Bids for capacity on Kinder Morgan's (NYSE:KMI) proposed Gulf Coast Express pipeline significantly exceeded the planned capacity 1.7B cf/day, potentially leading to a larger project that would connect west Texas natural gas supplies to the Gulf coast, Argus reports.
KMI is still evaluating the bids received during a non-binding open season that closed late last week and could increase the size of the pipeline based on the level of interest, according to the report.
KMI is jointly developing the Gulf Coast Express pipeline with DCP Midstream (NYSE:DCP), who also will be the anchor shipper.
DCP Midstream (NYSE:DCP) agrees to join with Kinder Morgan (NYSE:KMI) in the development of the proposed Gulf Coast Express Pipeline Project; KMI will build and operate the pipeline, while DCP will be a partner and shipper.
The project, designed to transport up to 1.7M dekatherms/day of natural gas through 430 miles of pipeline, will provide an outlet for growing Permian Basin production to Texas Gulf Coast markets.
KMI expects the project to be in service in H2 2019, subject to shipper commitments; a non-binding open season for firm natural gas transportation is currently in process.
DCP Midstream (DCP -0.2%) is upgraded to Buy from Neutral with a $45 price target, raised from $37, at UBS, which says it analyzed the locations of DCP's processing plants and rig count by county and saw rig count increases in the DJ Basin, Permian, SCOOP/STACK and Eagle Ford, regions that represent ~55% of DCP's total processing capacity.
DCP has ~10% exposure to Eagle Ford through its natural gas segment, and UBS expects the company can benefit from operating leverage as production in the basin recovers.
Combined with DCP's Sand Hills pipeline expansion, higher natural gas liquids prices and lower ethane rejection, UBS expects DCP's 2018 EBITDA to rise 12% Y/Y.
DCP Midstream Partners' (DPM +0.1%) merger with DCP Midstream LLC sparks different reactions from analysts, as Stifel upgrades DPM to Buy with a $42 price target price while RBC downgrades to Sector Perform from Outperform with a $38 target.
Stifel says the outlook for DPM is much improved, as the combination will significantly improve its asset base while maintaining distribution coverage at ~1.0x; management also announced a number of initiatives for growth capital deployment and plans to boost maintenance capital spending from trough levels in 2016.
But RBC believes the deal increases DPM's leverage and commodity price exposure and does not address the longer-term burden of incentive distribution rights, and current valuation reflects near-to-medium term growth potential.
DCP Midstream Partners (NYSE:DPM) and DCP Midstream, a 50/50 joint venture between Phillips 66 (NYSE:PSX) and Spectra Energy (NYSE:SE), agree to combine their assets, simplifying their corporate structure and creating the largest natural gas liquids producer and gas processor in the U.S.
Effective Jan. 23, the combined company will be renamed DCP Midstream LP, and the NYSE ticker symbol will be changed to DCP.
As part of the deal, the DCP Midstream joint venture will pay DPM $424M in cash and get 31.1M DPM units; DPM also will assume $3.15B of the joint venture's debt.
DPM also says it plans to build a new 200M cf/day processing plant to increase its capacity in Colorado's Denver-Julesburg basin by 50%, and expand its natural gas liquids capacity on Sand Hills pipeline by 30% to 365K bbl/day.
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.
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).