Magellan Midstream Arkansas Pipeline On Track - Analyst Blog

Publicly traded energy pipeline partnership, Magellan Midstream Partners LP MMP announced the success of its Arkansas-Little Rock pipeline open season. The partnership stated that it has received ample commitments to advance to the next phase of the project.

The pipeline, with an expected capacity of 75,000 barrels per day, will transport refined petroleum products from the Fort Smith, AR-based terminal of Magellan Midstream to the state's Little Rock market.   

The partnership intends to use a portion of a third-party pipeline for part of the route and is currently negotiating an agreement for the same. A new pipeline would be constructed to connect this existing third-party pipeline portion to the Fort Smith terminal and the Little Rock market.

The proposed Arkansas-Little Rock pipeline is expected to be functional in the latter part of 2015, subject to regulatory approvals and conclusion of the third-party pipeline agreement.

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. Lucrative acquisitions and organic growth projects have made major contributions toward Magellan Midstream's development.

Moreover, the partnership owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee and tariff based revenues. Other positive attributes include its investment grade rating and strong track record for distribution growth.

Magellan Midstream currently holds a Zacks Rank #2 (Buy), which implies that it is expected to outperform the broader U.S. equity market over the next one to three months.

One can also consider other players in the industry such as Enterprise Products Partners L.P. EPD, Kinder Morgan Management LLC KMR and Spectra Energy Partners, LP SEP. All these stocks currently carry a Zacks Rank #2.