Enterprise Products (EPD) Banks on Stable Fee-Based Revenues
Enterprise Products Partners LP EPD has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $5.5 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
The partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. The ratio has persistently been lower than the stocks in the industry in the past few years. The liquidity profile of Enterprise Products is impressive, as it completed the second quarter with consolidated liquidity of $4.1 billion, which incorporates available borrowing capacity along with unrestricted cash.
In the current volatile energy market, midstream energy players are better placed than upstream companies. This is because their assets are being booked by shippers for the long term, deriving stable cashflows. Other such players are Kinder Morgan Inc. KMI, The Williams Companies, Inc. WMB and MPLX LP MPLX.
With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan is a leading energy infrastructure company in North America. KMI derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, The Williams Companies connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s natural gas consumption, which is utilized for heating and clean-energy generation.
MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflows. With a strong focus on returning capital to unit holders, MPLX recently announced a repurchase authorization for an incremental $1 billion of units.
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Williams Companies, Inc. The (WMB) : Free Stock Analysis Report
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