Energy pipeline partnership Magellan Midstream Partners LP (MMP) and Netherlands-based liquid storage operator Royal Vopak have teamed up to assess a deep water storage and handling facility project at Houston Gulf Coast. As per the joint development agreement, both Magellan and Vopak will also conduct a feasibility study for the assessment.
The deep water tank storage terminal will be based on land in Deer Park, Texas, which is presently owned by Vopak. The terminal will have tanks, barge and ship docks for assisting high-speed loading rates. The facility will also remain connected with the refined products and crude oil pipeline systems of Magellan.
Magellan now owns roughly 20 million barrels of storage capacity at Houston along with the comprehensive pipeline system at Houston Gulf Coast.
Tulsa, OK-based Magellan is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. Magellan conducts its operations in three segments: Refined Products, Crude Oil and Marine Storage.
Magellan owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to more than 40% of refining capacity in the continental U.S. along with imports, and 85 petroleum terminals with more than 80 million barrels of storage.
However, unfavorable regulatory changes by the Federal Energy Regulatory Commission (:FERC) would impact the partnership’s results. This will also lead to increasing borrowing costs for Magellan and depressing market value of its limited partners.
Magellan 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.
Meanwhile, one can look at oil and gas production pipeline MLPs like Delek Logistics Partners LP (DKL), Enbridge Energy Management LLC (EEQ) and Kinder Morgan Management LLC (KMR) with a favorable Zacks Rank. All the stocks currently sport a Zacks Rank #1 (Strong Buy).
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