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Enterprise Products (EPD) Plans to Reconstruct NGL Pipelines


Enterprise Products Partners L.P. EPD proposes to convert one of its natural gas liquids (NGL) pipelines located in the Permian Basin. The pipelines will be modified to transfer crude oil to the Texas Gulf Coast.

The project is likely to be completedby first-half 2020. This will provide the partnership a total crude oil pipeline capacity of over 650,000 barrels per day (bpd). The oil willbe transported from the Permian Basin to Enterprise Product’s crude oil hub in the Houston area.

Currently, the partnership has three NGL pipelines — the Seminole Blue, Seminole Red and Chaparral. These pipelines extend from the Permian Basin to the Texas Gulf Coast. The pipeline — Shin Oak NGL — is under construction and will represent EnterpriseProducts’ fourth NGL pipeline in the Permian Basin.

The fourth NGL pipeline is projected to be commissioned in second-quarter 2019. The completion of the Shin Oak pipeline offers Enterprise Products the option to redirect NGL volumes from one of its existing pipelines onto Shin Oak.Thevacated NGL pipeline will be reused forcrude oil service. Currently, Enterprise Products is assessing which NGL pipeline(s) to reuse.

About Enterprise Products Partners

Enterprise Products has an extensive network of pipeline that spreads more thanalmost 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 7.4% compared with the industry’s decline of 8.6% 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

Enterprise Products currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include Holly Energy Partners, LP HEP, SunCoke Energy Inc SXC and Northern Oil and Gas Inc NOG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners, owner and operator of refined product pipelines and terminals, delivered an average positive earnings surprise of 57.14% in the preceding quarter.

SunCoke Energy produces metallurgical coke in the United States. The company delivered an average positive earnings surprise of 113.52% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average earnings surprise of 175.00% in the last four quarters.

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