Enterprise Products to Contest Pipeline Verdict - Analyst Blog


Enterprise Products Partners L.P. ( EPD ) announced that it intends to oppose the unfavorable verdict by a Dallas jury over not including Energy Transfer Partners, L.P. ( ETP ) in the Keystone XL pipeline project.

The duo originally came together over a proposed pipeline project that was cancelled in Aug 2011 due to lack of customer support. Prior to that, in Apr 2011, both Enterprise and Energy Transfer signed a non-binding letter of intent disclaiming any partnership or joint venture between them. Subsequently, Enterprise Products excluded Energy Transfer from a subsequent Keystone XL pipeline project that was to transport crude oil from Oklahoma to the Gulf Coast.

The jury however viewed things differently and awarded Energy Transfer $319 million in actual damages. This legal position has been contested by Enterprise Products which emphasizes on the absence of any mutual formal commitment.

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.

However, Enterprise remains vulnerable to macro conditions and unstable oil and gas prices, which in turn could hurt margins in NGL, natural gas and other businesses.

Enterprise currently carries a short-term Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Willbros Group Inc. ( WG ) and Patterson-UTI Energy Inc. ( PTEN ). Both these stocks hold a Zacks Rank #1 (Strong Buy).

ENTERPRISE PROD (EPD): Free Stock Analysis Report

ENERGY TRAN PTR (ETP): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

WILLBROS GROUP (WG): Free Stock Analysis Report

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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 , Business , Stocks

Referenced Stocks: NGL , EPD , ETP , PTEN , WG



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