Earnings

Return to Article

Magellan Midstream To Buy Longhorn Pipeline

The Associated Press

TULSA, Okla. (AP) — Magellan Midstream Partners LP said Friday it will submit an initial $340 million offer for a 700-mile pipeline and other assets of bankrupt Longhorn Partners Pipeline LP.

Magellan's so-called "stalking horse" bid, an initial offer for a bankrupt company's assets, is $250 million for the pipeline system plus about $90 million for product in the pipeline. Magellan said it will finance the acquisition with debt.

Other assets in the deal include a terminal in El Paso, Texas, and more than 900,000 barrels of storage. The completion of the sale will be determined by an auction process and approval from a bankruptcy court and regulators.

Tulsa, Ark.-based Magellan transports, stores and distributes refined petroleum products. Magellan also operates the Longhorn pipeline, which runs from Houston to El Paso.

The Longhorn assets were included in a bankruptcy reorganization petition filed Dec. 22 by Ogden, Utah-based Flying J. The privately owned integrated oil company's subsidiaries include Longhorn Pipeline Holdings LLC.

On Wednesday, Magellan cut its profit outlook for the full year and second quarter as rising oil prices hurt its hedge positions.

The revised forecast calls for a profit of $2.50 per limited partner unit for the full year, and 30 cents for the second quarter. In April, it had estimated it would earn $2.60 for the year and 63 cents for the quarter.

Magellan left intact its estimate of $330 million of cash flow to be distributed to partners.

Shares of Magellan rose 9 cents to $33.48 in morning trading.