Magellan Midstream Partners, L.P. (MMP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are maintaining our Neutral recommendation on Magellan Midstream Partners. The partnership expects fourth-quarter 2014 earnings of $0.92 per unit, higher than the year-ago profit. Additionally, Magellan Midstream projects 2014 distributable cash flow of $865 million, up $25 million from the previous projection. These reflect the partnership's strong outlook on the back of excellent operating performances. However, we remain concerned as Magellan Midstream is susceptible to lower-than-expected demand for refined products, commodity price fluctuations and cost overruns on expansion projects.

Overview:

Tulsa, Oklahoma-based Magellan Midstream Partners, L.P. (MMP) is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. In 2013, the partnership's pipeline volumes comprised 58% gasoline, 35% distillates (which include diesel fuels and heating oil), and 7% Liquefied Petroleum Gas (LPG)/aviation fuel. Magellan conducts its operations in three segments: Refined Products, Crude Oil, and Marine Storage.

Refined Products: The Refined Products unit primarily comprises Magellan's approximately 9,500-mile pipeline system with 54 integrated terminals and 27 independent terminals (not linked to Magellan's pipeline infrastructure). Additionally, the segment looks after the partnership's 1,100-mile ammonia pipeline system with 6 Magellan-owned terminals that extends from Texas and Oklahoma to Minnesota, and caters to the mid-continent region.

Crude Oil: The Crude Oil division includes roughly 1,100 miles of pipelines as well as storage services with a total storage capacity of approximately 18 million barrels.


Marine Storage: This contains marine terminals that are spread along coastal waterways with a collective storage capacity of approximately 27 million barrels.

In a major transaction, the partnership acquired its publicly traded general partner, Magellan Midstream Holdings, through an all-equity exchange. With the completion of the transaction, in the third quarter of 2009 following unit-holder approvals from both entities, Magellan dissolved Magellan Midstream Holdings and the associated incentive distribution rights.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: MMP , MLP , LPG

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