Full Ownership of BORCO for Buckeye - Analyst Blog

Buckeye Partners L.P. (BPL) has entered into an agreement to acquire the remaining 20% interest in Bahamas Oil Refining Company International Limited (BORCO) from Vopak Bahamas B.V. The partnership said the acquisition will be carried out on terms similar to the earlier purchase of 80% interest in the assets from First Reserve Corporation in December 2010.

Buckeye had acquired an 80% interest in BORCO, the largest petroleum products storage terminal in the Caribbean, for a total consideration of $1.36 billion in cash and equity. Buckeye's recent deal with Vopak will also be executed on the same proportionate price under the same terms and conditions.

Buckeye expects the acquisition of Vopak's interest to close as soon as definitive documentation is executed and the closing conditions are satisfied.

At the time of closing the earlier deal, Buckeye had highlighted plans to spend roughly $400 million at the facility over the next two to three years, adding about 7.5 million barrels of flexible petroleum products storage and increasing the total storage capacity to more than 29 million barrels. The partnership expects this to bring in about $70-80 million of incremental adjusted EBITDA every year. Buckeye also sees the scope to install an additional 13 million barrels of storage capacity at the site due to the availability of a large portion of unused land.

Buckeye Partners L.P. is a publicly traded partnership that owns and operates one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered. The partnership's pipeline system stretches across 5,400 miles with about 69 refined petroleum products terminals. It also operates about 2,400 miles of pipeline under agreements with major oil and chemical companies and owns a natural gas storage facility in northern California.

Buckeye currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating 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.

 
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