Ferrellgas Partners L.P. FGP – a leading distributor of propane and related equipment in the U.S. – further expanded its midstream business through the acquisition of Bridger Logistics, LLC for nearly $837.5 million, subject to certain closing adjustments. Bridger Logistics is a provider of integrated crude oil midstream services.
Ferrellgas Partners has lately ventured into the midstream business through the acquisition of Sable Environmental, LLC in May 2014.
Demand for midstream services is on the rise in the U.S. due to increasing oil and natural gas production. So, expanding its position in this growing market seems to be a prudent decision on the part of Ferrellgas’ management.
Ferrellgas Partners has been following an acquisition driven growth strategy for more than the last seven decades. The addition of Bridger Logistics, which owns and operates assets across the midstream value chain and can provide end-to-end crude oil logistics, including trucking, terminaling, pipeline, rail, and maritime, will expand the partnership’s midstream business across North America.
Since Bridger Logistics has operations in 14 U.S. states and in all major U.S. crude oil production regions, it is expected to be immediately accretive to Ferrellgas’ earnings and support further distribution growth.
The acquisition will help Ferrellgas to diversify its existing business, add significant scale to its growing midstream platform and offer a comprehensive portfolio of crude-focused midstream assets to its customers.
However, Ferrellgas Partners’ earnings per unit and total revenues missed the Zacks Consensus Estimate in the second quarter of fiscal 2015 by 7.3% and 18.7% respectively. On a year-over-year basis, the partnership’s top line plunged 23.4% primarily due to lower propane and other gas liquids sales.
Ferrellgas Partners currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader space are LRR Energy, L.P. LRE and Pembina Pipeline Corporation PBA, sporting a Zacks Rank#1( Strong Buy) and Holly Energy Partners L.P HEP, carrying a Zacks Rank #2 (Buy).
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