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Enterprise Products Partners L.P. Message Board

  • zoooootie2007 zoooootie2007 May 28, 2012 7:37 PM Flag

    EPD / why its a BUY

    Enterprise Products Partners is one of the largest and oldest MLPs in the U.S. The MLP focuses primarily on the ownership of assets related to natural gas. Some of Enterprise’s key assets include onshore and offshore gas pipelines, a series of floating production platforms in the Gulf of Mexico, natural-gas-processing and fractionating facilities for removing NGLs from the gas stream and NGL pipelines.

    In January 2012, Enterprise Products Partners LP (NYSE: EPD) raised its distribution for the 30th consecutive quarter, providing a preview of its solid results in the final three months of 2011. The blue-chip MLP grew its full-year distributable cash flow (DCF) to $3.7 billion, excluding another $1 billion in one-time gains. These strong earnings enabled the firm to cover its distribution by a robust 1.35-to-1 margin.

    The MLP’s midstream infrastructure benefitted from higher fees and throughput, thanks to rising production growth in the Rocky Mountains and the Eagle Ford Shale. The ongoing surge in the production of natural gas liquids (NGL), coupled with rising demand for these commodities, pushed volumes to record levels.

    Enterprise Products Partners continues to benefit from an exceptionally low cost of capital and a wide array of growth opportunities. In 2011 the company invested $3.6 billion in organic growth projects, completing a major pipeline and NGL fractionator that will fuel growth in 2012 and beyond. The company has another $6.5 billion invested in projects under construction. The MLP doesn’t need to issue equity to fund these endeavors.

    Enterprise’s main growth angle is organic: the building of new pipelines and other assets. And Enterprise does have some impressive and attractive organic growth projects underway that will add to DCF in coming quarters.

    Enterprise should be able to grow its distributions by roughly 6.0 percent year-over-year over the next 12 months. And with a sky-high coverage ratio, Enterprise’s distribution is absolutely secure even in the event the recession in the U.S. is a lot longer and deeper than anyone is currently projecting.

    Due to the stock’s defensive characteristics, Enterprise offers a slightly lower-than-average yield. But because of its unblemished record of boosting distributions, attractive financing position and ongoing organic projects, Enterprise Products Partners is a buy.


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27.50+0.57(+2.12%)Sep 28 4:02 PMEDT