Once again COVID-19 and the pandemic have affected the bottom line of an Oklahoma energy company. Magellan Midstream Partners, L.P. based in Tulsa reported a nearly 52% drop in net income for the second quarter 2020.
Net income totaled $133.8 million compared to $253.7 million in the second quarter of 2019. The company blamed the decrease as “primarily driven by reduced demand for refined products due to travel and economic restrictions related to COVID-19 and the negative impact of the lower commodity price environment on various aspects of the partnership’s business.”
Diluted net income was 59 cents per common unit for the 2020 second quarter compared to $1.11 a year earlier.
The company’s distributable cash flow also took it on the chin, totaling $209.5 million in the second quarter compared to $314.8 million a year earlier.
“Magellan delivered results against the backdrop of a challenging environment for our industry and our nation that exceeded our expectations for the quarter,” said Michael Mears, chief executive officer.
Beginning in first quarter 2020, the partnership reorganized its reporting segments to reflect changes to its business in conjunction with the sale of three of its marine terminals during March 2020. Historical financial results have been restated to conform to the new segment presentation.
The company’s different segments experienced declines including the refined products division where the operating margin was $171.4 million, a decrease of $79.6 million. Transportation and terminals revenue dropped nearly $68 million because of lower demand during the quarter. The company’s sale of the three marine terminals in the first quarter discontinuation of the ammonia pipeline in late 2019 also resulted in lower revenues.
Magellan’s crude oil segment saw a drop of nearly $35 million as the operating margin slipped to $128.3 million. The decline resulted from fewer third-party spot shipments on the partnership’s Longhorn pipeline.
Click here to view entire report from Magellan.