Pair Trade: BPL/SMLP
Buckeye Partners L P
Energy
10/21/2013
Presented
| Date | 10/16/2013 |
| Price | $65.63 |
| Market Cap | $7.55B |
| Ent Value | $10.24B |
| P/E Ratio | 32.53x |
| Book Value | $29.15 |
| Div Yield | 6% |
| Shares O/S | 115.03M |
| Ave Daily Vol | 410,000 |
| Short Int | 0.88% |
Current
| Price | $41.46 |
| Market Cap | $6.38B |
| Buckeye Partners, L.P. owns and operates refined petroleum products pipeline systems in the United States. Its Pipelines & Terminals segment transports refined petroleum products; and provides bulk storage and terminal throughput services in the continental United States. This segment owns and operates approximately 6,000 miles of pipeline serving approximately 110 delivery locations; and has 100 active products terminals with aggregate storage capacity of approximately 40 million barrels. The company’s International Operations segment provides marine terminal throughput, marine bulk storage, and other related services. This segment operates through two petroleum product terminals located on Grand Bahama Island, in The Bahamas and in Puerto Rico with an aggregate storage capacity of approximately 30 million barrels. Its Natural Gas Storage segment provides natural gas storage services through a facility with approximately 30 billion cubic feet of working natural gas storage capacity located in Northern California. The company’s Energy Services segment engages in the wholesale distribution of refined petroleum products, including gasoline; propane; ethanol; biodiesel; and petroleum distillates, such as heating oil, diesel fuel, and kerosene to wholesalers and commercial users. Its Development and Logistics segment provides contract operations, construction management, and asset development services to third-party pipeline and energy assets, and energy companies in the United States. This segment owns and operates 2 underground propane storage caverns with approximately 800,000 barrels of throughput and storage capability in Indiana and Illinois; and a 30-mile ammonia pipeline and 25 miles of pipeline in Texas. Buckeye GP LLC serves as the general partner of the company. Buckeye Partners, L.P. was founded in 1886 and is headquartered in Houston, Texas. |
Highlights
The presenter likes the risk/ reward of pairing a long position in Buckeye Partners (BPL) with a short in Summit Midstream (SMLP). The former is a well-managed mid-stream logistics provider with no Incentive Distribution Rights (IDRs) and a nearly 7% yield, and the latter owns what the presenter characterized as lower-quality gathering and processing assets, yields just over 5% and trades at a lofty 22x EBITDA.
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