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Enterprise (EPD) Holds Binding Open Season for ATEX Expansion

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Enterprise Products Partners L.P. (EPD - Free Report) recently commenced a binding open season to gauge shipping commitments for the proposed 50,000 barrels per day (BPD) expansion of capacity on the Appalachia-to-Texas (“ATEX”) ethane pipeline. The 1,200-mile pipeline induces the development and use of domestic energy in the United Sates.

This expansion is expected to enable the partnership to transport more ethane from its customers in the Marcellus and Utica shales in the Appalachian region to the natural gas liquids (NGLs) storage complex in Mont Belvieu, TX. Notably, the pipeline provides producers with an access to petrochemical plants located in the Gulf Coast.

Enterprise intends to boost the pipeline’s capacity with the help of a combination of pipeline looping and hydraulic improvements. Moreover, the midstream energy firm is expected to bring modifications to ATEX’s existing infrastructure for increasing transportation capacity, which is expected to come online by 2022. The open season is expected to close on Sep 25, 2019.

The partnership expects demand for ethane to rise in the coming years, which validates its move of expansion. Enterprise anticipates majority of the demand to come from the domestic market. The new crackers are expected to utilize around 1 million BPD of ethane. With export of ethylene and polythene — major components of chemical and plastic industries — on the rise, the demand for ethane is expected to jump by 2025. As such, the expanded capabilities, which are expected to come into service in 2022, will prepare the company to earn huge profits from NGLs transportation services.

Price Performance

Enterprise has gained 14.4% year to date compared with 9.5% growth recorded by the industry.

Zacks Rank and Stocks to Consider

Enterprise currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are given below.

NuStar Energy L.P. (NS - Free Report) is one of the largest independent liquids terminal and pipeline operators in the United States. Its third-quarter earnings per unit are expected to surge more than 100% year over year. It has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enbridge Inc. (ENB - Free Report) is a leader in energy transportation and distribution in North America and internationally. The Zacks Rank #2 company has not missed earnings estimates in the trailing four quarters. It delivered an average positive earnings surprise of 11.3% during this period.

TC PipeLines, LP (TCP - Free Report) is a midstream energy firm operating in the United States. It outpaced earnings estimates thrice in the trailing four quarters, with an average positive surprise of 12.6%.

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