Sunoco Logistics Partners L.P. (SXL) announced the beginning of an Open Season, whereby it is looking for customers for the pipeline segment, West Texas – Nederland Access.
The pipeline, with an initial capacity of 40,000 barrels per day, would be utilized for the supply of crude from West Texas to the terminal at Nederland, Texas. With an expected start-up time in the first quarter of 2013, this network will render producers in West Texas and refiners in the Gulf Coast accessibility to the West Texas Sour crude.
Sunoco Logistics will conduct the Open Season till May 11, 2012 through its subsidiary Sunoco Pipeline L.P.
West Texas Gulf Pipe Line Company and Mobil Pipe Line Company – a unit of Exxon Mobil Corp. (XOM) are also partners in this project.
Philadelphia-based Sunoco Logistics is a master limited partnership (MLP) that acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Oil refiner and marketer Sunoco Inc. (SUN) owns 34% of the partnership interest, including a 2% general partner interest.
Sunoco Logistics currently retains a Zacks #1 Rank (Strong Buy rating) for the short term. We are maintaining our ‘Outperform’ recommendation for the longer term.
We believe that Sunoco Logistics owns a high-quality and diverse portfolio of midstream assets that generate stable and recurring revenues by way of long-term fee-based contracts. Over the past few years, the partnership has consolidated its position in the midstream business, which was achieved through a combination of organic efforts and accretive acquisitions.
Additionally, the partnership’s synergistic relationship with Sunoco Inc. is beneficial on two accounts. First, a sound fee-based relationship with Sunoco shields it from competitive pressures in the MLP space and provides it with stable cash flows and consistent top-line growth opportunities. Second, the partnership continues to leverage its relationship with Sunoco to make joint acquisitions.
The partnership has also established a track record of consistent distribution growth – its current quarterly distribution of 42 cents per unit ($1.68 per unit annualized) is up from 15 cents per unit (60 cents per unit annualized) at the time of its 2002 initial public offering.
SUNOCO INC (SUN): Free Stock Analysis Report
SUNOCO LOGISTIC (SXL): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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