Adams Resources & Energy, which includes GulfMark Energy and Service Transport Company, is reporting a year-over-year increase in net earnings for the third quarter of 2020.
The parent company said it cleared $3.1 million on revenues of $266.9 million for Q3, compared to net earnings of $600,000 on revenues of $450.3 million for the third quarter of 2019.
However, Adams also reported using $19.6 million in net cash for operating activities in the quarter, compared to $9.4 million in net cash provided by operating activities last year. The company said the decrease primarily was driven by changes in working capital due to a reduction in the market price of crude oil.
“Our third quarter benefited from a significant uptick in activity levels from this year’s second quarter in both of our businesses,” said Kevin J. Roycraft, Adams’ chief executive officer. “The result was sequential quarterly revenue growth of 75% and, more importantly, a more than five-fold increase in adjusted cash flow.
“Our third quarter financial performance is a direct result of the efforts of our employees, and I want to thank them for their continued hard work and dedication as we focus on safely serving the needs of our customers during these challenging times.”
GulfMark, Adams’ crude oil marketing arm, marketed approximately 90,896 barrels per day (bpd) of crude oil during Q3, compared to 105,801 bpd during Q3 2019, and 81,152 bpd during the second quarter of 2020.
Additionally, the collective fleet of Service Transport traveled approximately 7.625 million miles during the third quarter, compared to 5.152 million miles in Q3 2019, and 3.890 miles during Q2 2020.
“At GulfMark, we saw improved topline driven by a 12% increase in marketed volumes along with strengthening crude pricing from the second quarter,” Roycraft said. “GulfMark’s third-quarter results also benefited from the cost and operational efficiency initiatives we put in place in the first half of the year to help offset the impact of reduced crude oil demand due to the COVID-19 pandemic.
“Substantially contributing to Service Transport’s sequential quarterly revenue growth of almost 80% was the impact of our recent purchase of assets from CTL Transportation. With the closing of the transaction on June 26, we grew our collective fleet of tractors and trailers by more than 50%, as well as expanded our footprint of operations into important markets in Florida, Georgia, Illinois, Missouri and Ohio.”
Adams also reported capital expenditures of $700,000 for leasehold improvements and other equipment during the third quarter.
Roycraft said he believes both Adams businesses, supported by two recent acquisitions, are “well-positioned” for success heading into 2021, despite continued market volatility as a result of the ongoing pandemic.
“The integration of the assets of CTL Transportation into Service Transport’s business has gone very well, and we look forward to leveraging the opportunities provided by our entrance into five new strategic markets,” Roycraft said. “We are also excited about GulfMark’s recently completed acquisition of the VEX Pipeline System, which includes a 90,000-barrel-per-day capacity crude oil and condensate pipeline that connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market through two terminals, along with 350,000 barrels of above ground storage and two eight bay truck offload stations.
“In addition, the acquisition significantly enhances our position at the Port of Victoria, where we now control 450,000 barrels of storage with three docks. The VEX Pipeline System has been key to GulfMark’s crude oil supply and marketing business, and we look forward to leveraging our expanded midstream offerings to better serve our end-user markets along the Gulf Coast.”