We reaffirmed our Neutral recommendation on leading master
Enterprise Products Partners, L.P.
), on May 20, 2013. Riding on growth from record throughput
volumes in its fee-based businesses, the partnership reported
robust earnings in the first quarter. The partnership currently
holds a Zacks Rank #3, which is equivalent to a short-term Hold
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
ENTERPRISE PROD (EPD): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
ENERPLUS CORP (ERF): Free Stock Analysis
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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 50,000 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 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 largest
fully-integrated midstream service providers with a positive
long-term outlook given its significant geographic and business
Enterprise Products Partners increased its first quarter 2013
cash distribution rate by 6.8% to $0.67 per common unit, or $2.68
per unit on an annualized basis. This marked the partnership's
35th consecutive quarterly increase. 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.
Enterprise Products Partners made capital investments of around
$914.3 million in the first quarter and expects to bring online
$7.5 billion worth of major assets from 2013 through 2015,
including $2.2 billion in the balance of 2013. The key projects
consist of Seaway crude pipe reversal, The Texas Express
Pipeline, Mid-America Pipeline, ATEX Express Pipeline, Western
NGL Pipeline Expansions and Front Range. The successful execution
of these projects will be value accretive to future cash flows.
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.
Other Stocks to Consider
There are other stocks in the sector that however appear more
rewarding. These include
Abraxas Petroleum Corp.
EPL Oil & Gas, Inc.
), which are expected to perform impressively over the next few
months and carry a Zacks Rank #1 (Strong Buy).