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EPD, ETP, MMP, WPZ: Which MLP Will Outperform Peers in 2018?

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Part 5
EPD, ETP, MMP, WPZ: Which MLP Will Outperform Peers in 2018? PART 5 OF 9

Top MLPs Expect to Spend Less on Capital Projects in 2018

Capital expenditures

In response to the energy commodities demand and supply dynamics, most energy MLPs have reduced their spending on growth projects over the last few years. Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Williams Partners (WPZ) expect to spend less on capital projects in 2018 compared to their estimated 2017 spending. Only Magellan Midstream Partners (MMP) expects to spend 33% higher on capital projects in 2018 compared to its 2017 estimated spending.

Top MLPs Expect to Spend Less on Capital Projects in 2018

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MMP’s capital expenditures

The above graph compares the 2016 and estimated 2017 and 2018 capital spending for EPD, MMP, ETP, and WPZ. Magellan Midstream expects to spend $800 million on capital projects in 2018 compared to $600 million estimated spending in 2017. Further, it expects $350 million in capital expenditures in 2019 to complete its current slate of construction projects. MMP’s growth capital spending should contribute to its EBITDA (earnings before interest, taxes, depreciation, and amortization) in the coming quarters.

EPD’s capital expenditures

Enterprise Products Partners’ expected capital spending for 2018 is ~$2.7 billion, which is down 10% from its 2017 estimated spending. For 2017, EPD currently expects to invest in the range of ~$2.9 billion to $3.1 billion, including $191 million paid for the Azure acquisition. EPD’s total capital spending in 3Q17 was $1.0 billion. EPD’s 2016 expenditures in the chart above include $1 billion paid during the year for the EFS Midstream acquisition.

Energy Transfer Partners’ capital expenditures

Energy Transfer Partners expects to spend ~$3 billion on organic growth projects in 2018, which is nearly 27% lower than its estimated 2017 capital expenditure.

Energy Transfer Partners’ capital spending in 2017 is expected to remain largely flat compared to 2016. For the full year 2017, ETP expects to spend ~$4.1 billion on capital projects net of a ~$1.4 billion reduction related to the sale of a portion of ETP’s interest in the Rover pipeline project. In 2016, ETP spent ~$4.1 billion on capital projects.

Williams Partners’ capital expenditure

Williams Partners expects to spend nearly $2.1 billion to $2.8 billion on capital projects in 2017. A major chunk of this amount, ~$1.4 billion to $1.9 billion, was spent on its Transco expansions and other interstate pipeline projects. WPZ’s forecasted growth capital expenditures for 2017 through 2019 average $2.0 billion to $2.5 billion per year.

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