On Nov 21, 2014, the units of Buckeye Partners, L.P. (BPL) touched a 52-week high of $85.14. The unit price finally closed at $82.58, up by a penny from the previous day’s closing.
We identified several catalysts, including systematic capital investments in organic growth projects and strategic acquisitions, steady asset divestments and payment of cash distribution at regular intervals, which have collectively helped Buckeye Partners to reach the 52-week high mark. Going forward, these positives are expected to drive the partnership’s performance.
Buckeye Partners has a well-set midstream asset base, located in several mineral-rich regions in the U.S. and other international locations. The partnership continues to enhance its existing operations through acquisitions and organic expansion ventures.
Buckeye Partners remains well focused on its inorganic expansion strategies. In Sep 2014, the partnership completed the acquisition of an 80% interest in Buckeye Texas Partners LLC for $860 million. In 2013, the partnership had acquired 20 liquid petroleum products terminals from Hess Corporation (HES). These acquisitions will enable Buckeye Partners to ensure a stable future cash inflow backed by long-term service agreements.
Buckeye Partners is also investing substantially to expand its pipeline capacities and terminals. The partnership invested $99.3 million during the third quarter of 2014 and intends to invest around $100 million in the fourth quarter. During the third quarter, Buckeye Partners completed its rail capability at Perth Amboy. It is also in the middle of several projects, including the expansion of storage capacity at the Texas Hub. These projects will allow Buckeye Partners to meet increasing midstream service demand from the exploration and production companies.
In addition, Buckeye Partners also follows a strategic asset divestment strategy and plans to utilize the proceeds to repay its existing debts. This initiative will help the partnership to reduce its interest burden, going forward.
Buckeye Partners is keen on maximizing unitholder wealth through the payment of regular and incremental distributions. In Aug 2014, the partnership increased its quarterly distribution rate around 1.1% sequentially to $1.1125 per unit.
Buckeye Partners currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Atlas Pipeline Partners, L.P. (APL) and Magellan Midstream Partners LP (MMP), each carrying a Zacks Rank #2 (Buy).
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