Energy Transfer Partners LP (NYSE:ETP) and Sunoco Logistics Partners L.P. (NYSE:SXL) announced they have signed an agreement to sell 36.75% of the Bakken Pipeline Project, which includes the Dakota Access pipeline and the Energy Transfer Crude Oil pipeline, to MarEn Bakken Company LLC (“MarEn”), an entity jointly owned by Enbridge Energy Partners, L.P. and Marathon Petroleum Corporation (“MPC”), for $2 billion in cash. The sale is expected to close in the third quarter of 2016, subject to certain closing conditions. ETP and SXL will receive $1.2 billion and $800 million in cash at closing, respectively. As previously announced, the Bakken Pipeline entities have arranged a $2.5 billion project financing facility that is expected to provide substantially all of the remaining capital necessary to complete the project. As a result, ETP and SXL plan to use the proceeds from the sale of the equity interest in the project to MarEn to pay down debt and to help fund their current growth projects. In addition, following the closing of the transaction, all owners of the Bakken Pipeline will participate on a pro rata basis for any incremental capital needs to complete the project.
Upon closing, a subsidiary of MPC has committed to participate in a forthcoming Dakota Access/Energy Transfer Crude Oil Pipeline open season, and subject to the terms and conditions of the open season, make a long-term volume commitment on the Bakken Pipeline Project. A new open season is expected to be launched in the third quarter of 2016.
Bakken Holdings Company, LLC, a joint venture between ETP and SXL (“Bakken Holdings”), owns a 75-percent membership interest in each of Dakota Access, LLC (“Dakota Access”) and Energy Transfer Crude Oil Company, LLC (“ETCO”), the entities responsible for developing, owning and operating the Bakken Pipeline Project. The project will consist of approximately 1,172 miles of new 30-inch diameter crude oil pipeline fromNorth Dakota to Patoka, Illinois, and more than 700 miles of pipeline converted to crude service from Patoka toNederland, Texas. Bakken Holdings is selling 49-percent of its 75-percent interest (36.75%) in Dakota Access and ETCO. The remaining 25-percent of each of Dakota Access and ETCO is owned by wholly-owned subsidiaries of Phillips 66 (NYSE: PSX).
Upon closing, ownership in the Bakken Pipeline Project will be as follows: ETP/SXL – 38.25%, MarEn 36.75% and PSX – 25%. ETP continues to oversee construction of the pipeline, which is expected to be ready for service at the end of this year. Once in operation, SXL will be the operator.
The Dakota Access pipeline is currently expected to deliver in excess of 470,000 barrels per day of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. The Dakota Access pipeline will provide shippers with access to Midwestern refineries, potential unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market. The Energy Transfer Crude Oil pipeline, through an interconnection in Patoka, Illinois with Dakota Access, will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.
Porter Hedges LLP acted as legal counsel to ETP and SXL, and Credit Suisse Securities (USA) LLC acted as financial advisor. (Original Source)
Shares of Energy Transfer Equity opened today at $15.89. ETE has a 1-year high of $31.15 and a 1-year low of $4. The stock’s 50-day moving average is $15.08 and its 200-day moving average is $10.71.
On the ratings front, ETE has been the subject of a number of recent research reports. In a report issued on July 25, Jefferies Co. analyst Christopher Sighinolfi maintained a Buy rating on ETE, with a price target of $20, which implies an upside of 25.9% from current levels. Separately, on July 19, BMO’s Danilo Juvane reiterated a Hold rating on the stock and has a price target of $17.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christopher Sighinolfi and Danilo Juvane have a total average return of 5.3% and -0.6% respectively. Sighinolfi has a success rate of 59.4% and is ranked #678 out of 4083 analysts, while Juvane has a success rate of 35.3% and is ranked #2799.
The street is mostly Bullish on ETE stock. Out of 5 analysts who cover the stock, 3 suggest a Buy rating and 2 recommend to Hold the stock. The 12-month average price target assigned to the stock is $20.00, which implies an upside of 25.9% from current levels.
Energy Transfer Equity LP provides natural gas pipeline transportation and transmission services. The company operates its business in seven segments: Interstate Transportation and Storage, Midstream, NGL Transportation and Services, Retail Marketing, Investment in Sunoco Logistics, Investment in Regency and Corporate and Other. The Intrastate Transportation and Storage segment includes natural gas transportation pipelines receive natural gas from other mainline transportation pipelines and gathering systems and deliver the natural gas to industrial end-users, utilities and other pipelines. The Midstream segment consists of natural gas gathering, compression, treating, processing and transportation, and is generally characterized by regional competition based on the proximity of gathering systems and processing plants to natural gas producing wells. The NGL Transportation and Services segment engages in processing and fractionating refinery off-gas. The Retail Marketing segment consists of Sunoco, Inc., marketing operations, which sell gasoline and middle distillates at retail and operates convenience stores in 25 states, primarily on the east coast and in the Midwest region of the U.S.