Earlier today, Sunoco Logistics Partners L.P. (SXL) — a master limited partnership (MLP) — announced weaker-than-expected third quarter results, hurt by a 50% fall in sales on the back of lower crude oil prices. The partnership reported earnings per unit (EPU) of $1.13, well below the Zacks Consensus Estimate of $1.44. In the year-ago period, Sunoco Logistics earned $1.41 per unit.

Distribution Raised

However, the partnership raised its quarterly distribution by 2.4% sequentially and 10.4% year-over-year to $1.065 per unit or $4.26 per unit annualized, representing the 25th distribution increase in the past 26 quarters. Distributable cash flow increased approximately 4% year-over-year to $54.4 million.

Refined Products Pipeline System

Operating income in the Refined Products Pipeline System segment increased more than 40% year-over-year to $13.3 million, primarily resulting from a $6.3 million increase in sales and other revenue. The revenue gains reflected contributions from the MagTex refined product pipeline and terminal systems and increased pipeline fees.

Terminal Facilities

Sunoco’s Terminal Facilities business segment had operating income of $20.7 million for the quarter, up nearly 51% year-over-year, mainly resulting from a $5.6 million increase in sales and other operating revenue. The revenue growth was primarily driven by increased throughput, higher fees and additional tankage at the Nederland crude oil terminal, coupled with results from the acquisition of the MagTex refined products terminals.

Crude Oil Pipeline System

Operating income in the Crude Oil Pipeline System segment decreased more than 25% from the year-earlier level to $25.9 million, pulled down by lower lease acquisition performance. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma, during the quarter decreased to $68.29 per barrel from $118.13 per barrel in the year-earlier quarter.

Capital Expenditure & Balance Sheet

The partnership’s maintenance capital expenditure and expansion capital expenditure for the quarter totaled $6.3 million and $82.1 million, respectively. Sunoco Logistics expects its full-year 2009 maintenance capital expenditure to be approximately $32.0 million.

At the end of the quarter, Sunoco had $889.4 million in long-term debt (consisting of $599.4 million of senior notes and $290.0 million of borrowing under the partnership’s credit facility), representing a net debt-to-capitalization ratio of approximately 51.0%.

Zacks Investment Research
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