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New Horizons Beckon Buckeye Partners

BPL BP XOM

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Oil and gas pipelines master limited partnership (MLP) Buckeye Partners L.P. (BPL - Analyst Report) said it has added two petroleum products terminals in Maine and a 124-mile pipeline that connects the two terminals to its portfolio of assets. The partnership acquired these assets from the affiliates of ExxonMobil Corp. (XOM - Analyst Report).

As part of the deal, Buckeye successfully acquired 100% stakes in the pipeline and two terminals in Maine – one at Bangor and the other at Portland. The terminal at Bangor has a storage capacity of about 140,000 barrels while the terminal in Portland, a marine terminal, has a storage capacity of nearly 725,000 barrels. Buckeye purchased the Portland terminal through a 50/50 joint venture with Irving Oil Terminals Inc. that will be operated by Buckeye's Development & Logistics group ("BDL").

The addition of two new terminals to Buckeye forms a part of its continued efforts to diversify into new geographic regions and to increase its marine terminals presence.

Being an independent owner and operator, Buckeye plans to commercialize these assets by contracting with third party customers to drive incremental revenue. This transaction is supported by long-term commitments and is expected to be immediately accretive to Buckeye.

Earlier last month, Buckeye completed the acquisition of 33 refined petroleum products terminals and 650 miles of refined petroleum products pipeline from BP Plc (BP - Analyst Report). Located in the Midwestern, Southeastern, and Western United States, the acquisition of these terminals and pipeline assets has expanded Buckeye's operations in new and key geographic markets. These terminals have a storage capacity of more than 10 million barrels, which have enhanced Buckeye's total liquid petroleum storage capacity by nearly 19% to over 63 million barrels.

Buckeye Partners is scheduled to release its second quarter 2011 results on Monday, August 1, 2011. The Zacks Consensus earnings estimates for Buckeye’s second quarter, fiscal 2011 and fiscal 2012 are 81 cents, $3.41 and $3.68 per share, respectively.

Based in Houston, Texas, Buckeye Partners L.P. primarily operates pipeline systems for refined petroleum products in the United States. Buckeye Partners currently retains a Zacks #4 Rank (short-term Sell rating). However, we retain our long-term Neutral rating on the stock.

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