Magellan Midstream to expand Crane-to-Houston crude oil pipeline capacity

TULSA, Okla. - Magellan Midstream Partners, L.P. (NYSE: MMP) announced on March 15 that it plans to expand the capacity of its Crane-to-Houston crude oil pipeline to 225,000 barrels per day (b/d).

Based on Magellan's recent successful binding open season, the expanded pipeline capacity is fully committed with long-term agreements.

"The market clearly confirmed the attractive fundamentals of our Crane-to-Houston crude oil pipeline, and we are pleased to increase the scope of our project in response to this strong industry demand," said Michael Mears, chief executive officer. "We continue to believe our Crane-to-Houston pipeline will be the most direct and cost-efficient route to deliver growing West Texas crude oil production to the refineries in the Houston and Texas City area, providing an alternative transportation option that will help alleviate the current crude oil oversupply situation in Cushing, Oklahoma."

Magellan had previously announced the initiation of a project to reverse and convert to crude oil service its pipeline from Crane, Texas, to its East Houston, Texas, terminal, with an expected initial capacity of 135,000 b/d and a cost of $245 million. The project is now estimated to cost $375 million including the cost to expand the system to its maximum capacity of 225,000 bpd.

Subject to receiving the necessary permits and regulatory approvals, the partnership expects the reversed pipeline to begin transporting crude oil at partial capacity by early 2013, ramping to its full 225,000-b/d capacity by mid-2013.

Magellan Midstream 4th quarter profit rises 25 percent on sales growth

Fourth-quarter earnings at Magellan Midstream Partners LP (NYSE: MMP) rose 25 percent as revenue benefited from high commodity prices and growth projects.

For the year, the company projected per-unit earnings of $3.75, above recent estimates of analysts polled by Thomson Reuters for $3.66.

For the current first quarter 2012, the company forecast per-unit earnings of 98 cents, above analysts' estimates of 90 cents.

Chief Executive Michael Mears said the company expects "the favorable momentum of 2011 to continue with another record year projected for 2012 as additional expansion projects come on line."

For the fourth quarter, Magellan Midstream reported a profit of $110.3 million, or 97 cents a unit, up from $88 million, or 78 cents a unit, a year earlier. Excluding mark-to-market impacts, earnings were $1.02 a share. The company in November forecast 93 cents a share, which was slightly below analysts' views at the time.

Revenue increased 22 percent to $486.9 million. Analysts most recently projected $434 million.

Operating margin eased to 28.7 percent from 28.9 percent amid higher operating and product purchases costs.

Based on progress of expansion programs under way, the company raised its 2012 capital spending forecast to $430 million from its November view for $270 million.

Magellan also raised its 2013 estimate to $90 million to complete the projects, from $65 million as it continues to pursue expansion opportunities.

11 large-cap MLP stocks for dividend lovers

For many investors, publicly traded master limited partnerships (MLPs) can be valuable tools for income. As partnerships, MLPs are subject to a special tax code and avoid federal and state corporate income taxes. Their distributions to investors are partially or entirely tax-deferred.

Most MLPs are high yield investments and increase their distributions to investors each quarter, achieving a consistent dividend growth for years. However, investing in MLPs can be tricky due to the disadvantages of holding them in tax-deferred accounts. Investors should consult with their tax advisors before adding MLPs to their portfolios.

The market data for stocks listed below are sourced from Fidelity and data is as of Aug. 26, 2011. All companies on the list have a 12-month dividend yield of at least five percent. The stocks also have market capitalizations above $3 billion and positive average dividend growth over the past five years. The average dividend yield of these 11 stocks is 7.00 percent, while their five-year average dividend growth is 6.29 percent on average.

Boardwalk Pipeline Partners (NYSE: BWP) is a U.S. energy partnership that provides natural gas transportation and storage services in the United States. BWP lost -17.68 percent since the beginning of this year and the stock now has an 8.59 percent dividend yield. In the past five years, BWP increased its dividend payments by 6.68 percent annually. The stock recently traded at $24.56 and has a market cap of $4.84 billion. Jim Simons and Chuck Royce are prominent BWP investors.

Energy Transfer Partners (NYSE: ETP) is a limited partnership that operates in the natural gas transportation business in the United States. ETP lost -8.24 percent year-to-date and the stock now has a 8.24 percent dividend yield. In the past five years, ETP increased its dividend payments by 6.99 percent annually. The stock recently traded at $43.36 and has a market cap of $9.06 billion. Jim Simons holds the largest ETP position.

Enbridge Energy Partners (NYSE: EEP) is a U.S. energy partnership providing crude oil, liquid petroleum and natural gas transportation and storage services in the United States. EEP lost -7.85 percent since the beginning of this year and it has a 7.59 percent dividend yield. In the past five years, EEP increased its dividend payments by 2.86 percent annually. The stock recently traded at $27.34 and has a market cap of $7.17 billion.

NuStar Energy (NYSE: NS) is a U.S. partnership that operates petroleum terminals and provides petroleum transportation services. NS lost -13.11 percent in 2011 and the stock now has a high dividend yield of 7.53 percent. In the past five years, NS increased its dividend payments by 4.35 percent annually. The stock recently traded at $57.40 and has a market cap of $3.62 billion.

Kinder Morgan Energy Partners (NYSE: KMP) is a U.S. energy partnership providing energy products transportation and storage services. KMP has a 6.68 percent dividend yield and returned 1.13 percent since the beginning of this year. In the past five years, KMP increased its dividend payments by 7.26 percent annually. The stock recently traded at $67.82 and has a market cap of $22.38 billion.

Buckeye Partners (NYSE: BPL) is a U.S. energy partnership that distributes petroleum in the United States. BPL lost -5.12 percent since the beginning of this year and it now has a 6.58 percent dividend. In the past five years, BPL increased its dividend payments by 5.84 percent annually. The stock recently traded at $60.45 and has a market cap of $5.55 billion. John Phelan's MSD Capital and Michael Messner’s Seminole Capital are the most prominent BPL investors.

Plains All American Pipeline (NYSE: PAA) is a limited partnership that provides energy products transportation, storage and marketing services in the United States and Canada. PAA has a 6.50 percent dividend yield but lost -1.08 percent since the beginning of this year. In the past five years, PAA increased its dividend payments by 6.27 percent annually. The stock recently traded at $59.36 and has a market cap of $8.78 billion.

Markwest Energy Partners (NYSE: MWE) is a U.S. partnership that provides natural gas transportation and processing services in the United States. MWE has a 6.03 percent dividend yield and gained 6.32 percent since the beginning of this year. In the past five years, MWE increased its dividend payments by 8.76 percent annually. The stock recently traded at $44.10 and has a market cap of $3.45 billion.

Enterprise Product Partners (NYSE: EPD) is a U.S. partnership that distributes natural gas and crude oil in the United States, Canada and the Gulf of Mexico. EPD has a 5.89 percent dividend yield and returned 1.05 percent year-to-date. In the past five years, EPD increased its dividend payments by 5.98 percent annually. The stock recently traded at $40.34 and has a market cap of $33.78 billion.

Williams Partners (NYSE: WPZ) is an American energy partnership that engages in natural gas exploration, processing, storage and transportation. WPZ has a 5.46 percent dividend yield and gained 16.15 percent since the beginning of this year. In the past five years, WPZ raised its dividend payments by 11.50 percent annually. The stock recently traded at $52.00 and has a market cap of $15.03 billion.

Magellan Midstream Partners (NYSE: MMP) is a U.S. partnership that provides transportation and storage services for refined petroleum products. MMP has a 5.29 percent dividend yield and returned 6.50 percent since the beginning of this year. In the past five years, MMP increased its dividend payments by 6.33 percent annually. The stock recently traded at $57.81 and has a market cap of $6.45 billion.

Magellan Midstream generates record quarterly operating profit and net income

Magellan Midstream Partners, L.P. (NYSE: MMP) on Aug. 3 reported a record quarterly operating profit of $128.7 million for the second quarter 2011, compared to $124.7 million for second quarter 2010. The partnership also generated record quarterly net income of $103 million for the second quarter 2011, compared to $102.5 million for second quarter 2010.

Net income per limited partner unit was 91 cents in the second quarter 2011 versus 96 cents in the corresponding 2010 period. Net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, was also 91 cents for second quarter 2011, exceeding the 87-cent guidance provided by management in early May.

Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, increased 17 percent to $117.6 million for second quarter 2011 compared to $100.7 million during second quarter 2010.

"Magellan continues to perform well this year, delivering record quarterly financial results during the second quarter of 2011," said Michael Mears, chief executive officer. "Contributions from recently-completed acquisitions and expansion projects have exceeded our initial expectations, and along with strong commodity performance, are keeping us on track for a record year. We remain focused on additional opportunities to grow our partnership further."

Magellan strikes sour note with plan to “simplify” capital structure

TULSA, Okla. – Stock in Magellan Midstream Partners, L.P. (NYSE: MMP) nosedived following a March 2 announcement that it had reached an agreement with Magellan Midstream Holdings, L.P. (NYSE: MGG) on March to “simplify” their capital structure by transforming the incentive distribution rights and approximately two percent economic interest of MMP's general partner into MMP common units.
Unitholders will receive 0.6325 MMP common units in exchange for each MGG common unit they own at closing, representing a 25 percent premium to the March 2 closing price of MGG's common units. The “simplification” will result in MGG being dissolved and in MMP owning its general partner, which will no longer have an economic interest in MMP.