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Crestwood (CEQP) Gains 8.2% Since Q4 Earnings Top Estimates

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Crestwood Equity Partners LP’s units have gained 8.2% since it reported strong fourth-quarter earnings on Feb 22. The favorable commodity price scenario has changed the playing field for the midstream space in the fourth quarter. With continuing growth in energy demand, the company’s pipelines have seen higher utilization of midstream assets.

The partnership incurred fourth-quarter 2021 adjusted earnings of 79 cents per unit, which beat the Zacks Consensus Estimate of earnings of 33 cents. The bottom line increased from the year-ago adjusted earnings of 3 cents per unit.

Total revenues surged to $1,380.4 million from $654.5 million in the prior-year quarter. Also, the top line beat the Zacks Consensus Estimate of $1,192 million.

The strong quarterly results can be attributed to higher gas gathering and processing volumes.

Crestwood Equity Partners LP Price, Consensus and EPS Surprise

 

Segmental Performance

As of Dec 31, 2021, Crestwood has re-segmented its business for reporting purposes. The Gathering and Processing North segment includes the Williston Basin and the Powder River Basin assets. The Gathering and Processing South segment includes the Delaware Basin, Barnett and Southwest Marcellus assets. The Storage and Logistics segment includes the NGL Logistics business, the COLT Hub, the Tres Palacios JV, and the Stagecoach Gas Services assets that were divested in July 2021.

Gathering and Processing North: The segment generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $116.5 million, up from $108.6 million in the year-ago quarter. Operating and maintenance expenses marginally increased to $12.9 million from the year-ago level of $12.1 million.

Total gas gathering volumes for the quarter were 243.7 million cubic feet per day (MMcf/d), up from 224.6 MMcf/d a year ago. Gathering volumes declined in the Williston Basin, while the same rose in the Powder River Basin. Total processing volumes increased to 231.4 MMcf/d from the year-ago level of 222 MMcf/d.

Gathering and Processing South: The segment generated EBITDA of $8.8 million, down from $19.5 million in the year-ago quarter. Operating and maintenance expenses decreased to $5.5 million from the year-ago level of $7.1 million.

Total gas gathering volumes for the quarter were 700.1 MMcf/d, up from 628.6 MMcf/d a year ago. Gathering volumes declined in Marcellus, while rose in Delaware and Bakken - Barnett. Total processing volumes increased to 188.6 MMcf/d from the year-ago level of 137.5 MMcf/d. Yet, compression volumes declined to 247.9 MMcf/d from 345.4 MMcf/d in the year-ago period.

Storage and Logistics: It generated earnings of $76.3 million, significantly up from $21.3 million in the year-ago quarter. Operating and maintenance expenses of $12.4 million remained flat with the year-ago level.

NGL volumes sold or processed in the fourth quarter were 157.5 MBbls/d, up from 128.2 MBbls/d in the year-ago period.

Expenses

Total operating expenses and others increased to $142.6 million from $118.5 million in the year-ago period.

General and administrative expenses also increased to $30.8 million in the December-end quarter from $27.5 million in fourth-quarter 2020. However, operation and maintenance costs declined to $30.8 million from $31.6 million a year ago.

Cash Flow

Distributable cash flow for the fourth quarter was recorded at $91.1 million, down from $106.3 million in the year-ago period.

Free cash flow after distributions was recorded at $32.8 million for the December-end quarter, down from $57.6 million in the year-ago period.

Balance Sheet

As of Dec 31, 2021, the partnership had $13.3 million in cash, down from $14.3 million at the third-quarter end. Total debt of $2,052.3 million at the fourth-quarter end increased from $2,025.1 million at the third-quarter end.

Outlook

For 2022, Crestwood projects adjusted EBITDA at $780-$840 million. The partnership expects free cash flow after paying distributions of $75-$135 million.

Crestwood expects capital spending related to growth projects and joint venture contributions of $160-$180 million. Maintenance capital is expected to be $30-$35 million for the year.

Moreover, the partnership plans to recommend to the board of directors an increase to the common unit distribution to $2.62/unit annually, suggesting a year-over-year increase of 5% attributable to first-quarter 2022.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at the following stocks that reported solid fourth-quarter earnings numbers and presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips (COP - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $2.27, comfortably beating the Zacks Consensus Estimate of $2.20. COP reported preliminary 2021 year-end proved reserves at 6.1 billion Boe.

ConocoPhillips’earnings for 2022 are expected to soar 62.1% year over year. COP revised higher its expected 2022 return of capital to shareholders. The new guidance is at $8 billion, reflecting an increase from the prior projection of $7 billion. The incremental returns to stockholders will get distributed through share repurchases and VROC tiers.

Exxon Mobil Corporation (XOM - Free Report) reported fourth-quarter 2021 earnings per share of $2.05, excluding identified items, beating the Zacks Consensus Estimate of $1.96 per share. At the end of the fourth quarter, XOM’s total cash and cash equivalents were $6.8 billion.

ExxonMobil is expected to see an earnings growth of 28.1% in 2022. XOM has initiated share repurchases at the beginning of the March-end quarter of this year. The buybacks are associated with the repurchase plan announced earlier, representing the program of repurchasing up to $10 billion over the next 12 to 24 months.

Marathon Oil Corporation (MRO - Free Report) reported fourth-quarter 2021 adjusted net income per share of 77 cents, comprehensively beating the Zacks Consensus Estimate of 55 cents. As of 2021-end, MRO had 1,106 million oil-equivalent barrels in net proved reserves, suggesting a year-over-year increase of 14%.

Marathon Oil’s earnings for 2022 are expected to soar 83.4% year over year. In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1 billion of share repurchases since October (with $1.7 billion remaining under the current authorization) and recently announced a dividend hike.


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