Shell Midstream’s 4Q Revenues Outperform On Volume Recovery

Shares of Shell Midstream Partners LP closed 1.6% higher on Friday after the energy company reported stronger-than-expected 4Q revenues.

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Shell Midstream’s (SHLX) revenues of $130 million grew 18.2% year-over-year and exceeded analysts’ expectations of $118.2 million.

Meanwhile, the company’s earnings of $0.29 per share lagged analysts’ expectations of $0.32 and declined 3.3% year-over-year. Weakness in its bottom line reflected lower adjusted EBITDA during the reported quarter and declined 1.6% year-over-year to $188 million.

In the offshore business, the company witnessed a 14% increase in throughput volumes compared to the third quarter. During the earnings call, the company said that this increase was “primarily related to our producers returning to normal levels following the hurricanes and planned producer turnarounds.” Zydeco’s onshore transportation also benefitted as offshore production recovered following the hurricane season.

Steven C. Ledbetter, Vice President of the Commercial division, said, “our refined product systems continued to see impacts related to the pandemic, as we experienced continued lower than normal throughput in the fourth quarter. Now, we remain optimistic and expect that when demand improves across the US, our system throughput will recover as well.” (See Shell Midstream Partners stock analysis on TipRanks)

On Jan. 20, Barclays analyst Theresa Chen downgraded Shell Midstream Partners to a Hold from a Buy.

However, Chen raised the stock’s price target to $11 (4.2% downside potential), up from $10, as she expects higher production in the Permian, Bakken, and Marcellus basins, compared to other basins which were flat to down quarter-over-quarter. Shares have lost about 30% in value over the past year.

TipRanks’ stock investors tool shows that investors currently have a Very Negative stance on the stock with only 0.1% of all portfolios holding SHLX.