Sunoco Logistics Starts Open Season - Analyst Blog


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Sunoco Logistics Partners LP ( SXL ), an energy pipelines and terminals operator, has announced the start of a binding Open Season for its Mariner South Pipeline from Mar 21, 2013.

The Mariner South Pipeline will carry export quality propane and butane from the Mont Belvieu, Texas-based storage and fractionation area of Lone Star NGL LLC, to the Nederland, Texas-based terminal of Sunoco Logistics. Lone Star NGL LLC is a joint venture between natural gas pipeline operator Energy Transfer Partners LP ( ETP ) and natural gas service provider Regency Energy Partners LP ( RGP ).  

Sunoco Logistics says that depending on the interest of the shipper, the pipeline will also be available for transporting other natural gas liquids and petroleum products. The partnership added that the pipeline is expected to have a capacity of roughly 200,000 barrels per day, which can be extended later on.

Sunoco Logistics expects the pipeline to start operating by the first quarter of 2015.  

Philadelphia-based Sunoco Logistics, a master limited partnership (MLP), acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Its facilities are available in 17 states, which include the Northeast, the Midwest, the Southeast and the Southwest of the country. Sunoco Logistics is organized into four segments - Refined Products Pipeline System, Terminal Facilities, Crude Oil Pipeline System, and Crude Oil Acquisition and Marketing.

With its low-risk and stable cash flow-generating energy infrastructure assets, Sunoco Logistics offers investors an opportunity to capture income growth through steadily-rising cash distributions and capital appreciation.

On the flip side, the actual amount of cash distributed to the Sunoco Logistics' unitholders may fluctuate. The amount is also dependent on the partnership's future operating performance, which is susceptible to movements in margins and throughput volumes. Realized margins and/or volumes could differ significantly from our estimates, thereby affecting Sunoco Logistics' cash distributions.  

Sunoco Logistics currently retains 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, one can look at other energy pipelines and terminals operator like Rose Rock Midstream LP ( RRMS ) as attractive investment. The firm displays better fundamentals and currently carries a Zacks Rank #1 (Strong Buy).

ENERGY TRAN PTR (ETP): Free Stock Analysis Report

REGENCY ENERGY (RGP): Free Stock Analysis Report

ROSE ROCK MIDST (RRMS): Free Stock Analysis Report

SUNOCO LOGISTIC (SXL): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Stocks
Referenced Stocks: ETP , MLP , RGP , RRMS , SXL

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