Enbridge Energy Partners, L.P. EEP has priced an underwritten public offering of 8 million of its Class A Common Units, representing limited partner interests, at $36.70 a piece. The offering is expected to generate total gross proceeds of approximately $293.6 million and close on Mar 13.
The partnership expects to use the net proceeds from the offering to fund a portion of its capital expansion projects and for general partnership purposes.
Enbridge Energy Partners is a master limited partnership, engaged in the gathering, processing and transmission of natural gas and crude oil. The partnership is best known for its ownership of the Lakehead System, one of the world’s longest petroleum pipeline systems that transfers over 60% of the Canadian oil output to the U.S. This unique position helps the partnership to capitalize on the growing Canadian oil sands production.
A focus on fee-based and diversified businesses has enabled Enbridge Energy Partners to dilute its business risks, as well as steadily enhance its earnings profile. We remain positive on Enbridge given its wider exposure to the Bakken Shale, the Haynesville Shale and Granite Wash.
The partnership has a number of natural gas liquids (NGLs) and crude oil focused organic growth projects lined up for the next two years. The projects are backed by a sharp rise in liquids drilling from prolific shale plays in the U.S., including the Bakken Expansion, Border to Flanagan Expansion, Cushing Terminal Expansion and the Texas Express NGL pipeline.
Enbridge’s Liquids segment is also poised to benefit from the current economics of producing oil, increased output from the Bakken Shale and Canadian Oil Sands regions as well as higher revenues from Alberta Clipper. In Liquids, the emphasis will likely be on rising crude takeaway capacity in the Bakken and intensifying capacity to ship crude eastward to the upper Midwest and Canada refineries. Enbridge is also assessing other expansion projects including Alberta Clipper and Southern Access crude pipeline expansion.
However, Enbridge’s midstream natural gas business is sensitive to changes in natural gas supply, demand fundamentals and commodity cycles associated with gas processing margins. Furthermore, through the expansion of its natural gas gathering and processing business, Enbridge has increased its risk exposure to commodity prices.
Enbridge currently carries a Zacks Rank #3 (Hold). Better-ranked oil and gas stocks include Valero Energy Partners L.P. VLP, Global Partners LP GLP and Hallador Energy Company HNRG. All these carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment