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Energy Transfer Seeks Commitment for PE3 Remaining Capacity

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Energy Transfer Partners, L.P. recently announced that its unit, Permian Express Partners LLC started a marketing process to obtain binding commitments from potential crude shippers for its Permian Express 3 (PE3) pipeline’s 50,000 barrels per day (BPD) capacity. It constitutes the remaining capacity of its phase 1’s 140,000 BPD volumes. The phase 1 came online in the fourth quarter of 2017.

Notably, huge production from the Permian Basin and inadequate pipeline capacity have limited producers’ profit level in the shale play recently. The situation forced the producers to sell their products at a discounted rate, which makes the Permian Express 3 a hot cake for the shippers. The pipeline will ship Permian crude to the U.S. Gulf Coast and also reach the Nederland, TX markets.

The pipeline is expected to enhance the partnership’s midstream value chain and strengthen its foothold in the United States’ most prolific basin. Moreover, the partnership expects the pipeline to significantly contribute to improvement in the profit level.  Further, the Dallas, TX-based midstream firm will keep on evaluating the possibility of expanding the pipeline in the future.

Energy Transfer anticipates the remaining capacity to be added in operation in the fourth quarter of 2018. Per the partnership, the available capacity is strictly for intrastate service. It follows the rules depicted by the Texas Railroad Commission.

Price Performance

Energy Transfer has lost 16.2% in the past year compared with a 14.8% decline for its industry.

Zacks Rank and Stocks to Consider

Currently, the partnership carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Nine Energy Service, Inc. (NINE - Free Report) , Delek US Holdings, Inc. (DK - Free Report) and BP p.l.c. (BP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, its bottom line is likely to be up 181.7%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 39.2% year over year, while its bottom line is expected to increase 194.4%.

London-based BP is an integrated oil major. For 2018, its bottom line is likely to be up 67.6%. In the last four reported quarters, the company delivered an average positive earnings surprise of 29.6%.

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