U.S. Markets closed

Gathering and Processing Segments Drive 3Q15 EBITDA Growth

Ruth King

Tesoro Logistics Reports Strong EBITDA Growth in 3Q15

(Continued from Prior Part)

TLLP’s Gathering segment

Tesoro Logistics’ (TLLP) Gathering segment primarily gathers crude oil and natural gas. The segment contributed 34% of Tesoro Logistics’ EBITDA (earnings before interest, tax, depreciation, and amortization) in 3Q15. The Gathering segment’s EBITDA more than tripled compared to 3Q14. The growth in EBITDA was driven by the acquisition of QEP’s Rockies natural gas business.

Tesoro Logistics’ Gathering segment’s crude oil gathering pipeline throughput grew 47% YoY (year-over-year). Its crude oil gathering trucking volume fell 32% YoY. The development of the pipeline infrastructure in the US has generally resulted in a fall in the trucking volumes across companies. The segment’s gas gathering throughput in 3Q15 was 1,115,000 MMBtu/d (British thermal units in millions per day). Tesoro Logistics didn’t have gas gathering operations in 3Q14.

Processing segment

Tesoro Logistics’ Processing segment contributed 23% of its 3Q15 EBITDA. It introduced the Processing segment after the QEP Midstream and related acquisitions. The segment operates gas processing and fractionation facilities. The above graph compares Tesoro Logistics’ 3Q15 segmental EBITDA with the same quarter last year. Tesoro Logistics forms ~0.6% of the Guggenheim Raymond James SB-1 Equity ETF (RYJ).

Targa Resources (NGLS), DCP Midstream Partners (DPM), Tallgrass Energy Partners (TEP), and Southcross Energy Partners (SXE) are other MLPs involved in fractionation.

Terminaling and Transportation segment

Tesoro Logistics’ Terminaling and Transportation segment contributed 43% of its 3Q15 EBITDA. The segment operates crude oil and refined products pipelines, terminals, and storage facilities. The segment’s EBITDA grew 9% YoY. Its terminaling throughput grew 2% YoY. The increase is due to higher third-party volumes and contributions from the West Coast Logistics Asset dropdown.

Next, we’ll discuss the growth in Tesoro Logistics’ distributions and coverage in 3Q15.

Continue to Next Part

Browse this series on Market Realist: