Tesoro Offering Logistics Business In 2011 (TSO, SUN, SXL, OKS, TLLP)

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*Initial*Tesoro plans to raise funds through the sale of limited
partnership interests in Tesoro Logistics LP, a wholly owned
subsidiary of the company. The company has not disclosed any pricing
of the IPO.

*Assets*Tesoro Logistics LP owns a number of assets in the United
States, some of which are located in areas where the rapid growth in
development of oil and gas properties are occurring.

The company owns the High Plains system, a crude oil gathering system
located in the Williston Basin in North Dakota and Montana. This
system consists of a 23,000-barrel-per-day truck-based gathering
system and 700 miles of pipeline with the capacity to deliver 70,000
barrels of oil per day. The High Plains system is currently
configured to deliver the crude to the Tesoro refinery in Mandan,
North Dakota.

The High Plains system has significant growth potential as the oil and
gas industry is focusing huge amounts of capital into the Williston
Basin to develop the Bakken and Three Forks formations. However, the
Mandan refinery currently has capacity of only 58,000 barrels per day
so future growth might bump up against this limit.

Tesoro Logistics LP also owns terminals, storage facilities and other
transportation assets across the United States. The company owns eight
terminals that distribute refined products from Tesoro
refineries. These terminals have capacity of 229,000 barrels per

Tesoro Logistics LP reported pro-forma revenues of approximately
$40.3 million and pro-forma EBITDA of $51.5 million in 2009. The
company does 93% of its business with the parent company.

*History*Tesoro is emulating other refiners that have conducted
similar actions in the past. In 2002, *Sunoco* (NYSE:SUN) put its
storage and pipeline assets into *Sunoco Logistics Partners*
(NYSE:SXL). Sunoco still owns 33% of Sunoco Logistics Partners, and
has seen its value soar over the last decade.

*Dividend*Investors in Tesoro Logistics LP will also benefit from a
higher dividend rate, which is typical of companies in this type of
business. Sunoco Logistics Partners has a dividend yield of 5.5%,
while *Oneok Partners LP* (NYSE:OKS) has a yield of 5.7%.

*The Bottom Line*Tesoro's plan to sell its logistics business through
an initial public offering should help the company as it attempts to
deal with the refining environment in 2011. (To learn more, see our
_IPO Basics Tutorial_.)

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Source: Investopedia.Com