltd. (KOS - Snapshot Report) as attractive investments. All three firms sport a Zacks Rank #1 (Strong Buy).
 

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