Must-know: An overview of Genesis Energy (Part 4 of 5)
Genesis Energy’s outlook
In 2013, Genesis Energy (GEL) spent ~$310 million in growth capex. GEL has given guidance for growth capital expenditures in 2014 of $300 million—60% are stated to be spent on the supply and logistics segment, and 40% are stated to be spent on the pipeline transportation segment.
Grant Sims, CEO of Genesis Energy, said, “We continue to anticipate that we’ll realize an increasing contribution in 2014 from the combined effects of our recent acquisition and our organic projects. Our two largest projects scheduled for completion in 2014—our SEKCO joint venture with Enterprise Products and our Scenic Station project around ExxonMobil’s Baton Rouge refinery complex—should begin contributing in the second half of 2014 and accelerate into 2015.”
Enterprise Products Partners (EPD) and GEL have executed crude oil transportation agreements with a consortium of six Gulf of Mexico (or GOM) producers which will provide the necessary support for the construction of a crude oil gathering pipeline serving the Lucius development area in southern Keathley Canyon. The pipeline will be constructed and owned by Southeast Keathley Canyon Pipeline Company LLC (or SEKCO).
Also, GEL said that the Baton Rouge Terminal will be located on about 90 acres of land near the Port of Greater Baton Rouge. It will be connected to the Port’s existing deepwater docks on the Mississippi River.
The Baton Rouge Terminal will also be connected to Exxon Mobil Corporation’s (XOM) facilities in the area, as well as to Genesis Energy’s previously announced Scenic Station unit train-capable rail facility.
EPD and GEL are part of the Alerian MLP ETF (AMLP) while XOM is a part of Energy Select Sector SPDR ETF (XLE).
GEL noted in its latest presentation that the negative impact felt in the last two quarters of fiscal year 2013 might well continue into the 1Q14. The fully financial contribution of the Hornbeck acquisition (August, 2013) and the SECKO project would begin mid-2014 whereas the Baton Rouge project is stated to start in 2015.
GLE mentioned that it believes it’s well positioned, given the current available capacity on their offshore oil pipelines and their Gulf Coast infrastructure, to benefit the level of development activities in the deepwater Gulf of Mexico. They’re well positioned to continue to achieve low double-digit growth in distribution and deliver an increasing coverage ratio.
Continue reading the next section to learn about factors contributing to GEL’s growth story.
Browse this series on Market Realist:
- Part 1 - Must-know: A business overview of Genesis Energy
- Part 2 - Overview: Genesis Energy’s assets and operations
- Part 3 - Overview: Genesis Energy’s 1Q14 earnings and key statistics
- Oil, Gas, & Consumable Fuels
- Investment & Company Information
- Genesis Energy