Enterprise Products Partners L.P. (EPD) announced that shipper commitments received during a recent binding commitment period will support its proposed expansion of the Panola Pipeline Company, LLC natural gas liquids (“NGL”) system.
A 181-mile long Panola Pipeline starts near Carthage in Panola County, TX and supports the oil and gas production regions of Haynesville and Cotton Valley. The pipeline, which stretches to destination points at Mont Belvieu in Chambers County, TX, gives shippers passage into the world’s largest NGL fractionation complex. The access extends to the amenities owned and operated by Enterprise Products.
As part of the expansion project, Enterprise Products plans to install 60 miles of new pipeline, as well as pumps and other related equipment designed to increase system capacity by 50,000 barrels per day. The incremental capacity is expected to be available in the first quarter of 2016.
We continue to view Enterprise Products Partners as a core holding in the MLP portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. The partnership is one of the major fully integrated midstream service providers with a positive long-term outlook, and has significant geographic and business diversity.
Enterprise Products Partners continues to position itself to capitalize on the NGL market dynamics by increasing its Eagle Ford shale exposure. Eagle Ford continues to be a growth driver for the partnership by offsetting volume weakness in other regions of the Mid-continent.
We believe that Enterprise Products Partners has solid cash flow stability based on its quality pipeline, storage assets and geographic diversity. Yet, volume risk and commodity price exposure could weigh on its near-term results. We also remain apprehensive of a volatile NGL pricing environment.
At present, Enterprise Products Partners carries a Zacks Rank #3 (Hold). Better-ranked players in the energy sector are Cheniere Energy Partners LP (CQP), Spectra Energy Partners LP (SEP) and Golar LNG Partners LP (GMLP). All these stocks sport a Zacks Rank #1 (Strong Buy).
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