Energy Transfer Partners L.P.
), through its wholly-owned subsidiary - La Grange Acquisition -
entered into a sale agreement, worth $207 million, with midstream
energy firm Summit Midstream Partners.
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Per the deal, Summit Midstream will acquire a natural gas
production company - ETC Canyon Pipeline from La Grange. The
operations of Canyon Pipeline involve collection and production of
natural gas from the Piceance and Uinta basins in Colorado and
Summit Midstream will take over the gas gathering and processing
system including about 1,600 miles of pipe, 44,000 horsepower of
compression and processing assets with a total daily capacity of 97
million cubic feet. The company also plans to acquire two natural
gas liquids (NGL) injection stations.
The deal, with certain customary approvals impending, may be closed
in the last quarter of 2012.
Dallas, Texas-based Energy Transfer Partners is a master limited
partnership that owns and operates a diversified portfolio of
energy assets. The partnership is engaged primarily in the
gathering, processing, storage and transportation of natural gas.
We believe that Energy Transfer is well positioned to compete in
the natural gas midstream and transportation and storage businesses
with its geographically-dispersed asset mix. The partnership has
significant market presence in each of its operating areas, which
are located in all major natural gas-producing regions of the U.S.
Additionally, the proposed acquisition of Philadelphia-based
refining and petroleum product marketing company,
) for $5.3 billion will help Energy Transfer to diversify its
portfolio by adding crude and refined products pipelines to the
partnership's existing natural gas and NGL infrastructure.
On the flip side, we remain concerned about the continued
challenging macro environment and cost overruns on expansion
projects (which lead to lower returns). As such, we expect the
Energy Transfer units to perform at par with the broader market and
maintain our long-term Neutral recommendation.
Energy Transfer currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.