Buckeye Partners Expands Role in Eagle Ford, Gulf Coast in Third-Quarter 2014, Acquires Hess Terminals

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Researched by Industrial Info Resources (Sugar Land, Texas)--Midstream services provider Buckeye Partners LP (NYSE:BPL) (Houston, Texas) reported solid overall gains for third-quarter 2014, as long-anticipated projects became operational and major acquisitions boosted the company's presence on the U.S. Gulf Coast and in the Eagle Ford Shale. Net income was reported to be $102.94 million, a 33.25% increase from third-quarter 2013.

Industrial Info is tracking $31.5 million in active projects involving Buckeye, including $11 million in inspections, upgrades and maintenance outages in Ohio. Buckeye also is performing a $1 million replacement of a vapor recovery unit at a petroleum terminal in Cleveland. The terminal has eight tanks and six loading racks. The replacement is expected to kick off in January.

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Total revenues for the quarter stood at $1.57 billion, a 46.53% increase from the same period last year. During the quarter, a 1.1 million-barrel crude oil storage project at the company's Chicago facility became operational. Buckeye also acquired an 80% interest in Buckeye Texas Partners LLC from Trafigura AG (Amsterdam, Netherlands) for $860 million. Trafigura still holds the remaining 20%.

These actions are furthering Buckeye's move into the crude oil market, as the deal with Trafigura includes the ownership of three crude oil and condensate-gathering facilities in the Eagle Ford shale; a deep-water, high-volume marine terminal on the Corpus Christi Ship Channel; and a condensate splitter and LPG storage complex, also in Corpus Christi.

"This acquisition is part of our strategy to improve Buckeye's geographic and product diversification," said Clark Smith, the chairman, president and chief executive officer of Buckeye, in a conference call. "It establishes a fourth major energy hub for Buckeye, in addition to a Chicago complex, the New York harbor, and Caribbean hubs. It also further diversifies the products we handle, expanding our crude and condensate storage, throughputting and processing capabilities, while also adding liquefied petroleum gas (LPG) and other downstream products."

Capital expenditures for the quarter were reported to be $99.32 million, compared with $109.14 million in the same period last year. Although the company's Pipelines & Terminals business saw an increase in spending, there was a significant drop in investment in the Global Marine Terminals business. Maintenance expenditures dropped to $20.43 million, from $26.1 million.

Buckeye also completed the integration of the terminals it acquired from Hess Corporation (NYSE:HES) (New York, New York) last year in an $850 million deal. Among them were refined petroleum product terminals in Groton, Connecticut, and Jacksonville, Florida, which are undergoing April-through-December tank inspections and upgrades this year and next year, respectively.

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"These [Hess] assets are fully integrated, and they continue to exceed our performance expectations," Smith said in the conference call. "We applied our best practices operating model across these terminals, and have worked to increase their utilization through an aggressive commercial marketing plan. An example of the commercial success we've enjoyed is our previously announced strategic gasoline reserve storage contract, awarded to Buckeye by the U.S. Department of Energy. This five-year agreement provides for gasoline being stored at an underutilized former-Hess terminal in New York harbor, as well as one of our Buckeye terminals in Maine.

"In addition, New York's Governor Cuomo announced last week the selection of Buckeye to perform similar gasoline storage services at six Buckeye terminals in upstate New York."

For more information, visit Industrial Info's North American Oil & Gas Pipeline Project Database and North American Terminals Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.