BPL to Buy a Score of Hess Terminals - Analyst Blog
10 Octubre 2013 - 11:00AM
Zacks
Buckeye Partners
LP (BPL) announced that it has inked a definitive
agreement with Hess Corp. to purchase 20 liquid petroleum product
terminals for $850 million. The terminals have a total storage
capacity of roughly 39 million barrels. The transaction is
anticipated to be completed by 2013 end and is subject to
regulatory approval as well as customary closing conditions. The
acquisition involves multi-year storage and throughput requirement
by Hess.
The 19 domestic terminals are placed along the U.S. East Coast
covering the areas of New York Harbor, Upstate New York,
Mid-Atlantic, and Southeast. Except 2 the rest are marine
terminals while 12 have deep-water access. The terminals have a
storage capacity of around 29 million barrels of refined petroleum
products which include 15 million barrels of capacity located in
the key New York Harbor.
The St. Lucia terminal in the Caribbean has a crude oil and refined
petroleum products storage capacity of roughly 10 million barrels
and has deep-water access. Buckeye’s strategic acquisition will
also expand its operation to the high-growth Southeast markets like
Florida.
Additionally, the Port Reading
terminal is in the vicinity of the company’s existing Perth Amboy
terminal and the Linden Hub. This would help Buckeye Partners to
create an integrated network of pipeline assets in New York Harbor,
leveraging the pipeline connections between the terminals and
optimizing capabilities at each facility.
The St. Lucia terminal will
strengthen the partnership’s Caribbean storage operations and help
tap the growing Latin American crude oil production volumes.
Buckeye is poised to gain from continued investments in terminal
expansion. The partnership has placed itself well to reap the
synergies from global logistic product flows.
Buckeye’s pipeline and terminal
business has been a key revenue churner thanks to its constant
development efforts. These initiatives have helped the partnership
in securing profitable long-term contracts. During the second
quarter 2013, its Perth Amboy terminal and Chicago propylene
storage asset successfully clinched several crude oil services and
storage deals.
Nonetheless, deep sea operations do have its share of risks as
harsh weather could disrupt Buckeye’s operations especially with
the ongoing hurricane season. The coming years might pose
significant challenges for Buckeye as the Energy Information
Administration predicts petroleum products and diesel prices to
weaken by 5.5% and 3.8% in 2014, respectively, from the 2012
level.
Currently, the partnership carries a Zacks Rank #4 (Sell). However,
other well-placed pipeline operators include Zacks Ranked #2 (Buy)
Magellan Midstream Partners L.P. (MMP),
Pioneer Southwest Energy Partners L.P. (PSE) and
Sunoco Logistics Partners L.P. (SXL).
BUCKEYE PARTNRS (BPL): Free Stock Analysis Report
MAGELLAN MDSTRM (MMP): Free Stock Analysis Report
PIONEER SW EGY (PSE): Free Stock Analysis Report
SUNOCO LOGISTIC (SXL): Free Stock Analysis Report
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