December 7, 2010 [OPIS] - Watch for TransMontaigne to pull the trigger on at least a deal or two next year, and don't be surprised to see the company resort to a joint venture to accomplish something of scale. Executives at the Denver-based Master Limited Partnership acknowledged at a conference today that they are approaching completion dates on organic projects and see lots of expansion opportunities thanks to major divestment of terminal and pipeline assets.
At a Wells Fargo conference devoted to Master Limited Partnerships, CEO Chuck Dunlap said that TransMontaigne has a “robust list of acquisitions” on its radar, and predicted that several deals will come to fruition in 2011. He hinted that those deals would involve existing facilities as well as greenfield sites. He expressed confidence that the MLP would be able to raise sufficient funds in the capital markets as opportunistic plays were presented.
The company just completed its best quarter since it was spun off as an MLP, with $11.3 million in operating income in the third quarter. A subsidiary of Morgan Stanley is a beneficiary since Morgan Stanley is the General Partner of the MLP.
Ongoing projects include a 700,000-bbl expansion of light products storage at Collins, Miss., with completion slated next year. Executives believe the build-out will help contribute another $4.1 million to the TransMontaigne system. The other major internal project that will wrap up soon is the installation of ethanol blending equipment throughout the southeast.
Dunlap and chief financial officer Fred Boutin noted that the most profitable segments of the company’s business were the terminals in Florida and in Mobile, Ala., as well as the southeastern terminals that mostly border the Colonial Pipeline. The Florida system, with some 7.3 million bbl of storage, represents about 36% of network margins and the southeastern system, with 9.1 million bbl of storage, reflects a 35% slice of the margin pie.
On the other extreme, terminals in Arkansas City, Ark., and Baton Rouge, La., have proved to underperform in recent quarters.
