Enterprise Products Hits 52-week High on Oil Export Ruling - Analyst Blog


Shutterstock photo

Shares of Enterprise Products Partners L.P. ( EPD ) hit a 52-week high of $79.30 during Wednesday's trading session. The stock closed the session at $78.53, reflecting a solid return of 11.4% over the past three months. The average trading volume for the last three months aggregated 1,013,010 shares.

The upside comes on the back of a U.S. Commerce Department ruling last week. The ruling allowed two companies - Enterprise Products Partners and Pioneer Natural Resources Co. ( PXD ) - to export ultra-light oil, often referred to as condensate, after minimal refining in a distillation tower. Export of oil, permitted from the facilities in the fields of south Texas, will likely begin as early as August.

The ruling has spread fears that condensate export would be extended to more U.S. companies, leading to a tight oil market. This would narrow the gap between the U.S. and international oil prices thereby weakening refiners' margin, as producers will sell oil at international prices. As such, international prices will likely fall and U.S. prices would rise. In fact, this phenomenon was witnessed steadily from the day oil export ban ease was announced. The spread between the two oil prices narrowed to $6.76 per barrel on Jul 2.  

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 51,000 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 the master limited partnership 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 thanks to its significant geographic and business diversity.

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.

Zacks Rank & Stock Pick

With the company's shares trading at a 52-week high, any upside from here may be limited. The company's Zacks Rank #3 (Hold) also does not reflect an upside potential.

Some better-ranked oil and gas stocks include Encana Corp ( ECA ) and Matrix Service Company ( MTRX ). Both stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENTERPRISE PROD (EPD): Free Stock Analysis Report

PIONEER NAT RES (PXD): Free Stock Analysis Report

MATRIX SERVICE (MTRX): Free Stock Analysis Report

ENCANA CORP (ECA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

This article appears in: Investing , Business , Stocks
Referenced Stocks: NGL , EPD , PXD , MTRX , ECA

More from Zacks.com




Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com