| Enbridge's Exposure to Natural Gas Price Volatility a Drag | |
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On Aug 25, 2015, we issued an updated research report on Enbridge Energy Partners LP EEP, which is a master limited partnership ("MLP") engaged in the gathering, processing and transmission of natural gas and crude oil.
Enbridge’s midstream natural gas business is sensitive to changes in natural gas supply, demand fundamentals and commodity cycles associated with gas processing margins. Furthermore, with the expansion of its natural gas gathering and processing business, Enbridge’s risk exposure to commodity prices has increased.
A decline in natural gas processing margins or a drop in domestic oil, gas drilling and/or end market demand is likely to lower the partnership‘s growth rate and affect its distributable cash flow.
Enbridge could be affected by a number of global macro issues, which include sovereign debt risks, defaults on sovereign credits, and changes in U.S. monetary and fiscal as well as tax policies. Additionally, an economic slowdown could impact the demand and price of crude oil, which in turn, could hurt Enbridge's margins of its NGL, natural gas and other businesses.
However, the partnership’s focus on fee-based and diversified businesses has enabled it to dilute its business risks as well as provide a stable and steadily growing earnings profile. We are optimistic about Enbridge’s increased exposure to the Bakken Shale, the Haynesville Shale and Granite Wash. We believe that these growth prospects have not been fairly captured by its current yield of 8.80%. Enbridge’s Lakehead system transfers over 60% of the Canadian oil output to the U.S. This unique position helps the partnership to capitalize on the growing Canadian oil sands production. Moreover, its 35% share in the Texas Express pipeline and the Ajax project increases its natural gas liquids handling capacity and raises the prospect of significant near-term growth. Enbridge’s Liquids segment is also poised to benefit from increasing production in the Bakken Shale and Canadian Oil Sands regions as well as higher revenues from Alberta Clipper. The partnership plans to focus on increasing crude takeaway capacity in the Bakken and intensifying capacity to ship crude eastward to the upper Midwest and Canada refineries.
Key Picks in the Sector
Enbridge carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same space are Alon USA Partners, LP ALDW, BraskemS.A. BAK and Renewable Energy Group, Inc. REGI. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ENBRIDGE EGY PT (EEP): Free Stock Analysis Report BRASKEM SA (BAK): Free Stock Analysis Report RENEWABLE ENERG (REGI): Free Stock Analysis Report ALON USA PTNRS (ALDW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Enbridge Energy Partners LP
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CODE : EEP |
ISIN : US29250R1068 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Enbridge Energy is a and oil producing company based in United states of america. Enbridge Energy holds various exploration projects in USA. Its main exploration property is LAKEHEAD in USA. Enbridge Energy is listed in United States of America. Its market capitalisation is US$ 3.4 billions as of today (€ 3.0 billions). Its stock quote reached its lowest recent point on June 22, 2018 at US$ 10.00, and its highest recent level on December 19, 2018 at US$ 10.43. Enbridge Energy has 326 517 110 shares outstanding. |