Significant Items to Report:
-- Net income of $75.6 million for the first quarter of 2009, compared to
a net loss of $3.4 million in the first quarter of 2008
-- Adjusted EBITDA of $50.1 million for the first quarter of 2009, an
increase of $35.2 million over the first quarter of 2008
-- Distributable cash flow of $38.9 million for the first quarter of
2009, an increase of $25.7 million over first quarter of 2008
-- Declared a quarterly cash distribution of $0.45 per unit on all
outstanding units.
-- Increased Shreveport refinery average throughput by approximately
11,500 bpd to approximately 45,500 bpd, a 34% increase over the fourth
quarter of 2008
Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership" or "Calumet") reported net income for the quarter ended March 31, 2009 of $75.6 million, an increase of $79.0 million over the first quarter of 2008, due primarily to an increase of $44.1 million in gross profit and increased derivative gains of $30.6 million. The increase in gross profit was primarily due to the significant decline in crude oil prices leading up to and sustained during the first quarter of 2009 as compared to the rapidly rising crude oil price environment in the first quarter of 2008. The increased derivative gains of $30.6 million, are comprised of changes in both non-cash gains of $36.2 million and cash losses of $5.6 million. The increase in non-cash derivative gains is primarily related to our fuel products segment and such gains either may not be realized or may be realized in different amounts upon settlement. These non-cash derivative gains are not included in our Adjusted EBITDA of $50.1 million for the first quarter of 2009.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $99.7 million and $50.1 million, respectively, for the quarter ended March 31, 2009 as compared to $12.2 million and $14.9 million, respectively, for the first quarter of 2008. Distributable Cash Flow for the quarter ended March 31, 2009 was $38.9 million as compared to $13.2 million for first quarter of 2008. (See the section of this release titled "Non-GAAP Financial Measures" and the attached tables for discussion of EBITDA, Adjusted EBITDA, Distributable Cash Flow and other non-generally accepted accounting principles ("non-GAAP") financial measures, definitions of such measures and reconciliations of such measures to the comparable GAAP measures.)
Gross profit by segment for the first quarter of 2009 for specialty products and fuel products was $59.9 million and $19.1 million, respectively, compared to $22.3 million and $12.5 million, respectively, for the first quarter of 2008. As mentioned above, the increase in specialty products segment gross profit quarter over quarter was primarily due to the significant decline in crude oil prices, our primary raw material, during the first quarter of 2009. Partially offsetting the impact of lower crude oil prices was lower sales volumes in lubricating oils, solvents and waxes due to economic conditions impacting customer demand. The increase in our fuel products segment gross profit was due primarily to increased sales volume resulting from higher throughput rates at the Shreveport refinery and increased gains on derivatives offset by lower overall crack spreads in the first quarter of 2009 compared to the first quarter of 2008.
"Our proactive approach to managing our business in the current economic environment helped us to achieve good performance in the first quarter despite weaker demand for specialty products. We are attempting to offset the impacts of this weaker demand by broadening our marketing efforts and focusing on specialty product development. We continue to focus on efficient plant operations to meet current demand levels and controlling operating costs. We also plan to continue to increase throughput rates at our Shreveport refinery to more fully utilize its expanded capacity as market conditions dictate. We believe these efforts will help us to enhance our liquidity during this continued period of economic uncertainty," said Bill Grube, Calumet's CEO and President.
Quarterly Distribution
As announced on April 16, 2009, the Partnership declared a quarterly cash distribution of $0.45 per unit for the quarter ended March 31, 2009 on all outstanding units. The distribution will be paid on May 15, 2009 to unitholders of record as of the close of business on May 5, 2009.
Operations Summary
The following table sets forth unaudited information about our combined operations. Production volume differs from sales volume due to changes in inventory.
Three Months Ended
March 31,
---------
2009 2008
---- ----
Sales volume (bpd):
Specialty products sales volume 24,589 32,088
Fuel products sales volume 29,833 27,319
------ ------
Total (1) 54,422 59,407
Total feedstock runs (bpd) (2) 63,219 55,998
Production (bpd):
Specialty products:
Lubricating oils 11,650 13,120
Solvents 8,267 8,882
Waxes 1,101 2,054
Fuels 666 1,487
Asphalt and other by-products 7,735 6,758
----- -----
Total 29,419 32,301
------ ------
Fuel products:
Gasoline 11,078 9,212
Diesel 12,750 8,367
Jet fuel 7,346 5,898
By-products 275 203
--- ---
Total 31,449 23,680
------ ------
Total production (3) 60,868 55,981
====== ======
(1) Total sales volume includes sales from the production of our facilities and sales of inventories.
(2) Total feedstock runs represents the barrels per day of crude oil and other feedstocks processed at our facilities. The increase in feedstock runs for the three months ended March 31, 2009 is primarily due to the completion of the Shreveport expansion project in May 2008. This increase was offset by decreases in specialty products feedstock run rates in the first quarter of 2009 at our other facilities due to lower overall demand for certain specialty products.
(3) Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks at our facilities and certain third-party facilities pursuant to supply and/or processing agreements. The difference between total production and total feedstock runs is primarily a result of the time lag between the input of feedstock and production of finished products and volume loss.
Credit Agreement Covenant Compliance
Compliance with the financial covenants pursuant to our credit agreements is measured quarterly based upon performance over the most recent four fiscal quarters, and as of March 31, 2009, we continued to be in compliance with all financial covenants under our credit agreements and achieved improvement in our financial covenant performance metrics compared to the fourth quarter of 2008.
While assurances cannot be made regarding our future compliance with these covenants and being cognizant of the general uncertain economic environment, we believe that we will continue to maintain compliance with such financial covenants and improve our liquidity.
Revolving Credit Facility Capacity
On March 31, 2009, we had availability on our revolving credit facility of $69.2 million, based on a $182.3 million borrowing base, $20.1 million in outstanding standby letters of credit, and outstanding borrowings of $93.0 million. We believe that we have sufficient cash flow from operations and borrowing capacity to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. However, we are subject to business and operational risks that could materially adversely affect our cash flows. A material decrease in our cash flow from operations or a significant, sustained decline in crude oil prices would likely produce a corollary material adverse effect on our borrowing capacity under our revolving credit facility and potentially our ability to comply with the covenants under our credit facilities. Further substantial declines in crude oil prices, if sustained, may materially diminish our borrowing base, which is based in part on the value of our crude oil inventory, which could result in a material reduction in our borrowing capacity under our revolving credit facility.
About the Partnership
The Partnership is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products.
The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, May 6, 2009, to discuss the financial and operational results for the first quarter of 2009. Anyone interested in listening to the presentation may call 800-901-5226 and enter passcode 12962556. For international callers, the dial-in number is 617-786-4513 and the passcode is 12962556.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 13891244. International callers can access the replay by calling 617-801-6888 and entering passcode 13891244. The replay will be available beginning Wednesday, May 6, 2009, at approximately 4:00 p.m. until Wednesday, May 20, 2009.
The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com/.
Cautionary Statement Regarding Forward-Looking Statements
Some of the information in this release may contain forward-looking statements. These statements can be identified by the use of forward-looking terminology including "may," "believe," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other "forward-looking" information. These forward-looking statements involve risks and uncertainties that are difficult to predict and may be beyond our control. These risks and uncertainties include, but are not limited to the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of crude oil and crack spread price fluctuations and rapid increases or decreases including the impact on our liquidity; the results of our hedging and other risk management activities; our ability to comply with the financial covenants contained in our credit agreements; the availability of, and our ability to consummate, acquisition or combination opportunities; labor relations; our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets or businesses; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit ratings and ability to receive open credit from our suppliers and hedging counterparties; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane and other weather interference with business operations; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns; and general economic, market or business conditions. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in this release as well as the Partnership's most recent Form 10-K filed with the Securities and Exchange Commission, which could cause the Partnership's actual results to differ materially from those contained in any forward-looking statement. The statements regarding (i) increased Shreveport throughput rates, (ii) future compliance with our debt covenants, and (iii) improvements in liquidity as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements.
Non-GAAP Financial Measures
We include in this release the non-GAAP financial measures of EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow and (in the case of EBITDA and Adjusted EBITDA) to net cash provided by operating activities, our most directly comparable financial performance and liquidity measures calculated and presented in accordance with GAAP.
EBITDA and Adjusted EBITDA are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others to assess:
-- the financial performance of our assets without regard to financing
methods, capital structure or historical cost basis;
-- the ability of our assets to generate cash sufficient to pay interest
costs and support our indebtedness;
-- our operating performance and return on capital as compared to those
of other companies in our industry, without regard to financing or
capital structure; and
-- the viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
We define EBITDA as net income plus interest expense (including debt extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA to be Consolidated EBITDA as defined in our credit facility agreements. Consistent with that definition, Adjusted EBITDA, for any period, equals: (1) net income plus (2)(a) interest expense; (b) taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for derivative activities; (e) unrealized items decreasing net income (including the non-cash impact of restructuring; decommissioning and asset impairments in the periods presented); (f) other non-recurring expenses reducing net income which do not represent a cash item for such period; and (g) all non-recurring restructuring charges associated with the Penreco acquisition minus (3)(a) tax credits; (b) unrealized items increasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); (c) unrealized gains from mark to market accounting for derivative activities; and (d) other non-cash recurring expenses and unrealized items that reduced net income for a prior period, but represent a cash item in the current period. We are required to report Adjusted EBITDA to our lenders under our credit facilities and it is used to determine our compliance with the consolidated leverage and interest coverage tests thereunder.
We believe that Distributable Cash Flow provides additional information for investors to evaluate the Partnership's ability to declare and pay distributions to unitholders.
We define Distributable Cash Flow as Adjusted EBITDA less replacement capital expenditures, cash interest paid (excluding capitalized interest) and income tax expense.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
For the Three Months
Ended
March 31,
---------
2009 2008
---- ----
Sales $414,264 $594,723
Cost of sales 335,293 559,889
------- -------
Gross profit 78,971 34,834
Operating costs and expenses:
Selling, general and administrative 9,322 8,252
Transportation 15,155 23,860
Taxes other than income taxes 1,125 1,054
Other 418 224
--- ---
Operating income 52,951 1,444
------ -----
Other income (expense):
Interest expense (8,644) (5,166)
Debt extinguishment costs - (526)
Realized loss on derivative instruments (8,470) (2,877)
Unrealized gain on derivative instruments 39,739 3,570
Other 144 171
--- ---
Total other income (expense) 22,769 (4,828)
------ -------
Net income (loss) before income taxes 75,720 (3,384)
Income tax expense 82 8
-- ---
Net income (loss) $75,638 $(3,392)
======= ========
Calculation of common unitholders' interest
in net income (loss) (Note A):
Net income (loss) $75,638 $(3,392)
Less:
General partner's interest in net income
(loss) 1,510 (68)
Subordinated unitholders interest in net
income (loss) 30,002 (1,347)
------ -------
Net income (loss) available to common
unitholders $44,126 $(1,977)
======= =======
Weighted average number of common units
outstanding - basic and diluted 19,166 19,166
Weighted average number of subordinated
units outstanding - basic and diluted 13,066 13,066
Common and subordinated unitholders' basic
and diluted net income (loss) per unit $2.30 $(0.10)
Cash distributions declared per common and
subordinated unit $0.45 $0.63
Note A: The Partnership has adopted Emerging Issues Task Force 07-4, "Application of the Two-Class Method under FASB Statement No. 128 to Master Limited Partnerships" and applied it retrospectively to the period ended March 31, 2008 for the calculation of common unit holders' interest in net income (loss) and its basic and diluted net income (loss) per unit, therefore the March 31, 2008 amounts differ from what was previously reported.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2009 2008
------ ------
Unaudited
ASSETS
Current assets:
Cash $28 $48
Accounts receivable, net 102,318 109,556
Inventories 148,976 118,524
Derivative assets 86,793 71,199
Prepaid expenses and other current assets 1,140 5,824
----- -----
Total current assets 339,255 305,151
Property, plant and equipment, net 652,247 659,684
Goodwill 48,335 48,335
Other intangible assets, net 46,649 49,502
Other noncurrent assets, net 16,496 18,390
------ ------
Total assets $1,102,982 $1,081,062
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $68,674 $87,460
Accounts payable - related party 27,966 6,395
Other current liabilities 23,046 23,360
Current portion of long-term debt 4,778 4,811
Derivative liabilities 5,837 15,827
----- ------
Total current liabilities 130,301 137,853
Pension and postretirement benefit obligations 9,938 9,717
Long-term debt, less current portion 450,050 460,280
------- -------
Total liabilities 590,289 607,850
Partners' capital:
Partners' capital 478,416 417,646
Accumulated other comprehensive income 34,277 55,566
------ ------
Total partners' capital 512,693 473,212
------- -------
Total liabilities and partners' capital $1,102,982 $1,081,062
========== ==========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Three
Months Ended
March 31,
---------
2009 2008
---- ----
Operating activities
Net income (loss) $75,638 $(3,392)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 16,135 11,350
Amortization of turnaround costs 1,597 330
Provision for doubtful accounts 240 400
Non-cash debt extinguishment costs - 526
Unrealized gain on derivative instruments (39,739) (3,570)
Other non-cash activities 106 114
Changes in assets and liabilities:
Accounts receivable 6,998 (16,745)
Inventories (30,452) 24,494
Prepaid expenses and other current assets 684 6,237
Derivative activity (7,228) 5,961
Deposits 4,000 -
Other assets (76) 1,372
Accounts payable 2,785 32,910
Other current liabilities 1,630 2,059
Pension and postretirement benefit obligations 315 383
--- ---
Net cash provided by operating activities 32,633 62,429
Investing activities
Additions to property, plant and equipment (4,945) (90,274)
Acquisition of Penreco, net of cash acquired - (268,969)
---- ---------
Net cash used in investing activities (4,945) (359,243)
Financing activities
Repayments of borrowings, net - revolving credit
facility (9,569) (6,958)
Repayment of borrowings - prior term loan credit
facility - (30,099)
Proceeds from (Repayments of) borrowings, net -
existing term loan credit facility (963) 366,637
Debt issuance costs - (10,996)
Payments on capital lease obligation (309) -
Change in bank overdraft (1,944) 98
Common units repurchased for phantom unit grants (105) (115)
Distributions to partners (14,818) (21,738)
-------- --------
Net cash provided by (used in) financing activities (27,708) 296,829
-------- -------
Net increase (decrease) in cash and cash equivalents (20) 15
Cash and cash equivalents at beginning of period 48 35
-- --
Cash and cash equivalents at end of period $28 $50
=== ===
Supplemental disclosure of cash flow information
Interest paid $7,917 $5,666
====== ======
Income taxes paid $- $7
====== ==
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA,
AND DISTRIBUTABLE CASH FLOW
(In thousands)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Unaudited Unaudited
Reconciliation of Net Income (Loss) to EBITDA,
Adjusted EBITDA and Distributable Cash Flow:
Net income (loss) $75,638 $(3,392)
Add:
Interest expense and debt extinguishment
costs 8,644 5,692
Depreciation and amortization 15,289 9,928
Income tax expense 82 8
-- -
EBITDA $99,653 $12,236
------- -------
Add:
Unrealized (gain) loss from mark to market
accounting for hedging activities $(46,404) $475
Prepaid non-recurring expenses and accrued
non-recurring expenses, net of cash
outlays (3,146) 2,196
------- -----
Adjusted EBITDA $50,103 $14,907
------- -------
Less:
Replacement capital expenditures (1) (3,016) (1,487)
Cash interest paid (2) (8,153) (224)
Income tax expense (82) (8)
---- ---
Distributable cash flow $38,852 $13,188
======= =======
(1) Replacement capital expenditures are defined as those capital
expenditures which do not increase operating capacity or sales from
existing levels.
(2) Represents cash interest paid by the Partnership, excluding
capitalized interest.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF ADJUSTED EBITDA AND EBITDA TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
(In thousands)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Unaudited Unaudited
Reconciliation of Adjusted EBITDA and
EBITDA to net cash provided by operating
activities:
Adjusted EBITDA $50,103 $14,907
Add:
Unrealized gain (loss) from mark to
market accounting for hedging activities 46,404 (475)
Prepaid non-recurring expenses and
accrued non-recurring expenses, net of
cash outlays 3,146 (2,196)
----- -------
EBITDA $99,653 $12,236
======= =======
Add:
Interest expense and debt extinguishment
costs, net (7,743) (4,239)
Unrealized (gain) loss on derivative
instruments (39,739) (3,570)
Income tax expense (82) (8)
Provision for doubtful accounts 240 400
Non-cash debt extinguishment costs - 526
Changes in assets and liabilities:
Accounts receivable 6,998 (16,745)
Inventory (30,452) 24,494
Other current assets 4,684 6,236
Derivative activity (7,228) 5,961
Accounts payable 2,785 32,910
Other current liabilities 1,630 2,058
Other, including changes in noncurrent
assets and liabilities 1,887 2,170
----- -----
Net cash provided by operating activities $32,633 $62,429
======= =======
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UPDATE ON EXISTING COMMODITY DERIVATIVE INSTRUMENTS
March 31, 2009
Fuel Products Segment
The following tables provide information about our derivative
instruments related to our fuel products segment as of March 31, 2009:
Barrels
Crude Oil Swap Contracts by Expiration Dates Purchased BPD ($/Bbl)
-------------------------------------------- --------- --- -------
Second Quarter 2009 2,047,500 22,500 $66.26
Third Quarter 2009 2,070,000 22,500 66.26
Fourth Quarter 2009 2,070,000 22,500 66.26
Calendar Year 2010 7,300,000 20,000 67.29
Calendar Year 2011 3,009,000 8,244 76.98
--------- -----
Totals 16,496,500
Average price $68.67
Diesel Swap Contracts by Expiration Dates Barrels
Sold BPD ($/Bbl)
----------------------------------------- ----------- --- -------
Second Quarter 2009 1,183,000 13,000 $80.51
Third Quarter 2009 1,196,000 13,000 80.51
Fourth Quarter 2009 1,196,000 13,000 80.51
Calendar Year 2010 4,745,000 13,000 80.41
Calendar Year 2011 2,371,000 6,496 90.58
--------- -----
Totals 10,691,000
Average price $82.70
Gasoline Swap Contracts by Expiration Dates Barrels
Sold BPD ($/Bbl)
------------------------------------------- ----------- ---- -------
Second Quarter 2009 864,500 9,500 $73.83
Third Quarter 2009 874,000 9,500 73.83
Fourth Quarter 2009 874,000 9,500 73.83
Calendar Year 2010 2,555,000 7,000 75.28
Calendar Year 2011 638,000 1,748 83.42
------- -----
Totals 5,805,500
Average price $75.52
The following table provides a summary of these derivatives and implied
crack spreads for the crude oil, diesel and gasoline swaps disclosed
above, all of which are designated as hedges.
Implied
Barrels Crack
Swap Contracts by Expiration Dates Purchased BPD Spread
($/Bbl)
---------------------------------- --------- ----- --------------
Second Quarter 2009 2,047,500 22,500 $11.43
Third Quarter 2009 2,070,000 22,500 11.43
Fourth Quarter 2009 2,070,000 22,500 11.43
Calendar Year 2010 7,300,000 20,000 11.32
Calendar Year 2011 3,009,000 8,244 11.99
--------- -----
Totals 16,496,500
Average price $11.48
At March 31, 2009, the Company had the following derivatives related to
crude oil sales and gasoline purchases in its fuel products segment, none
of which are designated as hedges. As a result of these derivatives not
being designated as hedges, the Company recognized a gain of $7.5 million
in unrealized gain on derivative instruments in the unaudited condensed
consolidated statements of operations for the three months ended March
31, 2009.
Crude Oil Swap Contracts by Expiration Dates Barrels
Sold BPD ($/Bbl)
-------------------------------------------- ------------ --- -------
Second Quarter 2009 455,000 5,000 $62.66
Third Quarter 2009 460,000 5,000 62.66
Fourth Quarter 2009 460,000 5,000 62.66
Calendar Year 2010 547,500 1,500 58.25
------- -----
Totals 1,922,500
Average price $61.40
Barrels
Gasoline Swap Contracts by Expiration Dates Purchased BPD ($/Bbl)
------------------------------------------- --------- --- -------
Second Quarter 2009 455,000 5,000 $60.53
Third Quarter 2009 460,000 5,000 60.53
Fourth Quarter 2009 460,000 5,000 60.53
Calendar Year 2010 547,500 1,500 58.42
------- -----
Totals 1,922,500
Average price $59.93
To summarize at March 31, 2009, the Company had the following crude oil
and gasoline derivative instruments not designated as hedges in its fuel
products segment. These trades were used to economically lock in a
portion of the mark-to-market valuation gain for the above crack spread
trades.
Implied
Crack
Barrels Spread
Swap Contracts by Expiration Dates Purchased BPD ($/Bbl)
---------------------------------- --------- --- --------------
Second Quarter 2009 455,000 5,000 (2.13)
Third Quarter 2009 460,000 5,000 (2.13)
Fourth Quarter 2009 460,000 5,000 (2.13)
Calendar 2010 547,500 1,500 0.17
------- ----
Totals 1,922,500
Average price $(1.47)
The above derivative instruments to purchase the crack spread have
effectively locked in a gain of $9.70 per barrel on approximately
1.4 million barrels, or $13.3 million, to be recognized in 2009 and a
gain of $7.82 per barrel on approximately 0.5 million barrels, or $4.3
million, to be recognized in 2010.
At March 31, 2009, the Company had the following put options related to
jet fuel crack spreads in its fuel products segment, none of which are
designated as hedges. As a result of these derivatives not being
designated as hedges, the Company recognized $0.2 million of loss in
unrealized gain on derivative instruments in the unaudited condensed
consolidated statements of operations for the three months ended March
31, 2009.
Average Average
Sold Bought
Jet Fuel Put/Option Crack Spread Put Put
Contracts by Expiration Dates Barrels BPD ($/Bbl) ($/Bbl)
------------------------------ ------- --- ------- -------
January 2011 216,500 6,984 $4.00 $6.00
February 2011 197,000 7,036 4.00 6.00
March 2011 216,500 6,984 4.00 6.00
------- ---- ----
Totals 630,000
Average price $4.00 $6.00
Specialty Products Segment
As a result of our specialty products crude oil hedging activity, we
recorded a loss of $14.3 million to realized loss on derivative
instruments of which $12.3 million was recorded to unrealized in the
prior period, for a net impact of $2.0 million loss in the unaudited
condensed consolidated statements of operations for the three months
ended March 31, 2009. At March 31, 2009, the Company had the following
crude oil derivative instruments related to crude oil purchases in its
specialty products segment, none of which are designated as hedges. As a
result of these derivatives not being designated as hedges, the Company
recognized $0.2 million of losses in unrealized gain on derivative
instruments in the unaudited condensed consolidated statements of
operations for the three months ended March 31, 2009.
Crude Oil Put/Call Average Average Average Average
Spread Contracts Bought Sold Bought Sold
by Expiration Put Put Call Call
Dates Barrels BPD ($/Bbl) ($/Bbl) ($/Bbl) ($/Bbl)
------ ------- --- ------- ------- ------- -------
April 2009 105,000 3,500 $33.49 $43.49 $53.49 $63.49
May 2009 93,000 3,000 34.55 44.55 54.55 64.55
June 2009 30,000 1,000 34.50 44.50 54.50 64.50
------ ----- ----- ----- -----
Totals 228,000
Average price $34.06 $44.06 $54.06 $64.06
Average Average Average
Bought Bought Sold
Put Swap Call
Crude Oil Put/Swap/Call Barrels BPD ($/Bbl) ($/Bbl) ($/Bbl)
Contracts by Expiration Dates
------------------------------ ------- --- ------- ------- -------
April 2009 60,000 2,000 $41.33 $53.55 $63.55
May 2009 62,000 2,000 45.53 55.30 64.50
June 2009 90,000 3,000 43.47 53.42 62.83
------ ----- ----- -----
Totals 212,000
Average price $43.46 $54.01 $63.52
First Call Analyst:
FCMN Contact: jenny.zelik@calumetspecialty.com
SOURCE: Calumet Specialty Products Partners, L.P.
CONTACT: Jennifer Straumins, Investor Relations of Calumet Specialty
Products Partners, L.P., +1-317-328-5660
Web Site: http://www.calumetspecialty.com/