Fuel-gatherer/transporter Tesoro Logistics L.P. (TLLP) has priced a public offering of 8,500,000 common units at $41.70 a piece, with a 30-day over-allotment option for an additional 1,275,000 units. The offering is expected to close on January 14, 2013.
The master limited partnership (MLP) plans to use the net proceeds from this offering to part finance its previously declared acquisition of Chevron Pipeline Company's Northwest Products System and for general partnership purposes. The proposed $400 million purchase – announced in December last year – will see Tesoro Logistics buy out the system’s 760-mile Northwest Product Pipeline extending from Salt Lake City, Utah, to Spokane, Washington, another 5-mile jet fuel pipeline to the Salt Lake City International Airport and refined products terminals in Idaho and Washington.
The transaction with Chevron Pipeline Company, an indirect wholly owned subsidiary of Chevron Corp. (CVX), is expected to close by March 31, 2013. Should the agreement fail to go through, Tesoro Logistics – which was publicly floated on April 26, 2011 by independent refiner Tesoro Corp. (TSO) – may utilize the net proceeds from the offering towards future acquisitions and capital programs.
Tesoro Logistics is scheduled to report its fourth quarter 2012 results on Monday, February 11 after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 56 cents per share on revenues of $49 million.
San Antonio, Texas-based Tesoro Logistics is engaged in the ownership, operation, development and acquisition of crude oil and refined products logistics assets. The partnership currently retains a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.
However, there are certain other energy stocks like Boardwalk Pipeline Partners L.P. (BWP) and Atlas Energy L.P. (ATLS) that offer tremendous value and are worth buying now. Both these partnerships sport a Zacks #1 Rank (short-term Strong Buy rating).
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