U.S. Markets open in 2 hrs 53 mins

New Acquisition Boosts MPLX's Export Capacity Before IMO 2020

Zacks Equity Research
1 / 2

New Acquisition Boosts MPLX's Export Capacity Before IMO 2020

MPLX acquires export and storage terminal for $450 million from Pin Oak Holdings.

MPLX LP MPLX recently acquired an export and storage terminal in Louisiana for $450 million from Pin Oak Holdings, LLC — a storage and logistics company. The deal is expected to expand the partnership’s gasoline and diesel exporting capacity from the Gulf Coast. MPLX is a sponsored master limited partnership of Marathon Petroleum Corporation MPC.

Terminal Capacity

Per the deal, the terminal will be named MPLX's Mt. Airy Terminal. The facility has a leased storage capacity of 4 million barrels along with a dock with 120,000 barrels per day (BPD) strength. The partnership is likely to increase the capacity of the facility by 6 million barrels. Moreover, the facility has permission for building a new dock with 120,000 BPD strength, at the site.

Acquisition Rationale

The strategic location of the terminal can provide great growth potential for the partnership as it is built on the Mississippi River, between New Orleans and Baton Rouge. The facility has nine lower-Mississippi refineries located close to it, which incorporates Marathon Petroleum's Garyville refinery.

Notably, the facility is equipped to manage numerous refined products along with bunker commodities and residual fuel. Hence, it can offer different options for feedstocks and finished goods for its clients. The location and the strength of the terminal can enable MPLX to benefit from the increasing energy exports from the Gulf Coast.

Most importantly, with the IMO 2020 looming, demand for low sulfur marine fuel is expected to surge all around the globe. The fuel terminal will enable MPLX to help its clients to export bunker fuel and meet the new fuel standards.

Price Performance

Findlay, OH-based MPLX’s units have lost 2.3% in the past year compared with 13.2% decline of the industry.

Zacks Rank and Stocks to Consider

Currently, MPLX has a Zacks Rank #3 (Hold). Investors interested in the Oil and Gas sector can opt for some better-ranked stocks like Petroleo Brasileiro S.A. or Petrobras PBR and RGC Resources Inc RGCO. While Petrobras sports a Zacks Rank #1 (Strong Buy), RGC Resources has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rio de Janeiro, Brazil-based Petrobras is an integrated energy company. The company’s top line for 2018 is expected to improve 8.7% year over year. In the trailing four quarters, it delivered an average positive earnings surprise of 10.4%.

Roanoke, VA-based RGC Resources’ full-year earnings are expected to grow 5.8%. In the last reported quarter, the company delivered an earnings surprise of 40%.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
MPLX LP (MPLX) : Free Stock Analysis Report
RGC Resources Inc. (RGCO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research