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Sunoco (SUN) Proceeds With Strategic Portfolio Optimization

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Sunoco LP (SUN - Free Report) announced significant developments in its strategic portfolio management with the completion of key acquisitions and divestitures. The transactions are part of Sunoco's broader strategy to enhance its business model and deliver increased value to its unitholders.

Sunoco completed a major acquisition, purchasing several bulk liquid fuel terminals from Zenith Energy for €170 million. The acquisition includes strategically located terminals in Amsterdam, at the heart of the Port of Amsterdam, and the Bantry Bay terminal in Ireland.

The Amsterdam terminal’s pivotal location is expected to boost supply-chain efficiencies, particularly benefiting Sunoco’s operations along the U.S. East Coast. Meanwhile, the Bantry Bay terminal in Ireland is set to contribute to the stability of the nation’s oil reserves, ensuring continued energy security and supporting local economic stability.

This strategic expansion into Europe represents a significant step for Sunoco, positioning the company to harness stable midstream income and enhance its operational reach and efficiency.

Simultaneously, Sunoco divested 204 of its convenience stores located in West Texas, New Mexico and Oklahoma. These properties were sold to 7-Eleven, Inc. for approximately $1 billion. This recently finalized sale is part of Sunoco’s ongoing efforts to optimize its asset portfolio and refocus on its core business strengths.

In addition to the sale, Sunoco has revised its take-or-pay fuel supply agreement with 7-Eleven. This revised agreement is anticipated to be beneficial, contributing positively to Sunoco’s fuel gross profit, thus reinforcing the financial and strategic rationale behind the divestiture.

Despite these significant structural changes, Sunoco has maintained its financial outlook for 2024. The company projects 2024 adjusted EBITDA between $975 million and $1 billion.

Furthermore, Sunoco is in the process of acquiring NuStar Energy (NS - Free Report) , a transaction that is expected to further enhance the company's market position. This deal is anticipated to close in the second quarter of 2024, adding to Sunoco’s capabilities and service offerings.

Zacks Rank & Stocks to Consider

SUN currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. The three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Core Laboratories N.V. (CLB - Free Report) is an oilfield services company, operating in more than 50 countries. CLB’s strong presence in the emerging shale plays and its global footprint provide for steady growth rates, going forward.

Core Laboratories has a Zacks Style Score of B for Value and Growth. The consensus estimate for CLB’s 2024 and 2025 earnings per share is pegged at 95 cents and $1.24, respectively.

Enerplus Corporation (ERF - Free Report) is an independent oil and gas production company with resources across Western Canada and the United States.

Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $2.06 and $2.36, respectively.

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