Genesis Energy (NYSE:GEL) reported fourth-quarter 2025 results that management said were slightly ahead of internal expectations, supported by continued growth in offshore volumes and a return to more “normalized” performance in marine transportation. On the call, executives also discussed a higher common unit distribution, recent preferred unit repurchases, and expectations for 2026 that account for planned offshore downtime and a heavier marine maintenance schedule.
Fourth-quarter performance led by offshore pipeline growth
Chief Executive Officer Grant Sims said the offshore pipeline transportation segment delivered another quarter of strong sequential growth, driven by steady legacy volumes, a full quarter of Shenandoah volumes running above its minimum volume commitment, and continued ramping at Salamanca.
Operationally, Genesis said the Shenandoah floating production unit (FPU) continued operating at or near its 100,000 barrels-per-day target rate from four phase one wells during the quarter. At Salamanca, volumes continued to ramp from the first three wells, and management said it remained encouraged by reservoir performance and remaining development plans.
2026 outlook: offshore growth, but conservatism around timing and downtime
Looking to 2026, Sims characterized Genesis as “largely a deepwater Gulf of America growth story,” but emphasized the inherent variability of offshore schedules, including drilling timelines, weather, and planned facility turnarounds that can last 30 to 45 days. He said the company benefited from no significant turnarounds in 2025, but noted customers have scheduled routine turnarounds in 2026, including at facilities where Genesis may handle volumes more than once, which can be more financially impactful.
When asked about the company’s 2026 expectations, management described an anticipated range of roughly plus or minus 15% to 20% versus normalized 2025 adjusted EBITDA of approximately $500 million to $510 million. Sims said the company hoped to exceed the top end of that range and could “easily make a case” to do so, but indicated the company wanted to reflect factors outside its control and frame any variance largely as timing rather than a change in long-term cash flow expectations from contracted fields.
In the Q&A, management provided additional detail on assumptions embedded in 2026 expectations:
- Offshore downtime: Genesis is assuming 10 days of anticipated downtime, effectively treating the third quarter as an 82-day quarter rather than 92 days for the offshore business.
- Marine dry-docking impact: The company expects a net $5 million to $10 million reduction on the segment margin line due to a heavy dry-docking schedule.
Management also reiterated that producer development plans point to a stronger 2027 than 2026 based on current schedules shared with Genesis.
Offshore project cadence: Salamanca, Shenandoah, and future tiebacks
Genesis outlined a series of expected offshore milestones. At Salamanca, an additional well is scheduled for completion in the second quarter of 2026, with the potential for a fifth well as early as the fourth quarter. Management said these wells are expected to result in total production of 50,000 to 60,000 barrels per day from the Salamanca production facility.
At Shenandoah, Genesis expects the Monument development—described as a two-well subsea tieback to Shenandoah—to be completed and flowing through the company’s facilities by late 2026 or “certainly early 2027.” Following Monument, a fifth well at Shenandoah is scheduled to be drilled, which management said could increase total throughput across the Shenandoah FPU to as much as 120,000 barrels per day, with potential upside of an additional 10,000 to 20,000 barrels per day in early 2027.
In addition to wells associated with Salamanca and Shenandoah, Sims said the company is aware of at least eight additional development or subsea tieback wells at legacy production facilities served exclusively by Genesis pipeline infrastructure that are planned to be drilled over the next 12 to 15 months.
On longer-term activity, management highlighted the Bureau of Ocean Energy Management’s lease sale “Big Beautiful Gulf 1” (BBG 1) held Dec. 10, 2025, which it said generated more than $300 million in high bids for 181 tracts covering about 1 million acres. Genesis said roughly 65% of the acreage was in the Central Gulf of Mexico. Sims added that, combined with two earlier lease sales in 2023, more than 4.4 million acres have been leased in federal Gulf waters over the past three years, with approximately 53% in the Central Gulf, where Genesis’ offshore pipeline infrastructure is located and has existing capacity.
Marine and onshore operations: normalization, maintenance, and refinery services
Genesis said its marine transportation segment returned to a more normalized level of operating performance as refinery customers increased runs of heavy crude, increasing volumes of intermediate black oil available for transport. Management said conditions affecting the blue water fleet in the prior quarter appeared to be “behind us,” as supply pressures eased and broader equipment utilization improved.
Looking ahead, management said 2026 is expected to be a higher maintenance year for the blue water fleet, with four of nine offshore vessels scheduled for regulatory dry-dockings in the first half of the year. Sims said those shipyard periods will temporarily reduce vessel availability and may mute near-term benefits from any dayrate improvement, but the company expects vessels to reenter the market against a more constructive backdrop. Management also noted the American Phoenix remains under contract through early 2027 and said it would expect the vessel to recontract at a higher day rate than its current charter based on prevailing market rates for comparable assets.
In response to a question on capital needs tied to dry-docking, management said it expects 2026 maintenance capital to be higher than 2025 and suggested an increase in the range of $15 million to $20 million would be “within the ballpark.”
In the onshore transportation and services segment, Genesis said performance was in line with expectations. Throughput increased across Texas and Raceland terminals and pipelines as new offshore volumes moved onshore. The company’s refinery services business delivered results largely consistent with expectations, and management discussed potential to produce more sodium hydrosulfide (NaHS) at existing facilities if heavier sour volumes return to Gulf Coast refining systems.
Capital allocation: liquidity, distributions, preferred repurchases, and leverage target
Sims said strategic actions in 2025, combined with operating performance and new offshore volumes, allowed Genesis to exit the year with “effectively zero” outstanding borrowings under its $800 million senior secured revolving credit facility after accounting for cash on hand. With improved liquidity, the board increased the quarterly common unit distribution to $0.18 per unit, representing a 9.1% year-over-year increase.
Management also disclosed that it recently purchased an additional $25 million of corporate preferred units in a privately negotiated transaction. Sims described the distribution increase and preferred repurchase as evidence of a disciplined approach to capital allocation, alongside plans to reduce debt and evaluate future distribution increases over time.
On leverage, Sims said bank-calculated leverage was 5.12 at Dec. 31, and reiterated a long-term target “in the neighborhood of 4,” describing a clear line of sight as free cash flow is used to reduce debt while EBITDA grows. He added that distribution decisions are discussed by the board every quarter and that there is no hard-and-fast program regarding the cadence of distribution increases.
During the Q&A, Sims also addressed customer consolidation, citing the closing of Harbour Energy’s acquisition of LLOG. Sims said LLOG is an “extremely important customer” and estimated Genesis moves about 70% of LLOG’s operated production through its pipelines, adding that Harbour has publicly stated an intent to double production from the acquired asset base by the end of 2028, which management viewed as a positive read-through for Genesis.
About Genesis Energy (NYSE:GEL)
Genesis Energy LP (NYSE: GEL) is a publicly traded master limited partnership headquartered in Houston, Texas, that owns and operates a diversified portfolio of energy infrastructure assets in the United States. The company’s primary focus is on the transportation, storage and delivery of refined petroleum products, serving major domestic markets across the Gulf Coast, Atlantic Seaboard and inland waterway systems.
Genesis Energy’s operations are organized into several key business segments.
