CorEnergy Infrastructure Trust, Inc. announced financial results for the second quarter, ended June 30, 2022.
Second Quarter 2022 and Recent Highlights
• Reported consolidated revenue of $31.5 million for the three months ended June 30, 2022.
• Generated Net Income of $2.2 million and Adjusted EBITDA of $10.0 million.
• Experienced lower than expected transportation volumes, mitigated by higher than plan revenue from the value of crude oil received as pipeline loss allowance and by cost management. Transportation volumes on the Crimson assets are expected to rebound during the third quarter.
• The Company also announced that Crimson subsidiaries recently submitted applications for 10% rate increases to the California Public Utilities Commission, to become effective during the third quarter 2022. This rate increase mitigates the adverse earnings impact of long term decline in oil production levels.
• Declared a second quarter 2022 Common Stock dividend of $0.05 per share and a 7.375% Series A Cumulative Redeemable Preferred Stock dividend of $0.4609375 per depositary share. Both dividends will be paid on August 31, 2022, to stockholders of record on August 17, 2022.
Management Commentary
“Our second quarter was characterized by steady performance from our predictable MoGas operations but a reduction in volume at Crimson as a result of disruptions in the global oil supply chain. Subsequently in July, a third-party operational issue drove increased volume to our California assets, a benefit which is expected to persist through Q3. We have also initiated a combination of cost efficiency measures and pricing increases on our California pipelines in response to this increased volatility for the near-term. Net of these updates, we are maintaining our 2022 outlook calling for adjusted EBITDA of $42.0-$44.0 million,” said Dave Schulte, Chief Executive Officer.
“We also continue to advance our work to enable the transportation of CO2 as part of the emerging carbon sequestration efforts in California. Carbon capture and associated transportation and sequestration has received increased investment and interest due in part to favorable economic incentives from government entities at both the federal and state levels. We believe CorEnergy's assets are very well positioned for carbon sequestration projects in California, and could enable us to maximize utilization of our pipeline assets and rights of ways.”
Second Quarter Performance Summary
Business Development Activities
CorEnergy has identified multiple opportunities for negotiated transactions that could expand the Company's market reach or REIT qualifying revenue sources, including both traditional infrastructure and potential-alternative uses for its rights of way. The Company will continue to prudently advance these opportunities within our existing footprint or to enhance scale and diversification.
Outlook
CorEnergy maintained its outlook for 2022:
• Expected adjusted EBITDA of $42.0-$44.0 million,
• Maintenance capital expenditures expected to be in the range of $8.0 million to $9.0 million in 2022; quarterly maintenance costs are not expected to be uniform throughout the year due to project timing,
• Maintain $0.20/share annual run rate common dividend subject to Board approval on a quarterly basis.
Dividend and Distribution Declarations
The Company currently expects to characterize at least some portion of its 2022 Common Stock and Preferred Stock dividends as Return of Capital for tax purposes.
Common Stock: A second quarter 2022 dividend of $0.05 per share was declared for CorEnergy's common stock. The dividend will be paid on August 31, 2022, to stockholders of record on August 17, 2022.
Preferred Stock: For the Company's 7.375% Series A Cumulative Redeemable Preferred Stock, a cash dividend of $0.4609375 per depositary share was declared. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, will be paid on August 31, 2022, to stockholders of record on August 17, 2022.
Class A-1 Units: Pursuant to the terms of the Crimson transaction, the holders of Crimson Class A-1 Units received a cash distribution of $0.4609375 per unit based on the Company’s declared Series A Preferred dividend.
Class A-2 and Class A-3 Units: Pursuant to the terms of the Crimson transaction, the holders of Crimson Class A-2 and Class A-3 Units did not receive a cash distribution this quarter, since no dividend was declared on the underlying Class B Common Stock.
