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Sunoco Logistics' Mid-Valley Pipeline Spills

Zacks Equity Research

Energy pipeline and terminal operator, Sunoco Logistics Partners LP (SXL) closed a portion of its Mid-Valley pipeline system, after the pipeline spilled considerable amount of crude oil near the Great Miami River in southwest Ohio. All necessary cleanup activities are in progress. Moreover, the spread of the spilled oil has been restricted.

The pipeline spans over 1,600.0 kilometer and has a capacity to transport and deliver roughly 238,000 barrels of crude oil every day to the refiners of Midwestern U.S. Sunoco Logistics, which owns a controlling interest in the pipeline, has not commented on the restart of the pipeline system.

Philadelphia-based Sunoco Logistics, a master limited partnership (MLP), acquires, owns and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Its facilities are located in 17 states in the Northeast, the Midwest, the Southeast and the Southwest of the U.S. Sunoco Logistics is organized into four segments – Refined Products Pipeline System, Terminal Facilities, Crude Oil Pipeline System, and Crude Oil Acquisition and Marketing.

However, unfavorable regulatory changes by the Federal Energy Regulatory Commission would impact the partnership’s results. The regulations will also result in increased borrowing costs for Sunoco Logistics and a reduced market value for its limited partner units.

Sunoco Logistics currently carries 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 better-ranked players in the oil and gas production pipeline industry like Valero Energy Partners LP (VLP), Access Midstream Partners LP (ACMP) and Kinder Morgan Management LLC (KMR). Valero Energy sports a Zacks Rank #1 (Strong Buy), while Access Midstream and Kinder Morgan Management carry a Zacks Rank #2 (Buy).

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Read the Full Research Report on KMR
Read the Full Research Report on VLP

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