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What Could Drive Buckeye Partners’ 2Q17 Earnings Growth?

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Nov. 20 2020, Updated 2:47 p.m. ET

Buckeye Partners’ 2Q17 EBITDA estimates

Buckeye Partners (BPL) is scheduled to release its 2Q17 earnings on August 4, 2017. BPL peer Kinder Morgan (KMI) recently reported its 2Q17 earnings on July 19, and NuStar Energy (NS) reported on July 28. For post earnings analysis on KMI, read Kinder Morgan Rose Due to Its 2018 Dividend Forecast.

In this series, we’ll talk about BPL’s 2Q estimates, distributions, valuations, technical indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.

Wall Street analysts’ 2Q17 consensus EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate for BPL is $277.4 million. BPL’s 2Q17 estimate is 8.1% more than the 2Q16 adjusted EBITDA, and 0.04% less than the previous quarter’s adjusted EBITDA.

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Buckeye Partners’ 2Q17 EBITDA drivers

The expected YoY increase in BPL’s 2Q17 earnings could be driven by the following factors:

  • The company could see higher capacity utilization and storage rates at BPL’s Global Marine Terminals segment.
  • Recent acquisitions and expansion projects placed into service could drive EBITDA. The partnership is expected to benefit from the ramp-up of the VTTI acquisition completed in 1Q17.
  • The company expects higher refined products throughput volumes driven by strong refined products demand.
  • The company could see higher crude oil volumes at BPL’s Domestic Pipelines & Terminals segment due to the slight recovery in Eagle Ford crude oil production. According to the EIA (Energy Information Administration), average crude oil production in the region rose 7.4%. Energy Transfer Partners (ETP) and Plains All American Pipelines (PAA) are among the midstream companies that are also expected to benefit from Eagle Ford crude oil production growth.

These positives might be offset by expected decline at the partnership’s Merchant Services segment due to weak commodity prices.

Buckeye Partners’ adjusted EBITDA versus consensus estimates

The 1Q17 EBITDA estimate for BPL was $276.0 million, while the adjusted EBITDA was $277.5 million, a marginal beat of 0.5%. We’ll have to wait for the 2Q17 earnings release to see whether BPL beats or misses its 2Q17 earnings estimates. We’ll cover this in our post-earnings series for BPL once it reports its 2Q17 results.

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