Magellan Midstream Partners reported on May 4 higher revenues to transport crude oil and refined products in the first quarter, and raised its distributable cash flow guidance for the year.
Magellan's refined products transportation and terminals revenue increased $23 million on the same period last year, primarily due to higher average transportation rates.
Customers increased long-haul shipments, which move at higher rates, to overcome various supply disruptions in the U.S. Midcontinent and West Texas regions, the company said.
Transportation and terminals revenue for crude oil increased $10 million because of higher volumes on the company's Houston distribution system.
Magellan increased its distributable cash flow guidance by $40 million to $1.22 billion for 2023 because of its better-than-expected first quarter performance. The updated guidance also reflects its latest outlook for refined products transportation rates, which the company expects to increase by an average of about 11%, starting in July.
The company reported net income of $274 million for the first quarter 2023, compared to $166 million for the first quarter 2022.
"Magellan began 2023 with strong financial results that exceeded our initial expectations, resulting from an improved pricing environment that benefited our commodity-related activities and continued solid demand for our transportation and terminals services," said Aaron Milford, chief executive officer.
Magellan estimates capital spending will total about $120 million in 2023 and $40 million in 2024 to complete projects, including a new investment to add enhanced rail capabilities for a refined products terminal near Denver, Colorado.
The company expects an expansion of a 30,000 bbl/d refined products pipeline to El Paso, Texas, to start up in early 2024.
An incremental 5,000 bbl/d expansion of Magellan's refined products pipeline from Kansas to Colorado became operational in March 2023.