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Genesis Energy’s Segment Margin Breakdown by Segment

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Onshore Pipeline Transportation

Genesis Energy broadly calculates segment margin as revenues less product costs, cash operating expenses, and segmental, general, and administrative expenses, plus its share of distributable cash from investees. It also adjusts this number for stock appreciation rights and direct-financing leases.

Genesis Energy’s (GEL) Onshore Pipeline Transportation segment saw a $2.2 million, or 13%, fall in its segment margin during 2Q15. This was a result of “pipeline loss allowance volumes, collected and sold” and a decline in throughput volumes across its Jay and Louisiana pipeline systems. The partnership expects a ramp up in the Louisiana pipeline system in the future.

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Offshore Pipeline Transportation

Genesis Energy’s Offshore Pipeline Transportation segment saw a $13.7 million, or 120%, jump in its segment margin. This was driven by the recent completion and commencement of the SEKCO (Southeast Keathley Canyon Pipeline Company) pipeline system.

Refinery Services

Genesis Energy’s Refinery Services segment margin decreased to $20.2 million in 2Q15 from $21.6 million in 2Q14, a YoY (year-over-year) fall of 7.0%. This was due to a decline in NaHS (sodium hydrosulphide) and NaOH (sodium hydroxide, or caustic soda) sales volumes and a fall in NaOH prices.

The fall in NaOH prices affects the revenues and costs of sulfur extraction facilities as well as the sales of caustic soda.

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Marine Transportation

Genesis Energy’s Marine Transportation segment margin increased to $27.2 million in 2Q15 from $18.9 million in 2Q14, a YoY rise of 43.4%. This was driven mainly by inclusion of operating results from the M/T American Phoenix and the addition of two inland barges.

The segment’s inland and offshore barge utilizations in 2Q15 were 99.4% and 99.7%, respectively.

Supply and Logistics

Genesis Energy’s Supply and Logistics segment margin decreased to $11.7 million in 2Q15 from $14.1 million in 2Q14, a YoY fall of 17%. The fall was primarily due to lower crude oil volumes unloaded at Genesis Energy’s Natchez terminal and Port Hudson terminal.

Sunoco Logistics (SXL), Buckeye Partners (BPL), and NGL Energy Partners (NGL) also saw similar falls in their crude oil and refined petroleum products acquisition and marketing segments.

Genesis Energy alone constitutes 3.3% of the Global X MLP ETF (MLPA).

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