Energy Transfer Partners to Drop MACS to Susser Petroleum - Analyst Blog

Natural gas transportation and storage partnership, Energy Transfer Partners LP (ETP) declared its first asset dropdown transaction with Susser Petroleum Partners LP (SUSP). The transaction is in line with Energy Transfer Partners' previously announced plan to drop all its retail gas stations to Susser Petroleum Partners −  an unit of gasoline retailer Susser Holdings Corp. Last month, Energy Transfer Partners completed the acquisition of Susser Holdings.

As part of the drop down program, Energy Transfer Partners will sell its unit Mid-Atlantic Convenience Stores LLC (MACS) to Susser Petroleum Partners. Assets of MACS include 320 retail convenience stores and consignment sites situated at Virginia, Washington, D.C., Maryland, Tennessee and Georgia.  

Energy Transfer Partners is expected to get $556 million cash along with 4 million newly issued common units of Susser Petroleum Partners from the sale. The total transaction is valued at $768 million. The divestment – which will likely be completed by the end of this year − is however dependent on customary closing conditions. Energy Transfer Partners believes that the transaction will be instantly accretive to its distributable cash flow.

Moreover, Energy Transfer Partners – which acquired Philadelphia-based refining and petroleum product marketing company Sunoco Inc. in 2012 – has decided to change the name of Susser Petroleum Partners to Sunoco LP. In the New York Stock Exchange (NYSE), Sunoco LP will be traded under the ticker symbol “SUN”.  The choice of the SUN ticker symbol and the change of the name to Sunoco LP. reflect Energy Transfer Partners' intention to take advantage of well established Sunoco brand name.

In a separate development, Energy Transfer Partners stated that Susser Petroleum Partners has decided to acquire Aloha Petroleum Ltd – the largest independent marketer of gasoline in Hawaii. This transaction is also expected to close by the fourth quarter, pending regulatory approvals.

Aloha Petroleum – which is also one of the largest operators of convenience store in Hawaii – has six fuel storage terminals along with a broad network of wholesale fuel distribution in the islands. For the purchase, Susser Petroleum Partners will likely spend $240 million. Aloha Petroleum currently operates gas stations under Royal Dutch Shell plc (RDS.A), Aloha and Mahalo brands.

Dallas, Texas-based Energy Transfer Partners currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can look at better-ranked player in the energy sector like Patterson-UTI Energy Inc. (PTEN). The stock sports a Zacks Rank #1 (Strong Buy).

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