Magellan Midstream Partners L.P. (MMP) filed Quarterly Report for the period ended 2009-09-30.
Magellan Midstream Partners L.P. formerly Williams Energy Partners L.P. is a publicly traded partnership formed to own operate and acquire a diversified portfolio of energy assets. The partnership primarily transports stores and distributes refined petroleum products and ammonia. Magellan Midstream Partners L.p. has a market cap of $2.59 billion; its shares were traded at around $38.71 with a P/E ratio of 16.3 and P/S ratio of 2.1. The dividend yield of Magellan Midstream Partners L.p. stocks is 7.3%. Magellan Midstream Partners L.p. had an annual average earning growth of 18.4% over the past 5 years.
Highlight of Business Operations:
During the three and nine months ended September 30, 2009, MMP incurred $6.9 million and $13.6 million, respectively, of costs associated with the simplification of its capital structure. In accordance with Accounting Standards Codification (“ASC”) 810-10-45, Consolidation – Overall – Changes in Parent’s Ownership Interest in a Subsidiary, MMP charged these costs to equity. The amount for the nine months ended September 30, 2009 was reported under the caption “Simplification of capital structure” in the financing activities section of its consolidated statements of cash flows.
Longhorn Pipeline Acquisition. On July 29, 2009, MMP acquired substantially all of the assets of Longhorn Partners Pipeline, L.P. (which we refer herein to as the “Longhorn acquisition”) for $252.3 million plus the fair market value of the linefill of $86.1 million. The Longhorn acquisition primarily included an approximate 700-mile common carrier pipeline system that transports refined petroleum products from Houston to El Paso, Texas and a terminal in El Paso. The El Paso terminal serves local petroleum products demand and distributes product to connecting third-party pipelines for ultimate delivery to markets in Arizona and New Mexico and, in the future, Northern Mexico.
Debt Issuance. In August 2009, MMP issued $250.0 million of 6.55% notes due 2019. In connection with this debt issuance, MMP entered into $100.0 million of interest rate swap agreements to hedge against changes in the fair value of a portion of this debt. See Liquidity and Capital Resources below for further discussion of this matter.
Cash Distribution. During October 2009, the board of directors of Magellan Partners’ general partner declared a quarterly cash distribution of $0.71 per unit for the period of July 1 through September 30, 2009. This quarterly cash distribution will be paid on November 13, 2009 to unitholders of record on November 6, 2009. Total distributions to be paid under this declaration are approximately $75.7 million.
Interest expense, net of interest income and interest capitalized, increased $6.4 million. Magellan Partners’ average debt outstanding, excluding fair value adjustments for interest rate hedges, increased to $1.5 billion for third quarter 2009 from $1.0 billion for third quarter 2008 principally due to borrowings for expansion capital expenditures and the Longhorn acquisition. The weighted-average interest rate on Magellan Partners’ borrowings, after giving effect to the impact of associated fair value hedges, decreased to 5.5% in the current period from 5.9% in the 2008 quarter.
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