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.
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
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
Enbridge Energy Partners, L.P. (EEP): Read the Full
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