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Enterprise to Boost Aegis Capacity

Zacks Equity Research

Enterprise Products Partners L.P. (EPD) announced the commencement of a supplemental binding open commitment period on its Aegis pipeline.

The ongoing supplemental binding open commitment period will aid in analyzing the additional shipper demand for capacity on the pipeline as well as its size. The new 270-mile pipeline system, Aegis, will carry purity ethane from the Enterprise Mont Belvieu, Texas liquids storage complex to petrochemical refineries in Texas and Louisiana.

Enterprise has made commitments which are adequate for project progression. The pipeline is expected to be commissioned in 2014 and the partnership continues to receive attention from prospective shippers.

The supplemental binding open commitment period which started on Apr 15 and conclude on May 9, 2013 will support only those who have shown appropriate interest in execution of long-term transportation agreements.

The final design of the pipeline, which comprises capacity and delivery points, will be determined on the completion of negotiation of the binding agreements at the end of the supplemental binding open commitment period.

We believe EPD remains a core holding in the master limited partnership portfolio with focus on projects that generate stable cash flow and contribute to its integrated value chain. While EPD increased its cash flow distribution by 6.5% in the fourth quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth.

Enterprise holds a Zacks Rank #3, which is equivalent to short-term Hold rating. However, Zacks Ranked #1 Range Resources Corporation (RRC), EPL Oil & Gas, Inc (EPL) and Stone Energy Corp (SGY) are expected to outperform the market over the next few months.

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