On Jun 19, 2015, we issued an updated research report on Enterprise Products Partners L.P. EPD.
Enterprise Products Partners has made capital investments of around $2.3 billion in the first quarter of 2015, and expects to bring $6.1 billion worth of major assets online through 2016. During 2014, the partnership commissioned the ATEX, Front Range, and Seaway loop pipelines as well as the first segment of its Aegis ethane pipeline, which are likely to boost bottom-line growth this year. The partnership also developed new projects that are currently under construction. These include the ethane export terminal and the South Eddy natural gas gathering and processing facilities.
Over the last year, the partnership has commissioned several projects that add up to over $5 billion. These projects include – the eighth NGL fractionator at Mont Belvieu, Texas Express NGL pipeline (TEP), the first two processing trains at its Yoakum natural gas plant, the extension of the Acadian Haynesville and the Seaway crude oil pipeline reversal. The Eagle Ford natural gas, NGL and crude oil pipelines are expected to deliver increased volumes over the coming years. These projects are likely to boost cash flow, going forward. The partnership believes that these projects will generate new sources of fee-based cash flow, which are expected to increase the proportion of its stable fee-based income and thereby, insulate it from any near-term shock.
We continue to view Enterprise Products Partners as a core holding in an MLP 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, given its significant geographic and business diversity.
We believe that Enterprise Products Partners possesses solid cash flow stability from quality pipeline and storage assets and geographic diversity. However, volume risk and commodity price exposure can negatively impact the company’s near-term results. We also remain apprehensive about a volatile NGL pricing environment.
The Gulf Coast and GoM regions are prone to storms and hurricanes. The partnership’s significant presence in these regions will continue to expose its results to such weather-related uncertainties.
Stocks to Consider
Enterprise Products Partners currently carries a Zacks Rank #3 (Hold). Better-ranked players from the same space include Transmontaigne Partners L.P. TLP, LRR Energy, L.P. LRE and EQT Midstream Partners, L.P. EQM. All these stocks sport a Zacks Rank #1 (Strong Buy).
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