Energy Transfer Partners L.P. (ETP) announced the closure of its previously announced public offering. The firm priced the public offering of 14,202,500 common units at $50.52 apiece, including a fully exercised over-allotment option for 1,852,500 units.
The natural gas and propane gas master limited partnership (MLP) plans to use the net proceeds from this offering – approximately $717.5 million – to pay back outstanding debt under its revolving credit facility, to finance capital expenditures associated with pipeline construction projects and general purposes.
Dallas, Texas-based Energy Transfer owns and operates a diversified portfolio of energy assets. It is engaged primarily in two businesses: 1) the gathering, processing, storage and transportation of natural gas, and 2) and the distribution of propane.
Energy Transfer Partners currently retains a Zacks #3 Rank (short-term ‘Hold’ rating). We are also maintaining our long-term Neutral recommendation on the unit. ETP competes with other large-cap pipeline MLP peers like Enterprise Products Partners L.P. (EPD), Kinder Morgan Energy Partners L.P. (KMP) and Plains All American Pipeline L.P. (PAA).
Energy Transfer Partners remains a premier MLP with strategically-positioned assets that serve major North American natural gas-producing basins. We like the partnership’s robust organic growth profile, stable fee-based operating income and strong liquidity position. While the partnership kept its distribution unchanged, we expect growth to resume shortly, driven by the completion of a broad array of organic growth projects.
However, we believe that the near- to medium-term outlook for Energy Transfer Partner’s natural gas gathering and processing business continues to be weak. The partnership’s seasonal propane business also remains a major liability, in our view.
As such, we expect the pipeline operator’s growth potential to be restrained with little room for meaningful upside from current levels.
ENTERPRISE PROD (EPD): Free Stock Analysis Report
ENERGY TRAN PTR (ETP): Free Stock Analysis Report
KINDER MORG ENG (KMP): Free Stock Analysis Report
PLAINS ALL AMER (PAA): Free Stock Analysis Report
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