Natural gas transporter and processor Crosstex Energy L.P. (XTEX) has priced a public offering of 7,200,000 common units at $20.33 a piece, with a 30-day over-allotment option for an additional 1,080,000 units. The offering is expected to close on Jun 14.
The master limited partnership (MLP) plans to use the proceeds from this offering to finance capital expenditures associated with pipeline projects – including the 130-mile, 12-inch Cajun-Sibon natural gas liquids pipeline expansion – and for general partnership purposes.
Crosstex Energy L.P. is a midstream natural gas partnership that operates about 3,500 miles of pipeline, 10 processing plants, and 4 fractionators. Additionally, it is engaged in the operation of barge terminals, rail terminal, product storage facilities, and brine water disposal wells, apart from having an extensive truck fleet.
In the recently reported first quarter on May 8, Crosstex Energy delivered a positive 34.8% earnings surprise – the first outperformance in 4 quarters – propelled by solid contribution from all business segments.
Following the better-than-expected results, units of the Dallas, Texas-based energy midstream firm hit a 52-week high of $21.89 on May 29. Considering that Crosstex Energy has already seen its unit price climb some 30% since the beginning of the year, any upside from here may be limited.
As a result, Crosstex Energy currently retains a Zacks Rank #3 (Hold), implying that it is expected perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at Atmos Energy Corp. (ATO), Chesapeake Utilities Corp. (CPK) and EQT Corp. (EQT) as good buying opportunities. These natural gas distributors – sporting a Zacks Rank #2 (Buy) – have solid secular growth stories with potential to rise from current levels.
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