Plains Acquires Assets Worth $175M – Analyst Blog

White Cliff Pipeline LLC is an owner of a 526-mile, 12-inch, common-carrier crude oil and condensate pipeline, which transports production from the DJ Basin and the Mid-Continent region to the Cushing interchange. This acquisition will help Plains All American to bolster its existing position in the Cushing interchange. The partnership purchased the interest in these assets indirectly from SemGroup Corporation.

 

Plains All American Pipeline increased its stake in the Capline pipeline systems to 54% by acquiring an additional 11% interest from a unit of BP Plc (BP). Capline is a 633-mile, 40-inch mainline crude oil pipeline that transports shipping crude oil and condensate to the Midwestern U.S. The acquisition of the additional interest in Capline will benefit Plains All American Pipeline, as Capline is connected to the partnership’s existing St. James and Patoka area terminal facilities, which upon completion of expansion will have approximately 7 million barrels and 5 million barrels of storage capacity, respectively.

 

The rest of the assets acquired by the partnership include 12 storage tanks with a combined capacity of 55,000 barrels, 34 miles of pipelines, a truck and rail terminal, and 20 acres of land, helping it to expand inorganically.

 

The adjusted earnings of Plains All American Pipeline at the end of second-quarter 2010 were 57 cents per unit compared with 74 cents per unit in the year-ago comparable period. The Zacks Consensus Estimates for third quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are 64 cents per unit, $2.79 per unit and $3.12 per unit, respectively.

 

Plains All American Pipeline currently retains a Zacks #3 Rank (short-term ‘Hold’ rating). The closest peers of the partnership are Enterprise Products Partners L.P. (EPD) and Sunoco Logistics Partners L.P. (SXL)

 

Houston, Texas based Plains All American Pipeline owns assets strategically located in well-established oil producing regions, catering to major U.S. refinery and distribution markets. Other than organic growth opportunities, the partnership also relies on acquisitions to spur growth.