An affiliate of Enterprise Products Partners LP (EPD) plans to divest Energy Transfer Equity L.P. (ETE) common units to an undisclosed purchaser for about $169 million. This is a part of Enterprise’s effort to sell common units of Energy Transfer that the partnership owns.
Notably, 4.45 million units of Energy Transfer will be offered to the prospective customer and the proceeds are expected to meet general purposes of the partnership, including capital growth projects.
Enterprise Products Partners, a leading master limited partnership (MLP), is engaged in providing a wide range of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGL) and crude oil.
Enterprise registered robust first quarter 2011 results fueled by solid performances at NGL Pipeline and Services as well as Onshore Natural Gas Pipes segments. Moreover, it raised its quarterly distribution by 5.3% year over year to 59.75 cents per common unit, or $2.39 per unit on an annualized basis.
Again, management expects full-year expansion capital spending of $3.5 billion, of which 80% is apportioned for Eagle Ford and Haynesville shale projects. For 2011, maintenance capital outlay is expected to range between $250 million and $260 million.
We believe Enterprise Products remains a core holding in a MLP portfolio and focuses on projects that generate stable cash flow and contribute to its integrated value chain. While Enterprise increased its cash flow distribution by 5.3% in the last quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth.
Given a broad and vertically integrated asset base, steady cash flow generation ability and financial strength for strategic growth, we believe Enterprise is well positioned to deliver an impressive total return versus its pipeline peers like Kinder Morgan Energy Partners L.P. (KMP), Enbridge Energy Partners (EEP) going forward.
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