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Enterprise Products Partners L.P. (EPD): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By: Zacks.com
Posted: 2/12/2014 7:00:00 AM
Referenced Stocks: NGL;EPD;MLP

Summary:
We are maintaining our Neutral recommendation for Enterprise Products Partners following its third-quarter 2014 earnings results. Going forward, this MLP's large scale and diverse asset base, robust coverage ratio of 1.4x and multi-billion dollar projects under construction support meaningful distribution growth. Moreover, Enterprise Products Partners recently hiked its cash distribution by 5.8% and deployed cash in various fee-based development projects. However, the partnership s earnings and revenues missed Zacks Consensus Estimates. We remain apprehensive about the lower pricing environment for natural gas liquids (NGL). Enterprise Products Partners also remains vulnerable to macro conditions and unstable oil & gas prices, which could hurt its margins in NGL, natural gas and other businesses.

Overview:

Enterprise Products Partners, L.P. (EPD), a leading master limited partnership (MLP), 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 asset portfolio prior to its September-2004 merger with GulfTerra included integrated natural gas and NGL transportation, fractionation, processing, storage, and import/export facilities in the U.S. The merger added to the mix a diversified portfolio of onshore and offshore energy infrastructure assets. GulfTerra's considerable offshore assets in the Gulf of Mexico (GoM) included oil and natural gas pipelines, production platforms, and other infrastructure assets. GulfTerra's onshore natural gas pipelines and processing assets are located in Alabama, Colorado, Louisiana, Mississippi, New Mexico, and Texas. The partnership's NGL fractionation, pipelines, and storage facilities are located in Texas, Louisiana and Mississippi.

The partnership's assets include 51,000 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. Enterprise divides its operations into five segments: Natural Gas Liquids (NGL) Pipelines & Services (accounted for 57% of its gross operating margin), Onshore Natural Gas Pipelines & Services (14%), Petrochemical & Refined Product Services (14%), Offshore Pipelines & Services (2%) and Onshore Crude Oil Pipelines & Services (13%).

In Jun 2009, Enterprise Products Partners and Enterprise GP Holdings L.P. merged with Teppco Partners along with Teppco's general partner. The merger has made Enterprise the largest publicly traded energy partnership.


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