Should You Buy Anadarko Petroleum (APC) Ahead of Earnings?
Enterprise Products Partners L.P. EPD has initiated operations to enhance the loading capacity for liquefied petroleum gas (LPG), primarily propane and butane, at the Enterprise Hydrocarbon Terminal (“EHT”).
The expansion will increase the loading capacity by 175,000 barrels per day (bpd) or about 5 million barrels per month. The total LPG export capacity at EHT will reach 720,000 bpd or about 21 million barrels per month.
The completion of this project, expected in the second half of 2019, will enable EHT to load as many as six Very Large Gas Carrier (“VLGC”) vessels concurrently, while maintaining the option to change between propane and butane. Once the project is brought online, it will facilitate EHT to load a single VLGC in less than 24 hours. This will create cost synergies as well as greater competence.
Enterprise Products is one of the leading exporters of propane in the world. Courtesy of this expansion project its capability to export LNG from EHT will increase by another 30%. Currently, LPG production exceeds U.S. demand by more than one million barrels per day and domestic export terminals are approaching full utilization. U.S. LPG production is estimated to increase by an additional 1.5 million barrels per day by 2025. Therefore, the need to augment current loading capabilities as well as construction of new infrastructure is much required.
The latest expansion is vital to support the growth of U.S. crude oil and natural gas production. Without access to international markets, the growth will come to a standstill.
Enterprise Products’ large ethane export facilities in the Gulf Coast, which link domestic producers to overseas market, will drive further growth as ethane is being increasingly used to manufacture plastic instead of naphtha. The partnership is also spending significantly on propane dehydrogenation (PDH) plants, which produce propylene using propane. Along with ethylene, propylene is one of the major ingredients used to make plastic. The expansion project emphasizes its commitment toward the same.
In the past year, Enterprise Products’ units have increased 9.7% compared with the industry’s 1% rise.
Zacks Rank & Stocks to Consider
Enterprise Products currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Petroleo Brasileiro S.A. PBR, or Petrobras SA, Helix Energy Solutions Group, Inc HLX and TC Pipelines, LP TCP. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.
Helix Energy offers specialty services to the offshore energy industry. The company delivered an average positive earnings surprise of 66.7% in the trailing four quarters.
TC Pipelines purchases, owns and actively participates in the management of U.S.-based natural gas pipelines and related assets. The company delivered an average positive earnings surprise of 3.7% in the last four quarters.
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TC PipeLines, LP (TCP) : Free Stock Analysis Report
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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
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