On Mar 14, we issued an updated research report on oil and gas
Buckeye Partners, L.P.
). Though the partnership is pretty active on the investment
front, its business depends to a large extent on the level of
activity at the refiners. Any decline in refining will hurt the
Buckeye Partners' earnings per unit in the fourth quarter 2013
missed the Zacks Consensus Estimate, but revenues beat the same.
On a year-over-year basis, the partnership's top and bottom lines
climbed higher. The commencement of operation at the recently
refurbished truck rack at the Perth Amboy terminal and sales from
the BORCO facility contributed to the bottom-line growth in 2013.
Buckeye Partners, a Zacks Rank #3 (Hold) stock, closed the
acquisition of 20 liquid petroleum products terminals with a
total storage capacity of approximately 39 million barrels for
$850 million from Hess Corporation in the fourth quarter. This
acquisition increased Buckeye's total liquid petroleum storage
capacity by approximately 53% to over 110 million barrels and
will contribute to earnings growth going forward.
Moreover, Buckeye Partners has reorganized its reporting segments
to turn more competitive and realign its business in sync with
However, increasing merger and acquisition activities among its
customers leads to a shrinking of Buckeye Partners' customer
base. The merged entities often start utilizing their own
pipeline or storage facilities for transportation or storage of
fossil fuels. Since the operating cost of the partnership is
fixed, a reduction in sales volume will impact margins.
Buckeye also needs to cope with weather variations that can have
an adverse impact on demand. A significant portion of its service
area is susceptible to severe weather conditions like hurricanes
which damage marine infrastructure and disrupt operations.
Service interruptions could impact the business of the
Key Picks from the Sector
Players in the oil and gas pipeline industry with a favorable
Zacks Rank include
Valero Energy Partners LP
Magellan Midstream Partners LP
Access Midstream Partners, L.P.
). While Valero Energy Partners sports a Zacks Rank #1 (Strong
Buy), both Magellan Midstream Partners and Access Midstream
Partners carry a Zacks Rank #2 (Buy).
ACCESS MIDSTRM (ACMP): Free Stock Analysis
BUCKEYE PARTNRS (BPL): Free Stock Analysis
MAGELLAN MDSTRM (MMP): Free Stock Analysis
VALERO EGY PTNR (VLP): Free Stock Analysis
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