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, 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, 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
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%).
Thu, Feb. 18, 2:49 PM
- Midcoast Energy Partners is downgraded (MEP -10.3%) to Underperform from Outperform with a $5 price target, slashed from $16, at Credit Suisse, which says that although the company made progress in 2015, it was inadequate in the face of its rapidly deteriorating fundamentals.
- In its Q4 earnings report, MEP's Q4 adjusted EBITDA of $27M came in better than expected, but distributable cash flow of $16 million fell short of estimates due to high maintenance capex and interest expenses, and the company’s guidance for 2016 came in 39% below the consensus, prompting a 21% plunge in the unit price yesterday.
- MEP needs $40M in support from Enbridge Energy Partners (EEP +5.2%) to pay 2016 dividends, Credit Suisse says.
Fri, Feb. 5, 11:38 AM
- The unprecedented buildup of surplus crude oil supplies in Cushing, Okla., is causing logistical difficulties for companies moving crude between thousands of steel tanks in the most important U.S. storage hub, Reuters reports.
- Enterprise Products Partners (EPD -2.5%) is said to have told at least some counterparties that it is experiencing delays in delivering crude from its tanks.
- The disruptions are attributed to the unusually high level of oil collecting in Cushing; the EIA said stockpiles rose to a record 62.4M barrels as of last week, just 9M barrels shy of their theoretical limit.
- EPD is a relatively small operator in the Cushing market relative to the likes of Enbridge Energy Partners (EEP -0.7%), which has more than 20M barrels, but traders reportedly first noticed that something was amiss when EPD began bidding to buy the Feb./March WTI cash roll early Thursday, indicating that they were potentially short barrels for immediate delivery.
- The delivery delays are unusual but apparently not yet severe enough to trigger contractual disputes.
Mon, Jan. 4, 3:48 PM
- Enterprise Products Partners (EPD +3%) maintains strong early gains after announcing that it raised its quarterly distribution by 1.3% while planning to recommend a 5.2% increase for FY 2016's annual distribution.
- EPD also said affiliates of Enterprise Products Company and its general partner plan to purchase $200M in EPD common units during Q1 through the partnership's distribution reinvestment plan and/or at-the-market equity issuance program.
- The news is providing support across the MLP sector, which is in the green in an otherwise dismal showing for stocks; the ALPS Alerian MLP ETF (AMLP +0.6%) - which includes EPD, Magellan Midstream (MMP +1.3%), Energy Transfer Partners (ETP +3.7%), Plains All American (PAA +4.9%), Williams Partners (WPZ +2.4%), Buckeye Partners (BPL -0.5%), ONEOK Partners (OKS +0.3%), Enbridge Energy Partners (EEP +3.4%), Sunoco Logistics (SXL +0.6%) and Targa Resources Partners (NGLS -3%) - edges higher for its best level since late November.
Nov. 3, 2015, 10:53 AM
- Enbridge Energy Partners (EEP +2.2%) is upgraded to Buy from Neutral with a $34 price target at UBS, which cites its slate of growth prospects, investment grade rating and stable cash flows.
- Alongside its Q3 earnings, EEP increased transparency of its dropdown schedule, with upwards of $1.2B in options including Eastern Access, Mainline and the Line 3 replacement, and the possibility of $500M/year in selective dropdowns, in contrast to Q2 earnings where management removed its dropdown visibility and injected uncertainty around growth, UBS says.
- However, Credit Suisse downgrades shares to Neutral from Outperform, saying management's commitment to achieving distribution growth of 2%-5% depends on capital market conditions and may not occur until 2018 and beyond.
Oct. 9, 2015, 3:39 PM
- Oppenheimer serves up a dreary outlook for energy MLPs, seeing "no salvation" in the near term for the group and joining the "lower for longer" consensus around oil prices, but the firm upgrades Energy Transfer Partners (ETP +1.9%) and Enbridge Energy Partners (EEP -1%) as companies that can sustain current distribution payments and possibly even raise them.
- Oppenheimer thinks the market already has priced in ETP's low-growth scenarios after shedding nearly a third since November even as it has the potential for high single-digit distribution growth over the next few years.
- The firm says EEP's distribution is backed by high-quality, fee-backed assets, and it forecasts a sustainable 1x distribution coverage through next year.
May 13, 2015, 3:49 PM
- Energy MLPs are trading with mixed results, which is not in line with an analyst's expectation that several names in the space may be outperformers today after Williams Cos. (WMB +6.2%) agreed to buy Williams Partners (WPZ +22.7%).
- In an earlier note to investors, Credit Suisse named Plains GP Holdings (PAGP +1%), Targa Resources (TRGP +1.1%), NuStar GP Holdings (NSH -0.1%) and Western Gas Equity (WGP -0.7%) as MLPs that could climb on the news.
- Meanwhile, Wells Fargo says the deal is positive, since it reduces the WMB's cost of capital, will immediately increase its profits, and enhances its dividend growth outlook.
- Among major energy MLPs: EPD -1.5%, ETP +0.9%, PAA +0.2%, EEP -0.2%, MWE +2.2%, MMP -0.3%.
Mar. 9, 2015, 6:04 PM
- Enbridge Energy Partners (NYSE:EEP) -3.3% AH after announcing a public offering of 8M common units, with an underwriters option to purchase up to an additional 1.2M units.
- EEP says it will use the proceeds to fund part of its capital expansion projects and for general partnership purposes.
Dec. 4, 2014, 3:25 PM
- Enbridge (ENB +10.8%) soars to all-time highs on heavy volume following news of its sweeping plan to raise its dividend by 33% and transfer ownership of its Canadian pipelines to affiliates in a bid to lower funding costs for future expansion and new projects.
- The dropdown allows ENB “to accelerate dividend growth immediately and for the next four-plus years,” ScotiaBank analyst Matthew Akman says.
- "It's another attempt to remove the conglomerate discount by streamlining its businesses," says Colin Cieszynski of CMC Markets.
- The move comes as rival TransCanada (TRP +1.6%) faces pressure from activist investors to overhaul its business, including accelerating dropdowns into its U.S.-based affiliate TC Pipelines (TCP +0.6%) and a spinoff of its power business.
- EEP +6.6%, EEQ +7.3%.
Dec. 4, 2014, 8:41 AM
- Enbridge (NYSE:ENB) +9.6% premarket after saying it will increase its dividend by 33% and transfer ownership of its Canadian pipelines to affiliates in an attempt to lower funding costs for future expansion and new projects.
- ENB plans to drop down its Canadian pipeline assets to its Enbridge Income Fund subsidiary and then raise up to C$800M in equity over the next three years through another affiliate, Enbridge Income Fund Holdings (OTC:EBGUF).
- The combined value of the pipeline assets involved in the transfer totals C$17B and includes the Canadian segment of the Alberta Clipper pipeline.
- ENB says it also is considering a similar move to restructure its U.S. assets by transferring them to its Enbridge Energy Partners (NYSE:EEP) affiliate.
Oct. 15, 2014, 3:18 PM
- MLPs have been crushed this week, and today Citi warns that the rapid drop in oil prices has created a "negative feedback loop on spending” and that a 15% drop in oil-directed drilling activity would result in a 50% drop in oil production growth.
- It Brent oil prices stabilize at $85-$90, Citi thinks the MLPs exposed mostly to oil and natural gas liquids would rebound modestly as a new equilibrium is developed between producers and midstream companies on spending; if crude continues to slide, Citi says MLPs exposed to natural gas would outperform.
- Miller Howard, a money manager specializing in income-producing stocks, is blaming newbie investors who don't fully understand MLPs and are "in it for the yield."
- Most MLP contracts are very long term, meaning that a temporary change in the oil price has no effect on those sources of revenue, Howard says, adding that "there is far from enough infrastructure to serve the domestic energy industry, even if it slows a bit."
- Some big MLPs have turned higher even as most stocks plunge: KMI +1.8%, KMP +1.5%, EPD +4.8%, PAA +3.7%, ETP +4%, ETE +8.6%, RGP +7.2%, CQP +6.6%, TEP +5.2%, PSXP +4.1%, MMP +7.1%, PAGP +4.9%, EEP +2.1%.
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, AMZA, IMLP, OSMS
Oct. 6, 2014, 3:58 PM
- Midcoast Energy Partners (MEP -3.2%) is downgraded to Neutral from Buy with a $23 price target, down from $24, at UBS.
- MEP has performed well, up ~15% in the last three months in part fueled by drops from its general partner Enbridge Energy Partners (NYSE:EEP) and should continue to benefit from drops; however, MEP has inherent commodity exposure, and the UBS energy team is lowering its commodity deck assumptions.
- In addition to the revised commodity outlook, MEP has missed UBS' volume expectations for the last three quarters, so the firm is lowering volume expectations to the lower end of the guidance range.
Sep. 18, 2014, 3:48 PM
- Enbridge Energy Partners (EEP +2.8%) is reiterated with an Outperform rating and a higher stock price target of $42, up from $39, at Credit Suisse after the dropdown of Alberta Clipper to EEP announced yesterday.
- The firm says the move is consistent with its thesis on EEP that many investors are missing the series of steps management has been taking recently to move EEP from what has been lagging distribution growth to at least average distribution growth in the coming years.
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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