Analyst Coverage Change
Today, on Thursday June 15th, Stifel Nicolaus (Rank#23) released a research report updating their coverage on Gibson Energy’s stock. The analyst maintained their “Buy” rating on the stock, and increased the 12 month target price forecast on the stock $29 from $26 per share.
Gibson Energy Acquisition
Gibson Energy Inc, a Canadian energy infrastructure company based in Calgary, Alberta, announced on Wednesday its plans to acquire the South Texas Gateway oil terminal from Buckeye Partners and its partners for $1.1 billion. This strategic move by Gibson Energy reflects its ambition to expand into the lucrative U.S. crude oil export markets.
The South Texas Gateway oil terminal is a crucial infrastructure asset located on the Corpus Christi Ship Channel, one of the primary oil export hubs on the Gulf Coast of Texas. With this acquisition, Gibson Energy aims to capitalize on the growing U.S. crude oil exports, primarily driven by the significant production growth in the Permian Basin, a low-cost and resource-rich oil-producing region.
By acquiring the South Texas Gateway terminal, Gibson Energy positions itself to benefit from the increasing demand for oil export facilities. The company foresees the potential for future expansions at the terminal, as U.S. crude oil production continues to rise and export volumes escalate. This acquisition aligns with Gibson Energy’s long-term growth strategy, enabling it to establish a stronger foothold in the expanding U.S. energy market.
To finance the $1.1 billion deal, Gibson Energy plans to utilize a combination of funding sources. This includes a C$350 million equity offering, where the company will issue new shares to investors, and other debt offerings. By employing a mix of equity and debt financing, Gibson Energy aims to strike a balance between raising capital and managing its financial obligations effectively.
The equity offering involves selling a portion of the company’s ownership to investors, thereby raising funds that can be used to complete the acquisition. This approach allows Gibson Energy to leverage investor confidence and secure the necessary capital required for the transaction.
Additionally, the company intends to utilize debt offerings, which may involve issuing bonds or other debt instruments. By tapping into the debt market, Gibson Energy can access additional funds while spreading the financial burden over a longer period. This approach can provide the company with the flexibility to manage its cash flow and allocate resources towards operational requirements and growth initiatives.
Overall, Gibson Energy’s acquisition of the South Texas Gateway oil terminal represents a significant strategic move as it seeks to expand its presence in the U.S. crude oil export markets. By capitalizing on the growing demand for oil export infrastructure and utilizing a combination of equity and debt financing, the company positions itself to capture opportunities in the dynamic energy landscape, particularly in the resource-rich Permian Basin.
