On April 8, 2014, the units of Buckeye Partners, L.P. (BPL) touched a 52-week high of $77.20. The unit price was finally closed at $76.26, up 0.4% from the previous day’s closing. We believe that the partnership’s systematic capital investments in growth projects, positive impact from the acquisition of several Hess Corporation’s (HES) assets and payment of cash distribution at regular intervals have led to the surge in unit price.
We appreciate Buckeye Partners’ continuous effort towards expansion of its asset base. The partnership plans to invest $280–$310 million in 2014 under its growth capital projects. In 2013, Buckeye Partners invested substantial amount to expand its crude oil rail and butane blending capabilities. Currently, the partnership is in the middle of development at the Perth Amboy Terminal. The scheduled completion of these projects will enable Buckeye Partners to meet the increasing demand from the upstream players.
In addition to extending existing operations, Buckeye Partners is also pursuing an inorganic growth strategy to enhance its service capacity. In Dec 2013, the partnership completed the acquisition of 20 liquid petroleum products terminals from Hess Corporation. This acquisition enabled Buckeye Partners to increase its storage capacity by around 39 million barrels.
Apart from utilizing funds for enhancing midstream portfolio, Buckeye Partners also follows a practice of regular payout of cash distribution. Since 1986, the partnership has paid cash distribution every quarter. In Feb 2014, Buckeye Partners increased its quarterly cash distribution rate by 4.8% year over year to $1.875 per unit.
During fourth-quarter 2013 earnings call, Buckeye Partners announced that it has modified the operating divisions and reorganized the reporting segments as per its long-term objectives.
Buckeye Partners currently has a Zacks Rank #2 (Buy). Some other stocks worth considering in the oil and gas pipeline industry include Enterprise Products Partners L.P. (EPD) and Magellan Midstream Partners LP (MMP), each carrying a Zacks Rank #2 (Buy).
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