Shell Midstream Partners, L.P. reported net income attributable to the Partnership of $129 million for the fourth quarter of 2020, which equated to $0.29 per diluted common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $188 million.
Total cash available for distribution was $162 million, approximately $1 million lower than the prior quarter. The Partnership was impacted by late season storms in the Gulf of Mexico, planned turnaround activities and the continuing effects of the COVID-19 pandemic. However, these headwinds were largely offset by increased throughput on the Zydeco system, as well as on certain offshore systems, when compared to the prior quarter.
“We had another solid performance this quarter—ending what was a very challenging year for our industry and the world in general,” said Kevin Nichols, CEO, Shell Midstream Partners GP LLC. “Throughout the year, we were able to rely on our strong operational capabilities and resilient portfolio to deliver value to the partnership while keeping the safety of our employees and assets a priority.”
The Board of Directors of the general partner previously declared a cash distribution of $0.4600 per limited partner common unit for the fourth quarter of 2020. This distribution was consistent with the prior quarter.
• Net income attributable to the Partnership was $129 million, compared to $135 million for the prior quarter.
• Net cash provided by operating activities was $147 million, compared to $149 million for the prior quarter.
• Cash available for distribution was $162 million, compared to $163 million for the prior quarter.
• Total cash distribution declared was $161 million, resulting in a coverage ratio of 1.0x.
• Adjusted EBITDA attributable to the Partnership was $188 million, compared to $191 million for the prior quarter.
• As of December 31, 2020, the Partnership had $320 million of consolidated cash and cash equivalents on hand.
• As of December 31, 2020, the Partnership had total debt of $2.7 billion, equating to 3.6x Debt to annualized Q4 2020 Adjusted EBITDA. Current debt levels are well within our targeted range and provide flexibility to the Partnership.
Significant Onshore Pipeline Transportation:
• Zydeco - Mainline volumes were 583 kbpd in the current quarter, compared to 524 kbpd in the prior quarter, primarily due to increased offshore volumes as production came back online following the impacts of hurricanes and planned producer turnarounds.
Significant Offshore Pipeline Transportation:
• During the quarter, the Partnership experienced a reduction in volumes across the Gulf of Mexico as producers shut-in offshore production several times due to storms and certain planned turnarounds were delayed until the fourth quarter.
o Mars - Volumes were 441 kbpd compared to 479 kbpd in the prior quarter.
o Amberjack - Volumes were 301 kbpd compared to 295 kbpd in the prior quarter.
o Eastern Corridor - Volumes were 347 kbpd compared to 261 kbpd in the prior quarter.
o Auger - Volumes were 110 kbpd compared to 55 kbpd in the prior quarter.
• Our assets sustained no material damage, and volumes returned to pre-storm levels once the producers restarted production.
• Based on current producer schedules, we expect an impact of approximately $10 million to net income and cash available for distribution in 2021 related to certain planned producer turnarounds.
• Acknowledging the continuing impacts of the global COVID-19 pandemic and lack of clarity on crude and finished products supply and demand in the near-term, the Partnership’s Board of Directors will monitor the business environment and make decisions regarding future distributions on a quarter-by-quarter basis.
• The Partnership has approximately $1.2 billion in available liquidity, which is a combination of cash and cash equivalents and availability under credit facilities.