Latest news with #GenesisEnergyLP
Yahoo
09-05-2025
- Business
- Yahoo
Genesis Energy LP (GEL) Q1 2025 Earnings Call Highlights: Strategic Moves and Offshore ...
Release Date: May 08, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Genesis Energy LP (NYSE:GEL) successfully exited its Sodash business, simplifying its balance sheet and reducing future cash costs. The company is nearing completion of its offshore expansion projects, Shenandoah and Salamanca, which are expected to significantly increase production capacity. Genesis Energy LP (NYSE:GEL) anticipates generating significant free cash flow, positioning it uniquely within the midstream space. The marine transportation segment is on pace to post record earnings in 2025, supported by favorable market conditions and steady demand. The onshore transportation and services segment is expected to see increased volumes as new offshore projects commence production. Several producer customers are experiencing mechanical issues affecting production from wells connected to Genesis Energy LP (NYSE:GEL)'s offshore infrastructure. The company expects to maintain a flat distribution for the second quarter due to uncertainties around project timelines and mechanical repairs. The current low commodity price environment poses challenges, although deepwater projects remain resilient. There is a lack of significant new construction in the marine transportation segment due to high costs and limited shipyard availability. The company faces uncertainties in the timing and volume of additional infill and subsea tie-back opportunities. Warning! GuruFocus has detected 10 Warning Signs with GEL. Q: Given the uncertain backdrop and moving pieces in the business, is there a thought to hold the distribution flat this year, and if not, is the timing maybe shifting to Q4 from Q3? A: We haven't changed our thoughts around this. We anticipate maintaining a flat distribution for the second quarter but will consider movements in the quarterly distribution relative to the third quarter and beyond, as we gain more visibility on the timing of the two big offshore projects and the resolution of mechanical issues. - Grant Sims, CEO Q: Can you quantify the opportunity for additional infield and subsea tie-backs in terms of volume or timing? A: Currently, 10 of the 22 deepwater rigs in the Gulf of Mexico are working on fields dedicated to us. These wells typically produce in the 7,000 to 10,000 barrels per day range, and we anticipate a cumulative increase in throughput from these wells throughout the year. - Grant Sims, CEO Q: Can you provide a bracket for segment margin for the offshore segment this year and a preliminary look into next year? A: We anticipate our OTS and Marine segments to be consistent with the first quarter, with the rest of the segment margin expected to come from the offshore segment, given our annual EBITDA guidance. - Grant Sims, CEO Q: Regarding producer issues, what gives you confidence in a resolution by the end of Q2 or early Q3? Also, is there a crude oil price point that could affect producer activity? A: We have confidence due to real-time data and producer incentives to resolve issues quickly. Historically, even at low prices, there hasn't been a significant supply response in the Gulf. Current prices, while not ideal, are unlikely to affect producer behavior significantly. - Grant Sims, CEO Q: What is the target leverage ratio and distribution coverage ratio before increasing the distribution more meaningfully? A: Our long-term target leverage ratio is around 4 times, and we anticipate reaching this fairly rapidly. The cost of increasing the distribution is not overly burdensome, and with anticipated incremental segment margin, we can approach our target leverage ratio and consider meaningful distribution increases. - Grant Sims, CEO For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
14-02-2025
- Business
- Yahoo
Genesis Energy LP (GEL) Q4 2024 Earnings Call Highlights: Strategic Growth and Financial Outlook
Offshore Pipeline Transportation Segment Growth: Expected upwards of 20% sequential growth in 2025. Marine Transportation Segment Performance: Anticipated record results in 2025 with increasing day rates and high utilization. Soda Ash Segment Margin: Expected to be at or near 2024 levels due to challenging market conditions. Adjusted EBITDA: Projected to be around $700 million in 2025 and $800 million in 2026. Cash Cost of Operations: Estimated at $600 million to $625 million per year. Warning! GuruFocus has detected 9 Warning Signs with GEL. Release Date: February 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Genesis Energy LP (NYSE:GEL) is nearing the completion of its major capital spending program, which will soon allow the company to generate cash from operations in excess of cash costs. The offshore pipeline transportation segment is expected to see significant growth in 2025, with new developments Shenandoah and Salamanca on schedule for production. Marine transportation segment is projected to deliver record results in 2025 due to increased days on the water and rising day rates. The company is implementing cost-saving initiatives in its soda and sulfur services segment, which should benefit future financial performance. Genesis Energy LP (NYSE:GEL) plans to use excess cash flow to pay down debt and return capital to unit holders, strengthening its financial position. The soda ash market remains challenging, with prices expected to stay low due to a well-supplied market and mixed demand. Mechanical issues affecting offshore producers have impacted production, though some issues are expected to be resolved soon. The company anticipates a 'sideways' year for its soda ash business, with segment margins expected to remain flat compared to 2024. Genesis Energy LP (NYSE:GEL) is not pursuing any capital-intensive projects in the near future, which may limit growth opportunities. The company faces challenging macro conditions in its soda ash market, with a need for further supply rationalizations to help prices recover. Q: Can you discuss the potential cash flow impact if offshore production challenges persist throughout 2025? A: Grant Sims, CEO, stated that the guidance includes some cushion for potential delays, estimating the impact to be between $5 million and $10 million. However, some issues have already been resolved, and they do not foresee these challenges lasting throughout 2025. Q: Does the 2026 EBITDA forecast of $800 million assume continued improvement in the marine business? A: Grant Sims, CEO, indicated that the forecast assumes a reasonably flat performance in the marine business, maintaining the current level of around $130 million to $140 million. Q: How do banks view your capital return priorities in terms of equity treatment? A: Grant Sims, CEO, explained that banks give 100% equity treatment to their capital returns, which is not necessarily how rating agencies view it. They plan to use excess cash flow to address this, with flexibility under their senior secured credit facilities. Q: As you approach free cash flow collection, what is the timing and magnitude of potential distribution increases? A: Grant Sims, CEO, mentioned that the board will evaluate this at the appropriate time, considering a balanced approach to capital allocation, but specifics on timing and magnitude are not yet determined. Q: Can you provide insights on the soda ash market, including contracting season and demand trends? A: Grant Sims, CEO, noted that the contracting season went as expected in a well-supplied market. They anticipate price increases in 2025 due to supply reductions and have opted for short-term contracts to benefit from potential price rises. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
