Magellan Midstream Partners LP
) has closed its previously announced acquisition of the Texas
and New Mexico-based pipeline properties from
Plains All American Pipeline LP
). Magellan has allocated $57.0 million from cash on hand for the
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The Texas-New Mexico pipeline system stretches over 250 miles and
carries refined petroleum products from El Paso, Texas, to
Albuquerque, NM. The carrier also transports products to the
Mexican border by a third party
Management believes that this purchase will facilitate its
Albuquerque and central New Mexico customers to access the
refined products of West Texas, Gulf Coast and Mid-Continent.
However, Magellan also informed that its planned purchase of the
Rocky Mountain pipeline system is yet to be completed and is
subject to the Federal Trade Commission's approval. The system,
which spreads over 550 miles, carries refined products in South
Dakota, Colorado and Wyoming.
Tulsa, OK-based Magellan 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. Magellan conducts its operations in three
segments: Refined Products, Crude Oil and Marine Storage.
We remain upbeat regarding Magellan's acquisition of petroleum
storage and pipelines from U.K. super major
) subsidiary. Following the acquisition, Magellan owns one of the
largest crude oil storages in the Cushing crude oil region and
will continue to exploit opportunities necessary for better
utilization of these assets.
However, unfavorable regulatory changes by the Federal Energy
Regulatory Commission (FERC) would impact the partnership's
results. This will also lead to increasing borrowing costs of
Magellan Midstream Partners and lower market value of its limited
Magellan currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, an oil and gas production pipeline MLP in the energy
sector, which is expected to perform better over the short-term
TC PipeLines LP
). The stock currently sports a Zacks Rank #1 (Strong Buy).