Back to top

Analyst Blog

A leading master limited partnership (MLP), Enterprise Products Partners, L.P. (EPD - Analyst Report) recently announced a public offering of 8,000,000 common units to increase its liquidity. Enterprise Products offered a 30-day option to the underwriters to purchase an additional 1,200,000 units by exercising their full over-allotment option. The units were priced at $53.07 each.

The public offering – including underwriter allotment – will fetch approximately $473 million after deducting underwriting discounts, commissions and offering expenses.

The net proceeds from this offering will be utilized by Enterprise Products to reduce its debt under multi-year revolving credit facility and for other partnership purposes.

Enterprise Products holds a Zacks #3 Rank, equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.

Enterprise Products is engaged in providing a wide range of midstream energy services to the producers and consumers of natural gas, natural gas liquids, and crude oil.

The partnership has a track record of steadily increasing distributions over the years. Enterprise Products paid a distribution of 63.5 cents per unit in second quarter 2012, representing an increase of 5.0% year over year. Management intends to increase distribution for the third quarter and fourth quarters of 2012 by 6.1% and 6.5%, respectively.

Recently, the partnership entered into a 50/50 joint venture (JV) with Plains All American Pipeline, L.P. (PAA - Analyst Report) for a crude oil pipeline in South Texas. A 140-mile crude oil and condensate line − with capacity of 350,000 barrels per day (BPD)− from Gardendale in LaSalle County to Three Rivers in Live Oak County will form part of the JV.

We continue to view Enterprise Products as a core holding in an MLP portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. The partnership is one of the largest fully-integrated midstream service providers with a positive long-term outlook given its significant geographic and business diversity.

While we believe the partnership’s massive expansion program provides clear growth visibility over the coming years, finding adequate projects of similar scale in the future could pose problems.


Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

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 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
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%