Marlin Is Moving Forward With Crude Oil Logistics For Future Growth

| About: Azure Midstream (AZUR)

Summary

Marlin Midstream is taking advantage of its two crude oil transloading facilities, which include five crude oil transloaders.

Marlin Midstream has been instrumental in growing its crude oil transloader business at a remarkable rate, accumulating $3.4 million in revenue for the first quarter of this year's operation.

During 2013, the company eliminated quite a bit of debt to the tune of almost $120 million, and is currently only holding $4 million in debt on its balance sheet.

Marlin Midstream is currently trading slightly under its IPO price of $20.00 and 5 percent above its 50-day moving average.

New revenue stream will enhance profits and dividend

Marlin Midstream Partners (FISH) is finally producing income from its crude oil logistic assets that the company made fully operational in July 2013. After the company released its latest earnings report on April 30, 2014, the crude oil logistics assets may very well be the new catalyst that makes Marlin Midstream even more profitable.

The crude oil logistic assets concentrate on transloading services, and with no real new pipelines in the works, railcar transportation of crude oil products has become very profitable for companies similar to Marlin Midstream. Marlin Midstream is taking advantage of its two crude oil transloading facilities, which include five crude oil transloaders. The company has positioned its two crude oil transloaders in Utah and Wyoming, and is serving the very profitable plays around Carbon County, Utah and Big Horn County, Wyoming.

Marlin Midstream has been instrumental in growing its crude oil transloader business at a remarkable rate, accumulating $3.4 million in revenue for the first quarter of this year's operation. Transloaders for crude oil have been active over the last few years, and with a lack of pipelines for crude transport railcars, have become more and more necessary for transporting crude. Railcar transport of crude oil has grown from just over 10,000 railcar loads in 2009 to over 400,000 railcar loads in 2013.

Another positive for the company is its balance sheet. During 2013, the company eliminated quite a bit of debt to the tune of almost $120 million, and is currently only holding $4 million in debt on its balance sheet. That is a pretty sizeable chunk of money that was weighing heavily on the company. With a cleaner balance sheet and considerably less debt, Marlin Midstream can take advantage of acquiring assets that will enhance its revenue and profitability. One case in point is its purchase of a 28-acre industrial park in western New Mexico. The company sees this asset as a big plus, because it can fill a needed service in the lucrative San Juan Basin drilling area.

Outlook

Marlin Midstream is currently trading slightly under its IPO price of $20.00 and 5 percent above its 50-day moving average. The company is a true small-cap that throws a big punch to investors with its current dividend of $1.42, which represents an enormous yield of 7.4 percent. Analysts have predicted a price target of $22.50 per share, but share prices have yet to move above $21.00.

Marlin Midstream also has an aggressive quarterly revenue growth rate of 150 percent, and is poised to add to future assets when the price is right. The company also has a palatable forward price-to-earnings at 14.62, as well as $3.57 of revenue produced for each share. Marlin Midstream also is carrying around $2 million in total cash on its balance sheet, as well as over $18 million in operating cash flow. Lower debt margins and positive cash flows will give Marlin Midstream the flexibility, going forward, to continue acquiring assets in strategic locations to help grow revenue streams in the future. If you can catch the stock for a 10 percent upswing, this, coupled with an attractive dividend yield of 7.4 percent provides something safe and sound for an investor with uncertainty in the markets.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.