Buckeye Buys Assets in Puerto Rico - Analyst Blog

Houston-based Buckeye Partners L.P. (BPL) has acquired a refined petroleum products terminal in Puerto Rico from an associate of Royal Dutch Shell plc (RDS.A). Royal Dutch Shell has agreed, under a multi-year contract, to remain a key customer at the terminal.

Located on the southeast coast of Puerto Rico, in Yabucoa, the terminal comprises 44 storage tanks with a storage capacity of roughly 4.6 million barrels. The terminal is capable of storing gasoline, jet fuel, diesel, fuel oil, and crude oil. 

The acquired Royal Dutch Shell assets represent an important step in Buckeye's growth objectives. Buckeye's first acquisition outside the continental United States brings the company's total storage capacity to over 30 million barrels.

The acquisition offers geographic diversity for Buckeye's operations while also providing strong local demand and potential regional growth opportunities. Furthermore, the acquisition is expected to immediately increase distributable cash flow, according to management. Buckeye recently paid cash distribution of 97.25 cents per limited partner unit for the quarter ended September 30, 2010.

Buckeye reported third-quarter 2010 operating earnings of 93 cents per limited partner unit, which matched the Zacks Consensus Estimate. The results of the partnership beat the year-ago earnings of 89 cents per share. The Zacks Consensus earnings per unit for fourth quarter 2010, fiscal 2010 and fiscal 2011 are 97 cents, $3.46 and $3.66, respectively.

Buckeye Partners L.P. primarily operates refined petroleum products pipeline systems in the United States. The partnership's independent refined petroleum products pipeline system stretches across 5,400 miles with about 67 products terminals.

Buckeye Partners currently retains a Zacks #3 Rank (short-term Hold rating), which supports our long-term Neutral recommendation on the stock. The partnership is favorably positioned versus its closest peer Ferrellgas Partners L.P. (FGP) with a Zacks # 4 Rank (Sell), based on short-term ratings.

 
BUCKEYE PARTNRS (BPL): Free Stock Analysis Report
 
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ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report
 
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