WNR Starts Delaware Project (CLMT) (KMP) (NGL) (WNR)

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Energy downstream operator Western Refining Inc. (WNR) declared start up of the first phase of its Delaware Basin Crude Oil Gathering System. The Mason Station Crude Oil Terminal is located in Reeves County, Texas and is owned and operated by a subsidiary of WNR.

The Mason Station comprises crude oil storage and truck offloading stations. It also includes a pipeline link to El Paso crude oil pipeline of Kinder Morgan Energy Partners L.P. (KMP) – the largest independent owner and operator of petroleum product pipelines in the U.S.

The second phase of WNR’s Delaware Basin System is slated for completion in second quarter 2013. It includes 50 miles of crude oil gathering lines in Southern New Mexico and West Texas. Upon completion, both the phases can together deliver up to 100,000 barrels per day (bpd) of shale crude oil to Kinder Morgan’s crude oil pipeline. The present capacity of the pipeline is 25,000 bpd.

WNR is also evaluating the viability of the third and fourth phases of the Delaware Basin System. The third phase will connect to WNRs’ 16" TexNew Mex pipeline in Chaves County, New Mexico. This link will enable extra supply flexibility for shale crude oil to its El Paso, Texas and Gallup, New Mexico refineries.

Phase four includes the expansion of WNRs’ rail capabilities at its Gallup refinery. At present, the Gallup refinery can load six tanker rail cars per day which could be extended to 20 tanker rail cars per day.

WNR plans to release its first quarter 2013 results on May 2, 2013, before the opening bell. With the success of the current project, WNR is on an expansion path. It looks forward to more such opportunistic programs in the coming years. We believe such accomplishments will garner profits for WNR in the upcoming quarters.

WNR currently retains 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, there are other oil refining and marketing firms in the energy sector that are performing better and are worth considering at the current level. These include Calumet Specialty Products Partners L.P. (CLMT) and NGL Energy Partners L.P. (NGL). Both these stocks sport a Zacks Rank #1(Strong Buy).

CALUMET SPECLTY (CLMT): Free Stock Analysis Report

KINDER MORG ENG (KMP): Free Stock Analysis Report

NGL ENERGY PART (NGL): Free Stock Analysis Report

WESTERN REFING (WNR): Free Stock Analysis Report

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