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High distribution, yield hasn’t boosted Exterran Partners in 2014

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Part 3
High distribution, yield hasn’t boosted Exterran Partners in 2014 PART 3 OF 6

Exterran Partners’s key business strategies

Exterran’s three major growth strategies

Exterran Partners (EXLP) aims to grow its business through organic growth, dropdowns, and acquisitions.

Organic growth

According to a company presentation, EXLP achieved organic growth of ~170,000 operating horsepower over the past year. The company noted in its recent earnings call that it saw 81,000 horsepower growth in the third quarter, primarily by activity in the Eagle Ford and Permian Basin Shale plays. It also noted that it achieved net organic growth of about 6.8% on an annual basis.

Dropdown growth

Exterran Holdings (EXH) currently still owns 1,000,000 of the horsepower that EXLP could acquire, which would help drive growth. EXLP has had eight dropdowns since 2006, comprising approximately 2.4 million horsepower. Additional dropdowns could help the business grow further.

EXLP is component of the Global X Junior MLP ETF (MLPJ), while its parent company EXH is a component of the Vanguard Energy ETF (VDE) and the Vanguard Total World Stock Index Fund. (VT).Exterran Partners’s key business strategies

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Growth through acquisitions

Exterran has achieved significant growth in 2014 through acquisitions, both of which were with Chesapeake Energy (CHK), a component of the Energy Select Sector SPDR ETF (XLE). According to a company presentation, EXLP saw growth through acquisitions of ~550,000 operating horsepower over the past year.

Growth through acquisitions also highlights EXLP’s efforts to not to remain entirely dependent on EXH for its growth. The following article talks about EXLP’s 2014 acquisitions in greater detail.

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