Genesis Energy, L.P. GEL recently won a downstream contract from Fieldwood Energy and Ridgewood Energy-operated Ridgewood Katmai and ILX Prospect Katmai. Per the deal, it will be responsible for transporting all crude oil production from the Gulf of Mexico Katmai field development, which is located at Green Canyon blocks 39 and 40.
The firm with operations concentrated in Texas, Louisiana, Alabama, Florida, Mississippi and New Mexico will deliver shipping services through the Tarantula production platform, located in the block 308 of South Timbalier Island. The Fieldwood-owned Tarantula platform is competent in processing around 25,000 barrels per day (bpd) of oil from the Katmai field development.
Genesis Energy will use its fully-owned Tarantula lateral to move crude output from the Tarantula platform to its majority-owned Poseidon system for onshore supply. The initial deliveries of crude oil are estimated to begin in the second quarter of 2020.
In a separate press release, Genesis Energy’s board of directors declared a quarterly cash distribution of 15 cents per unit to its common unitholders of record on May 1 along with a distribution of 8.75% Class A Convertible Preferred Units . The payout will be made on May 15.
Last month, this diversified midstream energy master limited partnership announced its plan to trim its quarterly distribution by 73% from the prior payout to 15 cents per unit for the quarter ended Mar 31 as the business weakens following the coronavirus outbreak. With this strategic move, Genesis Energy will be able to save around $200 million annually and plans to spend the amount on reducing its financial leverages. Thus, the firm will maximize its cash flows during the pandemic when fuel demand sees a drastic fall and oil prices plunge massively. Genesis Energy added that its prime intention is to minimize costs, optimize unitholder value and strengthen its financials.
Zacks Rank & Stocks to Consider
Genesis Energy currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are Calumet Specialty Products Partners, L.P. CLMT, BP (LON:BP) Midstream Partners LP BPMP and Summit Midstream Partners, LP SMLP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Summit Midstream Partners, LP (SMLP): Free Stock Analysis Report
Genesis Energy, L.P. (GEL): Free Stock Analysis Report
Calumet Specialty Products Partners, L.P. (CLMT): Free Stock Analysis Report
BP Midstream Partners LP (BPMP): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research