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Magellan (MMP) to Divest Its Independent Terminals for $435M

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Magellan Midstream Partners, L.P. (MMP - Free Report) recently inked a deal to offload its independent terminals network, which includes 26 refined petroleum product terminals with a total storage capacity of nearly six million barrels, predominantly in the southeastern part of the United States. This Tulsa, OK-based firm will divest the network for $435 million to petroleum distributor company Buckeye Partners, L.P., which is headquartered in Houston.

Magellan Midstream CEO Michael Mears believes that the sale of the firm's independent terminals illustrates its continuous commitment toward maximizing the unitholder value by leveraging all available alternatives including asset portfolio optimization. On behalf of Magellan Midstream, management expressed gratitude to all its dedicated personnel who have worked at these sites over the years for their earnest services and efforts. The transaction is subject to satisfactory closing conditions. The partnership plans to use the sale proceeds for its capital-allocation priorities.

Earlier in April, Magellan Midstream announced completing the divestiture of its nearly 50% joint-venture membership interest in the Pasadena, TX-based marine terminal MVP Terminalling, LLC to an unidentified buyer for $270 million.

Notably, the MVP hub is a refined products marine storage terminal located along the Houston Ship Channel in Pasadena. The sell-off was closed on Apr 19.

As a result, Magellan Midstream now owns about 25% of the MVP facility, which it will continue to operate. The facility comprises more than five million barrels of storage, two ship docks and truck-loading facilities. Moreover, the partnership mentioned that the plant has an available space to nearly double its current storage capacity.

The divestiture marks an efficient allocation of portfolio assets while maintaining a significant presence for the firm to continue satisfying the demand surge for refined product export logistics.

About Magellan Midstream

Tulsa, OK-based Magellan Midstream is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The firm primarily transports, stores and distributes refined petroleum products and to a lesser extent, ammonia.

Zacks Rank & Key Picks

Magellan Midstream currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Oasis Petroleum Inc. (OAS - Free Report) , SilverBow Resources Inc (SBOW - Free Report) and Whiting Petroleum Corporation (WLL - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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