Yesterday, Enterprise Products Partners L.P. (EPD) signed a long-term agreement with one of the largest and most active producers in the developing Eagle Ford Shale play in South Texas to provide natural gas transportation and processing services.

The agreement covers more than 150,000 acres in the heart of the Eagle Ford Shale play. The partnership’s integrated network of energy infrastructure in the region is strategically positioned and well suited to accommodate the Eagle Ford Shale’s extremely NGL-rich (Natural Gas Liquids) gas.

The proximity of the partnership’s infrastructure to this shale play will require only modest capital expenditures for the partnership to start providing services under the agreement. The agreement reflects the partnership’s initiative for strengthening long-term position in the shale plays.

Enterprise’s pipeline of growth opportunities is one of the best in MLP (master limited partnership) space. Like this agreement, the partnership’s operations are supported by long-term contracts, which enhance its earnings visibility. An example of such contracts is the 30-year agreement with ExxonMobil to provide gathering, compression and processing-related services for natural gas produced as part of a development program planned by ExxonMobil in the Piceance Basin of Colorado.

Given the recent positive performance of its assets, we believe that with the new contracts coming online in the near term and growth investments over the medium term, the partnership will be able to accelerate its distributions.

Zacks Investment Research
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