Oil refiner and marketer Western Refining Inc. (WNR) announced that it has signed a deal with the integrated energy major ConocoPhillips (COP), to acquire the latter’s Wingate Fractionation Plant in Gallup, New Mexico. The transaction is anticipated to close in early next month. However, financial details of the agreement were not disclosed.
The 25,000 barrel per day facility, which is currently idle, includes rail loading and offloading and storage facilities. The facility also has natural gas liquids (NGL) fractionation capability.
Management at Western Refining added that this acquisition would prove strategically beneficial for the company as the facility is located near its existing Gallup Refinery. These logistics assets would facilitate greater flexibility and connectivity for Western Refining.
El Paso, TX-headquartered Western Refining is an independent refiner and marketer of refined petroleum products in the Southwestern and Mid-Atlantic regions of the U.S. A shareholder friendly financial policy and the initiatives to reduce operating costs work in favor of the firm. A major advantage for the company is its proprietary access to pipelines, which inhibits lower-cost competitors from supplying Western Refining's key markets.
In an effort to tighten fuel emission norms, the Environmental Protection Agency (EPA) has proposed new gasoline standards, asking refiners to significantly reduce sulfur content in gasoline starting from 2017. These new standards are expected to increase capital expenditures and weigh on earnings and cash flows.
Currently, Western Refining carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players from the same industry like EnLink Midstream, LLC (ENLC) and Murphy USA Inc. (MUSA). Both these stocks hold a Zacks Rank #2 (Buy).
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