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Enterprise Products (EPD) Hikes Quarterly Cash Distribution


Enterprise Products Partners L.P.’s EPD board of directors has announced a 4.3% year-over-year increase in its quarterly cash distribution to 42.25 cents per common unit ($1.69 per unit on an annualized basis).

The distribution will likely be paid to the limited partners on Nov 7, to the unitholders of record as of Oct 31. Importantly, the recent distribution hike marks the 53rd successive quarterly increase.

In a separate announcement, the leading master limited partnership (MLP) stated that it has teamed with Colonial Pipeline in an attempt to increase exports from the Beaumont refined oil products terminal in Texas to compete with the Houston Ship Channel.

A division of Colonial Pipeline – Colonial Terminal Logistics – will provide marine logistic services. These would compriseblending, dock handling and access to about 2 million barrels of new storage at Enterprise Products’ Beaumont, TX facility.

Colonial shippers will also benefit as they will be able to transfer fuel from thirteen Gulf Coast refineries to the Beaumont terminal for vessel loading.

Owned by Koch Industries, South Korea’s National Pension Service, Royal Dutch Shell (RDS.A) and others, Colonial Pipeline is the largest refined products system in the United States. It tows over 3 million barrels of gasoline, diesel and other fuel from the Gulf Coast to the heavily populated northeast daily.

The export of refined product from the United States increased over the past year owing to higher demand from Latin America and Europe. Per U.S. government data, exports of petroleum products peaked at 5 million barrels per day in the week ended Sep 29, 2017. This was the highest in the last three months.

About Enterprise Products Partners

Enterprise Products has an extensive network of pipeline that spreads over almost 50,000 miles. The pipeline is connected to every major U.S. shale play and provides services to producers and users of commodities by transporting natural gas liquid (NGL), natural gas, crude oil and refined products. However, shares of the company have lost 3.8% compared with the industry’s decline of 6.5% over the last three months. The partnership’s escalating debt since 2012 reflects a weak balance sheet. We are also concerned about Enterprise Products’ rising operating costs.

Zacks Rank & Key Picks

Currently, Enterprise Products carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include Denbury Resources Inc DNR, Enbridge Energy Partners LP EEP and Alliance Resources Partners, LP ARLP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Denbury Resources, based in Plano, TX, is engaged in the exploration, production and development of natural gas properties in the Gulf Coast region. The company delivered an average positive earnings surprise of 25% in the last four quarters.

Enbridge Energy owns the U.S. portion of the world's longest liquid petroleum pipeline. The company delivered average positive earnings surprise of 22.83% in the last four quarters.

Alliance Resources Partners is a diversified producer and marketer of coal to major U.S. utilities and industrial users. The firm delivered an average positive earnings surprise of 29.76% in the last four quarters.

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