Magellan becoming a player in pipeline, storage market

A $350 million pipeline acquisition has helped turn Magellan Midstream Partners LP into a player on the pipeline and storage market. It also pushed the Tulsa company to No. 4 on this year's Oklahoma Inc. list.

BY JAY F. MARKS | Published: November 14, 2010 Comment on this article

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Magellan Midstream Partners LP set the stage for a big year in July 2009 when it acquired a 700-mile pipeline system in Texas.

CEO Don Wellendorf said the $350 million acquisition has generated a lot of money for the partnership.

That helped propel Magellan to the No. 4 spot in this year's Oklahoma Inc. rankings. The partnership's performance was bolstered by a 32.6 percent rise in revenue, good for second best among the state's public companies.

"Really the story for Magellan ... is that we're a yield-related company,” Wellendorf said. "We're attractive to investors because we provide a very strong upfront yield. Right now it's between 5.5 and 6 percent.

"People are looking for distribution from us that provides that yield, that they can believe is solid and sound.”

Wellendorf said investing in Magellan is considered low risk because of its stable assets.

"We're all about growing our cash flow, which allows us to grow our distributions to our unit holders.”

Magellan's success in the past year was about more than its Longhorn pipeline acquisition, he said.

The Tulsa-based master limited partnership also completed a $72 million expansion of its Delaware marine terminal in August, adding 1 million barrels of storage capacity and a new truck loading rack.

Wellendorf said federal regulators have allowed Magellan to raise pipeline tariffs by 7.

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