Tesoro Logistics LP
), an affiliate of independent refiner
), inked a deal with the latter to acquire a major portion of the
remaining Los Angeles Logistics Assets which is owned by Tesoro
Refining and Marketing Co. LLC - yet another affiliate of Tesoro
Corp. Tesoro Logistics will shell out $650 million for the
deal which is expected to close by fourth quarter 2013.
MATADOR RESOURC (MTDR): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
TESORO LOGISTIC (TLLP): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
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Of the total purchase price, $585 million will be in cash and the
remaining will be as equity holding. Part of this cash
consideration will be financed by an unregistered public offering
of 6,300,000 common units, which Tesoro Logistics announced in a
separate release. The partnership has offered underwriters a
30-day period to increase their holding to 945,000 common units.
Post acquisition, Tesoro Logistics will have control over 2
marine terminals that have a capacity of 285,000 barrels per day,
a 2 million barrels crude oil and refined products storage
terminal, a petroleum coke handling and storage unit with a
capacity of about 2,600 metric tons per day, a refined products
terminal and a shipping container storage lot. The partnership
will also own a 100 mile pipeline system - with expected capacity
of 550,000 barrels per day - that will provide connectivity to
the other acquired assets.
Per Tesoro Logistics management, this strategic acquisition not
only solidifies its position as a West Coast logistics provider
but also provides scope for organic growth. The deal should be
beneficial to the cash distribution.
The projected net income, for the first year of operation, from
the Los Angeles Logistics assets is $28-$33 million. This should
increase to $33-$43 million in the years to follow.
Tesoro Logistics is involved in the acquisition and development
of logistics properties of crude oil and refined products. The
partnership currently retains a Zacks Rank #3 (Hold), implying
that it is expected to perform in line the broader U.S. equity
market over the next one to three months.
Meanwhile, one can consider other stocks like
SM Energy Company
Matador Resources Company
) as good investment opportunities. The stocks currently sport a
Zacks Rank #1 (Strong Buy).