American Electric Power today announced that it is considering alternatives for its barge transportation subsidiary, AEP River Operations.
AEP said it has engaged Morgan Stanley & Co. LLC to complete a review of potential alternatives for its river operations, and there are no assurances that any particular alternative will be pursued or that any transaction will occur. AEP said it does not plan to release additional information about the status of the review by Morgan Stanley until a definitive agreement is entered into or the process is otherwise completed.
In its fourth-quarter earnings call in January, Brian Tierney, the company’s CFO, said 2014 was a good year for AEP River Operations primarily because it was beginning to see earnings capability from its new tanker barges. The company also had a good grain season, but “our entry into the tanker barge business has been successful,” Tierney said.
In the first quarter of 2014, AEP River Operations began operations of its new Liquids Division with the delivery of the first of 20 tank barges from Jeffboat LLC. The addition of the tank barges opened up the liquid transport market to AEP, which includes the movement of petrochemicals and agricultural chemicals. AEP had been offering barge transport for dry commodities for 41 years. AEP River Operations contributed 10 cents per share in 2014, eight cents per share more than 2013, due to improvements in barge freight demand. AEP River Operations had net earnings of $32 million in the fourth quarter, while AEP's total net earnings for the quarter was $191 million.
Each barge built at Jeffboat has a capacity of 11,000 bbls. and measures 200'x35'. The barges have external frames, six-pound pressure tank tops, vapor recovery and Tier 3 John Deere engines.
AEP River Operations is one of the largest U.S. inland marine transportation companies providing transportation services for bulk commodities, coal and liquids.
The current fleet includes more than 79 towboats ranging from 1,550 hp to 11,000 hp and over 2,900 hopper barges. AEP River Operations is based in Chesterfield, Mo., and has fleeting services in Convent and Algiers, La., and a shipyard in Belle Chasse, La. Crew and operations offices are located in Paducah, Ky., and Lakin, W. Va.
American Electric Power, Columbus, Ohio, is one of the largest electric utilities in the U.S., delivering electricity to more than 5.3 million customers in 11 states.