PAA Natural Gas Storage Beats Earnings

Zacks

PAA Natural Gas Storage L.P. (PNG) posted adjusted first quarter 2013 earnings of 26 cents per limited partner unit, beating both the Zacks Consensus Estimate as well the year-ago adjusted figure of 23 cents by 13.0%.

The upsurge was mainly due to its fee-based firm storage deals and better-than-expected oil revenues from the partnership’s liquids removal operations at the Bluewater facility.

The partnership’s GAAP earnings came in at 24 cents per limited partner unit versus 22 cents in the year-ago quarter.

Total Revenue

Total revenues at the end of the first quarter were $128.9 million, surpassing the Zacks Consensus Estimate of $71.0 million by 81.5% and were 18.6% higher than the comparable prior year quarter figure.

The top-line results for the quarter benefited from an almost 8% increase in revenue from firm storage services and a 22.4% increase in Hub services and merchant storage from the prior year. Revenues in the Other category improved 83.6% year over year to $2.1 million in the reported quarter.

Highlights of the Release

The partnership’s total costs and expenses during the quarter were $108.6 million, up 19.4% from the comparable prior-year period.

Despite the higher costs operating income increased 15.3% year over year to $20.4 million.

The interest expenses of the partnership in the quarter increased 43.8% year over year to $2.4 million mainly due to higher debt levels.

Average working storage capacity stood at 93 billion cubic feet (Bcf) in the reported quarter, an increase of 22.4% from the year-earlier level of 76 Bcf.

Long-term debt to total long-term book capitalization was 29% in the first quarter of 2013, which came in line with the year-ago figure.

Zacks Rank

PAA Natural Gas Storage currently retains a Zacks Rank #3 (Hold).

Based in Houston, Texas, PAA Natural Gas Storage, L.P. primarily deals with natural gas storage facility. The partnership operates as a subsidiary of Plains All American Pipeline L.P. (PAA). The partnership provides services to customers from its three natural gas storage facilities located in Louisiana, Mississippi and Michigan.

In the near term, we would advise investors to accumulate its short-term Zacks Rank #2 (Buy) peers Delek Logistics Partners L.P. (DKL) and Enbridge Energy Management LLC (EEQ).
 

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