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.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, goal, believe, estimate, expect, projected, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (4) shut-downs or cutbacks at refineries or other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016. Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
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SOURCE Magellan Midstream Partners, L.P.