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New Acquisition Boosts MPLX's Export Capacity Before IMO 2020

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MPLX LP (MPLX - Free Report) recently acquired an export and storage terminal in Louisiana for $450 million from Pin Oak Holdings, LLC — a storage and logistics company. The deal is expected to expand the partnership’s gasoline and diesel exporting capacity from the Gulf Coast. MPLX is a sponsored master limited partnership of Marathon Petroleum Corporation (MPC - Free Report) .

Terminal Capacity

Per the deal, the terminal will be named MPLX's Mt. Airy Terminal. The facility has a leased storage capacity of 4 million barrels along with a dock with 120,000 barrels per day (BPD) strength. The partnership is likely to increase the capacity of the facility by 6 million barrels. Moreover, the facility has permission for building a new dock with 120,000 BPD strength, at the site.

Acquisition Rationale

The strategic location of the terminal can provide great growth potential for the partnership as it is built on the Mississippi River, between New Orleans and Baton Rouge. The facility has nine lower-Mississippi refineries located close to it, which incorporates Marathon Petroleum's Garyville refinery.

Notably, the facility is equipped to manage numerous refined products along with bunker commodities and residual fuel. Hence, it can offer different options for feedstocks and finished goods for its clients. The location and the strength of the terminal can enable MPLX to benefit from the increasing energy exports from the Gulf Coast.

Most importantly, with the IMO 2020 looming, demand for low sulfur marine fuel is expected to surge all around the globe. The fuel terminal will enable MPLX to help its clients to export bunker fuel and meet the new fuel standards.

Price Performance

Findlay, OH-based MPLX’s units have lost 2.3% in the past year compared with 13.2% decline of the industry.

Zacks Rank and Stocks to Consider

Currently, MPLX has a Zacks Rank #3 (Hold). Investors interested in the Oil and Gas sector can opt for some better-ranked stocks like Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) and RGC Resources Inc (RGCO - Free Report) . While Petrobras sports a Zacks Rank #1 (Strong Buy), RGC Resources has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rio de Janeiro, Brazil-based Petrobras is an integrated energy company. The company’s top line for 2018 is expected to improve 8.7% year over year. In the trailing four quarters, it delivered an average positive earnings surprise of 10.4%.

Roanoke, VA-based RGC Resources’ full-year earnings are expected to grow 5.8%. In the last reported quarter, the company delivered an earnings surprise of 40%.

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