Sunoco Logistics Ups Distribution, Q3 Earnings Look Dull
Energy pipelines and terminals operator Sunoco Logistics Partners L.P. SXL declared that its general partner Sunoco Partners LLC has raised its third-quarter 2015 cash distribution to 45.8 cents per unit ($1.83 per unit annualized). This represents an increase of approximately 5% sequentially and 20% year over year.
The increased distribution of Sunoco Logistics complements its goal of delivering disciplined growth to its unitholders. The partnership’s new distribution is payable on Nov 13, to unitholders on record as of Nov 9, 2015.
Sunoco Logistics acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. However, the recent performance of Sunoco Logistics has been affected by weak inventory pricing in the Terminal Facilities unit and tepid refined product terminal processing volumes. The partnership's unit issuance earlier this year further indicates a building pressure on its financials.
On the earnings front, the partnership reported mixed results. Sunoco beat the Zacks Consensus Estimate in two of the trailing four quarters but missed the same the other two, with an average negative surprise of 18.79%.
For the upcoming quarter results – Sunoco is expected to report third-quarter results on Nov 4 – the earnings estimate is pegged at 33 cents per unit. This is substantially below the prior-year quarter figure of 50 cents.
The weakness in the energy sector has taken a toll even on midstream firms, which were considered to be the least affected by commodity prices. Other firms from the oil and gas production/pipeline MLP space like Energy Transfer Equity, L.P. ETE, Rose Rock Midstream, L.P. RRMS and Summit Midstream Partners, LP SMLP are also expected to report weak results.
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