Tulsa’s Magellan Midstream Partners LP reported its net income in the fourth quarter suffered a 36% drop because of the COVID-19 pandemic and the slashed demand for refined products.
Net income for the quarter was $183.9 million compared to $286.4 million from a year ago. The company leadership blamed not only the pandemic but lower volumes and average rates on its crude oil pipelines.
For investors, it meant an 82 cent a unit net income in the fourth quarter 2020 compared to $1.25 they made in the fourth quarter 2019.
“Despite the backdrop of the most challenging industry and economic conditions experienced in our 20-year history as a public company, Magellan produced solid financial results during 2020 while ensuring continuity of important fuel supply for our country,” said Michael Mears, chief executive officer.
The company blamed lower volumes and average rates on its crude oil pipelines in part because several of its higher-priced contracts on the Longhorn pipeline, which flows from Crane, Texas, in the Permian Basin to Houston, expired.
Total refined product volumes across all Magellan systems in the fourth quarter were about 5% lower than a year earlier.
The company’s Chief Financial Officer Jeffrey Holman said volumes continue to increase from the lows seen in early 2020.
“….gasoline and aviation remained impacted by the effects of the pandemic, particularly in some of the metropolitan areas we serve, while lower drilling activity continues to negatively impact distillate volumes on our system.”
For 2021, the company expects total refined products shipments to increase 13%, comprised of 16% higher gasoline, 8% higher distillate and 20% higher aviation fuel.
