Magellan Midstream & Occidental's Pipeline to Come Online - Analyst Blog

On Jun 6, Tulsa, OK-based publicly traded energy pipeline partnership, Magellan Midstream Partners L.P. MMP and oil and gas exploration and production company, Occidental Petroleum Corp. OXY owned BridgeTex Pipeline Company, LLC announced plans of starting commercial operations of its BridgeTex Pipeline, located in Texas.  

The company announced that it is ready to receive applications from spot shippers and intends to start initial commercial operations in the third quarter of the year, as part of the commissioning process. The company has already started filling storage tanks at the beginning of the pipeline and will fill the pipeline in the near future.

The BridgeTex pipeline, when fully operational, will have a transport capacity of 300,000 barrels of crude per day. The pipeline will transport crude oil from Colorado City, TX to the Houston Gulf Coast area and comprise about 450 miles of new pipelines. Magellan Midstream will act as the construction manager as well as the operator of the pipeline.  

The pipeline system will offer shippers the option to access the refining capacity and large transportation hubs in the Houston Gulf Coast area. The pipeline would also connect to several third-party terminals and distribution systems, which would provide shippers a wider area of coverage.

Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee and tariff-based revenues. The partnership's expansion plans, a sound liquidity position and strong track record for distribution growth are the other positives.

Los Angeles, CA-based Occidental Petroleum is an integrated oil and gas company, with significant exploration and production exposure. The company's steady progress in growth projects, along with simultaneous strategic asset divestment, should help in improving its future performance.

While Occidental Petroleum carries a Zacks Rank #3 (Hold), Magellan Midstream sports a Zacks Rank #1 (Strong Buy). Other players worth considering in the energy sector include Encana Corp. ECA and Ultra Petroleum Corp. UPL, both of which have a Zacks Rank #1.