Natural gas pipeline operator
Energy Transfer Partners L.P.
) recently announced a public offering of 12,000,000 common units
to increase its liquidity. The partnership also offered a 30-day
option to the underwriters to purchase 1,800,000 additional
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Energy Transfer intends to use the entire proceeds to pay off the
outstanding balance under its credit facility and other
In January, Energy Transfer offered $1.25 billion senior notes.
The offering was divided into two parts - $800 million 3.60%
senior notes due 2023 and $450 million 5.15% senior notes due
2043. The net proceeds of $1.24 billion were used for the same
Energy Transfer ended fourth quarter 2012 with long-term debt
(less current maturities) of $15,442 million.
Debt-to-capitalization ratio was 47.1%.
The partnership currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next 1 to 3 months.
We believe Energy Transfer Partners is well positioned to compete
in the natural gas midstream, and transportation & storage
businesses with its geographically dispersed asset mix. The
partnership has a significant market presence in each of its
operating areas, which are located in the major natural
gas-producing regions of the U.S.
However, gathering and processing master limited partnerships
(MLP) such as Energy Transfer Partners, are more sensitive to
commodity prices compared to other MLP subgroups. As a result,
collapsing energy prices have adversely affected their cash flow
Meanwhile, there are other energy firms that offer value and are
worth buying now. These include
Range Resources Corp.
Calumet Specialty Products Partners L.P.
NGL Energy Partners LP
). All these firms sport a Zacks Rank #1 (Strong Buy).