Morgan Keegan Raises 2012 Estimates On Genesis Energy

According to Morgan Keegan, Genesis Energy GEL estimates are raised on expansions announcement. Morgan Keegan reported that GEL announced it has acquired three storage tanks (230,000 bbls) that it will convert to handle oil, construct a 1.5 mile p/l spur to its TX p/l, and construct other infrastructure to enable it to handle 40,000 bbl/d of Texas crude at its new Texas City terminal and access both Houston/Texas City as well as higher priced refining markets via barge by 4Q:11. GEL also is expanding its NaHS capacity by 24,000 tons/year by 4Q:12. “We are raising our 2012 estimates on expectations GEL will be able to take advantage of the $16/bbl price differentials between Louisiana and Texas oil/refinery markets. We are raising 2012E EBITDA by $11mm to $199mm and CF/unit by $0.15 to $2.42/unit. Our estimates move further above consensus. We maintain our valuation range of $31-$33 and price target of $32 based on a 12-month target yield range of 5.5-5.75%. This equates to 19-24% total return potential over the next 12 months.” Genesis Energy closed yesterday at $27.66.