Magellan Midstream (MMP) Announces $300M Pipeline Expansion
Magellan Midstream Partners, L.P. MMP recently reported that the partnership intends to expand its refined petroleum products pipeline system’s western leg. The decision was made following a successful open season that commenced in March.
The pipeline system ships refined petroleum products like gasoline and diesel from the Gulf Coast refineries to several cities in Texas. The expansion is expected to address the high demand in Abilene, Midland/Odessa and El Paso, Texas and New Mexico. The pipeline system also facilitates in reaching the Arizona and Mexico markets.
Magellan Midstream received long-term commitments for the pipeline system, which supports the partnership’s decision to expand its capacity by 50,000 barrels per day (BPD) to around 150,000 BPD. The expansion also involves establishing connection with Exxon Mobil Corporation’s XOM terminal located in Wink, TX.
Additionally, the partnership will keep an option of increasing the capacity further by 20,000-BPD to 170,000 BPD. A supplemental open season is also planned to be carried out to solicit further commitments. Moreover, depending on demand, the partnership can build a new terminal for refined products in Midland.
Magellan Midstream anticipates the expansion cost to be around $300 million and the added capacity to be available by mid-2020.
Price Performance
Units of Tulsa, OK-based Magellan Midstream have lost 6% in the past year compared with 15.9% decline of the industry it belongs to. The partnership boasts access to 50% of the country’s refining capacity and has a petroleum products’ storage capacity of more than 100 million barrels.
Zacks Rank and Stocks to Consider
Currently, Magellan Midstream has a Zacks Rank #3 (Hold).
Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Nine Energy Service, Inc. NINE and Delek US Holdings, Inc. DK, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, its bottom line is likely to be up 168.1%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.
Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 35.6% year over year, while its bottom line is expected to increase 159.5%.
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