Alon USA Partners, LP (ALDW, Financial) last month announced results for the second quarter of 2014. Net income for the second quarter of 2014 was $7.8 million, or $0.12 per unit, compared to $45.3 million, or $0.73 per unit, for the same period last year. Net income for the first half of 2014 was $50.0 million, or $0.80 per unit, compared to $138.8 million, or $2.22 per unit, for the same period last year.
The Board of Directors of Alon USA Partners, the general partner of Alon Partners, declared a cash distribution for the second quarter of 2014 of $0.13 per unit payable on August 25, 2014 to common unitholders of record at the close of business on August 18, 2014, based on cash available for distribution of $8.4 million.
Paul Eisman, CEO and president, commented, "During the second quarter we completed the planned major turnaround of the Big Spring refinery while also completing the vacuum tower revamp project. The turnaround and the vacuum tower revamp project allowed us to increase the refinery's crude throughput by 3,000 barrels per day to 73,000 barrels per day. In addition, the distillate recovery and energy savings resulting from the vacuum tower revamp project are exceeding expectations as distillate yield has increased by more than 3,000 barrels per day. This will drive improvement in our margin capture rate going forward,” he added.
"The turnaround was challenging given its very significant scope. The turnaround duration was impacted by difficult weather conditions and a longer-than-expected maintenance period particularly in the FCC. This resulted in lower throughput than planned in the second quarter. However, we were very pleased with the good safety performance of our people and our contractors during the turnaround. We've also been encouraged by the operating performance of the refinery since the turnaround.
"Looking forward, we expect to operate the Big Spring refinery at a total throughput of 74,000 barrels per day in the third quarter and 75,000 barrels per day in the fourth quarter. We also expect to fully take advantage of the distillate recovery and energy savings benefits of the vacuum tower revamp project. The profitability of the Big Spring refinery should be supported in the third quarter by widening differentials for Midland-priced crude oil. Midland-priced crudes traded at attractive discounts to WTI Cushing in June and July, which will positively affect the cost of crude and refinery operating margin at our Big Spring refinery in the third quarter. The WTI Cushing to WTI Midland differentials that will favorably affect the cost of crude for July and August averaged $8.59 per barrel", he concluded.
Second quarter 2014
Refinery operating margin was $17.04 per barrel for the second quarter of 2014 compared to $14.99 per barrel for the same period in 2013. This increase in operating margin was primarily due to a widening of both the WTI Cushing to WTS spread and the WTI Cushing to WTI Midland spread, partially offset by lower Gulf Coast 3/2/1 crack spreads. The refinery's throughput for the second quarter of 2014 averaged 38,994 barrels per day ("bpd") compared to 72,124 bpd for the same period in 2013. The lower throughput rate during the second quarter of 2014 was due to our planned turnaround that was completed in June 2014. Also impacting the refinery operating margin for the second quarter of 2014 were RINs credits of $0.8 million, generated as a result of reduced production during the planned turnaround, compared to RINs costs of $8.0 million for the second quarter of 2013.
The average Gulf Coast 3/2/1 crack spread was $16.42 per barrel for the second quarter of 2014 compared to $21.17 per barrel for the second quarter of 2013, which was influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for the second quarter of 2014 was $7.56 per barrel compared to $12.51 per barrel for the same period in 2013. The average WTI Cushing to WTS spread for the second quarter of 2014 was $7.88 per barrel compared to $0.36 per barrel for the second quarter of 2013. The average WTI Cushing to WTI Midland spread for the second quarter of 2014 was $8.37 per barrel compared to $0.14 per barrel for the second quarter of 2013.
Year-to-date 2014Â
Refinery operating margin was $15.56 per barrel for the first half of 2014 compared to $21.18 per barrel for the same period in 2013. This decrease was primarily due to a lower Gulf Coast 3/2/1 crack spread, partially offset by a widening WTI Cushing to WTI Midland spread. The refinery's throughput for the first half of 2014 averaged 56,050 bpd compared to 65,835 bpd for the same period in 2013. Also impacting refinery operating margin was $2.2 million of costs associated with RINs obligations for the first half of 2014, compared to $8.0 million for the first half of 2013.
The average Gulf Coast 3/2/1 crack spread was $16.61 per barrel for the first half of 2014 compared to $24.76 per barrel for the same period in 2013, which was primarily influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for the first half of 2014 was $10.25 per barrel compared to $16.98 per barrel for the same period in 2013. The average WTI Cushing to WTI Midland spread for the first half of 2014 was $5.96 per barrel compared to $3.91 per barrel for the same period in 2013.
