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Will US Army Okay Energy Transfer's Dakota Access Pipeline?

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Texas-based midstream energy player Energy Transfer Partners, L.P.ETP recently reported that it is expected to receive the final approval from the U.S. Army for the completion of the Dakota Access Pipeline construction. This development follows President Donald Trump's request for a quick review of the $3.8 billion project, which had been stalled in September by the Obama administration to reconsider prior decisions.

According to initial plans, the pipeline development was to stretch over 1,172 miles and carry crude from the Bakken shale out to the U.S. Gulf of Mexico. However, the project was delayed due to protests from environmentalists as well as the tribes residing in and around the area. According to conservationists, the pipeline - expected to pass under a lake near the Standing Rock Sioux reservation - poses a serious threat to water resources.

The Energy Transfer Partners stock gained 1% in intraday trading amid speculations about the impending approval. This project, which was originally scheduled to be operational by the end of 2016, is now expected to commence by Jun 1, 2017. Upon completion, the Dakota Access Pipeline will be able to transport almost 570,000 barrels of oil every day to Illinois from North Dakota.

Energy Transfer Partners is a master limited partnership, headquartered in Dallas. The partnership is engaged in the intrastate transportation and storage business of natural gas in the U.S. Energy Transfer Equity, L.P. ETE , is the partnership's general partner and a 100% incentive distribution right in the partnership.

Energy Transfer Partners' dismal earnings surprise history shows that it has been struggling to protect cash flows amid the ongoing commodity price weakness. The partnership's deteriorating distribution coverage ratio in the tough business environment is another concern.

ENERGY TRANSFER PARTNERS Price

ENERGY TRANSFER PARTNERS Price | ENERGY TRANSFER PARTNERS Quote

Energy Transfer Partners currently carries a Zacks Rank #5 (Sell), which implies that the stock will underperform the broader U.S. equity market over the next one to three months.

In the last six months, the Zacks categorized Oil and Gas Production Pipeline-MLP industry has registered 6.27% growth. However, units of Energy Transfer Partners have underperformed the industry by declining 8.05%.

Some better-ranked players in the industry include Buckeye Partners L.P BPL and Enable Midstream Partners, LP ENBL . Both these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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