Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Oil and gas play, Devon Energy Corporation’s (DVN - Analyst Report) board of directors gave the go-ahead for the creation of a publicly traded midstream master limited partnership (MLP). The company intends to file a registration statement with the Securities and Exchange Commission in the third quarter of 2013 followed by the issuance of partnership units.

The new partnership will run the natural gas gathering and processing business and also manage the properties situated in the states of Oklahoma, Texas and Wyoming. Devon Energy will be the general partner of the midstream entity and have the entire incentive distribution rights.

Further, with the conclusion of the offering, Devon Energy will hold the lion’s share of the common units. Devon plans to use the proceeds from the sale of the MLP units to finance its continuing operations. This will render the MLP as a minority owner in Devon’s U.S. midstream business.

Of late, the shift towards unconventional resources like shale gas and oil sands, in North America, has led to the demand for greater investments in pipeline systems.  The new MLP could not have come at a better time, with midstream opportunities gaining traction in the country after a weak performance in the fourth quarter 2012. Moreover, prospects from the international market look promising.

As per the Energy Information Administration (EIA), imports from Canada are projected to fall while pipeline exports to Mexico will receive a substantial boost in the coming years. This will certainly bode well for the MLP business and help accelerate Devon Energy’s future growth trajectory.

Nevertheless, the contracting coal-to-gas switch in the U.S. might be a cause of concern. Currently, Devon Energy carries a Zacks Rank #3 (Hold).

However, other oil and gas operators well-positioned in the energy domain are Zacks Ranked #2 (Buy) Anadarko Petroleum Corporation (APC - Analyst Report), Encana Corp. (ECA - Analyst Report) and Oasis Petroleum Inc. (OAS - Snapshot Report).

Based in Oklahoma City, Okla., Devon Energy is an independent energy company and engages primarily in exploration, development, and production of oil, natural gas, and natural gas liquids.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%