Zacks_Analysts' Blog : Kinder Morgan Boosts BOSTCO Stake - Analyst Blog

Kinder Morgan Energy Partners L.P. ( has increased its holding in Battleground Oil Specialty Terminal Company, LLC (BOSTCO) project to 98% following the purchase of an additional 50% stake from TransMontaigne Partners L.P. (TLP).

Kinder Morgan, which currently holds ownership of the BOSTCO project, started construction in December 2011. A consumer at the BOSTCO facility will be holding the remaining 2%.

The first phase of the $430 million oil terminal situated on the Houston Ship Channel involves construction of 52 storage tanks, with an estimated capacity of 6.6 million barrels intended for handling residual fuel, feedstocks, distillates and other black oils. Kinder Morgan has executed terminal service agreements and/or letters of intent for the majority of capacity.

The BOSTCO project will include one of the deepest vessel drafts in the Houston Ship Channel and is expected to be value accretive to Kinder Morgan unit-holders when the first phase of the development is commissioned by the third quarter of 2013. The project positions Kinder Morgan favorably to take advantage of the trend to export petroleum-related products overseas. The completion of the project is scheduled for first quarter 2014.

TransMontaigne Partners sold its 50% interest in the BOSTCO project to Kinder Morgan. The divestiture took place after Morgan Stanley (MS), which indirectly controls TransMontaigne’s general partner, disclosed its disapproval to the BOSTCO project just when it had commenced construction of phase one.

We believe that Kinder Morgan is on track to achieve its growth target, thanks to organic expansions, joint ventures and acquisitions. Kinder Morgan’s high-quality inventory of assets and an efficient management team provide the necessary support to strengthen its presence in the energy sector.    

Kinder Morgan holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain a Hold rating on the stock.