Kansas City Southern About to Transport Huge Amounts of Canadian Oil
Not planning on waiting for the Keystone, I guess.
Train operator Kansas City Southern (KSU) is climbing after Credit Suisse analyst Allison Landry wrote in a note to investors earlier today that the company has said it's conducting "very serious negotiations" with an energy company about developing a crude oil terminal in Port Arthur, Texas. The facility would handle five trains per day and become a major destination point for heavy crude from Canada, the analyst wrote. As a result of this developing deal, the company's revenue from transporting crude oil will be significantly higher than expected, the analyst believes. She maintained an Outperform rating on the stock. Meanwhile, Wells Fargo analyst Anthony Gallo wrote that the Port Arthur location is favorable because of its proximity to chemical and crude oil processing markets. However, the company would likely obtain significantly less than $3,000 per train car of crude, which is the amount that other railroad companies have received, the analyst wrote. Nevertheless, the construction of a crude oil terminal in Port Arthur would be "very beneficial" to Kansas City Southern, wrote Gallo, who maintained an Outperform rating on the stock. In late morning trading, Kansas City Southern jumped $9, or 9%, to $107.
Kansas City Southern rallying on Port Arthur talks, says Wells Fargo Wells Fargo attributes the strength in shares Kansas City Southern to speculation that the company may be working on an agreement for construction of crude and chemical offloading and storage at its Port Arthur location. Wells notes that KSU owns around 500 acres in Port Arthur, Texas, and that discussions with a third party to construct storage facilities ended several years ago. The firm says the discussions appear to have been reignited with a different third party, leading to the rally in shares today. Wells thinks construction of such a facility at Port Arthur would be very beneficial to KSU and keeps an Outperform rating on the stock.