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Inergy Midstream, Enserco Form JV

Zacks Equity Research

Inergy Midstream LP (NRGM), a publicly traded energy pipeline partnership, has entered into a joint venture with Enserco Midstream LLC.

Per the deal, Inergy Midstream, along with Enserco Midstream, will operate and own Wyoming-based crude oil rail terminal (Douglas Facility). The owner of the facility was Powder River Basin Industrial Complex, LLC (:PRBIC), which is now equally owned by Inergy Crude Logistics LLC and Enserco Powder River Basin LLC, affiliates of Inergy Midstream and Enserco Midstream, respectively.

Though the Douglas facility is operational since Aug 2013, the unit’s train service will start by the first quarter in 2014. Both Inergy Midstream and Enserco Midstream believe to increase throughput capacity to roughly 20,000 barrels per day (bbl/d), after the unit’s train service starts. As the Douglas facility is located at the top of the Niobrara Powder River Basin shale play, the capacity is expected to expand up to 60,000 bbl/d after a surge in the output from the shale plays.     

Following the joint venture, Inergy Midstream and Enserco Midstream expect to provide premium takeaway solutions to Powder River Basin play based producers.  

Last month, Inergy Midstream announced its third-quarter fiscal 2013 result. The partnership posted loss per unit of 4 cents against the Zacks Consensus Estimate of earnings of 11 cents per unit. The lower-than-expected result was primarily due to significant hike of operating and administrative expenses.

Kansas City, Mo.-based Inergy Midstream is a master limited partnership (MLP), which is involved in the development and operations of fee-based gas and liquid businesses related to storage and transportation.

The partnership currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

Meanwhile one can look at oil and gas production pipeline MLPs like Sunoco Logistics Partners LP (SXL), Delek Logistics Partners LP (DKL) and Pioneer Southwest Energy Partners LP (PSE) that offer value. All the stocks have a Zacks Rank #2 (Buy).

Read the Full Research Report on SXL

Read the Full Research Report on PSE

Read the Full Research Report on NRGM

Read the Full Research Report on DKL

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