Enbridge Energy Partners, L.P. (EEP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are maintaining our Neutral recommendation on Enbridge Energy units. The partnership's second quarter earnings and revenues missed estimates, mainly due to soft natural gas liquids price realization and throughput. However, we like the partnership's diversified business portfolio, stable fee-based operating income and strong liquidity position. A focus on fee-based and diversified businesses has enabled Enbridge Energy Partners to dilute its business risks, as well as provide a stable earnings profile. We also remain positive on Enbridge given its exposure to the Bakken Shale, the Haynesville Shale and Granite Wash. Enbridge's organic growth program is also impressive, and its commitment to returning value to unitholders is reflected through its 2 5% distribution growth guidance going forward.

Overview:

Houston, Texas-based Enbridge Energy Partners LP (EEP), a master limited partnership (MLP), is 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. This system is the U.S. portion of the main artery for the delivery of crude oil supply from Western Canada to refining centers in the Upper Midwest of the U.S. and Ontario in Canada. The partnership structure involves two other publicly traded entities: Enbridge Energy Management LLC, (EEQ) and Enbridge Inc. (ENB). Enbridge Energy Management has a 14.7% limited partnership interest in Enbridge and manages the partnership's business on behalf of the general partner, ENB. Enbridge Inc. is a Canadian energy infrastructure company, which has an effective stake of roughly 27% in Enbridge, including its ownership interest in EEQ.

Enbridge Energy Partners divides its operations in three segments: Liquid Transportation, Natural Gas Transportation, and Marketing and Corporate. The Liquid Transportation segment includes the Lakehead System, the North Dakota System and the Mid-Continent System. The Natural Gas Transportation segment primarily consists of the East Texas System, the Northeast Texas System and the Anadarko System. In addition, the partnership has three FERC-regulated natural gas interstate pipeline systems, namely the Midla Pipeline, the AlaTenn Pipeline and the UTOS Pipeline. In November 2007, Enbridge sold the Kansas Pipeline System (KPC) interstate natural gas transmission system, which was a part of its Natural Gas Transportation segment. The Marketing segment is engaged in natural gas purchases and sales to wholesale customers.

As of December 31, 2013, other assets in the partnership's portfolio included 6,505 miles of crude oil gathering and transportation lines and 39.4 million barrels of crude oil storage and terminaling capacity, 11,400 miles of natural gas gathering and transportation lines, 11 natural gas treating, and 26 natural gas processing units.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: EEP , MLP , EEQ , ENB

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