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What Will Drive NuStar Energy’s 2Q16 EBITDA?

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NuStar Energy’s 2Q16 EBITDA estimates

NuStar Energy (NS) and its general partner, NuStar GP Holdings (NSH), are scheduled to release their 2Q16 earnings on August 2, 2016. Buckeye Partners (BPL) is scheduled to report its 2Q16 results on August 5, 2016.

In this series, we’ll talk about NuStar Energy’s 2Q16 estimates, each of its segments’ contribution to earnings, market performance, key performance indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.

Wall Street analysts’ 2Q16 consensus EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate for NS is $141.9 million. NuStar Energy’s 2Q16 estimate is 2.7% less than its 2Q15 adjusted EBITDA.

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NuStar Energy’s 2Q16 EBITDA drivers

The expected YoY decline in NuStar Energy’s 2Q16 earnings could be driven by the following factors:

  • NuStar Energy’s Fuel Marketing segment is exposed to crude oil prices. The average US crude oil price by the end of 2Q16 was ~$45 a barrel as compared to ~$58 a barrel during the second quarter of 2015.
  • The decline in Eagle Ford production might impact NuStar Energy’s crude oil throughput volumes. We’ll discuss this in more detail in the next article.

These negatives are expected to be offset by:

  • increased loading capacity at the Corpus Christi North Beach Terminal
  • higher storage lease revenues

NuStar Energy’s adjusted EBITDA versus consensus estimates

The 1Q16 EBITDA estimate for NuStar Energy was $144 million, while the adjusted EBITDA was $147.5 million, a beat of 2.5%. We’ll have to wait for the 2Q16 earnings release to see whether NS beats or misses its 2Q16 EPS estimates. We’ll cover this in our post-earnings series for NS once it reports its 2Q16 results.

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