TULSA, Okla., March 21, 2017 /PRNewswire/ — Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has entered into a new fee-based, take-or-pay agreement with Trafigura Trading LLC for the exclusive use of Magellan’s condensate splitter in Corpus Christi, Texas. Magellan recently completed construction of the splitter, which is capable of processing 50,000 barrels per day of condensate and is fully supported by the long-term commitment from Trafigura. Based on the new agreement, Magellan expects to begin commercial operation of the splitter during late second quarter 2017.
In conjunction with the new agreement, Magellan will build an additional 300,000 barrels of storage (for a total of 1.5 million barrels of storage to support the condensate splitter) and make other minor modifications to the splitter, increasing the expected capital spending for the project to $330 million from the prior estimate of $300 million. Based on the new spending estimates for the splitter, Magellan expects to generate a 7 times EBITDA multiple on its investment.
The new agreement was entered into as part of an amicable resolution of the dispute between the parties under the previous contract. Magellan has dismissed its lawsuit against Trafigura as part of such resolution.
Further, Magellan reaffirms its annual distributable cash flow (DCF) guidance of $1.0 billion for 2017. Although the partnership’s initial 2017 guidance conservatively assumed no revenue generated from the splitter, commodity margins have recently contracted, resulting in management’s reaffirmed guidance of $1.0 billion DCF for full-year 2017. Management also remains committed to its goal of increasing annual cash distributions by 8% in both 2017 and 2018, which would result in an expected distribution coverage of 1.2 times the amount needed to pay cash distributions each year.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation’s refining capacity, and can store approximately 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.