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EPD Starts Eighth NGL Fractionator - Analyst Blog

By: Zacks.com
Posted: 11/22/2013 3:50:00 PM
Referenced Stocks: APC;EPD;NGL;SM;WES

Enterprise Products Partners L.P. ( EPD ) saw fluctuating investor reaction to its latest announcement relating to the start-up of the eighth natural gas liquids (NGL) fractionator at its Mont Belvieu complex, Texas. While the stock price moved down 1.6% to touch $61.10 on the day of the announcement, it surprised with a 0.5% and 1.25% rise in the next two trading sessions to reach $62.15 per share on Thursday.

The addition of the new unit, which has a capability to fractionate about 85,000 barrels per day (bpd) of NGL, has enhanced the fractionation capacity at Enterprise's Mont Belvieu facility to around 655,000 bpd. The facility's capacity was 400,000 bpd three years ago. The partnership's eighth NGL fractionator is the second unit commissioned by Enterprise at Mont Belvieu in the last two months. Both these units were completed ahead of schedule and within budget.

The construction of fractionators seven and eight by Enterprise was part of a joint venture with Western Gas Partners LP ( WES ), an affiliate of Anadarko Petroleum Corporation ( APC ). Enterprise, the operator of the two units, holds a 75% interest. The remaining 25% interest is held by Western Gas Partners.

Enterprise's eighth fractionator will accommodate growing NGL production from domestic shale plays, including the Eagle Ford in South Texas, and other basins in the Rocky Mountain and Mid-continent regions.

The global petrochemical industry is largely benefited by increasing NGL production from the shale plays as it provides a low-cost natural gas-derived feedstock compared to more expensive crude oil-based derivatives.

Enterprise continues to position itself to capitalize on NGL market dynamics by increasing its Eagle Ford shale exposure. Management also expects the NGL market to improve in the balance of the year driven by inventory improvements in the ethane and propane markets.  

Enterprise carries a Zacks Rank #3 (Hold). Investors interested in the oil and gas industry may also consider SM Energy Company ( SM ), which carries a Zacks Rank #1 (Strong Buy).



ANADARKO PETROL (APC): Free Stock Analysis Report

ENTERPRISE PROD (EPD): Free Stock Analysis Report

SM ENERGY CO (SM): Free Stock Analysis Report

WESTERN GAS PTR (WES): Free Stock Analysis Report

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