Enbridge Energy Partners Looking For A Pop From A Drop
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, Sep. 19, 3:28 PM
- Goldman Sachs upgrades its coverage on energy midstream partnerships to Attractive from Neutral, expecting a return of volume growth in 2017 and further growth in natural gas liquids, oil and natural gas helping to generate better margins.
- The firm foresees few risks of any additional dividend cuts, as leverage and coverage should show improvements in 2017 and 2018, and believes financial risks from capital markets have begun to recede.
- Goldman upgrades two names - Targa Resources (TRGP +3%) and Buckeye Partners (BPL +1.8%) - to Buy from Neutral, and lifts two more - Enable Midstream Partners (ENBL +3%) and Enbridge Energy Partners (EEP +0.9%) - to Neutral from Sell; however, EnLink Midstream (ENLC -0.5%) is downgraded to Sell.
Tue, Sep. 13, 1:37 PM
- Enbridge (ENB -4.2%) has indicated that the MLPs it amasses from its $28B takeover of Spectra Energy (SE -4.4%) will continue to be operated separately, but analysts say they are headed for some sort of consolidation in the long run.
- While ENB and SE rallied following their merger news, results have been mixed for Spectra Energy Partners (SEP -1.6%), Enbridge Energy Partners (EEP -3.2%), Midcoast Energy Partners (MEP -1.3%) and DCP Midstream Partners (DPM -5.4%) - the MLP jointly owned by SE and Phillips 66 - highlighting investor concerns about the post-merger fate of the units.
- ENB may take 2-3 years to decide the structure of its MLPs after closing on SE, says Hennessey Gas Utility Fund's Skip Aylesworth, adding that when it finally happens, “you might end up with two of the four” units.
Sat, Sep. 10, 8:25 AM
- Energy MLPs enjoyed a lift this week (at least until yesterday) following news of the Enbridge-Spectra merger, particularly those lacking sponsorship by producers that may be targets for consolidation.
- Credit Suisse sees logical players to be involved in combinations to secure access to opportunities and capital including ETE/ETP, EPD, MMP, PAA/PAGP, OKE/OKS, WPZ, PSX/PSXP, MPC/MPLX, TRGP, NS/NSH, GEL and TEP/TEGP.
- FBR Capital says MLP valuations have improved ~45% from lows reached early this year, and expects macro trends to lift the sector; the firm thinks CAPL could enjoy double-digit growth for nearly seven years, and says MMLP is another notable outperformer whose valuation reflects more than enough discount for a distribution cut (which the firm is forecasting) - it also likes ENLK, EEP, TLP, SRLP, USAC, WLKP and USDP,
- RBC notes favorable sentiment in the MLP realm, highlighting attractive valuations particularly at ETP, BWP and AMID, and sees dropdown stories - out of favor YTD - such as VLP and SHLX offering visible growth that can support the stocks over the next 12 months.
- ETFs: AMLP, AMJ, KYN, TYG, KYE, SRV, CEM, MLPI, NML, FEN, NTG, KMF, MLPA, EMLP, FMO, AMZA, FEI, JMF, SRF, CBA, MLPN, GMZ, MLPX, GER, EMO, TTP, CTR, MLPS, CEN, SMM, DSE, FPL, AMU, MIE, JMLP, ENFR, ATMP, IMLP
Tue, Sep. 6, 7:45 PM
- Spectra Energy (NYSE:SE) surged +13.4% in today's trade for its biggest gain in more than three years, even staying above the original $40.33/share value of Enbridge's (NYSE:ENB) $28B all-stock offer, as traders clearly believe that antitrust and financing concerns are minimal and that the premium paid for SE was modest considering potential synergies.
- The deal has no serious antitrust problems, as the companies' networks have "limited overlap," according to Jones Day antitrust expert Bruce McDonald.
- Bloomberg's Liam Denning says combining the two companies "should entrench their advantage when it comes to raising money. Reassuring the capital markets is the no. 1 skill any pipeline executive requires in the aftermath of the crash."
- While ENB closed +5% and the Enbridge Energy Partners (NYSE:EEP) MLP ended +2.5%, Spectra Energy Partners (NYSE:SEP) was -1.3% as investors believed that the MLPs would be merged, even though the parent companies said it was not part of their current plans.
- SEP, which operates natural gas pipelines, has the lowest cost of capital in the group and would be diluted if it combines with EEP, which is more in crude pipelines, says Rob Thummel of Tortoise Capital, adding that he does not believe the MLPs will be combined.
Tue, Sep. 6, 7:17 AM
- Enbridge (NYSE:ENB) agrees to acquire Spectra Energy (NYSE:SE) in an all-stock deal valued at ~C$37B ($28B) that will create North America's largest energy infrastructure company.
- SE shareholders will receive 0.984 shares of the combined company for each SE share they own, the equivalent of $40.33/share, representing a ~11.5% premium to SE's closing price on Friday.
- After the deal, ENB shareholders will own ~57% of the combined company, while SE shareholders will own ~43%.
- The combined company will be called Enbridge Inc. and upon closing will be the largest energy infrastructure company in North America with a US$127B enterprise value.
- The companies’ MLP,s Spectra Energy Partners (NYSE:SEP) and Enbridge Energy Partners (NYSE:EEP), will continue to be separate publicly traded companies; SE also owns a 50% stake in DCP Midstream Partners (NYSE:DPM).
- SE +5.8% premarket.
Thu, Sep. 1, 7:08 PM
- Enbridge Energy (ENB +0.1%, EEP +0.5%) has officially scrapped current plans for its heavily delayed $2.6B Sandpiper crude pipeline.
- Citing market conditions and other factors, the company withdrew regulatory applications with the Minnesota Public Utilities Commission, which had ordered environmental reviews that delayed the project into 2017 and then to 2019.
- Meanwhile, the company had been shifting investment to the Bakken Pipeline System. It's not listed anticipated joint funding terms: 25% of funding coming from EEP and 75% from general partner Enbridge Energy Co. Inc.
- Officially, the company is deferring the implementation of the Sandpiper project, which would have carried North Dakota light crude oil across Minnesota to its Wisconsin terminal, "beyond EEP's current five-year planning horizon." The Bakken line can carry the crude south to Texas.
Tue, Aug. 23, 12:37 PM
- Construction will remain halted on the 1,154-mile Dakota Access pipeline at a site near the Missouri River after a federal judge postpones a hearing to determine whether protesters should be prevented from accessing the site.
- The judge delayed a hearing until Sept. 8 to decide whether to grant a preliminary injunction sought to block the protesters from the site, while agreeing to extend a temporary restraining order against several of the protesters; the Standing Rock Sioux tribe argues that the pipeline threatens sacred sites and poses a risk to its drinking-water supply.
- The $3.7B pipeline is being built by Energy Transfer Partners (ETP +0.5%) and its Sunoco Logistics Partners (SXL -0.1%) affiliate; refiner Phillips 66 (PSX +1.1%) owns a 25% stake, and Enbridge Energy Partners (EEP +0.1%) and Marathon Petroleum (MPC +1.4%) bought a stake for $2B earlier this month.
Thu, Aug. 4, 9:58 AM
- The long-planned and often-delayed Sandpiper pipeline through the U.S. Midwest seems a likely casualty of plans by Enbridge (ENB, EEP) and Marathon Petroleum (NYSE:MPC) to acquire a portion of the rival Dakota Access Pipeline while scrapping their joint venture agreements and transportation services for the 450K bbl/day Sandpiper project.
- Current outgoing pipeline capacity from the Bakken is ~641K bbl/day, but will surge to 1.21M bbl/day once Dakota Access becomes operational; with global oil futures down by 70% in the last two years, traders and analysts say there just is not enough crude in production in the U.S. Midwest for both pipelines.
- For ENB, investing in another project could be the best move forward: The $2.6B Sandpiper project originally was planned for startup this year, but Minnesota regulators ordered environmental reviews that pushed the timetable out to 2017 and then to 2019.
Wed, Aug. 3, 8:17 AM
- Enbridge Energy Partners (ENB, EEP) and Marathon Petroleum (NYSE:MPC) agree to pay a combined $2B for a 49% stake in the Bakken pipeline system from an affiliate of Energy Transfer Partners (NYSE:ETP) and Sunoco Logistics Partners (NYSE:SXL).
- EEP says it is paying $1.5B for its share in the deal, while MPC says it is contributing $500M in the joint venture project to acquire the stake in the holding company that owns 75% of the pipeline network.
- The deal follows the startup earlier this year of the Southern Access Extension, linking Enbridge’s mainline terminals near Chicago to the storage hub in Patoka, Ill.
- The deal gives EEP the ability to move shale oil from the Bakken to refineries along the U.S. Gulf Coast, through connections to its mainline; EEP will seek to set joint tolls to the Gulf.
- ETP and SXL will receive a respective $1.2B and $800M in the sale.
Fri, Jul. 29, 5:58 PM
- Noting that many MLPs have climbed after announcing distribution reductions this year, Baird analysts compile a list of 14 10%-plus yielding MLPs they believe could enjoy a quick price boost after announcing a cut.
- The Baird group does not necessarily recommend investors buy all the MLPs on the list, but "ample market evidence exists a) to justify a cut, and b) to believe it will drive short run returns, though not without material implications to investors’ cash flow."
- The 14 MLPs: AMID, ARCX, CCLP, CELP, CEQP, EEP, ENBL, ETP, JPEP, MEP, MMLP, SMLP, USAC, USDP
Thu, Jul. 28, 5:52 PM
Thu, Jul. 28, 4:36 PM
Wed, Jul. 27, 5:35 PM
- ACTG, AFL, AIV, AJG, ALDW, ALGN, ALJ, AMZN, ARII, ATEN, ATR, AUY, BCOV, BGS, BIDU, BOOM, BRKS, CAA, CATM, CBL, CBS, CENX, CHMT, CLD, CLMS, COLM, COWN, CPHD, CPT, CUBE, CWST, CY, DECK, DGI, DGII, DLR, DTLK, ECOL, EEP, EGO, EHTH, EIX, ELLI, EMN, EQC, ES, ESS, EXPE, EYES, FE, FET, FICO, FII, FIX, FLS, FPO, FR, FTNT, GIMO, GNMK, GOOG, HIG, HLS, IM, INVA, INVN, ISIL, ITGR, IXYS, KAMN, KBR, KLAC, KRG, LEG, LMNX, LPLA, LYV, MATW, MOBL, MSCC, MSTR, MTD, N, NGVC, NR, NSR, OMCL, OUTR, PCCC, PDFS, PFG, PXLW, QGEN, QSII, RGA, RMD, ROVI, RSG, RTEC, SB, SBAC, SKYW, SNMX, SPNC, SRCL, STMP, STRZA, SYNA, TCO, TFSL, THG, TLGT, TNDM, UCTT, ULH, VCRA, VDSI, VRSN, WDC, WLK, WRI, WYNN, YRCW
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%.