A leading master limited partnership (MLP),
Enterprise Products Partners, L.P.
) announced the commencement of a two-week supplemental binding
open commitment period. The open commitment is likely to meet
additional shipper demand for capacity on the partnership's
1,230-mile Appalachia-to-Texas ("ATEX Express") pipeline.
ENTERPRISE PROD (EPD): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
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The pipeline will transport the escalating ethane yield to Mont
Belvieu, Texas from the Marcellus/Utica Shale areas of
Pennsylvania, West Virginia.
Management reported that it has ample long-term commitments that
are more than adequate for it to advance with the expansion of ATEX
Express pipeline. This supplementary open commitment will assist
those producers, who have endless enquiries for long-term shipping
The open commitment will aid Enterprise in assessing market
interest in additional binding, 15-year transportation agreements.
The ATEX Express pipeline is anticipated to be commissioned in the
first quarter of 2014.
Recently, the partnership entered into a 50/50 joint venture (JV)
Plains All American Pipeline, L.P.
) for a crude oil pipeline in South Texas. A 140-mile crude oil and
condensate line − with capacity of 350,000 BPD − from Gardendale in
LaSalle County to Three Rivers in Live Oak County will form part of
The joint venture is expected to optimize the companies' capital
investments and is supported by a commitment of 210,000 barrels per
day (BPD) from shippers.
Given a broad and vertically integrated asset base, steady cash
flow generation ability and financial strength for strategic
growth, we believe Enterprise is well positioned to deliver an
impressive total return going forward. The partnership believes
that the projects will generate new sources of fee-based cash flow
that are expected to increase the percentage of its gross operating
margin attributable to fee-based activities from approximately 73%
in 2011 to approximately 80% in 2013.
Enterprise Products holds a Zacks #3 Rank, equivalent to a Hold
rating for a period of one to three months. Longer term, we
maintain our Neutral recommendation.