Back to top

Analyst Blog

Boardwalk Acquisition Company, LLC, a joint venture between Boardwalk Pipelines Holding Corp., a wholly owned unit of Loews Corporation (L - Analyst Report) and Boardwalk Pipeline Partners LP (BWP - Snapshot Report), closed the purchase of PL Midstream LLC from PL Logistics LLC for $625 million. The deal was announced in August.

The purchase was backed by Boardwalk Pipelines Holding’s $268 million for equity ownership, Boardwalk Pipeline Partners’ $132 million for its equity interest and a 5 year bank loan of $225 million. Boardwalk Pipelines Holding will own 67% of the JV and Boardwalk Pipeline Partners will own the remaining 33%.

Boardwalk Pipeline Partners believes this acquisition will support its diversification strategy as it will help it venture into the natural gas liquids business. Natural gas liquids business complements Boardwalk’s core natural gas pipeline and storage businesses.

Natural gas is usually an attractive choice because of its relative fuel efficiency, low emissions, quick construction timelines and low capital costs. There is an abundance of natural gas in the U.S. markets, resulting in lower prices. This trend is encouraging power generators to not only convert their existing plants to gas-fired ones but to build new nat-gas units.

PL Midstream boasts assets that can capitalize on the petrochemical boom in the U. S. Gulf Coast region. Also, it has 53.5 million barrels of salt dome storage capacity that includes 11.2 billion cubic feet of working natural gas storage capacity, brine supply infrastructure and 240 miles of pipeline transportation assets.

Additionally, it has fee-based contracts with an average lifespan of 10 years. Therefore, with PL Midstream in Boardwalk Pipeline portfolio, it will further fortify its presence as a diversified midstream energy company.

Loews Corporation currently holds a Zacks #4 Rank, translating into a short term Sell rating, while Boardwalk Pipeline Partners LP holds a Zacks #2 Rank, indicating a short-term Buy rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%