Earnings are down because of higher oil prices which result in hedging losses that lower earnings. What mattters is that cash flow was higher than guidance, and so was distribution coverage. We also have to remember that the distribution was paid on more units as a result of the recent offering, but the recent acquisition did not yet contribute much to the third quarter cash flow. This will improve in the 4th quarter and the DCF will increase.
I thought the same thing as I had prviously been concerned the increased units would cause coverage and cash flow per unit to be negatively impacted. I was pleased with results. With strong hedging, this firm is geared to steady cash flow and not surges of cash / earnings when prices rise. We have to think that way or go to some firm that has no hedges if we want to shoot for the moon.