We reaffirmed our Neutral recommendation on leading master
Enterprise Products Partners, L.P.
), on Aug 22, 2013. The partnership reported weak numbers for the
second quarter due to more than 15% year-over-year increase in
total costs and expenses. The partnership currently holds a Zacks
Rank #3, which is equivalent to a short-term Hold rating.
Enterprise Products Partners is engaged in providing a wide range
of midstream energy services to the producers and consumers of
natural gas, natural gas liquids (NGL), and crude oil. The
partnership's assets include 50,000 miles of onshore and offshore
pipelines, approximately 200 million barrels of storage capacity
for NGLs, refined products and crude oil, and 14 billion cubic
feet of natural gas storage capacity.
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.
Enterprise Products Partners increased its second quarter 2013
cash distribution rate by 7% to $0.68 per common unit, or $2.72
per unit on an annualized basis. This marked the partnership's
36th consecutive quarterly increase. With its diverse set of NGL,
natural gas, crude oil and refined products midstream
infrastructure assets, the partnership possesses fundamental
strengths that will continue to support distribution growth.
Enterprise Products Partners has made capital investments of
around $700 million in the second quarter of 2013 and further
expects to bring online $7.5 billion worth of major assets from
2013 through 2015, including $1.5 billion in the second half of
2013. The key projects consist of two NGL fractionators at Mont
Belvieu; Texas Express NGL pipeline; Front Range NGL pipeline;
extension of the Seaway crude oil pipeline; and the completion of
Eagle Ford crude oil pipeline. The successful execution of these
projects will be value accretive to future cash flows.
However, Enterprise remains vulnerable to macro conditions and
unstable oil and gas prices, which in turn could hurt margins in
NGL, natural gas and other businesses.
Other Stocks to Consider
There are other stocks in the sector that however appear more
rewarding. These include
Abraxas Petroleum Corp.
Oiltanking Partners, L.P.
Seacor Holdings Inc.
), which are expected to perform impressively over the next few
months and carry a Zacks Rank #1 (Strong Buy).
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
SEACOR HLDGS (CKH): Get Free Report
ENTERPRISE PROD (EPD): Free Stock Analysis
OILTANKING PTNR (OILT): Free Stock Analysis
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