Genesis Energy, L.P. has recently released its 10-K report, providing an overview of its business operations. The company operates in the midstream segment of the crude oil and natural gas industry, offering integrated midstream services such as transportation, storage, sulfur removal, blending, terminaling, and processing for a large area of the Gulf of Mexico and the Gulf Coast region. Additionally, the company is one of the leading producers of natural soda ash, serving a diverse portfolio of assets including pipelines, offshore hub and junction platforms, refinery-related plants, storage tanks and terminals, railcars, rail unloading facilities, barges, and other vessels, and trucks.
Financial Metrics:
- Net Income Attributable to Genesis Energy, L.P. was reported at $117.7 million in 2023, compared to $75.5 million in 2022, reflecting an increase in operating income associated with reportable segments, primarily due to increased volumes and activity in the offshore pipeline transportation segment and higher day rates in the marine transportation segment.
- Cash flows from operating activities were $521.1 million for the 2023 period compared to $334.4 million for 2022, primarily attributable to higher Segment Margin reported during 2023 and positive changes in working capital requirements.
- Available Cash before Reserves decreased to $351.2 million in 2023 compared to $352.6 million in 2022, primarily due to increased distributions to preferred unitholders, higher interest expense, increased maintenance capital utilized, and increased corporate general and administrative expenses.
- Segment Margin was reported at $827.1 million in 2023, indicating an increase of $57.0 million compared to 2022, driven by increased volumes and activity in the offshore pipeline transportation segment and increased utilization and day rates in the marine transportation segment.
Distributions to Unitholders:
On February 14, 2024, the company paid a distribution of $0.15 per common unit related to the fourth quarter of 2023, and declared a quarterly cash distribution of $0.9473 per unit for Class A Convertible Preferred Units.
Recent Developments and Initiatives:
- The company's primary objectives include generating and growing stable free cash flows, deleveraging the balance sheet, and advancing its sustainability program.
- Key initiatives include new and increased volumes on existing offshore assets in the Gulf of Mexico, increased capacity for soda ash production, and leveraging available borrowing capacity to fund high return capital projects.
Offshore Growth Commitments and Capital Projects:
- The company entered into definitive agreements to provide transportation services for 100% of the crude oil production associated with two separate standalone deepwater developments, with a combined production capacity of approximately 160,000 barrels per day.
- Additionally, the company is expanding the current capacity of the CHOPS pipeline and constructing a new 100% owned, approximately 105-mile, 20” diameter crude oil pipeline, the SYNC pipeline, to connect one of the developments to its existing asset footprint in the Gulf of Mexico.
Results of Operations:
- Revenues for the year ended December 31, 2023, increased by $388.0 million, or 14%, from the year ended December 31, 2022, primarily driven by increased volumes and activity in the offshore pipeline transportation segment and increased utilization and day rates in the marine transportation segment.
- Costs and expenses (excluding the gain on sale of assets in 2022) increased by $333.6 million, or 13%, between the two periods, resulting in a net increase to operating income of $54.4 million.
- The company has limited its direct commodity price exposure in its crude oil and petroleum products operations through the broad use of fee-based service contracts, back-to-back purchase and sale arrangements, and hedges.
As a result of these announcements, the company's shares have moved 5.8% on the market, and are now trading at a price of $11.53. For more information, read the company's full 10-K submission here.
