BP Midstream Partners to Raise $893M From IPO Offering

A unit of British oil giant BP plcBP , BP Midstream Partners, is planning to raise funds from its initial public offering of about $893 million.

Per a filing with the U.S. Securities and Exchange Commission, BP Midstream Partners intends to sell 42.5 million units. The sale, which excludes underwriters' option, is anticipated in the price band of $19-21 each.

Created by BP's U.S. pipeline unit, BP Midstream Partners is a master limited partnership (MLP) and will be listed on the New York Stock Exchange under the code "BPMP". Another such recent IPO was launched by Oasis Petroleum Inc OAS to form Oasis Midstream Partners. Oasis Midstream started trading since Sep 21, 2017.

It is to be noted that an MLP does not have to pay tax at the corporate level. Instead, the unitholders pay tax when distributions are received, thus evading the concern of double taxation for companies paying dividends.

Per sources, the IPO plan was raised internally by BP about five years ago. But the sudden oil crash enforced the oil giant to defer the idea.

Benefits of the IPO

BP Midstream Partners' formation as a separate vehicle that owns, operates, develops and acquires pipelines and other midstream assets will help in the growth of midstream business. The IPO will be in line with BP's strategy to develop its business and at the same time boost shareholder value. BP Midstream Partners, headquartered in Houston, TX, will have offices in Chicago, IL.

Price Movement

The company's shares havereturned 12.5% compared with the industry 's increase of 9.7% over the last three months.

Zacks Rank & Key Picks

Currently, BP carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Enbridge Energy Partners LP EEP and Alliance Resources Partners, LP ARLP . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Enbridge Energy owns the U.S. portion of the world's longest liquid petroleum pipeline. The company delivered average positive earnings surprise of 22.83% in the last four quarters.

Alliance Resources Partners is a diversified producer and marketer of coal to major U.S. utilities and industrial users. The firm delivered an average positive earnings surprise of 29.76% in the last four quarters.

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

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

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