PG&E Corporation (PCG), PAA Natural Gas Storage, L.P. (PNG): A Deeper Look Inside the Hidden Assets of Buckeye Partners, L.P. (BPL)

Development and logistics
Of Buckeye’s three service businesses, the development and logistics business provides a nice consistent boost to the bottom line. That boost, however, was just 2% of its adjusted EBITDA last quarter, but given that the other two segments lost money last year, it’s the consistency that counts.

Overall, there are three primary components to this segment. First, it operates or maintains third-party pipelines for major oil, gas, and chemical companies. It’s also responsible for identifying and completing potential acquisitions and organic growth projects for the company. Finally, it offers a variety of services to customers including project origination, asset development and project management.

The bottom line here, Buckeye investors can expect growth to come from its development and logistics segment. A majority of this segment’s business is dedicated to developing, operating, and maintaining pipeline assets along the Gulf Cost for third-party operators. There’s potential for Buckeye to acquire stakes in the projects it develops as well as to acquire the assets it’s currently operating.

My Foolish take
Buckeye Partners, L.P. (NYSE:BPL)’s service businesses serve to complement and grow the company’s core business. If there is one oddity in the collection, it’s the natural gas storage business. However, it has the potential to be nice fee-based business once spreads improve, which is why it fits in well with an MLP like Buckeye.

The article A Deeper Look Inside the Hidden Assets of Buckeye Partners originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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