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Magellan's (MMP) East Houston-to-Hearne Pipeline Comes Online

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Magellan Midstream Partners LP recently announced that it has started transporting refined products from its newly-constructed pipeline. The pipeline running from East Houston terminal to Hearne, TX is 135-mile long with a diameter measuring 20 inches.

The pipeline has provided Magellan with an additional capacity of 85,000 barrels of oil per day (bpd) in order to meet demand in the partnership’s Texas and Midcontinent markets. The project is backed by valuable credit from customers with strong commitments. Nearly, $425 million capital has been spent on this construction and in return, the company expects an 8x EBITDA multiple from the committed volume.

Apart from East Houston terminal to Hearne pipeline, Magellan is working on the expansion of an existing pipeline segment between Hearne and Dallas. This extension is done by constructing a 140-mile, 20-inch pipeline from Hearne to Alexander, leading to an additional capacity of 75,000 bpd. The pipeline is expected to be active in mid-2020.

Per the firm, construction of a pipeline spur from the new system to the George Bush Intercontinental Airport has also been completed and the same will be made operational by Nov 1 with immediate effect if it gets through the test run. Magellan is now building a new refined products terminal in Midland, TX and planning to complete the project in mid-2020.

Magellan is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The firm primarily transports, stores and distributes refined petroleum products and ammonia.

 

Zacks Rank & Key Picks

Magellan carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners , Dril-Quip, Inc. (DRQ - Free Report) and World Fuel Services Corp. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.

Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.

World Fuel Services earnings beat the Zacks Consensus Estimate in all the last four quarters.

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