|Blueknight is among the top-ten public companies in the state as part of this year's Oklahoma Inc.
|Moves made this past year by Blueknight Energy Partners are paying off for the firm.
The Tulsa-based company is among those in Oklahoma that turned in a top-ten performance for Oklahoma Inc., an annual review of publicly traded companies based here.
Alex Stallings, Blueknight's chief financial officer, said the company is in a good place strategically.
He said the company achieved that goal about a year ago through an arrangement it entered into with Ergon, Inc. to acquire Blueknight's general partner. Before the deal, Ergon already was one of Blueknight's major customers.
The deal brought nine additional asphalt terminals with 2 million barrels of storage into Blueknight's network of terminals across the nation, giving it exposure to additional business opportunities it continues to work to expand.
When the deal was announced, Blueknight CEO Mark Hurley called it "transformative."
And a year in, Stallings said the arrangement is working very well.
"They actually had been a customer of ours since 2009, so we've known them for a long time," Stallings said. "The timing was just right for them to kind of step in and take ownership of the general partner of our company.
"And it's been a very nice transition. We had a good general partner previously, but with Ergon, there's a very strong cultural and overall strategic relationship between the two companies," Stallings said, adding that about half of Blueknight's 54 asphalt terminals provide storage services to Ergon.
Paving the way
Through Blueknight's network of 54 asphalt terminals, the company provides its customers with a base ingredient they need to build and rebuild roads.
Blueknight brings customers' product to its terminals using pipelines, trucks, rail, ships and barges. It stores the liquid asphalt and blends it with other products to meet exact specifications the customers need as they go about doing their work.
Road builders transport the liquid asphalt from Blueknight's terminals to construction sites using trucks. At a road construction site, the liquid asphalt is blended with rock and applied to roadbeds. Once it hardens, you've got a road.
"Each of the states has different recipes for their roads, so we blend it to spec," Stallings said.
The company has 9.6 million barrels of storage at its 54 asphalt terminals, which are in 26 different states.
"Our asphalt terminal business benefits really from infrastructure projects," he said.
The center of Blueknight's oil storage system is the 6.6 million barrels of capacity it has at its Cushing terminal facility, part of the nation's largest commercial storage hub for oil.
Blueknight's 34 tanks are tied into all of Cushing's terminal systems, making it capable of receiving or shipping as much as 350,000 barrels of oil per day from the location. Like at its asphalt terminals, Blueknight doesn't own the oil stored in its system, and provides only storage, blending and transportation services.
It also brings Oklahoma-produced oil to its Cushing terminal using a couple of pipelines it operates that extend into southern Oklahoma.
Blueknight trucks bring oil to those lines, and from there it is transported to Cushing for storage or for delivery directly to producers' or Blueknight's downstream customers.
It also is building a line to carry light crude oil from producers in southern Oklahoma to Cushing, and that line is expected to become operational early next year. Plus, Blueknight is exploring the possibility of expanding its oil pipeline system into the STACK play in northwest Oklahoma.
STACK, an acronym for the Sooner Trend, Anadarko (Basin), Canadian and Kingfisher (counties), is a play that can be accessed by wells drilled in six counties north and west of Oklahoma City.
"We are excited about results we have seen out of SCOOP (the South Central Oklahoma Oil Province, a stretch of land south and southwest of the Oklahoma City metro area) and STACK, and hoping to capitalize on those opportunities," Stallings said.
While the price of West Texas Intermediate has spiked and fell, Blueknight has managed to keep its earnings consistent.
Its top-10 performance as part of this year's Oklahoma Inc. list follows its 19th place ranking a year ago.
Data gathered by S&P Capital IQ for Oklahoma Inc. reports Blueknight's total return on stock and dividends increased by 30.7 percent, and its earnings per share grew 92.1 percent, year over year. Some of those results were driven by noncash items, Blueknight officials said.
Jake Dollarhide, president of Longbow Asset Management Co. in Tulsa, said Blueknight is a good investment for more conservative investors because it has a good portfolio of strategic assets, including ones in some of the most exciting energy plays in the country.
"A lot of master limited partnerships have been taken back private by their general partners, so there are less now than there were eight to 10 years ago," he said.
"As that pool has shrunk, (it has helped) the ones still out there that are profitable, have a good reputation and are well known, like a Blueknight.
"Many investors are trading up for dividend stocks, over bonds," he said. "They are looking to capture good returns, and Blueknight has a distribution yield of nearly 10 percent, which is fantastic."
Stallings said Blueknight looks forward to continued growth, noting it expects to acquire additional asphalt terminals from Ergon and others.
He said the firm also is looking at expanding its terminal operations to include other types of refined or bulk products.
"With Ergon and other third parties, we have diverse group of customers that gives us a great base as we move forward," Stallings said.
View Original story here
|Nov 14, 2017