Wednesday, refined petroleum products distributor Magellan Midstream Partners L.P. (MMP), said it expects outlook for the second quarter and fiscal year 2009, below its previous projection, citing significant increases in petroleum prices resulting in negative mark-to-market adjustments.
The Tulsa, Oklahoma-based company now expects second quarter net income per limited partner unit to be nearly $0.30 a share, compared to earlier issued guidance of $0.63 a share.
On average, 11 analysts polled by Thomson Reuters expect the company to post earnings of $0.64 a share, with a low estimate of $0.59 a share and a high estimate of $0.67 a share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the preceding first quarter, the company reported earnings of $0.34 per limited partner unit.
The company indicated that the updated guidance is primarily due to the higher-than-expected increases in petroleum prices which will result in negative mark-to-market adjustments, mostly in the second quarter, for New York Mercantile Exchange positions that are used to hedge the partnership's petroleum products blending and fractionation activities.
Magellan Midstream noted that the unrealized mark-to-market losses would be included in current quarterly net income if the present petroleum prices are higher than the pricing of the partnership's existing NYMEX positions that will be settled with future physical product sales.
For the full year 2009, Magellan Midstream now anticipates net income per limited partner unit of $2.50 a share, compared to its earlier issued forecast of $2.60 a share. Wall Street analysts currently expect the company to earn $2.49 per share for the full year.
The company, however, affirmed its previous 2009 annual guidance for distributable cash flow of about $330 million.
MMP is currently trading at $32.77, down $0.91 or 2.70% on the NYSE.
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