Earnings plunge for Holly Energy Partners

Earnings plunged to nearly half for Holly Energy Partners, L.P. operators of a Tulsa refinery and others across the U.S.  as like other energy firms, it suffered from the impact of the coronavirus and the oil price war.

The Dallas-based firm reported net income for the first quarter of 2020 fell to $24.9 million or 24 cents a diluted limited partner unit while a year ago, the firm’s net income was $51.2 million and 49 cents a share.

Company CEO Michael Jennings doesn’t expect a turnaround soon.

“COVID-19 has created destruction of demand, as well as lack of forward visibility, for refined products and crude oil  transportation, and for the terminalling and storage services that we provide. We expect a recovery of our services as demand for these essential products returns in the long run; however, there is little visibility on the timing for, or the extent of, this recovery in the near-term,” he stated in announcing the earnings report.

The decrease in earnings is primarily due to a charge of $25.9 million related to the early redemption of the company’s previously outstanding $500 million aggregate principal amount of 6.0% senior notes, due in 2024.

Cash flow was nearly $71 million for the quarter which was a slight increase of $0.1 million compared to the first quarter of 2019. In April, Holly Energy Partners declared a cash distribution of 35 cents a share, 48% less than a year earlier.

Revenues fell nearly $7 million in the first quarter and totaled $127.9 million and the company blamed lower volumes on its UNEV pipeline and crude systems in Wyoming and Utah where there was a 17% drop in volumes.

Revenues also fell from the company’s refined product pipelines as shipments of crude plummeted.

Revenues were up slightly on the company’s intermediate pipelines as the sector saw an increase in crude shipments, largely due to higher throughputs on the firm’s intermediate pipelines servicing HollyFrontier’s Tulsa refinery.

But Holly’s revenues from its crude pipelines fell as overall shipments tumbled compared to a year ago. The decreases were mainly attributable to decreased volumes on its crude pipeline systems in New Mexico and Texas and on the crude pipeline systems in Wyoming and Utah.

Revenues were also down from terminal, tankage and loading rack fees while storage of refined products and crude oil grew at HFC’s Tulsa and El Dorado refineries, its new Orla diesel rack and  Catoosa terminal while revenue remained constant mainly due to contractual minimum volume guarantees.

Source: Business Wire