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Magellan (MMP) & Plains All to Increase BridgeTex Capacity


Magellan Midstream Partners, L.P. MMP along with Plains All American Pipeline, L.P. PAA, its joint venture partner in BridgeTex Pipeline Company, LLC, announced plans to increase the capacity of the BridgeTex pipeline by 40,000 barrels per day (bpd). The joint venture also announced an additional open season to evaluate the demand for increased capacity, which will give potential customers an opportunity to come out with binding commitments by Dec 30, 2017.

The open season activities in the region are primarily driven by a rise in drilling activities in the Permian Basin. Active rig count in the region has been on the rise for quite some time now, which triggered the interest of pipeline manufacturers in the area. The latest expansion decision on BridgeTex comes on the heels of a long-term deal signed in July between a Singapore-based commodity trading company, Trafigura Pte Ltd and Plains All American Pipeline. Per the deal, Trafigura demanded 100,000 bpd of Permian crude and condensate delivered to the Gulf Coast.

About BridgeTex Pipeline

BridgeTex Pipeline is a 50/50 joint venture between Magellan Midstream and Plains All American. The pipeline’s transportation capacity was increased to 400,000 bpd from 300,000 bpd in July. After the latest capacity expansion, the Permian Basin crude oil will be delivered from Colorado City, TX to the Houston Gulf Coast area with new capacity of around 440,000 bpd.

About the BridgeTex JV Partners

Magellan Midstream is a master limited partnership that owns and operates a diversified portfolio of energy infrastructure assets. This Tulsa, OK-based partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. Currently, the partnership performs its operations via three segments — Refined Products, Crude Oil and Marine Storage. Units of Magellan Midstream have lost 11.4% year to date compared with 24.3% decline of the industry it belongs to.

Houston, TX-based Plains All American, a master limited partnership, is involved in the transportation, storage, terminalling and marketing of crude oil, natural gas, natural gas liquids (NGL) and refined products in the United States and Canada. The partnership has operations in the Permian Basin, South Texas/Eagle Ford area, Rocky Mountain and Gulf Coast in the United States, and Manito, South Saskatchewan, Rainbow in Canada. Plains All American operates through three segments -Transportation, Facilities, and Supply and Logistics. Units of Plains All American have lost 39.6% year to date compared with 24.3% decline of the industry it belongs to.

Zacks Rank & Stock to Consider

Both Magellan Midstream and Plains All American carry Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector include ConocoPhillips COP and Northern Oil and Gas, Inc. NOG. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based ConocoPhillips is a major global exploration and production company. The company’s sales for 2017 are expected to increase 24.4% year over year. The company delivered an average positive earnings surprise of 152.3% in the last four quarters.

Minnetonka, MN -based Northern Oil and Gas is an independent energy company. The company’s sales for the fourth quarter of 2017 are expected to increase 51.9% year over year. The company delivered an average positive earnings surprise of 175% in the last four quarters.

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