Genesis Energy LP (NYSE:GEL) is a Master Limited Partnership (MLP) providing transport, refining, storage and other energy related services to its customers. The stock also pays a significant distribution for those investors looking for income.
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Genesis Energy LP received $46 million in operating income from the Pipeline Transportation segment in the 12 months ending Sept 30, 2010. The company owns four separate pipeline networks running approximately 425 miles across Texas, Alabama, Mississippi and Florida. These are used to transport crude oil, and Genesis Energy LP also owns approximately 900,000 barrels of above-ground storage facilities in these networks.
Genesis Energy LP owns 269 miles of pipeline used to transport carbon dioxide, including the Northeast Jackson Dome pipeline, which brings carbon dioxide to oil fields undergoing tertiary recovery.
Genesis Energy LP has a 20-year lease with Denbury Resources (NYSE:DNR) to supply carbon dioxide to the company's fields in Mississippi. Denbury Resources used to own the general partner of Genesis Energy LP and sold it in February 2010.
Genesis Energy LP produced $59 million in operating income from the Refinery Services segment in the 12 months ending Sept 30, 2010. This company uses caustic soda to remove sulfur from natural gas during the refining process. This process generates large amounts of sodium hydrosulfide, which the company sells to customers in the mining, paper and pulp industries. The company's customers include International Paper (NYSE:IP) and BHP Billiton (NYSE:BHP)
Supply and Logistics
Genesis Energy LP also has a large supply and logistics business which generated $29 million in operating income in the 12 months ending Sept 30, 2010. The company owns crude oil and refined products storage and transportation assets here, including trucks and barges.
Genesis Energy LP is also involved in the industrial gas business and reported $12 million in operating income here in the 12 months ending Sept 30, 2010. The company sells carbon dioxide to customers for industrial uses including beverage carbonation.
Genesis Energy LP recently announced the purchase of a 50% interest in the Cameron Highway Oil Pipeline Company (CHOPS) from Valero (NYSE:VLO). The operator of CHOPS is Enterprise Products Partners, L.P. (NYSE:EPD), which also owns the other 50%.
CHOPS is a 380 mile pipeline segment that transports crude oil from the Gulf of Mexico to refineries in the Gulf Coast region. The pipeline has a capacity of 500,000 barrels per day and will give the company exposure to growing production from offshore developments in the gulf area.
Genesis Energy LP also paid a distribution of $1.55 out to investors over the last four quarters, giving a yield of 6.4%. The company has increased its distribution for 21 consecutive quarters.
The Bottom Line
Genesis Energy LP is involved in the transport, refining, and storage of crude oil and natural gas and also comes with a high yield for those that need some cash flow. (Find out how to stay on top of data reports that could cause volatility in these markets. See Become An Oil And Gas Futures Detective.)
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