From Zacks
Oklahoma based pipeline operator Magellan Midstream Partners, L.P. (ticker: MMP) recently entered into a new fee based agreement with commodity trader Trafigura Trading LLC for the use of its Corpus Christi condensate splitter. This will settle a lawsuit between the two firms over the facility.
Trafigura had inked an agreement with Magellan Midstream in 2014 to use the condensate splitter. However, Magellan Midstream filed a lawsuit in January 2017 after Trafigura decided to terminate its contract. This new deal seeks to bring about an amicable resolution to the dispute.
Magellan Midstream has recently completely the construction of the splitter which is capable of processing 50,000 barrels per day of condensate. The partnership is expected to commence the commercial operation of the splitter in the second quarter of 2017. Per the new agreement, the partnership is also required to construct additional 300,000 barrels of storage and also make minor modifications to the splitter.
Due to the additions and changes in the new agreement, the capital expenditure for the project has been revised to $330 million from the prior estimate of $300 million. Based on the new estimate, Magellan Midstream expects to generate seven times EBITDA multiple on its investment. The partnership affirms distributable cash flow guidance of $1 billion for 2017.
