Enbridge Energy Partners Looking For A Pop From A Drop
Stephen Simpson, CFA
Stephen Simpson, CFA
Enbridge Energy Partners Working A Tricky Balance
Stephen Simpson, CFA
Stephen Simpson, CFA
Wed, Jul. 20, 12:57 PM
- Goldman Sachs downgrades Enbridge (ENB -1.5%) to Neutral from Buy with a $42 price target, cut from $44, and Enbridge Energy Partners (EEP -1.1%) to Sell from Neutral with a $20 target, trimmed from $21, citing project delays, more challenging fundamentals in the Bakken and oil sands regions, and increasingly strained financials.
- From an operational standpoint, the firm notes regulatory challenges on ENB's Sandpiper and Line 3 replacement projects, growing competition in the Bakken, macro uncertainty on oil sands and Bakken volume growth.
- Goldman says its ENB downgrade is due to valuation, as well as the fundamental challenges at its EEP MLP and ENB's relatively high leverage (greater than 6x consolidated 2016-18 debt/EBITDA).
- Goldman issued its recommendations before news of the companies' $177M settlement with the U.S. DoJ and EPA over 2010 oil spills.
Wed, Jul. 20, 11:47 AM
- Enbridge (ENB -1.4%) and Enbridge Energy Partners (EEP -1.7%) reach a $177M settlement with the U.S. Department of Justice and the EPA over 2010 oil spills in Michigan and Illinois, resolving the biggest legal question over the failure of ENB’s Line 6B, which spilled more than 20K barrels of oil into a Kalamazoo River tributary when it ruptured six years ago.
- ENB agrees to spend at least $110M on a series of measures to prevent spills and improve operations across nearly 2K miles of its Lakehead pipeline system in the Great Lakes region, and will pay $62M in civil penalties for Clean Water Act violations plus $5.4M in unreimbursed costs incurred by the government in connection with spill cleanup; ENB also is required to replace nearly 300 miles of one of the pipelines.
- ENB already has paid $57.8M to reimburse the government for cleanup costs tied to the spill, previously said it would pay $75M to settle claims pursued by the state of Michigan, and spent more than $800M cleaning up the accident.
Thu, Jul. 14, 2:52 PM
- Williams Cos. (WMB +5.6%) moves sharply higher following a Reuters report that it has received at least seven bids for its Canada unit, in a potential sale that could fetch $1B-$2B.
- Interest has come from pipeline companies Enbridge (ENB -0.4%), Pembina (PBA +0.5%), Keyera (OTC:KEYUF) and Inter Pipeline (OTCPK:IPPLF), as well as three Canadian pension plans, and an unspecified number of U.S. companies, according to the report.
- The sale process reportedly is at an advanced stage, and a deal could result by the end of the month; interest is said to be strong, highlighting demand for midstream assets that offer a steady cash flow despite volatile oil prices.
- Also: WPZ +3.3%, EEP +0.1%.
Tue, Jul. 12, 5:41 PM
- The state of Michigan selects two independent companies to analyze the financial risk of an oil pipeline rupture in the Straits of Mackinac and evaluate any alternatives to two 63-year-old underwater lines in the waterway.
- Enbridge (ENB, EEP), owner of the twin oil pipelines in the area where lakes Huron and Michigan converge, will pay $3.5M toward the studies but will not oversee them; the pipelines are part of Line 5, which carries nearly 23M gallons/day of light crude oil and liquefied natural gas.
- Det Norske Veritas will determine how much money would be needed to clean up a spill in the Straits, and Dynamic Risk Assessment Systems will study alternatives to Line 5 in the area.
- Environmental groups and some elected officials have called for shutting down the portion of Line 5 beneath the Straits, which was laid in 1953.
Tue, Jun. 21, 11:16 AM
- Enbridge (ENB, EEP), which owns twin oil pipelines in the area where Lakes Huron and Michigan converge, says it plans to spend $7M over the next two years on additional equipment that could be deployed quickly in the event of a spill, while trying to reassure locals that it probably never would be needed.
- ENB announces the equipment purchase as it kicks off a three-day public relations tour in northern Michigan designed to convince residents its Line 5 pipeline has never leaked, is in good shape and poses no risk to the scenic area and its tourism-based economy.
- Some elected officials have raised concerns about Line 5 - which carries nearly 23M gallons of light crude oil and liquefied natural gas daily - since another ENB pipeline ruptured in southern Michigan in 2010, releasing more than 800K gallons of oil into the Kalamazoo River and a tributary creek.
Tue, May 10, 7:58 AM
- Enbridge (ENB, EEP) agrees to acquire a 50% interest in Eolien Maritime France, a French offshore wind development company, from Dong Energy for C$282M.
- Enbridge and a subsidiary of Electricite de France will co-develop three large-scale offshore wind farms off the coast of France that would produce a combined 1,428 MW of power; development of the three projects is already underway, although construction is still subject to final investment decisions and regulatory approvals.
- The deal is ENB’s second investment in European offshore wind after buying a 25% stake in EON’s 400 MW Rampion project off the coast of Sussex, England, last year for C$750M.
Tue, May 3, 2:58 PM
- Midcoast Energy Partners (MEP -2.7%) is upgraded to Neutral from Underperform with a $6 price target, raised from $5, at Credit Suisse, citing the company's announcement of a strategic review.
- The firm notes that MEP reported better than expected Q1 EBITDA of $23.6M and distributable cash flow of $16.2M, driven by continued cost saving efforts; although MEP’s adjusted gross margins of $70.1M missed expectations, its total Q1 gathering, processing and transportation volumes were in-line.
- Credit Suisse suggests Enbridge Energy Partners (EEP -0.8%), which is considering strategic alternatives, should buy MEP, although the former’s balance sheet concerns may pose a challenge.
- Now read Midcoast Energy Partners, turnaround play with a current 9% yield
Tue, May 3, 7:40 AM| Tue, May 3, 7:40 AM
Mon, May 2, 12:59 PM
- Enbridge Energy Partners (EEP -0.1%) says it is considering a possible sale of its main U.S. natural gas business, which suffered a 51% in Q1 revenue and a higher operating loss compared with last year.
- EEP also reported a 26% drop in Q1 overall revenue to $1.06B, including $432M from natural gas from $873.5M a year ago; the natural gas segment’s operating loss rose to $29.9M from $26M, while the liquids business increased its operating profit to $301.4M from $270.2M.
- EEP says Q1 liquids pipeline systems deliveries totaled 3.3M bbl/day, 15% higher than the year-ago quarter.
Mon, May 2, 6:02 AM
Fri, Apr. 29, 4:42 PM
Fri, Apr. 1, 6:54 PM
- The huge investor outflow from MLPs has created a handful of major value opportunities in the space, Simmons analysts say, naming Enterprise Products Partners (NYSE:EPD) and Holly Energy Partners (NYSE:HEP) as their top Buy ideas.
- The firm believes that not all MLPs are as financially solid as they claim, preferring names that can fully cover current distribution payments and have financed growth projects in 2016 and EBITDA outlook clarity.
- Simmons also names EnLink Midstream Partners (NYSE:ENLK) as a higher risk/higher reward play for more aggressive investors; the firm rates ENLK, EPD, HEP and Delek Logistics Partners (NYSE:DKL) at Outperform.
- Rated Neutral: KMI, JPEP, NS, EEP, PAA, PAGP, OKS, ENLC.
- Now read High dividend stock has 46 dividend hikes, earnings estimates rising, insiders are buying
Wed, Mar. 30, 7:09 AM
- February monthly performance was: +1%
- 52-week performance vs. the S&P 500 is: -38%
- No dividends were paid in February
- Top 10 Holdings as of 12/31/2015: Enterprise Products Partners LP (EPD): 18.36%, Energy Transfer Partners LP (ETP): 10.13%, Magellan Midstream Partners LP (MMP): 8.69%, MPLX LP (MPLX): 5.14%, Buckeye Partners LP (BPL): 4.11%, Plains All American Pipeline LP (PAA): 3.95%, Sunoco Logistics Partners LP (SXL): 3.86%, EQT Midstream Partners LP (EQM): 3.84%, Enbridge Energy Partners LP (EEP): 3.57%, Williams Partners LP (WPZ): 3.49%
Thu, Mar. 17, 3:27 PM
- Credit Suisse analyst John Edwards issues a dozen downgrades - and one upgrade - among MLPs following the group's recent rally, believing the severity of the oil downturn has called into question the entire MLP model.
- "The prolonged downturn has challenged the robustness assumption on account of counterparty risks and contract renegotiation risks," Edwards writes.
- Downgraded to Underperform from Neutral: Columbia Pipeline (CPGX +2.4%), Magellan Midstream Partners (MMP -0.6%), ONEOK Partners (OKS +0.8%).
- Downgraded to Neutral from Outperform: Antero Midstream Partners (AM +0.8%), Enterprise Products Partners (EPD +2.7%), Enbridge Energy Partners (EEP +3.8%), EnLink Midstream Partners (ENLC +1.7%), Kinder Morgan (KMI +0.3%), Spectra Energy LP (SEP -0.1%), VTTI Energy Partners (VTTI +1.9%), Western Gas Equity Partners (WGP -0.1%), Western Gas Partners (WES +5%).
- Upgraded to Outperform from Neutral: Enable Midstream Partners (ENBL +14.6%).
Tue, Mar. 8, 5:17 PM
- A U.S. bankruptcy judge says Sabine Oil & Gas (OTCPK:SOGCQ) can reject contracts with midstream companies it made before oil and gas prices plunged.
- But the judge says her ruling is not binding, potentially setting the stage for another legal battle over the pipeline operators' argument that the agreements cannot be broken because they are inextricably tied to the land on which Sabine operates.
- The ruling covers agreements with two companies, including an affiliate of Cheniere Energy (NYSEMKT:LNG), that gather natural gas for Sabine in specific geographic locations; Sabine has said that rejecting the contracts could save as much as $115M for the bankruptcy estate.
- Restructuring and energy experts have warned that a loss for Sabine's pipeline operators could inspire other bankrupt oil and gas producers to seek similar relief, spreading the distress that has plagued them to the midstream companies that process and transport oil and natural gas.
- Similar requests are pending in the chapter 11 cases of companies including Quicksilver Resources (OTCPK:KWKAQ) and Magnum Hunter Resources (OTCPK:MHRCQ); a Delaware judge is expected to rule on KWK's request by the end of the month.
- Pipeline stocks include: KMI, ENB, EEP, SE, SEP, WMB, ETE, ETP, OKS, PAA, PBA, MMP, CQP, BWP, BPL, WES, SXL, NS, NSH, TCP, NGL, DPM, GEL, HEP, APL, SEMG, TLLP, MMLP, TLP, SGU, BKEP
Thu, Feb. 25, 7:25 PM
- Morgan Stanley analyst Tom Abrams sees improvement in the MLP multiple compression that has weighed on the group throughout the oil downturn, and the firm expands its MLP coverage by initiating ratings on several midstream names.
- While MLP prices could yet fall to new lows, Abrams believes progress has been made in approaching a bottom; however, he says investors should continue to avoid MLPs with overly-levered balance sheets, funding issues, weak cash flows and high distribution risk.
- Initiated with an Overweight rating: BPL, PSXP, VLP, DM, CPPL.
- Initiated at Equal Weight: MMP, CPGX, EQGP, EQM, WGP, WES, NS, NSH.
- Initiated at Underweight: EEP, ENBL, EEQ, MEP.
Enbridge Energy Partners LP engages in the energy transportation, delivering crude oil, liquid petroleum and natural gas businesses in the U.S. The company operates its business through two segments: Liquids and Natural Gas. The Liquids segment operates the U.S. portion of a pipeline supplying... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
Country: United States
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