Inside the Growth Prospects of ETE, WMB, PAGP, and WGP
Energy Transfer Partners
The growth prospects of Energy Transfer Equity (ETE), Williams Companies (WMB), Plains GP Holdings (PAGP), and Western Gas Equity Partners (WGP) are all dependent on the future distribution growth of their respective subsidiaries. Remember, distribution growth is directly linked to distributable cash flow growth, which is dependent on inorganic and organic expansion.
That said, the distribution growth of these GPs (general partners) is also dependent upon the growth opportunities of their LPs (limited partnerships). In this part of our series, we’ll look at the growth capital targets of LPs.
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Energy Transfer Partners
Energy Transfer Partners (ETP) has a capital budget of $3.9 billion for 2017, of which $1.7 billion was spent in the first half of the year. That leaves $2.2 billion to be spent on organic projects like the Rover Pipeline, Revolution System, and Bayou Bridge.
The partnership recently received FERC (Federal Energy Regulatory Commission) approvals for phase 1 of its Rover Pipeline project, and ETP expects to fund the remaining capital expenditure for 2017 through liquidity under its credit facility and equity offerings. ETP had total liquidity of $3 billion under its two credit facilities at the end of 2Q17. It also recently announced a major equity offering.
Plains All American Pipeline
Plains All American Pipeline (PAA) expects to spend $950 million on expansion projects in 2017. PAA’s 2017 capital spending target is 32.4% less than its 2016 capital expenditure.
The partnership is expected to spend on existing projects like the Diamond Pipeline, Fort Sask Facility, and Permian Basin Area Systems. PAA expects to fund the remaining capital program for 2H17 and fiscal 2018 through asset sale proceeds and preferred equity offerings.
Western Gas Partners
Western Gas Partners (WES) expects to spend $900 million–$1.0 billion on organic expansion and maintenance capital by the end of 2017. The partnership spent $260 million on organic expansion in 1H17, and so the majority of organic spending remains for 2H17.
WES is bullish on expansion in the Delaware Basin. It recently announced two new cryogenic processing plants in the region with a total capacity of 400 MMcfpd (million cubic feet per day), and the partnership is planning to bring online the Ramsey VI plant at the Ramsey complex in the Delaware region in 4Q17.
Williams Partners (WPZ) expects to spend $2.1 billion–$2.8 billion on organic projects in 2017, of which $1.4 billion–$1.9 billion is expected to be spent on its natural gas Transco expansion projects. Williams Partners has successfully placed a number of Transco expansion projects since 2016. The partnership recently received a FERC (Federal Energy Regulatory Commission) permit for its key Atlantic Sunrise project.