Energy infrastructure provider, Magellan Midstream Partners, L.P. (MMP - Free Report) , announced that the leak in its Longhorn Pipeline located four miles southwest of Bastrop has been repaired. The incident that happened on Thursday resulted in the spill of 1,200 barrels of crude. Local homeowners within a one-mile radius had to evacuate the place as the cleaning process began. The pipeline has now resumed operations.
The partnership uses the pipeline to move crudes at a rate of 275,000 barrels oil equivalent per day (BOE/d) to refineries and export terminals in the Gulf Coast from the Permian basin.
The leak was contained in the Longhorn Pipeline by shutting it down and isolating the affected section. The rupture in the pipeline took place near Austin as a contractor hit the pipeline during maintenance operations. The repair of the damaged segment of the pipeline started on Friday.
Per the partnership, the leaked oil did not reach water resources as proper measures were adopted to contain the spill and minimize the environmental impact. Approximately 100 representatives of Magellan were at the site to speed up the process. There have been no reports of injury so far. The partnership is ready to pay the locals any additional costs incurred during the evacuation process.
According to the Pipeline and Hazardous Materials Safety Administration (PHMSA), an inspector was sent to the site to evaluate the situation. Following the spill, FM 20 at the south of Shiloh Road was closed in both directions for a day and was reopened on Friday morning.
The spill can affect the price of crude oil in West Texas as oil transportation through the Longhorn Pipeline was stalled. The unplanned shortage in supply can raise oil prices in Houston.
We would like to inform investors that Magellan’s non-fee based assets continue to be under pressure due to weak crude prices. This may result in reduced earnings and revenues for the firm. The leakage in the Longhorn Pipeline may make matters worse.
About the Partnership
Tulsa, OK-based Magellan is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. Magellan conducts its operations in three segments: Refined Products, Crude Oil, and Marine Storage.
Magellan belongs to the Zacks categorized Oil and Gas - Production Pipeline - MLP industry. In the last three months, the stock has declined 6% while the industry registered a decrease of 6.7%.
Zacks Rank and Stocks to Consider
Magellan presently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the oil and energy sector include Delek US Holdings, Inc. (DK - Free Report) , Crescent Point Energy Corporation (CPG - Free Report) and Canadian Natural Resources Limited (CNQ - Free Report) . While Delek has a Zacks Rank #2 (Buy), Crescent and Canadian Natural Resources sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Delek US Holdings’ sales for 2017 are expected to increase 56.9% year over year. The company delivered an average positive earnings surprise of 60.7% in the last four quarters.
Crescent Point’s sales for the second quarter of 2017 are expected to increase 20.2% year over year. The partnership delivered an average positive earnings surprise of 354.9% in the last four quarters.
Canadian Natural Resources’ sales for 2017 are expected to increase 49.4% year over year. The company delivered a positive earnings surprise of 30.8% in the first quarter of 2017.
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