Western Refining Logistics, LP - a subsidiary of oil refiner
Western Refining Inc.
) - has launched an initial public offering of 12.5 million
common units with a price band of $19-$21. Per company estimates,
upon successful completion of the offer this would bring in about
$237.5 million-$262.5 million for the newly formed master limited
PEMBINA PIPELN (PBA): Free Stock Analysis
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WESTERN REFING (WNR): Free Stock Analysis
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Western Refining Logistics intends to list its common units on
the New York Stock Exchange under the symbol "WNRL".
Western Refining is moving ahead with the formation of the MLP
owing to significant financial benefits. An MLP can raise money
from the bourses but is taxed only at the unit holder level.
These are exempted from paying corporate income taxes.
The underwriters have a 30-day option to purchase up to an
additional 1.875 million units at the IPO price. The offering
represents a 27.4% limited partner interest in Western Refining
Logistics. Moreover, if the underwriters exercise their option in
full, the limited partner interest would increase to 31.5%. The
remaining stake and the distribution rights remain with Western.
The El Paso, Texas-based company formed its subsidiary to own,
operate, develop, and acquire terminals, storage tanks,
pipelines, and other logistics assets.
Incorporated in 2005, Western Refining is an independent refiner
and marketer of refined petroleum products in the south western
and mid-Atlantic regions of the U.S. The company operates in
three segments, refining, wholesale and retail. Among the three,
refining is the major contributor to the company's income.
Western Refining stock trades in a 52-week range of $23.67 to
$39.42. The company's stock has been trading at the middle of the
range for the greater part of last month with shares settling at
$30.50 on Oct 2. Moreover, with volatile industry fundamentals
and limited geographic diversification, we do not see any
significant price upside for the Western Refining stock in the
Western Refining currently holds 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 stocks in the energy sector that
are expected to outperform in the near term. These include Zacks
Ranked #1 (Strong Buy) stocks of
Stone Energy Corp.
China Petroleum & Chemical Corp.
Pembina Pipeline Corporation