Falling Crude Helps Calumets 4th Quarter


Calumet Specialty Products Partners L.P. on Feb. 18 reported net income of $18.5 million for the quarter ended Dec. 31, 2008, 137 percent higher than $7.8 million net income in 2007s fourth quarter. For the full year, Calumets net income reached $44.4 million, down 46.4 percent from $82.9 million for 2007.

The Indianapolis-based refiner attributed the difference in quarterly net income primarily to a $53.2 million increase in gross profit – to $81.2 million – offset by increased derivative losses of $28.4 million and interest expenses of $8.3 million. The increase in gross profit was primarily due to the significant decline in crude oil prices during the fourth quarter of 2008 as compared to the rising crude oil price environment in the fourth quarter of 2007, Calumet stated.

The increased derivative losses were due mainly to the settlement of certain crude oil derivative instruments that declined significantly in value as crude oil prices fell, the company explained, while the increased interest expense came about because of higher debt levels. Increased derivative losses and interest expenses also played key roles in Calumets net income for 2008 turning out substantially lower than in 2007.

Total sales at Calumet rose more than 14 percent to $498.7 million in the fourth quarter, compared to the fourth quarter in 2007. For the full year 2008, Calumets sales revenue reached $2.5 billion, up 56 percent from $1.6 billion during 2007. Part of the increase came about from Calumets acquisition of Penreco in January 2008.

In order to continue to achieve improved results from operations, to further enhance liquidity and for continued compliance with the financial covenants in our credit agreements, we will continue to focus on our specialty products, maintaining prudent working capital levels and increasing our Shreveport refinery throughput rates, which are currently approximately 50,000 barrels per day, or approximately 17,000 higher than the fourth quarter of 2007, said Calumet CEO and President Bill Grube.

Calumets production of specialty products – base oils, waxes, solvents and asphalt – was up slightly for the fourth quarter, compared to the year-earlier period. Calumet completed a major expansion at its Shreveport, La., refinery in May 2008, which accounts for the increased production. In the fourth quarter, base oil output declined slightly to 10,540 b/d, solvents production rose 43 percent to 7,062 b/d, and wax production was virtually unchanged at 5,880 b/d. For the full year 2008, base oil output rose 16 percent to 12,462 b/d, solvents production rose more than 59 percent to 8,130 b/d and wax production rose 48 percent to 1,763 b/d, all compared to the production figures for 2007.

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