Tesoro Logistics LP
), an affiliate of independent refiner
), declared that it has lowered its acquisition price for buying
the Northwest Products System of Chevron Pipe Line Co from the
originally planned $400 million to $355 million.
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Tesoro Logistics revealed that the Mar 18 fuel spill incident
involving the system - at the site close to Willard, Utah - is
the primary reason behind the price reduction. Chevron Pipe Line
Co, a subsidiary of the U.S. energy behemoth -
) - will clean the affected area and is expected to hold all the
liabilities for two years.
Tesoro Logistics is planning to spend roughly $15 to $25 million
to organize a thorough examination program in order to heighten
the integrity level of the pipeline system. Tesoro Logistics
added that it will use the funds from the $392 million equity
issued on Jan 14, 2013, for acquiring the asset.
For the first 12 months, Tesoro Logistics expects earnings before
income, tax, depreciation and amortization (EBITDA) from the
property to be roughly in between $30 to $35 million. The asset
comprises the Northwest product pipeline, which spreads over 760
miles and is now under the regulation of Federal Energy
Regulatory Commission (FERC). The carrier supplies refined
products in southern Idaho and eastern Wash and is the primary
and leading provider in these regions. The throughput volumes of
the pipeline system were roughly 87,000 barrels per day during
The Northwest Products System also consists of jet fuel pipeline
that spread over five miles and refined products terminals. The
terminals are based in Idaho and Wash and can store roughly 1.3
million barrels of liquids.
San Antonio, Texas-based Tesoro Logistics is a limited
partnership, which purchases and possesses logistics properties
of crude oil and refined products. The partnership also operates
and develops these assets.
Tesoro 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.
However, one oil and gas production pipeline Master Limited
Partnership (MLP) that is expected to outperform the broader U.S.
equity market over the next one to three months is
Kinder Morgan Management LLC
). The firm retains a Zacks Rank #2 (Buy).