Crestwood Equity Partners LP’s units have declined 3.6% since it reported weak third-quarter earnings on Oct 26. Despite an improvement in the overall energy scenario, the partnership’s marketing, supply and logistics business incurred massive losses in the quarter.
It incurred third-quarter 2021 adjusted loss per unit of 29 cents versus the Zacks Consensus Estimate of earnings of 17 cents. The bottom line also deteriorated from the year-ago adjusted loss of 28 cents per unit.
Total revenues surged to $1,226.3 million from $519.2 million in the prior-year quarter. Also, the top line beat the consensus mark of $945 million.
The weak third-quarter earnings were caused by decreased contribution from storage and transportation as well as marketing, supply, and logistics businesses. Also, increased operating expenses played a spoilsport. The negatives were partially offset by higher gas gathering and processing.
Segmental Performance
Gathering and Processing: The segment generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $112.9 million, up from $88.9 million in the year-ago quarter. Operating and maintenance expenses marginally decreased to $19.5 million from the year-ago level of $19.4 million.
Total gas gathering volumes for the quarter were 975.2 million cubic feet per day (MMcf/d), up from 867.8 MMcf/d a year ago. Gathering volumes declined in Marcellus, while rose in Delaware, Bakken - Arrow, Barnett and Powder River Basin. Total processing volumes increased to 409.4 MMcf/d from the year-ago level of 328.2 MMcf/d. Yet, compression volumes declined to 253.6 MMcf/d from 358.4 MMcf/d in the year-ago period.
Storage and Transportation: The unit generated EBITDA of $3.7 million, down from $14.7 million in the year-ago quarter, primarily due to the Stagecoach divestment. Operating and maintenance expenses increased to $1.5 million from the year-ago level of $0.7 million.
Firm storage services in the Gulf Coast storage declined to 225.7 MMcf/d from 285.4 MMcf/d in the prior-year quarter. Rail loading at the COLT hub decreased to 40.7 thousand barrels per day (MBbls/d) from 42.4 MBbls/d a year ago.
Marketing, Supply and Logistics: It incurred a loss of $34.8 million against a $14.9 million profit in the year-ago quarter, primarily due to limited storage opportunities for butane and market backwardation. Operating and maintenance expenses marginally decreased to $10.6 million from the year-ago level of $10.9 million.
NGL volumes sold or processed in the third quarter came in at 151.2 MBbls/d, up from 78.5 MBbls/d in the year-ago period.
Expenses
Total operating expenses and others increased to $140.6 million from $132.7 million in the year-ago period.
Operation and maintenance costs marginally increased to $31.6 million from $31 million a year ago. General and administrative expenses also increased to $25.9 million for the September quarter from $19.6 million in third-quarter 2020.
Cash Flow
Distributable cash flow for the third quarter was recorded at $85.8 million, down from $86.5 million in the year-ago period.
Free cash flow after distributions was recorded at $17.5 million for the September quarter, down from $29.6 million in the year-ago period.
Balance Sheet
As of Sep 30, 2021, the partnership had $14.3 million in cash, down from $16.6 million at second quarter-end. Total debt of $2,025.1 million at third quarter-end decreased from $2,621.8 million at second quarter-end. The partnership had a long-term debt to capitalization of 62%.
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Crestwood reiterated its 2021 adjusted EBITDA expectation at the $570-$600 million range. It expects to meet or surpass the upper limit of the range. The partnership reiterated estimates for free cash flow after paying distributions at the $150-$180 million band.
Furthermore, it expects capital spending related to growth projects of $35-$45 million. Maintenance capital is expected within $20-$25 million. Crestwood anticipates volumes from Bakken, Powder River Basin, Delaware and Barnett to increase in the coming days.
In the third quarter, the Zacks Rank #3 (Hold) firm received new long-term deals from Continental Resources, Inc. for Powder River and Delaware basins’ assets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Oct 26, it agreed to acquire Oasis Midstream Partners LP , the midstream unit of Oasis Petroleum Inc. , for $1.8 billion. The move is expected to boost Crestwood’s footprint in major U.S. shales, primarily in Williston and Delaware Basins. The deal is expected to close in first-quarter 2022. The move is expected to add incremental annual cash flow of $20 million to Crestwood’s portfolio over the next few years. Also, the combined entity will likely save $25 million in annual cost synergies. Investors should note that the partnership expects the deal to enable it to boost distribution by 5% year over year to $2.62 per unit per annum.
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Crestwood (CEQP) Falls 3.6% Since Q3 Earnings Miss Estimates
Crestwood Equity Partners LP’s units have declined 3.6% since it reported weak third-quarter earnings on Oct 26. Despite an improvement in the overall energy scenario, the partnership’s marketing, supply and logistics business incurred massive losses in the quarter.
It incurred third-quarter 2021 adjusted loss per unit of 29 cents versus the Zacks Consensus Estimate of earnings of 17 cents. The bottom line also deteriorated from the year-ago adjusted loss of 28 cents per unit.
Total revenues surged to $1,226.3 million from $519.2 million in the prior-year quarter. Also, the top line beat the consensus mark of $945 million.
The weak third-quarter earnings were caused by decreased contribution from storage and transportation as well as marketing, supply, and logistics businesses. Also, increased operating expenses played a spoilsport. The negatives were partially offset by higher gas gathering and processing.
Crestwood Equity Partners LP Price, Consensus and EPS Surprise
Crestwood Equity Partners LP price-consensus-eps-surprise-chart | Crestwood Equity Partners LP Quote
Segmental Performance
Gathering and Processing: The segment generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $112.9 million, up from $88.9 million in the year-ago quarter. Operating and maintenance expenses marginally decreased to $19.5 million from the year-ago level of $19.4 million.
Total gas gathering volumes for the quarter were 975.2 million cubic feet per day (MMcf/d), up from 867.8 MMcf/d a year ago. Gathering volumes declined in Marcellus, while rose in Delaware, Bakken - Arrow, Barnett and Powder River Basin. Total processing volumes increased to 409.4 MMcf/d from the year-ago level of 328.2 MMcf/d. Yet, compression volumes declined to 253.6 MMcf/d from 358.4 MMcf/d in the year-ago period.
Storage and Transportation: The unit generated EBITDA of $3.7 million, down from $14.7 million in the year-ago quarter, primarily due to the Stagecoach divestment. Operating and maintenance expenses increased to $1.5 million from the year-ago level of $0.7 million.
Firm storage services in the Gulf Coast storage declined to 225.7 MMcf/d from 285.4 MMcf/d in the prior-year quarter. Rail loading at the COLT hub decreased to 40.7 thousand barrels per day (MBbls/d) from 42.4 MBbls/d a year ago.
Marketing, Supply and Logistics: It incurred a loss of $34.8 million against a $14.9 million profit in the year-ago quarter, primarily due to limited storage opportunities for butane and market backwardation. Operating and maintenance expenses marginally decreased to $10.6 million from the year-ago level of $10.9 million.
NGL volumes sold or processed in the third quarter came in at 151.2 MBbls/d, up from 78.5 MBbls/d in the year-ago period.
Expenses
Total operating expenses and others increased to $140.6 million from $132.7 million in the year-ago period.
Operation and maintenance costs marginally increased to $31.6 million from $31 million a year ago. General and administrative expenses also increased to $25.9 million for the September quarter from $19.6 million in third-quarter 2020.
Cash Flow
Distributable cash flow for the third quarter was recorded at $85.8 million, down from $86.5 million in the year-ago period.
Free cash flow after distributions was recorded at $17.5 million for the September quarter, down from $29.6 million in the year-ago period.
Balance Sheet
As of Sep 30, 2021, the partnership had $14.3 million in cash, down from $16.6 million at second quarter-end. Total debt of $2,025.1 million at third quarter-end decreased from $2,621.8 million at second quarter-end. The partnership had a long-term debt to capitalization of 62%.
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Crestwood reiterated its 2021 adjusted EBITDA expectation at the $570-$600 million range. It expects to meet or surpass the upper limit of the range. The partnership reiterated estimates for free cash flow after paying distributions at the $150-$180 million band.
Furthermore, it expects capital spending related to growth projects of $35-$45 million. Maintenance capital is expected within $20-$25 million. Crestwood anticipates volumes from Bakken, Powder River Basin, Delaware and Barnett to increase in the coming days.
In the third quarter, the Zacks Rank #3 (Hold) firm received new long-term deals from Continental Resources, Inc. for Powder River and Delaware basins’ assets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Oct 26, it agreed to acquire Oasis Midstream Partners LP , the midstream unit of Oasis Petroleum Inc. , for $1.8 billion. The move is expected to boost Crestwood’s footprint in major U.S. shales, primarily in Williston and Delaware Basins. The deal is expected to close in first-quarter 2022. The move is expected to add incremental annual cash flow of $20 million to Crestwood’s portfolio over the next few years. Also, the combined entity will likely save $25 million in annual cost synergies. Investors should note that the partnership expects the deal to enable it to boost distribution by 5% year over year to $2.62 per unit per annum.