ETE looks strong
After sailing through rough seas for the past few years, Energy Transfer Equity (ETE) seems to have attractive prospects going forward. Its pending consolidation with Energy Transfer Partners (ETP), robust growth in Q2 2018 earnings, and upcoming projects paint a nice picture for the near future.
Energy Transfer Equity stock is up 2%, while Energy Transfer Partners has rallied more than 23% so far this year. The Alerian MLP ETF (AMLP) has risen 2% in the same period.
Upcoming expansion projects
Global trade tensions could pressure crude oil prices in the near future. However, Energy Transfer management seemed optimistic in its Q2 2018 earnings call about its recently announced projects. Energy Transfer Partners is planning to expand its Permian Express crude oil pipeline capacity by 100,000 barrels per day (or bpd). Production continues to surge in the country’s most prolific Permian Basin, and oil production volumes from the Permian Basin have increased recently beyond its carrying capacity.
ETP also plans an expansion of its key asset, the Dakota Access Pipeline, that connects North Dakota and Illinois to increase its existing capacity of 500,000 bpd by 100,000 bpd.
Project Mariner East 2 and 2x will transport natural gas liquids from Western Pennsylvania to Marcus Hook Industrial Complex on the East Coast. The two phases of the project are expected to be in service in Q3 2018 and by mid-2019.
The upcoming pipeline projects that extend from the midstream to natural gas liquids segments are likely to support ETE’s earnings over the long term. However, crude oil prices could have a greater impact on ETE’s performance.