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This chart shows Magellan Midstream Partners’ Revenue Breakdown, split across Affiliate management fee, Product sales and Transportation and Terminal revenue, reported on a quarterly basis from Q1 2016 onwards.
|Revenue Mix||Q3 2020||Q2 2021||Q3 2021||Contribution in Q3 2021|
|Affiliate management fee revenue||$5.29||$5.29||$5.33||1%|
|Product sales revenue||$119.45||$193.07||$168.82||26%|
|Transportation and terminal revenue||$473.53||$455.28||$464.91||73%|
(All figures are in millions, except percentages)
Magellan Midstream Partners revenue increased from $598.26 million in Q3 2020 to $639.05 million in Q3 2021, growing by approximately 6.81% on a year-on-year basis. But there has been a decline of 2.23% on a quarter-on-quarter basis, from $653.64 million in Q2 2021 to $639.05 million in Q3 2021.
Affiliate Management Fee Revenue
The company operates and offers management services as well as receives payment for certain direct operational payroll and other overhead costs from companies like BridgeTex, HoustonLink, MVP, Powder Springs, Saddlehorn, Texas Frontera, and the pipeline activities of Seabrook. Revenue is recognised when customers take control of the commodity purchased.
The revenue increased marginally from $5.29 million in Q3 2020 to $5.33 million in Q3 2021, growing by 0.756% on a year-on-year basis. The revenue witnessed no growth from Q3 2020 to Q2 2021, thus even the quarter-on-quarter growth stood at 0.756%. The contribution of this category is very insignificant when compared with the other two verticals as it only contributes 1% to the company’s total revenue.
Product Revenue Sales
Product revenue is generated from gas-liquid blending and fractionation activities as well as the sale of those products which are generated from the operations of pipelines and terminals. Revenue is recognized for crude oil shipments when customers’ products are delivered to their designated destinations. Due to the constant fluctuation in the prices of petroleum products, the company involves itself in hedging strategies. This strategy includes entering into a forward physical and exchange-traded gasoline futures contract at the time of purchase of related gas-liquid.
Revenue from this category increased from $119.45 million in Q3 2020 to $168.82 million in Q3 2021, approximately by 41.33% on a year-on-year basis. But there has been a decline in revenue from $193.07 million in Q2 2021 to $168.82 million approximately by 12.56%, on a quarter-on-quarter basis. This category contributes 26% to the company’s total revenue in Q3 2021.
Transportation and Terminal Revenue
Transportation and terminal revenue includes revenue from transportation tariffs on volume shipped from refined products pipeline system. These tariffs depend on where products originate and where the ultimate delivery is to be made.
There has been a decrease in revenue from $473.53 million in Q3 2020 to $464.91 million in Q3 2021, approximately by 1.82%. This decrease was caused by a reduction in transportation volumes due to lower demand and reduced drilling activities, which was on account of a lower commodity price environment. The sale of three marine terminals and the discontinuation of ammonia pipeline operations also led to a decrease in revenue. On a quarter-on-quarter basis, the revenue increased by 2.11%, from $455.28 million in Q2 2021 to $464.91 million in Q3 2021.
Magellan Midstream Partners is a publicly-traded company that focuses on transportation, storage and distribution of refined petroleum products. It is based in Tulsa, Oklahoma, and is listed on New York Stock Exchange (NYSE) under the symbol “MMP”. The company consists of two segments, the refined product segment and the crude oil segment. The company’s refined products are output from crude oil refineries. These refined products include gasoline, diesel fuel, aviation fuel, kerosene, and heating oil. Covid-19 pandemic has negatively impacted the operations of the company. Due to the reduction in the operation of economic activity, the demand for petroleum products has declined. This led to lower crude oil prices and reduced refined products demand, which created a downward pressure in domestic crude oil production.
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