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Which Segment Could Drive Buckeye Partners’ Performance in 1Q18?

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May. 1 2018, Updated 6:33 a.m. ET

Domestic Pipelines & Terminals segment

Domestic Pipelines & Terminals, which is Buckeye Partners’ (BPL) largest business segment, posted 9.7% year-over-year adjusted EBITDA growth in 4Q17. This trend is expected to continue in 1Q18 due to the positive impact of colder winters on higher heating oil demand, higher refined products throughput volumes, a contribution from the placement of Phase 1 of the Michigan/Ohio project, and strong Permian volumes.

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Global Marine Terminals segment

Buckeye Partners’ Global Marine Terminals segment performance is expected to be negatively impacted by lower capacity utilization. This is mainly due to BPL’s inability to renew a long-term contract in one of its Caribbean facilities. The average capacity utilization at the Global Marine Terminal was 88.0% during 4Q17. 

However, the partnership expects the utilization to improve in 2018, driven by recent renewals including a long-term contract with Marathon Petroleum Corporation (MPC) and recontracting of the open capacity. These negatives could be partially offset by VTTI acquisition and the ramp-up of Buckeye Texas Partners assets.

Merchant Services segment

Buckeye Partners’ Merchant Services recovered slightly in 4Q17. This segment saw a 4.6% YoY adjusted EBITDA increase. This trend is expected to continue during 1Q18, supported by strong commodity prices and volume growth.

In the next article, we’ll look into Buckeye Partners’ distribution plans and coverage for 2018.

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