On Aug 19, 2014, we issued an updated research report on
Enterprise Products Partners L.P.
), a leading master limited partnership (MLP) engaged in providing
a wide range of midstream energy services to producers and
consumers of natural gas, natural gas liquids (NGL) and crude oil.
Enterprise Products Partners reported second-quarter 2014 adjusted
earnings per limited partner unit of 67 cents, which lagged the
Zacks Consensus Estimate of 73 cents but was higher than the
year-ago quarterly earnings of 65 cents.
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 major fully integrated
midstream service providers with a positive long-term outlook, and
has significant geographic and business diversity.
Enterprise Products Partners increased its second-quarter 2014 cash
distribution rate by 5.9% to 72 cents per common unit, or $2.88 per
unit on an annualized basis, thus marking the partnership's 40th
consecutive quarterly increase.
The partnership has made a capital investment of around $697
million in second-quarter 2014, and expects to bring $6 billion
worth of major assets online through 2016. The key projects consist
of two NGL fractionators at Mont Belvieu and Front Range NGL
pipeline; extension of the Seaway crude oil pipeline; expansion of
Mid-America Pipeline; the ATEX ethane pipeline and completion of
the Eagle Ford crude oil pipeline. The successful execution of
these projects will be value accretive and drive future cash flows.
Enterprise Products Partners continues to position itself to
capitalize on NGL market dynamics by increasing its Eagle Ford
shale exposure. The Eagle Ford shale continues to be a growth
driver for the partnership by offsetting volume weakness in other
regions of the Mid-continent.
The partnership has several projects planned for this region,
including an expanded gas processing facility at Yoakum with a
total processing capacity of to over 140,000 barrels a day. This
makes it one of the major NGL producing plants in North America.
While we believe that Enterprise Products Partners has solid cash
flow stability based on its quality pipeline, storage assets and
geographic diversity, volume risk and commodity price exposure
could weigh on its near-term results. We remain apprehensive of a
volatile NGL pricing environment.
Moreover, the Gulf Coast and Gulf of Mexico (GoM) are prone to
storms and hurricanes. The partnership's significant presence in
these regions will continue to expose its results to such
Other Stocks to Consider
At present, Enterprise Products Partners carries a Zacks Rank #3
(Neutral). Some better-ranked stocks in the same industry include
Weatherford International plc (
), Sunoco Logistics Partners L.P (
) and Sanchez Energy Corp (
). All of these stocks sport a Zacks Rank #1 (Strong Buy).
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ENTERPRISE PROD (EPD): Free Stock Analysis
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