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Could Enable Midstream Partners Gain Momentum?

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Could Enable Midstream Partners Gain Momentum? PART 1 OF 10

Enable Midstream to Acquire Align Midstream for $300 Million

Enable Midstream to acquire Align Midstream

Enable Midstream Partners (ENBL), which is mainly involved in natural gas gathering, processing, and transportation, announced the signing of a merger agreement to acquire Align Midstream in a press release published on September 12, 2017. ENBL has agreed to acquire Align Midstream from Tailwater Capital for $300 million.

Align Midstream owns natural gas gathering and processing assets in the Haynesville plays and Cotton Valley regions of the Ark-La-Tex Basin. These assets include 190 miles of gathering pipeline and a cryogenic natural gas processing plant. According to the related press release, “Align’s assets are underpinned with long-term, fee-based contracts, including approximately 100,000 gross acres of dedication from producer customers.”

Enable Midstream to Acquire Align Midstream for $300 Million

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Enable Midstream Partners’ recent market performance

The acquisition announcement didn’t affect Enable Midstream Partners’ stock price much. It rose 0.8% following the announcement. Meanwhile, the Alerian MLP ETF (AMLP) rose 1.0%. ENBL had a weak start to September. It has lost 1.4% since the beginning of the month while AMLP has gained 1.1%.

Enable Midstream Partners’ performance this year

Enable Midstream Partners had a good start to the year, with its YTD (year-to-date) gains reaching ~10% by mid-February. However, these gains turned into losses by the end of May 2017. It recovered slightly in July 2017 but then tumbled again. Overall, ENBL has lost 6.7% since the beginning of this year. Peers EnLink Midstream Partners (ENLK), Crestwood Equity Partners (CEQP), and DCP Midstream (DCP) have lost 10.5%, 2.0%, and 14.5% YTD, respectively, and AMLP has lost 10.2%. ENBL is outperforming AMLP by 350 basis points so far this year. ENBL’s stronger performance could be due to its lower leverage and presence in prolific regions.

Series overview

In this series, we’ll assess whether ENBL could gain upward momentum. We’ll also analyze the partnership’s operational guidance, commodity price exposure, cash flow, balance sheet, valuation, technical indicators, and analyst recommendations.

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