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Magellan Midstream’s (MMP) Pipeline in Eagan Spills Gasoline


Magellan Midstream Partners, L.P. MMP recently reported a leakage in its 12-inch pipeline system that transports fuel from Rosemount, MN to Minneapolis. Leakage of around 500 barrels or 21,000 gallons of gasoline has been confirmed so far although the partnership estimated the initial leakage at 300 barrels

The leak, resulted from issues related to excavation equipment of third-party, took place in Eagan, MN. The cleanup process is on at the site with environmental specialists monitoring the situation.

Following the news of leakage, several roads were temporarily blocked and a minor evacuation carried out. Although the partnership has not provided a time frame for the repair works, it expects supply at Minneapolis facilities to be uninterrupted.

Price Performance

Units of Magellan Midstream have lost 4.5% in the last year compared with 15.6% decline of the industry it belongs to.

About the Partnership

Tulsa, OK-based Magellan Midstream 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 Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to almost 50% of refining capacity in the continental United States along with imports, and 85 petroleum terminals with more than 90 million barrels of storage.

However, the partnership is facing pressure on the balance sheet. In the past five years (2012–2016), long-term debt increased at a CAGR of 14%. A continued rise in project outlays and tough operating environment were the primary reasons for the rise in debt. While the company is taking initiates to reduce its indebtedness, it will take some time to recover.

Zacks Rank and Stocks to Consider

Magellan Midstream has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Cabot Oil & Gas Corporation COG, Royal Dutch Shell plc RDS.A and Delek US Holdings, Inc. DK. All these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX -based Cabot is an independent energy company. Its sales for the fourth quarter of 2017 are expected to grow 39.5% year over year. Earnings for the year 2017 are expected to be up 357.14%.

Shell, based in The Hague, the Netherlands, is an integrated energy company. Its earnings for 2017 are expected to increase 99.5% year over year. The company delivered a positive earnings surprise of 18.1% in the third quarter of 2017.

Brentwood, TN-based Delek is an integrated energy company. Its sales for the fourth quarter of 2017 are expected to increase 90.3% year over year. The company delivered a positive earnings surprise of 19.1% in the third quarter of 2017.

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