Two San Antonio-Based Energy Companies Exceed Expectations With Earnings

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NuStar Energy increased earnings 39% from 2017 to 2018.

Courtesy / NuStar Energy

A NuStar Energy terminal along Highway 85 southwest of San Antonio features five unloading bays that allow trucks to offload 50,000-barrel tanks.

One San Antonio-based energy company revealed an impressive earnings report late last week exceeding expectations for investors, while another reported a drop of $1 billion in net income from the previous year largely because of a tax offset.

NuStar Energy, a pipeline operator which underwent a significant restructuring and paid down debt, reported it made $205.7 million in 2018. That’s a jump of 39 percent from $148 million in earnings reported in 2017.

Valero Energy Corp., meanwhile, said it had net income of $3.1 billion in 2018, down from $4.1 billion in 2017. The company also experienced a significant drop in fourth-quarter earnings from $2.4 billion in 2017 to $952 million in the last quarter of 2018.

However, a significant portion of the 2017 fourth-quarter earnings were attributable to a $1.9 billion adjustment from the 2017 federal tax cut.

Valero exceeded expectations in terms of earnings per share at $2.24 per share, which was more than twice as much as Wall Street analysts forecasted. The earnings per share were down from $5.42 per share in fourth quarter 2017.

Valero also avoided a work stoppage at its Port Arthur refinery when it came to terms on a new contract with steelworkers at the facility.

“We also delivered on our commitment to invest in growth projects and acquisitions that increase Valero’s earnings capability, while maintaining solid returns to our stockholders,” Chairman, President, and CEO Joseph Gorder said in a conference call.

NuStar President and CEO Brad Barron said the merger with general partner NuStar GP Holdings enabled the company to lower capital costs and pay down debt which allowed it to return more to investors.

When adjusted for a $79 million hurricane insurance payment and a $43 million sale of its European assets, NuStar said its net income was $170.4 million last year.

“So 2018 was a truly transformational year for NuStar,” Barron said in the company’s press release. “Not only did we reposition the company for long-term success, but we delivered significantly higher quarter-over-quarter and year-over-year financial results, with higher adjusted net income …while significantly improving our debt metrics and distribution coverage.”

NuStar acquired its Permian Crude System in May 2017 and has since seen volumes increased 190 percent compared to just 60 percent in the Permian Basin as a whole in the same period.

“We expect continued strong growth in our system, so suffice it to say that we are very happy with our system’s performance and outlook,” Barron said in the release.

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