Gas shipments boost Magellan's third quarter: The company is planning growth capital projects.

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Nov 04, 2009 (Tulsa World - McClatchy-Tribune Information Services via COMTEX) -- MMP | Quote | Chart | News | PowerRating -- Record gasoline shipments helped Magellan Midstream Partners LP record a third-quarter profit of $54.2 million, the Tulsa-based refined petroleum storer and transporter announced Tuesday.

Net income was still down from the $69.4 million generated in the same three months last year. The third quarter of 2008, however, benefited from usually high product margins, officials said.

Once those product margins and other accounting implications are excluded, Magellan actually had higher earnings in this year's third quarter.

"Magellan continues to benefit from higher results from our core transportation and terminals assets even during the current challenging economic environment," CEO Don Wellendorf said in a statement. "Record quarterly gasoline shipments and record results from our terminals segment, driven in part from expansion projects, have helped to offset the negative impact of lower commodity prices and lower diesel fuel shipments this year."

Gasoline shipments set a new quarterly record and were 7 percent higher than 2008's third quarter, even excluding the negative impact of Hurricane Ike last year. Magellan's pipeline and terminal assets move refined petroleum products north from the Gulf Coast.

Tuesday's earnings report was the first since two Magellan entities merged in a capital simplification. Unitholders voted in September to dissolve 3-year-old Magellan Midstream Holdings LP and combine it with Midstream Partners in exchange for a swap of stock.

Magellan officials

said the move simplified the company brand for investors and also saved money on capital costs and reporting requirements. Magellan Midstream Holdings had owned the general partner interest and incentive distribution rights to the other company, which actually does the fee-based work of moving and storing fuels.

Overall, Magellan Midstream Partners logged $94.1 million in operating margin from its pipeline system and $27.7 million from its terminals segment. The ammonia pipelines lost $3.4 million, the company reported.

Magellan officials said the company plans to spend about $510 million on growth capital projects. One new project is building additional storage at a marine terminal in Galena Park, Texas, while Magellan also bought the 700-mile Longhorn pipeline system earlier this year.

Rod Walton 581-8457 rod.walton@tulsaworld.com

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