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Magellan Midstream Extends Open Season of Voyager Pipeline

Zacks Equity Research
ONE Gas (OGS) reports strong Q1 results, courtesy of new rates, colder-than-normal weather and customer growth.

Magellan Midstream Partners, L.P. MMP and Navigator Energy Services have announced an extension of the open season to commitments from shippers for the planned Voyager Pipeline to May 31, 2019. The pipeline will transfer different grades of light crude oil and condensate from Cushing, OK to Houston, TX.

Potential shippers continue to project considerable interest, especially the ones that reach Voyager from connecting carriers in numerous producing regions. The extension offers these shippers additional time to confirm their commitments across multiple pipelines and appraise a new origin point near Midland.

The proposed Voyager pipeline will involve construction of almost 500 miles of 20- or 24-inch diameter pipeline from Magellan Midstream’s terminal in Cushing to its facility in East Houston. Originating from the Cushing, the pipeline will enable shippers to begin deliveries at Cushing from the Magellan Midstream-operated Saddlehorn Pipeline serving the Rockies and Bakken production regions, Navigator’s Glass Mountain Pipeline serving the Mid-Continent basin as well as other connections within the strategic Cushing crude oil hub.

On request of potential shippers, the sponsors are assessing the addition of a Midland origin to provide further supply flexibility from the prolific Permian Basin. The Midland origin is likely to be accomplished in phases through Voyager’s use of an existing Magellan pipeline that may become inoperative in the near future. This is part of the company’s announced West Texas refined products pipeline expansion project. Voyager will have the capability to use an existing terminal in Frost to construct assets and connect to the Cushing-to-Houston segment.

At the destination, the widespread Houston crude oil distribution system will deliver the multiple grades of crude oil to Houston and Texas refineries. Also, the delivery will be made to export facilities like the terminal owned by Seabrook Logistics, LLC, which is owned 50% by Magellan Midstream.

Initially, the Voyager Pipeline is anticipated to have an initial capacity of at least 300,000 barrels per day, as proposed. Eventually the capacity will expand further if the industry demand increases. The pipeline is estimated to come online in late 2020.

Zacks Rank & Other Key Picks

Currently, Magellan Midstream carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Antero Resources Corporation AR, CrossAmerica Partners L.P. CAPL and SEACOR Holdings, Inc CKH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is an independent explorer, primarily engaged in the acquisition and development of natural gas, natural gas liquids as well as oil resources in the Appalachian Basin. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.

CrossAmerica Partners is involved in the wholesale distribution of motor fuels, comprising gasoline and diesel fuel. The partnership delivered an average positive earnings surprise of 452.2% in the last four quarters.

SEACOR Holdings is a diversified holding company, mainly focused on domestic and international transportation, logistics as well as risk management consultancy. The bottom line for 2019 is expected to inch up 1.7% year over year. The company delivered an average positive earnings surprise of 20.5% in the trailing four quarters.

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