Executive Summary

Q3 2025 results were broadly in-line with internal expectations: revenue rose 4.2% YoY to $414.0M and net income attributable to GEL improved to $9.2M from a loss in Q3 2024, with strong Offshore Pipeline performance offset by transitory Marine softness .
Offshore ramp catalysts: Shenandoah reached its targeted 100 kb/d within ~75 days of startup, and Salamanca commenced initial production with a path to 40–50 kb/d; Q3 included MVC recognition, with stronger volumetric contribution expected in coming quarters .
Management trimmed FY25 outlook: now “slightly below the low end” of prior Adjusted EBITDA guidance ($545–$575M), citing earlier offshore mechanical issues, timing delays to first oil, and temporary marine headwinds; leverage ratio improved to 5.41x LTM under the credit agreement .
Capital allocation signaling: excess cash generation in Q3 enabled revolver paydown; management emphasized measured debt reduction, opportunistic preferred redemption, and consideration of increased common distributions; Q3 distribution held at $0.165 per common unit (1.76x coverage) .

What Went Well and What Went Wrong

What Went Well

Offshore pipeline transportation outperformed: segment margin up 40% YoY to $101.3M, aided by MVCs on SYNC/CHOPS (Shenandoah), incremental MVCs on CHOPS (Warrior/Winterfell), and volume restoration after producer mechanical remediations .
New project ramp success: Shenandoah reached 100 kb/d across four wells within ~75 days; Salamanca began production, with rapid ramp plans to ~40 kb/d and then ~50 kb/d, positioning future margin expansion with minimal growth capex .
Cash generation inflection: Available Cash before Reserves was $35.5M (1.76x distribution coverage), and Q3 produced excess cash used to reduce revolver borrowings, supporting improving leverage trajectory through 2026 .

Quote: “We are excited about the successful start-up and ramp-up we have seen from both the Shenandoah and Salamanca… These new developments will serve as the cornerstone of our ability to generate increasing levels of free cash flow in future quarters and years.” — Grant Sims, CEO .

What Went Wrong

Marine Transportation softness: segment margin declined 18% YoY to $25.6M due to compressed heavy-to-light differentials (refiners ran more light sweet crude) and blue-water market disruption from vessel migration; utilization fell for both inland and offshore fleets .
FY25 EBITDA outlook trimmed: management now expects FY25 Adjusted EBITDA to be “slightly below the low end” of the $545–$575M range due to first-half producer issues, delays to Shenandoah/Salamanca first oil, and temporary marine challenges .
Higher Depreciation/Amortization and ongoing high interest expense: D&A rose by ~$1.5M YoY and net interest remained elevated at $66.4M in Q3, constraining net income leverage despite operational improvements .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$397.3	$377.3	$414.0
Net Income Attributable to GEL ($USD Millions)	$(17.2)	$(0.4)	$9.2
Net Loss per Common Unit (EPS, $)	$(0.32)	$(0.12)	$(0.05)
Adjusted EBITDA ($USD Millions)	$136.7	$122.9	$132.0
Total Segment Margin ($USD Millions)	$122.0	$135.9	$146.6
Cash Flows from Operating Activities ($USD Millions)	$87.3	$47.0	$70.3

Segment Breakdown (Segment Margin, $USD Millions)

Segment	Q1 2025	Q2 2025	Q3 2025
Offshore Pipeline Transportation	$76.5	$87.6	$101.3
Marine Transportation	$30.0	$29.8	$25.6
Onshore Transportation & Services	$14.8	$18.5	$19.7
Total Segment Margin	$121.4	$135.9	$146.6

KPIs (Selected Operating Data)

KPI	Q1 2025	Q2 2025	Q3 2025
CHOPS avg barrels/day	312,976	324,533	360,925
Poseidon avg barrels/day	244,323	248,785	251,788
Offshore crude pipelines total (bbl/d)	622,719	646,010	677,691
Natural gas transport (MMBtus/day)	401,764	403,703	425,801
Inland barge utilization (%)	93.6%	98.1%	91.2%
Offshore barge utilization (%)	96.2%	97.3%	89.7%
Texas pipeline avg barrels/day	61,924	98,626	88,989
Rail unload volumes (bbl/day)	20,492	24,979	25,695

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	$545–$575M range introduced Q1	“Slightly below the low end” of $545–$575M	Lowered
Adjusted EBITDA	FY 2025 (as of Q2)	“At or near the low end” of $545–$575M	“Slightly below the low end”	Lowered
Common Unit Distribution	Q3 2025	$0.165 per unit (prior quarters)	$0.165 per unit (coverage 1.76x)	Maintained
Leverage Ratio (Bank calc)	LTM Q3 2025	5.52x at Q2	5.41x at Q3	Improved

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Offshore ramp (Shenandoah/Salamanca)	Q1: commissioning & expected first oil mid-year; Q2: Shenandoah first oil late July; Salamanca first oil expected by end Q3	Shenandoah reached 100 kb/d within ~75 days; Salamanca started, ramping to 40–50 kb/d; MVCs recognized	Accelerating, now delivering volumes and MVCs
Marine market dynamics	Q1/Q2: structurally tight Jones Act supply; mixed day rate environment; inland stable, blue-water softened	Temporary softness from crude slate shifts and vessel migration; most vessels now contracted; improvement expected in Q4	Transitory weakness, stabilizing
Capital allocation & deleveraging	Q1: soda ash sale, debt reduction, preferred repurchase; Q2: paydown revolver planned, leverage ratio improvement	Q3: excess cash used to reduce revolver; focus on debt reduction, preferred redemption, potential distribution increases	Strengthening financial flexibility
Producer mechanical issues	Q1: several wells offline; remediation expected by Q3	Most issues largely behind; one high-margin field with lingering challenges	Improving
Guidance posture	Q1: FY25 Adj. EBITDA $545–$575M	Now “slightly below low end”	More conservative for FY25, bullish for 2026

Management Commentary

Prepared remarks emphasized the structural step-change from Shenandoah and Salamanca tied to GEL’s SYNC/SEKCO laterals feeding CHOPS/Poseidon, with decades-long production profiles and minimal future growth capex required .
Strategy: “measured and deliberate” capital allocation prioritizing absolute debt reduction, redemption of high-cost preferreds, and evaluating increased common distributions while preserving flexibility for accretive opportunities .
Forward look: growing segment margin and lower debt to drive rapid leverage ratio improvement through 2026; “well positioned to generate higher levels of Adjusted EBITDA and free cash flow in 2026 and beyond” .

Notable quotes:

“Earlier this month the operator of Shenandoah announced the successful completion of the ramp-up of the four phase one development wells to their targeted rate of 100 kbd, within the first seventy-five days after initial start-up.” — Grant Sims .
“We… generated excess cash in the third quarter from which we were able to reduce outstanding borrowings… and we fully expect to continue to do so in the fourth quarter.” — Grant Sims .

Q&A Highlights

Growth capex outlook: management sees typical growth capital in the ~$10–$15M range (tanks/pumps to support throughput), with focus on free cash flow generation and returning capital, not new large projects .
Offshore sustainability: management views offshore as a “self-regenerating annuity,” estimating ~11 additional development wells per year would replace annual reserves transported (~275M bbl at 750 kb/d throughput) without GEL spending growth capex .
Offshore segment margin upside: with Salamanca+Shenandoah near forecasts, incremental recognized segment margin could be ~$160M per year, and only ~half of installed capacity is used, implying upside with additional tie-backs .

Estimates Context

EPS: Consensus Primary EPS for Q3 2025 was $0.13*, while reported net loss per common unit was $(0.05); this is a miss and likely to prompt downward estimate revisions on the income line given marine softness and higher interest expense . Values retrieved from S&P Global.*
Revenue: Consensus revenue for Q3 2025 was unavailable*; company reported $414.0M . Values retrieved from S&P Global.*
EBITDA: Consensus EBITDA for Q3 2025 was ~$133.8M*, while company reported Adjusted EBITDA of $132.0M — a slight miss, consistent with transitory marine pressure . Values retrieved from S&P Global.*

Key Takeaways for Investors

Offshore ramp is the core catalyst: MVCs plus accelerating volumes from Shenandoah and Salamanca underpin segment margin growth into 2026, with limited capex required .
Near-term marine headwinds were transitory: inland and blue-water utilization/day rates should stabilize; most vessels are contracted, setting up a cleaner Q4 run-rate .
FY25 de-risked; FY26 leverage path visible: management reset outlook “slightly below low end,” but emphasized deleveraging via higher segment margin and reduced absolute debt .
Capital returns on the horizon: excess cash generation in Q3 and improved coverage (1.76x) strengthen the case for measured debt reduction, preferred redemption, and potential distribution hikes over time .
Watch KPIs: sustained CHOPS/Poseidon throughput >700 kb/d and continued ramp from Salamanca will confirm the margin step-change; any further producer remediation will add tailwinds .
Valuation narrative: improving leverage ratio (5.41x LTM bank calc) and durable offshore cash flows should compress risk premia as execution continues .
Risks: commodity slate mix affecting marine demand, lingering field-specific issues, and macro/geopolitical shocks could intermittently impact utilization and timing of ramp .

S&P Global disclaimer for estimates: Values retrieved from S&P Global.*

GENESIS ENERGY LP (GEL)·Q3 2025 Earnings Summary