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Buckeye Partners L.P. (BPL - Free Report) announced second-quarter 2011 operating earnings of $1.00 per limited partner unit, surpassing the Zacks Consensus Estimate of 80 cents per unit. The results of the partnership were higher than the year-ago earnings of 58 cents per unit.

Total Revenue

Total revenue of the partnership at the end of the second quarter was $1.07 billion versus $0.67 billion in the year-ago quarter, reflecting a growth of 61.4%.

Revenue of the partnership during the quarter was barely higher than the Zacks Consensus Estimate of $1.06 billion.

Quarterly Highlights

Higher revenues owed primarily to a solid performance at Energy Services. Revenue from Energy Services increased a substantial 72.2% year over year to $0.86 billion, constituting 80.2% of total revenue versus 75.2% in the year-ago quarter. International Operations constituted 4.9% of total revenue in the reported quarter.

During the quarter the partnership saw costs and expenses rise 66.5%, as input costs shot up 71.3% and operating expenses grew 30.4% year over year.

Despite cost overruns, operating profit remained unscathed because of a solid top line. During the second quarter 2011 the operating income of the partnership increased by 19.5% year over year.

Interest and debt expenses at the end of second quarter 2011 were $28.5 million, higher than $21.3 million reported in the year-ago quarter.

Financial Update

Total cash and cash equivalents as of June 30, 2011, were $18.1 million versus $13.7 million as of December 31, 2010.

Buckeye's long-term debt as of June 30, 2011 was $2.2 billion compared with $1.52 billion of long-term debt as of December 31, 2010.

Buckeye spent $62.4 million on capital expenditure during the quarter compared with $16.6 million in the previous year quarter. The rise in capital expenditure was mainly due to the partnership’s expansion in international operations, plus the spends on iits Pipeline & Terminals segment.

Cash Distribution

The partnership once again raised its cash distribution rate to be paid to unit holders. The current distribution rate of the partnership stands at $1.0125 per unit, which reflects a 5.2% increase from the second quarter 2010 cash distribution per unit of 0.9625 cents. The distribution will be payable on August 31, 2011 to unitholders of record on August 15, 2011.

At the Peer

Ferrellgas Partners, L.P. (FGP - Free Report) , which competes with Buckeye Partners, reported earnings per unit of 32 cents in the third quarter of fiscal 2011, below the Zacks Consensus Estimate of 54 cents. The results were also 9 cent short of the year-ago figure.

Ferrellgas Partners'  total revenue of $732.4 million in the quarter was 19.0% higher than $615.3 million reported in the comparable year-ago period. The results of the partnership also outpaced the Zacks Consensus Estimate of $698 million.

Our View

Buckeye's solid showing this quarter owes much to contributions from recent acquisitions and strong legacy assets.

In July 2011, the partnership purchased a liquid petroleum products terminal in Bangor, Maine as well as a 124-mile pipeline that connects the Bangor terminal to a marine terminal in South Portland, Maine. We believe this deal will prove beneficial for the partnership as proven in the past.

Buckeye Partners currently retains a Zacks #5 Rank (short-term Strong Sell rating).

Based in Houston, Texas, Buckeye Partners, L.P. primarily operates refined petroleum products pipeline systems in the United States.

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