TULSA, Okla.—Oil distributor Magellan Midstream Partners LP said Wednesday that its third-quarter profit nearly doubled to $110.2 million as hedging gains offset a drop in volumes resulting from lower gasoline demand.
The profit of 98 cents per limited partner unit for the quarter that ended Sept. 30 was up from $56.6 million, or 51 cents per unit, during the same period last year. Revenue rose 7.2 percent to $435.5 million, from $406.2 million a year ago.
Not counting commodity-related price adjustments, net income would have been 79 cents per unit, up from 68 cents a year ago. Analysts surveyed by FactSet were expecting a profit of 72 cents per unit on revenue of $389.5 million.
Not counting Texas pipelines acquired in September 2010, transportation volumes on the company's petroleum pipelines fell 3 percent for the quarter because of lower gasoline demand. Revenue and profit on the pipelines still rose because of higher fees and storage leases.
Magellan said it is looking at selling its ammonia pipeline system and has hired an investment adviser to look at options for it. It said it has gotten "initial non-binding indications of interest" and believes a sale is likely within the next year.
The ammonia pipeline system lost $1.7 million during the most recent quarter, after losing $7.6 million a year ago when it was unavailable for shipments for much of the quarter.
The company said it expects to earn $3.62 per unit for 2011, with 93 cents per unit for the fourth quarter. Analysts were expecting $3.46 per unit for the year and 94 cents for the quarter.
Magellan's common units rose $1.21 to $64.45 in morning trading.