Dallas, Texas-based
Energy Transfer Partners L.P.
(
ETP
) has commenced a public offering of 13,500,000 common units
representing limited partner interests.
The transportation and storage master limited partnership (MLP)
also intends to provide the underwriters with a 30-day option to
purchase up to 2,025,000 additional common units. Energy Transfer
plans to use the net proceeds from this offering to pay back the
outstanding debt under its revolving credit facility, to finance
capital expenditures associated with pipeline construction projects
and for general partnership purposes.
Energy Transfer owns and operates a diversified portfolio of
energy assets. It is engaged primarily in the gathering,
processing, storage and transportation of natural gas.
Additionally, the partnership holds a 70% stake in Lone Star NGL
LLC, a joint venture that owns and operates natural gas liquids
(NGL) storage, fractionation and transportation assets in Texas,
Louisiana and Mississippi.
Energy Transfer Partners, which competes with other large-cap
pipeline MLP peers like
Enterprise Products Partners L.P.
(
EPD
),
Kinder Morgan Energy Partners L.P.
(
KMP
) and
Plains All American Pipeline L.P.
(
PAA
), currently retains a Zacks #3 Rank (short-term Hold rating). We
are also maintaining our long-term Neutral recommendation on the
unit.
Energy Transfer Partners remains a premier MLP with
strategically-positioned assets that serve major North American
natural gas-producing basins. We like the partnership's robust
organic growth profile, stable fee-based operating income and
strong liquidity position.
While the partnership kept its distribution unchanged, we expect
growth to resume shortly, driven by the completion of a broad array
of organic growth projects. Additionally, the proposed acquisition
of Philadelphia-based refining and petroleum product marketing
company
Sunoco Inc.
(
SUN
) for $5.3 billion will help Energy Transfer to diversify its asset
mix by adding crude and refined products pipelines to the
partnership's existing natural gas and NGL infrastructure.
However, we believe that the near- to medium-term outlook for
the partnership's natural gas gathering and processing business
continues to be weak, which remains a major liability in our
view.
As such, we expect the pipeline operator's growth potential to
be restrained with little room for meaningful upside from current
levels.
ENTERPRISE PROD (EPD): Free Stock Analysis
Report
ENERGY TRAN PTR (ETP): Free Stock Analysis
Report
KINDER MORG ENG (KMP): Free Stock Analysis
Report
PLAINS ALL AMER (PAA): Free Stock Analysis
Report
SUNOCO INC (SUN): Free Stock Analysis Report
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