NZ Refining lifts 2017 fee revenue 19%; signals growing pipeline capacity

Thursday 18th January 2018

New Zealand Refining lifted processing fee income 19 percent in 2017 as the country's only refinery operator enjoyed wider margins in the year, helping offset a lower volume during the pipeline outage in September.

The Whangarei-based company increased processing fee income, its dominant revenue stream, to $328.9 million in the 12 months ended Dec. 31 from $276.6 million a year earlier, it said in a statement. The number of barrels processed fell to 41,7 million from 42.7 million in 2016, although it was at a wider gross refinery margin of US$8.02 a barrel compared to US$6.47/barrel.

NZ Refining shut down its refinery-to-Auckland pipeline in September due to a digger damaging the pipeline near the refinery, which led to fuel shortages in the country's biggest city. The company initially thought the outage would trim $10 million-to-$15 million from annual refining income, but later downgraded that hit to between $8 million and $9 million.

Last month the refinery operator said it was granted permission to increase the pressure pumped through the pipes and could run a higher throughput with an extra pump at the Kumeu station.

"The refinery to Auckland pipeline is operating at greater throughput than it was prior to the September leak," it said. "This is the result of the November commissioning of a planned capacity expansion and the regulator's approval of a partial increase in the operating pressure following repair of the leak."

NZ Refining anticipates another increase in capacity pending regulatory approval, which is expected in the first or second quarter of this year.

The shares last traded at $2.64 and have declined 4 percent over the past 12 months. The stock is rated an average 'buy' by three analyst recommendations compiled by Reuters with a median price target of $2.90.

(BusinessDesk)

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