Diversified midstream energy operator
Genesis Energy L.P.
), together with Genesis Energy Finance Corporation, announced
the start of an exchange offer for their 7 7/8% senior notes due
GENESIS ENERGY (GEL): Free Stock Analysis
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Total principal amount of the offer is $100 million. Genesis
Energy will swap its outstanding old notes, which were issued in
February, 2012, with the new ones.
The material terms of the new notes offering will be the same as
that of the earlier one, with one exception. Unlike the old
notes, the new notes will be registered under the Securities Act
of 1933 with no restrictions on transfer, registration rights or
additional interest related to the old notes offering.
The issuers will not receive any returns from the exchange offer.
Recently, Genesis Energy raised its third quarter 2012 cash
distribution to 47.25 cents per unit ($1.89 per unit annualized),
representing an increase of approximately 2.7% sequentially and
10.5% year over year.
Genesis Energy's announced distribution boost is in sync with its
goal of delivering disciplined growth to unitholders.
Houston, Texas-based Genesis Energy is a master limited
partnership that operates crude oil pipelines and is an
independent gatherer and marketer of crude oil in North America,
with operations concentrated in Texas, Louisiana, Alabama,
Florida, Mississippi and New Mexico. Genesis Energy engages in
three business segments: Pipeline Transportation, Refinery
Services, and Supply and Logistics.
We maintain our long term Outperform recommendation on Genesis
Energy, which acquired interests in Gulf of Mexico oil pipelines
Marathon Oil Corp.
) in January.
With an attractive distribution yield of 5.6%, a business model
focused on operational efficiencies and attractive
acquisitions/growth projects, Genesis Energy provides investors
with a steady, predictable income stream.
We expect earnings growth to be strong in 2012 and 2013, based on
the solid fixed margin businesses and limited commodity price