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What to Make of Magellan Midstream Partners’ Segment Performances

Rekha Khandelwal, CFA - Author
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Dec. 4 2020, Updated 10:52 a.m. ET

MMP’s Refined Products segment

Magellan Midstream Partners’ (MMP) operational segments are Refined Products, Crude Oil, and Marine Storage. The Refined Products segment, which primarily transports gasoline and diesel, earned 58% of MMP’s EBITDA (earnings before interest, tax, depreciation, and amortization) in 2Q16.

The segment is made up of a refined products pipeline system with 9,700-miles, 54 terminals, 26 independent terminals not connected to the pipeline system, and a 1,100-mile ammonia pipeline system. The segment’s transportation revenue per barrel of refined products shipped for 2015 was $1.44.

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Crude Oil segment

Magellan Midstream’s Crude Oil segment is one of the largest storage providers in Cushing, Oklahoma. It contributed 33% toward MMP’s total EBITDA in 2Q16, and it owns ~1,600 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of ~22 million barrels. The segment’s transportation revenue per barrel of crude oil shipped for 2015 was $1.12.

MMP’s Marine Storage segment

Magellan Midstream’s Marine Storage segment consists of five marine terminals located along coastal waterways with an aggregate storage capacity of ~26 million barrels. It operates at more than 90% utilization and is in strong demand due to market structure, connectivity, and price volatility. Marine Storage contributed 9% toward MMP’s total 2Q16 EBITDA. The chart above shows MMP’s segment-by-segment EBITDA over the last ten quarters.

Magellan Midstream sees profits from blending activities mostly in the first and fourth quarters each year. The summer months drive gasoline demand, increasing transportation volumes and revenues on its pipeline systems.

Let’s have a look at the growth in Magellan Midstream’s crude oil business and the company’s plans for this segment.

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