Shares of Enterprise Products Partners L.P. (EPD) hit a 52-week high of $41.13 during Tuesday’s trading session. The stock closed the session at $41.11, reflecting a solid return of 9.7% over the past three months. The average trading volume for the last three months aggregated 3,913,960 shares.
The upside came on the back of the news earlier this week that the partnership is commencing a binding open commitment period to evaluate shipper demand for capacity on a proposed new pipeline. The new 30-inch diameter pipeline will originate from the Williston Basin of North Dakota and serve the Powder River and Denver-Julesburg (“DJ”) Basins. The pipeline is likely to extend about 1,200 miles to the Cushing hub in Oklahoma. It would have an initial capacity of about 340,000 barrels per day (bpd) of crude oil, which can rise to over 700,000 bpd.
The Bakken-to-Cushing pipeline will have the potential to carry about six grades of crude oil and products, comprising Rockies Condensate and Processed Condensate. It is expected to start serving in stages, subject to adequate customer commitments. The DJ-to-Cushing portion is likely to begin operations in the fourth quarter of 2016 and is projected to be completely functional by the third quarter of 2017.
Enterprise Products Partners is engaged in a broad range of midstream energy services to the producers and consumers of natural gas, natural gas liquids (NGL) and crude oil. The partnership's assets include 51,000 miles of onshore and offshore pipelines, approximately 200 million barrels of storage capacity for NGLs, refined products and crude oil, and 14 billion cubic feet of natural gas storage capacity.
We continue to view Enterprise Products Partners as a core holding in the master limited partnership portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. The partnership is one of the largest fully integrated midstream service providers with a positive long-term outlook thanks to its significant geographic and business diversity.
With its diverse set of NGL, natural gas, crude oil and refined products midstream infrastructure assets, the partnership possesses fundamental strengths that will continue to support distribution growth.
Zacks Rank & Stock Pick
With the company's shares trading at a 52-week high, any upside from here may be limited. The company's Zacks Rank #3 (Hold) also does not reflect an upside potential.
Meanwhile, one can look at better-ranked players in the energy sector like Patterson-UTI Energy Inc. (PTEN), Cameron International Corporation (CAM) and Pioneer Energy Services Corp. (PES). All these stocks sport a Zacks Rank #1 (Strong Buy).
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