Blueknight Energy Partners, L.P. in Oklahoma City announced its first quarter earnings totaled $3.8 million in net income, a drop from the $4.4 million reported a year earlier. The company blamed the drop in income on $300,000 in flood damage to one of its asphalt operations and a $800,000 change in the estimate of the push down impairment of the Cimarron Express Pipeline, LLC.
Revenues for the quarter were $93.7 million compared to $44.7 million reported in the first quarter of 2018. The adjusted earnings before interest, taxes, depreciation and amortization were $16.2 million for the first three months of 2019, down slightly from the $16.5 million reported a year earlier.
Blueknight reported the year-over-year drop was due to the July 2018 asset divestiture of three asphalt facilities.
“Our strong performance during the quarter was driven by higher throughput and margins, especially within our crude oil transportation segments,” said Mark Hurley, Chief Executive Officer. “We continue to execute on our strategy to improve our financial profile by completing sales of non-core assets, enhancing the performance and efficiency of our current assets, and generating and retaining more cash flow to pay down debt. With distribution coverage increasing significantly to 1.23 times and leverage ratio falling to 4.6 times, we are confident in our ability to achieve our targets of distribution coverage greater than 1.0 times and a leverage ratio between 4.0 times and 4.5 times for the year.”
With summer months approaching, the company anticipates greater business opportunities, especially because demand is highest for the asphalt terminalling services.
“Our Cushing crude oil storage position is fully contracted for the remainder of 2019 and we are encouraged by our discussions with current and potential future customers for longer-dated contracts not dependent on a contango crude oil market,” added Hurley.
The company reported a 70 percent increase in its average crude oil stored per month compared to a year ago. As of May 3, 2019, an estimated 5.8 million barrels of crude oil storage were under service contracts.
Blueknight also reported a 17 percent increase in the average volumes in its crude oil trucking services compared to the first quarter of 2018. The operating margin increased too, driven by higher volumes captured from producers to service Blueknight’s two Oklahoma pipelines.
Crude Oil Trucking Services. Average volumes increased 17% for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018. Operating margin, excluding depreciation and amortization, increased by $0.2 million in the first quarter 2019 compared to the same period last year. The increase in operating margin was primarily driven by higher volumes captured from producers to service our two Oklahoma pipelines and the sale of the producer field services business.