Which Segment Will Drive Sunoco Logistics’ 1Q16 Performance?

What to Expect from ETE’s, ETP’s, and SXL’s 1Q16 Earnings

(Continued from Prior Part)

SXL’s Crude Oil Pipelines segment

Sunoco Logistics Partners’ (SXL) Crude Oil Pipelines segment provides crude oil transportation services. Crude Oil Pipelines is SXL’s largest business segment. It alone accounted 49% of SXL’s 4Q15 adjusted EBITDA. The segment’s 1Q16 performance is expected to be driven by recent projects and higher Permian throughput volumes. According to the EIA’s drilling productivity data, the Permian Basin’s three-month average crude oil production rose 13.1% year-over-year to 2.03 Mbpd (million barrels per day) in 1Q16 compared to 1.79 Mbpd in 1Q15.

However, this increase might be offset by a decline in the segment’s crude oil acquisition and marketing business, which provides crude oil purchase, sale, and exchange services. The business has been hurt by a decline in the WTI (West Texas Intermediate) Midland to LLS (Louisiana Light Sweet) spread in recent quarters due to a fall in crude oil prices (USO). NuStar Energy (NS), NGL Energy Partners (NGL), and Buckeye Partners (BPL) could experience similar declines in their crude oil acquisition and marketing businesses.

SXL’s Terminal Facilities segment

Sunoco Logistics’ Terminal Facilities segment provides crude oil, NGLs (natural gas liquids), and refined products terminaling and butane blending services. The segment’s 1Q16 performance is expected to be driven by higher NGL volumes at its Nederland terminal and Marcus Hook Industrial Complex.

SXL’s Product Pipelines segment

The Product Pipelines segment, which provides NGLs and refined products transportation, was SXL’s best-performing segment in 4Q15. The segment’s adjusted EBITDA increased 194% year-over-year in 4Q15 versus 4Q14. The trend might continue in the first quarter of 2016, driven by recent pipeline projects, including the Mariner East 1 pipeline. SXL forms 0.12% of the PowerShares Dividend Achievers Portfolio (PFM).

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Energy Transfer Partners’ Q1 Earnings Estimates: What’s Coming?

• Part 2 - Why Expansion Projects Might Drive Sunoco Logistics’ Q1 Earnings

• Part 3 - Which Segment Will Drive Energy Transfer Partners’ 1Q16 Results?