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Energy Transfer Starts Open Season

Zacks Equity Research

Natural gas pipeline operator Energy Transfer Partners LP (ETP), together with its owner Energy Transfer Equity LP (ETE), recently declared the start of a binding open season for their Eastern Gulf crude access project. The open season started from Jun 5 and will continue till Jul 19, 2013.

The open season is for shippers transporting crude from Patoka to the Eastern Gulf Coast refinery market. The pipeline will have transporting capacity of up to 420,000 barrels per day of crude oil from the Patoka Hub to refinery markets along the Mississippi River and the Louisiana Gulf Coast.

As part of the project, Energy Transfer also plans to deploy 575 miles of underutilized pipeline to mitigate construction and environmental impacts of the project. This pipeline will be environmentally friendly and cost effective for crude oil transportation to the Eastern Gulf Coast.

Energy Transfer Partners owns and operates a diversified portfolio of energy assets. It is engaged primarily in the gathering, processing, storage and transportation of natural gas.

Last month, Energy Transfer Partners announced impressive first quarter 2013 results, aided by strong transportation margins. Energy Transfer Partners reported a profit of 63 cents per limited partner unit, breezing past the Zacks Consensus Estimate of 45 cents.

However, gathering and processing master limited partnerships (MLP) such as Energy Transfer Partners are more sensitive to commodity prices compared to other MLP subgroups. As a result, collapsing energy prices have adversely affected their cash flow stability.

This accounts for the partnership’s current Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, pipeline operators like Enbridge Energy Management LLC (EEQ) and Kinder Morgan Management LLC (KMR) offer more value and are worth buying now. Both these firms sport a Zacks Rank #2 (Buy).

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Read the Full Research Report on EEQ

Read the Full Research Report on KMR

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