SXL Seeks Buyers for Texas Pipeline - Analyst Blog
April 12 2012 - 10:00AM
Zacks
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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