(By Balachander) Northern Tier Energy LP (NYSE:NTI) shares were initiated with a "Buy" rating and price target of $25 by Deutsche Bank analyst Paul Sankey.
Northern Tier Energy is an independent refiner and marketer located in the under-supplied U.S. mid-continent, operating the 74k b/d St. Paul Park refinery in Minnesota.
"With lower feedstock costs from access to crudes from the Bakken and Canada, it is one of the most competitive refiners in its region and a prime example of a beneficiary of our bullish 2010 'Diamond Age of Refining' thesis," Sankey wrote in a note.
Sankey favors cash return strategies for refiners, and said NTI has taken refining into a new era by assuming a variable payout MLP structure.
The analyst thinks NTI looks attractive, with raging mid-continental margins and a real argument that this is a secular story in refining given that US oil production growth is equally real and secular.
The stock looks outright attractive compared with Calumet (NASDAQ:CLMT), the only other refining MLP, yielding below 10 percent, Sankey said.
Ridgefield, Connecticut-based Northern Tier operates as an independent downstream energy company with refining, retail, and pipeline operations in the United States. The company was established to own and operate the St. Paul Park Refinery as well as a retail network of SuperAmerica brand convenience stores and a 17 percent equity interest in the Minnesota Pipeline
NTI shares lost 1.69 percent to trade at $19.79 on Friday. In the past 52-weeks, the stock has been trading between $13.00 and $21.95.