Buckeye Partners has listed the limited customer base of its Bahamas Oil Refining Company’s (BORCO) Bahama-based oil storage facility amongst its potential risks. BORCO’s top three customers provide 58% of core revenues, with the top customer having generated 27% of petroleum product storage revenue in 2011.
Buckeye has cited concern about the reliance BORCO has on so few customers, suggesting that if the company were to lose any of them, the effects would be potentially detrimental. With approximately 80% of revenue coming from storage customers, of whom they only have a limited number, reliance on their business is extremely high.
However, this is not the only risk BORCO faces, with potential issues arising from the high levels of petroleum products handled by the company being exported from Venezuela, and also the fact that the facility has previously had to shut down for reasons which Buckeye may be unaware.
Storage of petroleum products at BORCO is split into the categories of fuel oil, crude and refined products, accounting for 66%, 20% and 14% of overall storage respectively.
BORCO boasts three deep-water jetties that are able to handle large crude tankers, and reportedly have a long-term agreement with the Bahamas Government to lease 330 acres of the seabed upon which the jetties sit. The terminal also leases its inland dock from the Freeport Harbour Company.
Buckeye has filed with the US Securities & Exchange Commission (SEC).