Why Buckeye Partners Doesn’t Expect a Distribution Cut in 2018



Buckeye Partners’ 4Q17 distributions

In this article, we’ll look into Buckeye Partners’ (BPL) distribution plans for 2018. But first, let’s look into BPL’s recent quarter distribution. Buckeye Partners declared a flat distribution of $1.2625 per unit for the fourth quarter of 2017, which represented a 2.0% YoY (year-over-year) increase compared to the same quarter in the previous year. Based on the current distribution, the publicly traded partnership is trading at an attractive distribution yield of 9.9%. 

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Buckeye Partners’ distribution plans

Buckeye Partners managed to cover its distribution in the fourth quarter of 2017 with distribution coverage of 1.01x. BPL expects its distribution coverage to fall below 1 in 2018 due to lower terminal capacity utilization and other factors. However, the partnership doesn’t expect to announce a distribution cut even if its distribution coverage falls below 1.

Buckeye Partners’ peer NuStar Energy (NS) recently announced a ~45% distribution cut, effective the first quarter of 2018. This cut was mainly due to a massive decline in the partnership’s distribution coverage.

In the next part of this series, we’ll look into Buckeye Partners’ outlook and recent analyst recommendations.


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