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Sunoco (NYSE:SUN)

Q2 2011 Earnings Call

August 04, 2011 5:00 pm ET

Executives

Brian MacDonald - Chief Financial Officer and Senior Vice President

Clare McGrory - Manager, IR

Lynn Elsenhans - Chairman, Chief Executive Officer, President, Chairman of Executive Committee, Chairman of the Board of Sunoco Partners LLC and Chief Executive Officer of Sunoco Partners LLC

Analysts

Evan Calio - Morgan Stanley

Mark Gilman - The Benchmark Company, LLC

Paul Cheng

Paul Sankey - Deutsche Bank AG

Operator

Welcome to Sunoco Inc.'s Q2 2011 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Lynn Elsenhans, Chairman and CEO. You may begin.

Lynn Elsenhans

Thank you. Thank you and good evening, and welcome to Sunoco's quarterly conference call, where we will discuss the company's second quarter earnings that were reported this afternoon. With me today are Brian MacDonald, our Chief Financial Officer; John Pickering, Senior Vice President of Manufacturing; and Clare McGrory, Manager of Investor Relations. I'll start by making a few introductory comments, and then Brian will address business results and comment on our overall financial position.

As part of today's call, I would direct you to our website, www.sunocoinc.com, where we have posted a number of presentation slides, which may provide a useful reference as we progress through our remarks. I would also refer you to the safe harbor statement referenced in Slide 2 of the slide package and is included in this afternoon's earnings release.

Now, let's begin. As you can see from Slide 3, we reported net income before special items of $49 million or $0.40 per share. When I look at the performance in the second quarter, I see 3 things. First, we had very strong performance from Logistics and Retail, the 2 growth areas of our business. Logistics contributed $54 million in pretax income as Sunoco Logistics Partners generated record quarterly results, driven by market opportunities within our crude oil segment, as well as contributions from acquisitions and organic expansions in the past year. The $69 million in pretax income earned in retail was a near record second quarter performance, and resulted from the decline in wholesale gasoline prices, which expanded margins.

Second, the importance of reliability in our manufacturing operations cannot be overstated. In Refining and Supply, our ability to take advantage of margin improvement was limited by low utilization stemming from first quarter operational issues that continued into April. As you may recall from last quarter's conference call, there was a total refinery shut down at Marcus Hook that occurred in late March, which was caused by interruption of power from our electricity supplier. The Marcus Hook units affected by the power interruption will return to service in the second week of April. At Philadelphia refinery, maintenance work aimed at addressing the reliability and efficiency of our units extended into the third week of April. With these issues resolved, Refining and Supply was profitable in May and June as crude unit utilization improved to 94% for this 2-month period. Along with safety and reliability, margin capture remains an area of focus for us

Third, we continue to make progress in growing key parts of our business. In our Logistics segment, we have announced more than $450 million worth of acquisitions year-to-date. Most recently, Sunoco Logistics announced the purchase of a controlling interest in Inland Corporation's pipelines and other assets that serve the Mid-Continent. The purchase of East Boston terminal, the sole service provider for Logan International Airport, the purchase of Eagle Point Tank Farm and related assets from Sunoco, which Sunoco Logistics plans to turn into a major refined products terminal on the East Coast with import and export capabilities and the purchase of a lease crude business from Texon LP, an acquisition that significantly increases the partnership's position in key oil-producing regions and growing shale areas.

On the Retail side, growth has been more modest but continues nonetheless. In June, we announced the expansion of our retail network into Alabama, with 13 new Sunoco-branded distributor locations. Additionally, we recently reached an agreement to acquire leasehold interest in 14 retail locations in Central Pennsylvania. Each location will be company-operated and include an APlus Convenience Store. With these expansions, we have added approximately 215 new retail sites to our network since the beginning of 2010. We also continued to release capital through the divestment of non-core assets. During the second quarter, we announced an agreement to sell our phenol and acetone manufacturing facility in the Frankfurt section of Philadelphia to Honeywell, and we completed this sale in July for $87 million in proceeds.

These various actions show that we continue to make progress. With $1.5 billion in cash at the end of the second quarter, we have the strategic flexibility to continue pursuing growth in our Retail and Logistics businesses. We also remain focused on improving the overall reliability and competitiveness of our refineries. Our refining organization tackled the recent operational issues and have implemented fixes to the areas impacted and continued to implement the lessons learned across the system. The other part of our strategy, separating SunCoke Energy from Sunoco and delivering value to shareholders, remains a top priority. The recent initial public offering of SunCoke common stock was an unqualified success and makes the culmination of more than a year's worth of planning. Sunoco currently retains approximately 81% ownership of SunCoke and expects to distribute its common stock holdings to Sunoco shareholders within a year.

Now, I'll turn the call over to Brian.

Brian MacDonald

Thanks, Lynn. First, let me comment on quarterly income attributable to Sunoco shareholders and our special items. We reported pretax income of $71 million attributable to Sunoco shareholders in the second quarter, excluding special items. Net unfavorable special items of $294 million, pretax, were primarily associated with provisions to write down assets at the Frankfurt and Haverhill chemical facilities to their estimated fair values. Regarding Q2 business unit results, I direct you to Slides 4 through 7.

First, let's discuss the Retail and Logistics segments, businesses which we continue to believe have the best prospects for growth. These 2 businesses earned $123 million pretax in aggregate during the quarter. Retail Marketing earned $69 million pretax in the second quarter of 2011. Retail gasoline margins benefited from declining wholesale gasoline prices during the quarter, resulting in average margins in the quarter of $0.124 per gallon. Gasoline volumes in the second quarter trended lower by approximately 3% versus the same period last year on a same-store sales basis, which is largely consistent with the EIA data. Distillate volumes also trended lower than the prior year with a loss in volumes of about 1% on a same-store basis. Both gasoline and diesel prices at the pump approached near record highs for this time of the year, which had a detrimental impact to volumes. Total gasoline volumes for our network were up about 3% in the second quarter versus the prior year due to new sites added on the Garden State Parkway in New York State and within our distributor network.

Logistics earned $54 million pretax in the second quarter. The earnings in this business are almost entirely related to Sunoco's ownership in Sunoco Logistics Partners, which reported record earnings in the second quarter. The increase versus last year was primarily in the crude oil segment. Demand for West Texas crude is at a very high level, translating into tremendous demand for SXL services, including their proprietary pipelines, the West Texas Gulf and Mid-Valley Pipeline joint ventures and SXL's trucking services. There were also increases in crude production related to increases in drilling activity associated with the shale development, which led to the higher lease volumes and margins in addition to continuing contango market structure. The throughput in tourmaline business has proven to be a ratable and growing business, and is supplemented by crude oil market opportunities. The Logistics business also continues to demonstrate great success in its pursuit of growth. Including the recently announced acquisition of the Texon Crude leasing business, Sunoco Logistics Partners has announced over $450 million in acquisitions year-to-date. Additionally, Sunoco Logistics Partners has projected organic expansion capital to range from $100 million to $150 million, excluding the Mariner projects and the West Texas Gulf pipeline expansion.

Our Coke segment earned $20 million pretax in Q2. The improvements from the first quarter results was largely driven by earnings at our Indiana Harbor facility, including the absence of costs incurred in Q1 to purchase coke for the expected Q2 shortfalls. Partially offsetting the improvements at Indiana Harbor reflected in Q2 results were higher expenses primarily related to preparation to operate as a separate public company, as well as headquarters relocation.

Now turning to refining and supply. Refining and Supply incurred a loss of $44 million pretax in the second quarter of 2011, an improvement of $94 million pretax compared to the first quarter of 2011. As Lynn discussed earlier, our second quarter performance was impacted by the low April utilization that carried over from the first quarter's operating events. April was one of our worst performing months ever as we continued maintenance activities in Philadelphia through most of the month and Marcus Hook units remained down for several days into April following the loss of power at the end of March. During the quarter, our crude utilization rates averaged 84% for the quarter, but the May and June period reflected dramatic improvements with a rate of 94%. As we noted in our first quarter conference call at the beginning of May, we felt confident that we addressed the issues encountered during the first 4 months of the year and our profitable results and utilization above 90% in the last 2 months of the quarter reflect this improvement.

It is clear that our plants must run reliably and with high utilization in order to be profitable. As we experienced in the first quarter and even worse in April, with such low utilization, our production is unable to adequately cover fixed cost and our margin capture suffers as well as the suboptimal products slate and product purchases required to meet contractual requirements. Even as we returned to optimal utilization rates in May and June, our margin capture continued to be negatively impacted as we rebalanced our system, including inventories of crude and intermediate products.

Before we discuss our Q2 margin realizations, I'll take a quick moment to explain some changes we've made to our Refining and Supply benchmarks starting with this quarter's reporting of results. After the sale of the Toledo refinery, we took the opportunity to review our benchmarks and make some adjustments to arrive at an appropriate benchmark that reflects current market conditions and our operating systems' capabilities. The new benchmark components are detailed on Slide 22, which reflect 3 changes. Firstly, higher crude transportation costs of $0.50 per barrel to $2.75 per barrel, reflecting a stronger market that has persisted since at least early 2010. Secondly, replacement of conventional unleaded gasoline with CBOB gasoline, better reflecting our production as well as a more liquid product market. And lastly, a Resid benchmark that reflects a blend of 0.3% sulfur and 1% sulfur 6 oil to better represent our production slate. For comparative purposes, we restated the prior periods shown back to the first quarter 2010 so you can appropriately evaluate how we have trended during these periods.

Moving on with respect to our Q2 margin realizations, I refer you to Slides 6 and 7 for more detail on the refining system crude cost and product dips versus our benchmark. As you can see on Slide 6, our Refining and Supply benchmark averaged $6.11 per barrel for the second quarter and margin capture averaged 91%. Again, margin realizations -- our margin capture averaged 71%. Again, margin realizations in April were extremely poor due to low utilization rates. Poor reliability results in suboptimal production, poor conversion rates, lack of ratability and the required purchase of product to meet contractual requirements. Generally, market conditions in the Northeast improved in the second quarter versus prior quarters and with our return to more optimal utilization rates in May and June, we were able to generate much better margin realizations. However, we also experienced higher crude costs versus prior quarters due to the widening of the West African crude dips versus Dated Brent, and a higher quality mix of crude purchases as we rebalanced our crude mix in the system. This was partially offset by timing benefit due to falling crude prices and an inventory benefit within the overall crude differential.

In summary, we are pleased with the improvements that we made in our Refining and Supply system since the beginning of May. By the end of June, our system was positioned to run well operationally and seize opportunities in the marketplace as they become available. We feel confident that we can execute on many of the factors within our control, both operational and how we are approaching the market. In order to generate value from these refining assets, we will maintain focus on the elements within our control to drive optimal performance in whatever environment exists. In wrapping up our reporting segments, our Chemicals business reported pretax income of $6 million for the second quarter as feedstock availability improved from the first quarter, with the return of normal operations at the Philadelphia refinery in May.

Finally, let me take a few minutes to discuss our financial position at the end of June. In conjunction with that, I direct you to Slides 8 and 9. From a cash flow perspective, in the second quarter, we generated cash proceeds of approximately $170 million before debt activity at Sunoco, excluding SXL. We ended the quarter with cash exceeding debt by approximately $335 million, excluding SXL and a net debt-to-capital ratio of negative 13% at the Sunoco level excluding SXL. At June 30, we had $1.5 billion of cash and approximately $1.5 billion of available committed borrowing capacity at Sunoco excluding SXL. Cash was largely flat through the end of the prior quarter as working capital impacts largely netted out. We received $285 million of cash proceeds related to the PBF note receivable for inventory sold with the Toledo refinery. But this benefit was offset to a large degree by other net working capital used during the quarter. Working capital flows included cash proceeds from crude inventory draw, but this was offset by working capital uses related to seasonal refined product builds and the crude price decline that reduced overall crude payables. Second quarter cash flow activity also included the repayment of $177 million debt that came due on April 1.

In July, with the successful IPO of SunCoke, Sunoco at the parent level has received $775 million in proceeds. This consists of $575 million that was received via distribution of a portion of the proceeds of the $700 million of borrowings by SunCoke and approximately $200 million from the initial public offering of 13.34 million shares of SunCoke Energy, including the underwriters' overallotment which was exercised. As we look forward to 2011, we will continue to take appropriate actions that will assist us in maintaining our financial flexibility to pursue attractive opportunities in our growth businesses, as well as ride out the volatile refining environment.

With that, I'd ask the moderator to open up the lines for any questions you may have.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Paul Sankey of Deutsche Bank.

Paul Sankey - Deutsche Bank AG

Lynn, can you talk a little bit about the options for the Refining segment in terms of the fact that you are losing so much money on this on such a sustained basis in what arguably is quite a strong refining environment for many refiners?

Lynn Elsenhans

Paul, we've spent a lot of time and money to work out the problems that we have and improve our reliability and viability of these assets. And as we indicated before, we're committed to getting the most value for our shareholders that we can for all of our assets, including refining, and we will continuously add the options for doing so. And right now, we believe that running them is the best option.

Paul Sankey - Deutsche Bank AG

Is that because of the -- simply because of the [ph] shutting them down?

Lynn Elsenhans

It's a combination of factors. I'd say, Paul, one has to do with the outlook and what we think we can generate with that outlook. Another has to do with the contractual agreements that we have in place. And so taking those into consideration, but this is something that we look at, at a continual basis.

Paul Sankey - Deutsche Bank AG

The contractual obligations, I guess, have a present value that's a greater cost than the cost of shutting down, allowing for the fact that you're expecting the markets to improve. Is that what you're implying by the first part of the outlook?

Lynn Elsenhans

What I would say there is, in general for the long term, we do not have a bullish outlook on refining. We have seen some substantial improvement in the market this year relative to last year. We would hope to capture that improvement in the market going forward this year. But in general, I'd say we have not changed our outlook on refining and tend to be relatively bearish for the long term.

Brian MacDonald

Paul, it's Brian. I think what I would add to that is as you know, we've been focused on making sure that refining is free cash flow positive. And the refining team has been working pretty hard on a number of fronts and we made a lot of progress in that regard last year and we were able to essentially be free cash flow positive last year in that business. So as we kind of came into this year, we had a lot of reliability issues, so clearly, we haven't been free cash flow positive through the first part of the year. But as Lynn mentioned, we think we've made some real progress on these reliability issues and what we've seen in May and June is optimistic and we continue to really be focused on getting these assets to at least free cash flow break even so that we continue to have optionality here around them.

Paul Sankey - Deutsche Bank AG

I guess what you're saying to me is that the problem is not so much the margin or you don't have an expectation for the margin environment to improve but you can improve the operations and if you do that, you'll be free cash flow, let's say neutral, and then cover your contractual obligations?

Lynn Elsenhans

Correct.

Paul Sankey - Deutsche Bank AG

I got you. And is there anything -- do the contractual obligations pertain to both refineries?

Lynn Elsenhans

Yes.

Paul Sankey - Deutsche Bank AG

So essentially, you're going to have to keep running them and we just have to hope that the operations can be improved to the point that you said way back actually, you said you would get to free cash flow neutral?

Brian MacDonald

Yes, I would say, Paul. I mean, I wouldn't want to say that we have to keep running them. I think I would say that we think that's the best thing to do to keep running them. And we work on this every day and we think about this every day and the refining team is working hard every day to improve the results. And so, it's clearly probably been an issue for us and still is and we continue to work through it.

Paul Sankey - Deutsche Bank AG

Just finally for me, is there anything more you can give us on the contractual obligations, either the length of them, the scale of them, the way they're split between the 2 refineries?

Brian MacDonald

There are a number of different things that use them. As you would imagine with industrial aspects of this nature, there are some petrochemical contracts, one with a polypropylene business that we sold last year and one with Honeywell for the cumene plant that we just recently sold to Honeywell. And then there's some other ones as well and there's some detail on those in our disclosures that I would refer you to.

Operator

Our next question comes from Evan Calio of Morgan Stanley.

Evan Calio - Morgan Stanley

A few questions. To start off, for Brian on the cash position, are the phenol plant proceeds in cash or is that asset held for sale?

Brian MacDonald

We have closed on the sale of the Frankfurt facility to Honeywell and we received $87 million in cash proceeds from that. We are working on options for Haverhill and what we did at the end of the quarter is impair the assets down to what we thought was their fair market value.

Lynn Elsenhans

Evan, those cash proceeds came in July. They're not in cash on the balance sheet.

Evan Calio - Morgan Stanley

Okay, so they weren't in this quarter then?

Lynn Elsenhans

No.

Evan Calio - Morgan Stanley

Okay. And so, then the PBF receivables, short-term 90 day, that's in the cash today, right? I think you mentioned that.

Lynn Elsenhans

Yes.

Evan Calio - Morgan Stanley

And the next quarter you'll receive, it will be a pro forma or you'll actually receive the cash in conjunction with the SunCoke offering of your $575 million, plus $190 million less deal-related expenses. That's correct, right?

Brian MacDonald

Yes. A little bit more than $190 million because the greenshoe was exercised.

Evan Calio - Morgan Stanley

Okay. Can you remind me of the tender on the Toledo earn out and when that's termed and paid?

Brian MacDonald

The Toledo earn out is a multi-year earn out that's capped at a combined amount of $125 million. It's based upon the profitability of the plant in Toledo. And so early next year, we'll determine or PBF will determine if there's a profit, an earn out payment for this year and what the size of it will be.

Evan Calio - Morgan Stanley

So that payment is in the first half of 2012, if there's an earn out?

Brian MacDonald

Early 2012. Probably, sometime in the first quarter.

Evan Calio - Morgan Stanley

Okay. And maybe lastly, just on general cash strategy question for Lynn, now that you've successfully completed the SunCoke IPO, any update on intent to redeploy your cash position or appropriate cash levels for SunCoke -- sorry, for Sunoco?

Lynn Elsenhans

Evan, we have nothing new to disclose today on that. We continue to say that given the volatility in the refining business, we would expect to hold some significant cash level maybe beyond what was done in the past, past being sort of during the golden age. And we're looking to clean up some of the legacy liabilities in the company and use some of the cash to fund those liabilities. And we're looking to grow, if it makes sense in the strategy and if it's profitable, the 2 growth businesses, Retail and Logistics.

Evan Calio - Morgan Stanley

And do you guys still intend to hold an analyst meeting in September?

Brian MacDonald

We're working on dates and calendars and venues, Evan, for meeting sometime in the fall. Given kind of where we are now, it's unlikely it would be in September, but we're working on some options for the fall.

Operator

Our next question comes from Paul Cheng of Barclays Capital.

Paul Cheng

Lynn, I think that you've been always saying that other option is on the table and you guys are looking at what is the optimum organizational structure for the Sunoco Inc. should be. [Indiscernible] let's assume a year from now that SunCoke being totally spinoff and that you also sold Chemicals. So you have Retail, you have Refining and you have Logistics. Now that with the IPO done, have you guys been able to spend some time and think it through whether that the best structure to keep all 3 under the same roof, or that you could see a better value offer sort of to break up [ph] the company or that this something that you guys are just contemplating and that is going to take some time before you can come to a conclusion and recommend to the board? So if that's the case, then any kind of timeline you can share in terms of when you think you may have a more clear view of what you think is the best option?

Lynn Elsenhans

Paul, we continue to look at this and it is going to take some time and we're not yet ready to disclose a timeline on that.

Paul Cheng

Okay. So you can't even say this is going to -- is that 6 months or whatever. So you're going to just looking at that at this point?

Brian MacDonald

What I would say, Paul, I think demonstrated by the actions we've taken, I think we're open to what creates value here. We've been pretty busy on a few things. So we've just sort of checked off the Coke IPO and we're working on Chemical dispositions. And so I would just say that as we work through the strategy and we have more to say, we'll say it at the right time.

Paul Cheng

Brian, do you have an estimate of what is the lost opportunity cost in April related to the operating upset?

Brian MacDonald

It's a pretty big number, Paul. I mean, April was our worst month, at least for those people who've been around here for a while. April was our worst month in the history of refining. We were profitable in May and June. But we were -- we had a loss overall obviously in the quarter. So April was a pretty abysmal month.

Paul Cheng

It think in the first quarter call that you indicate, first quarter, the operating upset opportunity cost as we paid [ph] is around in the $130 million, $140 million. Are we talking about a similar type of number in April or is it a lower number?

Lynn Elsenhans

It's probably a lower number because we're talking one month but it was a significant number. It's fair to say we would have been profitable in April if we have been operating well.

Brian MacDonald

And there are a lot -- even though we operated well in May and June, I mean we had a lot of lingering effects through the second quarter. Our crude slate was off because we had an overabundance of heavier crudes. So our slate was very geared towards lighter crudes. We had the merge costs, our inventory was still out of order. We had a lot of impact to the supply chain that lingered through the whole quarter. So even though we were profitable in May and June, we would have been more profitable if we didn't have the lingering impacts of all the operational issues that we had from January through April.

Paul Cheng

Brian, those lingering effects or impacts, that's pretty much over by the end of the quarter or that spilled into July?

Brian MacDonald

No, pretty much the impact from that series of events is pretty much behind us at the end of the quarter. So we should see a clean quarter in Q3, absent anything else arising from. . .

Paul Cheng

And in your early comment, you're talking about a 5-day lag effect benefit and also inventory benefit. Can you quantify for us then how big are those?

Lynn Elsenhans

Yes. I'd say that both the timing and the inventory benefits were probably about $2 a barrel together.

Paul Cheng

$2 per barrel?

Lynn Elsenhans

Yes. A little better than $2 a barrel.

Paul Cheng

Okay. And when I'm looking at your result and your realization, it looked your refining cash operating costs were down nicely from the first quarter, but it's still high comparing to the 2010 level. It looks like you're still about $4 per barrel. I presume -- I mean, that in the third quarter, we will see them lower. What kind of sustainable level we could expect? And the last question that I have is that in retail similarly, it looks like your cash operating cost is a bit high. It looked like sequentially, it's up about $24 million and year-over-year up $22 million. Can you say and try to elaborate for us what's causing that increase?

Lynn Elsenhans

On the Refining side first, Paul, I'll tell you that as you know, we don't disclose our operating costs. You are correct to expect that they will be sequentially lower in 3Q since we did reduce utilization in 2Q. For the Retail side, we did see some higher cost related to credit card fees with the retail gasoline prices reaching almost record high. And if you're looking at the year-over-year, there was also higher expenses because there were some one-time benefits in 2Q 2010.

Paul Cheng

How much is the credit card fee increase?

Lynn Elsenhans

That's probably $3 million to $4 million.

Operator

Our next question comes from Mark Gilman of The Benchmark Company.

Mark Gilman - The Benchmark Company, LLC

A couple things. Brian, are the full tax consequences of the PBF sale hardware and inventory now behind you or is there anything residual on the tax line associated with the transaction that's going to show up in the second half?

Brian MacDonald

Not on the P&L. The cash taxes, we reflect as we go through the year, just like we would as individuals, our estimated taxes for the year that we pay to cash accordingly through the year. So there could be some cash tax implications as we go through the back end of the year. But that's all part of our estimated cash taxes. But from the P&L side, everything will be reflected.

Mark Gilman - The Benchmark Company, LLC

Can you give me a rough idea of how much that cash tax obligation in the second half is?

Brian MacDonald

No. I can't, Mark, because it really plays into what's the profitability in Q3 and Q4 and how the...

Mark Gilman - The Benchmark Company, LLC

No, I'm just talking about the transaction, Brian.

Brian MacDonald

Pardon me?

Mark Gilman - The Benchmark Company, LLC

I'm just talking about the transaction, which I wouldn't think has anything to do with profitability going forward. Just the sale transaction.

Brian MacDonald

Well, what I'm telling you is that your cash taxes are a function of a transaction plus the overall profitability of the company and those 2 blend together. So depending on the profitability and the deductions that the company has, may completely offset any cash taxes required on the transaction. And that's why I can't give you a specific answer.

Mark Gilman - The Benchmark Company, LLC

I see, okay. Can you indicate what your LIFO inventory reserve was as of June 30?

Lynn Elsenhans

$3 billion, Mark.

Mark Gilman - The Benchmark Company, LLC

This one may be difficult, but it sure as heck would be helpful. As you look at the logistics profit item in the second quarter, how much of that [ph] earning level would you attribute to the WTI dislocation?

Lynn Elsenhans

We didn't disclose that because we don't have that as a segment that we disclose to the marketplace.

Mark Gilman - The Benchmark Company, LLC

It's not a segment, Lynn. It's a market factor.

Lynn Elsenhans

But what you're basically asking for is to segment out the crude earnings and we don't segment out those earnings.

Clare McGrory

I'd say Mark, as SXL talks about their earnings, they talk about some of the factors that affect their market earnings and they talk about that there was higher demand for their services, given the opportunities, obviously with the Mid-Continent crude. So they talk about conceptually market-related earnings and ratable earnings. So that WTI piece falls into a piece of that and year-to-date, they said their market-related earnings have been about 25% of their total, talking SXL but, yes, so there's been more market-related earnings this year than is typical.

Operator

And currently, we're showing no further questions.

Brian MacDonald

Thank you, everyone. We'll end the call here and we'll be available for any questions, and thanks everyone for joining. I know it's been a tough day for everyone and a tough couple of days. Hopefully, it gets a little better from here, and thanks again.

Operator

Thank you. That does conclude today's conference. Thank you all for participating. You may disconnect your lines at this time.

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