Citi Maintains 'Hold' on Sunoco Logistics Partners L.P. (SXL), Lowers Risk Rating

July 30, 2008 10:02 AM EDT

Citi maintains 'Hold' rating on Sunoco Logistics Partners L.P. (NYSE: SXL), but lowers Risk Rating to High from Medium.

Citi analyst says, "Sunoco Logistic Partners L.P. reported better than expected Q2 results driven by much higher than expected margins on its crude marketing and transportation assets in the Western Pipeline system and lower operating expenses on the Eastern Pipeline system. Cash flows and margins associated with the partnership's crude transportation assets can be somewhat volatile. However, with back to back quarters of strong performance from these assets near-term growth appears to be improving...We are maintaining our Hold rating based on the partnership's premium valuation relative to other refined product and crude transportation MLPs...Taking into consideration volatility in the commodity and credit markets we are increasing the risk rating for SXL from Medium to High. Specifically, we expect concerns related the recent announcements of SemGroup L.P. to have an impact on investor's perception of crude transportation assets."

Sunoco Logistics Partners L.P. (the Partnership) is principally engaged in the transport, terminalling and storage of refined products and crude oil, and the purchase and sale of crude oil in 12 states located in the Northeast, Midwest and Southwest United States.

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