Enbridge Energy Partners (EEP) has fallen 31% YTD (year-to-date). Its midstream energy peers Plains All American Pipeline (PAA) and ONEOK (OKE) have fallen 1% and 5%, respectively, so far in 2017, while Williams Partners (WPZ) has gained 5% in the same period.
By comparison, the Alerian MLP ETF (AMLP), which holds top infrastructure MLPs (master limited partnerships), has risen 1% YTD. So EEP has underperformed peers as well as the sector in 2017.
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Enbridge (ENB) closed its merger with Spectra Energy on February 27, 2017. Enbridge has been working on its MLP strategy after the merger was announced. The ongoing strategic review is aimed at improving Enbridge Energy Partners’ financial position. The company is considering “the sustainability of EEP’s current level of distributions” as part of the review process. This review is expected to continue into 2Q17.
The above graph shows EEP’s stock price, along with its 50-day and 200-day moving averages. EEP fell steeply on expectations of a distribution cut as well as its guidance for 2017 provided in January-end. EEP stock is currently trading 23% below its 50-day average and 33% below its 200-day average.
On February 15, 2017, Enbridge Energy Partners announced the closure of the acquisition of a 27.6% interest in Energy Transfer Partners’ (ETP) Bakken Pipeline system. EEP will initially fund the $1.5 billion investment through a bridge loan from Enbridge and later enter into a joint funding arrangement for the same. We’ll discuss the Bakken Pipeline system more in a later part of the series.
In this series, we’ll analyze EEP in-depth including its price targets, the performance of its various segments, its leverage, distributable cash flows, capital expenditures, and distribution growth. Finally, we’ll analyze the key drivers of EEP’s stock price and see where its current valuation stands next to peers.
Continue to Part 2 for a closer look at EEP’s segments and specific assets.