Nov. 02–Buckeye Partners LP said Friday it will sell more than $1.4 billion worth of assets as part of a strategic review, but the move will not disrupt hundreds of employees at its Lehigh County operations.
The Houston-based company said it expects to close by the end of the year on the sale of two holdings: Its 50 percent stake in a global marine terminal business VTTI BV for $975 million, and a package of pipeline and terminal operations worth $450 million. The U.S. assets to be sold include a jet fuel pipeline in Florida; pipelines and terminal facilities serving airports in Nevada, California and Tennessee; and refined petroleum products terminals in California.
Buckeye officials did not address the Lehigh County operations during the conference call, but Kevin J. Goodwin, vice president and treasurer, said in an interview that the company does not expect its moves to affect Lehigh Valley employees or operations.
Buckeye’s Lehigh Valley presence spans more than 50 years, when the company moved its technical offices from Ohio to the area. It maintains a regional office with a pipeline control center in Upper Macungie Township and has a sprawling pipeline tank farm in Lower Macungie and Upper Milford townships. Together, those operations employ about 350 people.
The company also did not identify buyers for VTTI stake or the asset package. However, Reuters said Vitol, a global energy trader, would retain its 50 percent stake, while IFM, an institutional fund manager, would own the other 50 percent.
Buckeye also announced a 40 percent cut in its quarterly dividend to 75 cents per unit. For at least the previous four quarters, Buckeye’s quarterly cash distribution was slightly more than $1.26 per unit. The company uses units rather than shares because its corporate structure is that of a publicly traded master limited partnership.
The new strategy, Buckeye said, will help it maintain its credit rating, increase financial flexibility and reallocate capital toward assets with “higher-return growth opportunities.”
During the earnings call, Buckeye CEO Clark C. Smith said the company expects a decision soon from federal regulators on its plan to move fuels in two directions between Altoona and Pittsburgh that should enable it to begin the service early next year. Goodwin did not have any more details.
Buckeye wants to be able to bring fuels from Midwest refiners to customers farther east in Pennsylvania, but opponents say it will hurt competition. The company filed a request in April with the Federal Energy Regulatory Commission to move the gas in two directions. The pipeline now moves from east to west. In July, the state Public Utility Commission denied the request.
Also Friday, Buckeye reported a third-quarter loss that fell short of analysts’ expectations.
The third-quarter net loss attributable to Buckeye was more than $745.8 million, or $4.86 per unit, compared to a profit of nearly $116.2 million, or about 82 cents per unit, in the third quarter of 2017.
Revenue also fell about 1.4 percent year over year to $909.5 million for the quarter, also short of analysts’ expectations of $914.1 million. However, revenue for the first three quarters of the year is $3.03 billion, up 12 percent compared to the same period last year.
Adjusted for EBITDA, or earnings before interest, tax, depreciation and amortization, Buckeye made $253.7 million during the quarter, down from $277.3 million for the year-ago quarter.
One of the largest independent pipeline and terminal owners and operators in the U.S., Buckeye stores, handles, and transports petroleum products for commercial customers such as airlines and railroads. It employs about 2,000 people overall in the U.S and the Caribbean.
Buckeye’s stock ended the week at $33.74 in New York Stock Exchange trading, down 7 cents.
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