Published Sat, 03 Jun 2017 09:00:00 -0400 on Seeking Alpha
This research report was jointly produced with High Dividend Opportunities co-author Philip Mause.
Arc Logistics Partners, L.P. (NYSE: ARCX), is an MLP which operates crude oil, refined products, and other terminal facilities. ARCX closed recently at $14.4 and pays a 44 cent per quarter distribution for an annual yield of 12.2%. ARCX - as an MLP - issues a K-1 creating the typical MLP tax issues.
The Business - ARCX is in a simple but very attractive business. It operates 21 terminals with tank storage for crude oil, refined products, methanol, ethanol and other products. It has no exposure to oil pricing and is paid on a volumetric basis. 84% of its revenue is under take or pay contracts and its largest customers are Exxon and Chevron. As described in more detail below, it is able to expand without enormous capital requirements - in some cases, by simply building a new tank on its property. ARCX can expand by simply building tanks one at a time on its existing tank farms rather than by having to acquire entire new facilities; Its capital requirements to expand are comparatively lower than those of an MLP which would have to acquire an entire new tank farm, pipeline or natural gas processing plant for example. Also its assets are strategically located and provide a necessary service for the industry.
Explosive Growth - ARCX has been enjoying explosive growth. The growth was achieve through a number of acquisitions, joint ventures with the seller, and in some cases,... Read more
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