Oil refiner and marketer, Western Refining Inc. (WNR - Analyst Report) announced that its subsidiary Western Refining Logistics, LP, has priced its initial public offering of 13.75 million common units at a price of $22.00 per unit. Settlement of the offering is expected on Oct 16, 2013.
Western Refining Logistics intends to begin trading of its common units listed on the New York Stock Exchange under the symbol "WNRL" on Oct 10.
The underwriters have a 30-day option to purchase up to additional 2,062,500 units at the IPO price. On completion, the offering represents a 30.1% limited partner interest in Western Refining Logistics. Moreover, if the underwriters exercise their option in full, the limited partner interest would increase to 34.7%. The remaining stake and distribution rights remain with Western.
The El Paso, Texas-based company formed its subsidiary to own, operate, develop, and acquire terminals, storage tanks, pipelines, and other logistics assets.
Incorporated in 2005, Western Refining is an independent refiner and marketer of refined petroleum products in the south western and mid-Atlantic regions of the U.S. The company operates in three segments, refining, wholesale and retail. Among the three, refining is the major contributor to the company’s income.
Western Refining stock trades in a 52-week range of $23.67 to $39.42. The company’s stock has been trading at the middle of the range for the greater part of last month with shares settling at $30.14 on Oct 9. Moreover, with volatile industry fundamentals and limited geographic diversification, we do not see any significant price upside for the stock in the near-to-medium term.
Western Refining currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at other stocks in the energy sector that are expected to outperform in the same time frame. These include the Zacks Ranked #1 (Strong Buy) stocks of Stone Energy Corp. (SGY - Analyst Report), Dril-Quip, Inc. (DRQ - Analyst Report) and Pembina Pipeline Corp. (PBA - Snapshot Report).