Is This the Right Time for Buckeye Partners?

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Is This the Right Time for Buckeye Partners? PART 1 OF 11

Buckeye Partners Trading near 52-Week Low: Can It Turn Around?

Buckeye Partners’ recent market performance

Buckeye Partners (BPL), which is mainly involved in crude oil, refined products, and NGLs (natural gas liquids) transportation and terminaling, has been one of the worst performing MLPs in recent months, hitting a new 52-week low of $54.60. It has recovered slightly since then. Overall, the partnership has fallen ~14.0% over the past two months. BPL’s weak recent performance could be attributed to the general pessimism in the midstream sector, volatility in crude oil prices, weak 2Q17 earnings, and possible operational losses from Hurricane Harvey and Hurricane Irma.

Buckeye Partners Trading near 52-Week Low: Can It Turn Around?

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Crude oil has been rallying due to the start-up of Gulf Coast refineries, which were shut down following Hurricane Harvey. For a recent outlook on crude oil prices, read The US Crude Oil Rise: Short Covering or Bulls Back in Action?

Buckeye Partners’ YTD performance

Buckeye Partners had a good start to the year with YTD (year-to-date) gains reaching ~10.0% by mid-February. However, these gains turned into losses by the end of May 2017. BPL hasn’t entered positive territory since then. Overall, it has fallen 14.8% since the beginning of the year. Peers NuStar Energy (NS), Kinder Morgan (KMI), and Magellan Midstream Partners (MMP) have fallen 18.1%, 7.6%, and 9.2%, respectively, YTD. The Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, has fallen 11.3%. BPL is underperforming AMLP by 350 bps (basis points). BPL’s underperformance relative to AMLP could be attributed to its rather high commodity exposure and weak earnings.

Series overview

In this series, we’ll try to find out whether BPL can gain upward momentum after the massive correction. We’ll analyze its recent quarterly earnings, the impact of the recent hurricanes on its operations, Eagle Ford drilling activity, cash flow measures, and its balance sheet position. After that, we’ll look at BPL’s valuations, technical indicators, and analyst recommendations.


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