NGL Energy Partners L.P.
) has priced a public offering of 8,000,000 common units at $43.85
a piece, with a 30-day over-allotment option for an additional
1,200,000 units. The offering, which was announced on Jun 17, is
likely to close on Jun 23.
The transporter and marketer of crude oil and natural-gas liquids
plans to use the net proceeds from this offering - including
exercise of underwriters' option to buy additional common
units - to repay the debts and for general partnership
purposes like capital expenditures and potential acquisitions.
NGL Energy Partners, which agreed to buy
) ownership interests in its oil storage business
TransMontaigne Partners L.P.
) earlier this month for $200 million - is a diversified midstream
partnership engaged in providing multiple services to producers and
end-users. The entity's operations include transporting and
marketing of crude oil, water solutions, and transporting and
marketing of natural gas liquids.
With a successful track record of growth, presence in most of the
prolific crude oil producing regions in North America and
conservative capital structure with low leverage, NGL Energy
Partners is primed for peer-leading returns. Moreover, a track
record of consistent distribution hike, together with a business
model focused on operational efficiencies and attractive
acquisitions/growth projects, makes the partnership a good choice
for investors looking for a steady, predictable income stream.
Having done a stellar job at generating stable fee-based cash flows
from its diversified and attractive asset base, analysts are
predicting strong earnings growth for NGL Energy Partners over the
next couple of years. The 2014 Zacks Consensus Estimate is $1.78,
representing whopping 249% earnings per unit growth over 2013. Next
year's average forecast is $2.04, corresponding with 14% growth.
But units of NGL Energy Partners - currently trading at $42.50 -
have already climbed 26% since the beginning of the year.
Therefore, any upside from here may be limited.
As a result, NGL Energy Partners currently retains a Zacks Rank #3
(Hold), implying that it is expected perform in line with the
broader U.S. equity market over the next one to three months.
However, a better-ranked energy pipeline partnership would be
Alon USA Partners L.P.
). It carries a Zacks Rank #1 (Strong Buy).
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