EPD Expands South Texas Network - Analyst Blog

Following the finalization of a midstream contract with a major Eagle Ford Shale producer, Enterprise Products Partners L.P. (EPD), a leading master limited partnership (MLP), is planning to expand its existing network of South Texas assets. The expansion includes the construction of a 140-mile crude oil pipeline originating in Karnes County, Texas, and connecting to the partnership’s existing crude oil system in Austin County, Texas.

With increasing output in the Eagle Ford Shale region, Enterprise is in talks with other producers to provide crude oil transportation services through additional connections to the pipeline.

Besides crude oil, the contract also includes a seven-year natural gas transportation processing agreement. For this, the partnership is developing adequate facilities for its existing natural gas gathering, processing and storage system and its NGL transportation and fractionation network serving South Texas producers.

We believe that Enterprise's solid financial position will help to develop new organic growth opportunities that will expand its integrated system. In addition to organic growth, the partnership is quite active on the acquisition front. Apart from the acquisition of Teppco Partners last year, the partnership acquired two natural gas gathering and treating systems for approximately $1.2 billion from M2 Midstream LLC ("Momentum") in the last month.

We continue to view Enterprise as a core holding in an MLP portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position.
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