Calgary-based midstream player Pembina Pipeline Corporation (PBA - Free Report) recently struck a 20-year infrastructure and service development deal with energy-major Chevron Corp. (CVX - Free Report) . Subject to sanction by Chevron and regulatory approvals, Pembina intends to make a multi-billion dollar investment on this project.
Per the deal, Pembina Pipeline is to construct and operate potential gas and liquid infrastructure in the Duvernay resource play. The company will also build liquids stabilization facilities and other supporting infrastructure as well as provide long-term service for Chevron on its pipelines.
The deal is likely to benefit Pembina as Duvernay shale is a world-class liquid-rich investment hotspot with attractive economies. Hence the deal will enhance the competitive positioning of the company in Duvernay shale and will also provide low risk investment opportunities.
Zacks Rank and Key Picks
Headquartered in Canada, Pembina Pipeline operates in four major segments – Conventional Pipelines, Gas Services, Midstream & Marketing and Oil Sands and Heavy Oil. The company presently carries a Zacks Rank #3 (Hold).
Pembina Pipeline has significantly outperformed the Zacks categorized Production & Pipeline industry over the prior three months. During the aforesaid period, the company’s shares rallied almost 14% while the broader industry gained around 5.6%.
Post the announcement of the deal, the share price of Pembina rose by around 4% to $32.64 from the previous day closing price of $31.32.
Better-ranked players in the industry include Holly Energy Partners, L.P (HEP - Free Report) and Enbridge Inc (ENB - Free Report) . While Holly Energy Partners sports a Zacks Rank #1 (Strong Buy), Enbridge carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Holly Energy is expected to report year-over-year growth of 9.29% and 13.32% on its revenue and earnings, respectively for 2017.
Enbridge posted a positive average earnings surprise of 11.22% in the preceding four quarters.
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