The partnership reported earnings per unit of 91 cents, handsomely beating the Zacks Consensus Estimate of 75 cents and more than double that of the year-ago earnings of 45 cents. However, revenue was down 16.1% year-over-year to $1.5 billion, in the process missing the Zacks Consensus Estimate. The negative comparisons were mainly on account of a 16.5% fall in sales from natural gas operations (which accounts for 74% of total sales).

Distribution Unchanged

Energy Transfer’s quarterly distribution of 89.375 cents per unit ($3.575 per unit annualized), remains unchanged from the year-earlier quarter and the previous quarter distribution. The distribution was paid on Feb 15 to unit-holders of record as on Feb 8, 2010.

EBITDA

Adjusted EBITDA for the quarter was $477.1 million, compared to $337.9 million in the year-ago quarter. The year-over-year increase in EBITDA was primarily due to the rebounding natural gas prices and modest improvement in natural gas basis differentials in Texas.

Capital Expenditure

During the quarter, maintenance capital expenditure totaled $31 million, bringing the full-year total to $103 million. Looking forward to 2010, the partnership expects to devote between $110 million and $120 million in maintenance capital spending.

Balance Sheet

As of Dec 31, 2009, Energy Transfer had cash on hand of $68.2 million and long-term debt of $6.2 billion. Debt-to-capitalization ratio was 57.5%.

Earnings Revisions & Surprise Trend

With respect to earnings surprises, the stock has fluctuated substantially over the last four quarters, with two positive and two negative surprises. However, the average remained negative at 31.4%, reflecting the partnership’s poor performance during this period. This implies that Energy Transfer has missed the Zacks Consensus Estimate by 31.4% over the last four quarters, pulled down by reduced volumes (due to the reduction in drilling activity that started in late 2008, early 2009), lower natural gas prices, and low basis differentials across Texas.

Looking ahead to the first quarter of 2010, the overall trend in estimate revisions for Energy Transfer has been bearish. Over the last 7 days, one of the 7 analysts covering the stock lowered his estimates; while there have been 2 downward revisions during the past month. There have been no positive revisions during these time frames as a result of which the quarterly Zacks Estimate has come down from $1.10 (30 days ago) to $1.06 (7 days ago) to $1.05 (currently).

The full year 2010 earnings estimates for the company have been trending down over the past month, with the quarterly Zacks Consensus Estimate going down by 14 cents (from $2.84 to $2.70). Overall, 4 of 15 analysts covering the stock have pulled back on first quarter projections during that time, while a lone analyst raised estimates. During the last 7 days, 2 analysts have lowered their estimates, with no upward revisions. The Zacks Consensus Estimate has come down 10 cents (from $2.80 to $2.70) over the past week.

As a result, our short-term as well as long-term recommendations on Energy Transfer remain Sell (Zacks Rank #4) and Underperform, respectively.

Zacks Investment Research

(ETP) Energy Transfer Partners L.P. Beats Expectations – Profit Rises

For the full year 2009, the partnership reported earnings of $3.14 per unit, beating the Zacks Consensus Estimate of $2.76 and the year-ago earnings of $2.93. The partnership’s 2009 earnings also exceeded its full-year 2009 earnings guidance of $2.88-$3.10 per unit.

Plains All American reported a 1% and 10% increase in the adjusted earnings for the Transportation segment for the fourth quarter and full year of 2009, respectively, due to higher average pipeline tariffs and increased pipeline loss allowance revenue.

The Facilities segment income increased 22% and 39%, respectively, driven by capacity increases from recently completed capital projects and acquisitions. The income for the Supply & Logistics segment increased 45% and 12%, respectively, due to higher average LPG margins and favorable Contango market conditions experienced early in the year.

Revenue in the quarter increased 23% to $6.08 billion, while revenue for the full year dropped 62% to $18.5 billion. In the fourth quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved 17% to $275 million from $236 million reported last year. For the full year, adjusted EBITDA totaled $1.02 billion, up 15% from $887 million in 2008.

At year-end, the partnership’s balance sheet was strong, with over $975 million of available liquidity. It had approximately 136.1 million units outstanding, long-term debt of $4.1 billion and an adjusted long-term debt-to-total capitalization ratio of 49%. Maintenance capital expenditures were $25 million for the quarter and $81 million for the year.

The partnership declared a quarterly distribution of 92.75 cents per unit (371 cents per unit on an annualized basis) payable February 12, 2010. This distribution represents an increase of approximately 3.9% over the quarterly distribution paid in February 2009 and an increase of approximately 0.8% from the November 2009 distribution level.

Outlook

Looking into 2010, the partnership is well positioned to continue to grow its business platforms and distributable cash flow through a combination of organic growth capital projects and acquisitions. For the full year 2010, the partnership expects adjusted EBITDA to range from $1.015 billion to $1.065 billion with adjusted net income ranging from $505 million to $571 million or $2.49 to $2.96 per diluted unit.

The partnership forecasts first quarter adjusted EBITDA to range from $250 million to $270 million with adjusted net income in the $122 – $147 million range or 60 – 78 cents per diluted unit.

For the Transportation segment, volumes are projected to be approximately 2.9 billion barrels per day which is inline with 2009 volumes, with segment profit per barrel expected to be 49 cents per barrel, inline with 2009 results.

Facility segment guidance is based on total capacity of 68 million barrels of oil equivalent, with segment profit per barrel forecasted to be 33 cents per barrel, up 10% from 2009 levels. Supply & Logistics segment volumes guidance is 825,000 barrels per day with a projected midpoint segment profit of 83 cents per barrel.

Plains All American expects maintenance capital expenditures for 2010 of approximately $85 million.

Zacks Investment Research

(PAA) Plains All American Pipeline L.P. Beats Zacks Estimates

Total project cost is approximately $141.8 million, which includes approximately 50 miles of 16-inch to 24-inch diameter pipe as well as an additional 38-mile, 24-inch lateral pipeline. These expansions will increase the partnership’s takeaway capacity to 900 million cubic feet per day (MMcf/d).

The partnership’s Natural Gas Transportation segment primarily consists of the East Texas System, the Northeast Texas System and the Anadarko System. The expansion of East Texas System will be followed by more transportation and acreage commitments from producers received by the partnership.

The partnership has been active with its five-year organic growth projects, which are largely completed. The expansion and diversification of its asset base has created opportunities for internal growth projects. Current expansion initiatives boost the partnership’s fee-based businesses.

Though Enbridge’s organic growth program is quite impressive, its cash distribution growth profile does not compare favorably with the other players in the MLP space. While many peers are raising cash distributions in the recent times with improving industry fundamentals, Enbridge is lagging behind in this metric. We are currently Neutral on EEP units.

Zacks Investment Research

(EEP) Enbridge Energy Partners LP Expands Pipelines

Distribution Maintained

Magellan maintained its quarterly distribution of 71 cents per unit ($2.84 per unit annualized), equal to the third quarter as well as year-ago distribution. The distribution will be paid on Feb 12 to unit-holders of record on Feb 2, 2010.

Petroleum Products Pipeline System

In the Petroleum Products Pipeline System, quarterly operating margin (operating profits before affiliate G&A and D&A expenses) was a record $113.2 million, up 2.8% year over year. The increase reflected higher average transportation rates, higher fees for incremental storage, and lower operating expenses. These factors were partly offset by an $8.1 million decrease in product margin and lower transportation volumes.

Petroleum Products Terminals

In the Petroleum Products Terminals segment, operating margin was a record $33.5 million, up approximately 40.1% year over year. The positive comparison was on account of the effects of expansion projects at the partnership’s terminals, higher storage rates and improved utilization at the partnership’s marine terminals, which were partly offset by higher operating expenses and lower product margin.

Ammonia Pipeline System

The partnership’s Ammonia Pipeline System reported operating profit of $4.9 million (a quarterly record), as against $2.0 in the fourth quarter of 2008. The segment results were favorably affected on account of higher rates, increased volumes and lower expenses.

2010 Guidance

Management expects distributable cash flows for the full year to be approximately $345 million and is targeting annual distribution growth of 4%. Magellan guided towards first-quarter and full-year earnings per unit of 65 cents and $2.66 respectively. The partnership plans to spend approximately $210 million on growth projects in 2010, with expenditures of $30 million in future years required to complete these projects. Additionally, the partnership continues to look out for more than $500 million of potential growth projects in the earlier stages of development.

Estimate Revisions Trend

It was the company’s 1st positive earnings surprise in the past 4 quarters. Magellan has performed poorly during this period, with its average earnings surprise being -25.0%. This implies that the partnership has missed the Zacks Consensus Estimate by 25.0% over the last four quarters.

However, in the context of the recent fourth quarter outperformance, estimates for the current quarter (first quarter of 2010) have been trending up with the quarterly Zacks Consensus Estimate going up by 8 cents (from 55 cents to 63 cents) in the last 7 days alone. Overall, 6 of the 7 analysts covering the stock raised their projections during that time, with no downward revisions. Despite the positive revisions, the Zacks Consensus Estimate for the March quarter is still below the company guidance of 65 cents.

But the challenging operating scenario for pipeline operators, weak near- to medium-term outlook for petroleum products expenditure and Magellan’s premium valuation continues to temper our view. As such, our short-term recommendation on the stock is Hold (Zacks Rank #3), meaning that Magellan is expected to relatively in line with the overall market during the next 1-3 months. Therefore, the investors should maintain their current position in the stock over this time period.

Zacks Investment Research

(MMP) Magellan Midstream Partners L.P.’s Net Income Rises

Revenue increased 8% year over year to $578.9 million in the quarter, while it declined 7% year over year to 1.8 billion for the full-year 2009. The increase in quarterly revenue was primarily due to increased volumes marketed in the energy services segment and higher natural gas storage and terminalling revenues. Buckeye’s adjusted EBITDA was $105.7 million (up 18%) in the quarter and $370.9 million (up 17%) in 2009. Operating income, before special charges, for the reported quarter and the full year increased 20% and 18%, respectively to $87.0 million and $300.2 million.

Buckeye continues to realize the cost reduction benefits through its best practices initiative. Buckeye achieved about $6.6 million of savings in 2009 and has set a target to achieve its previously forecasted annual savings of approximately $18 million per year related to its best practices initiative as announced in July 2009.

Buckeye continued to generate solid financial and operational performance in the fourth quarter of 2009. In November 2009, Buckeye completed the previously announced acquisition of 310 miles of refined petroleum products pipelines and three refined petroleum products terminals from ConocoPhillips (COP) and integrated these strategic assets into its business.

During the year, the partnership continued to grow geographically, developed product diversity and became more commercial as an overall enterprise. The partnership has created a more commercial culture and has decentralizing its operating structure to encourage accountability and entrepreneurship throughout the organization. This accountability is being encouraged with a gain sharing program that gives incentive to employees to make positive changes to improve their businesses. With this program, Buckeye expects to achieve an annualized earnings improvement of over $8 million in 2010.

Financially, distributable cash flow increased to $73.1 million in the quarter from $55.6 million last year. In 2009, distributable cash flow totaled $273.4 million versus $216.0 million in 2008. The partnership’s distribution coverage improved to 1.2 times for the quarter compared to 1.04 times last year. For the full year of 2009, distribution coverage increased to 1.5 – 1.15 times from 1.03 times for the full year of 2008.

From a balance sheet and liquidity perspective, Buckeye ended the year with $34.6 million in cash and long-term debt of $1.5 billion. At year-end, the partnership had $78 million drawn on its revolving credit facility, which has a committed capacity of $580 million. Furthermore, it has no maturities on long-term debt until the third quarter of 2012.

At December 31, 2009, its ratio of net long-term debt to adjusted EBITDA was 3.95 times and adjusted EBITDA to interest coverage was 4.96 times. Both of these metrics represent improvements from the prior year.

The Board of Directors of Buckeye GP LLC (BGH), the general partner of Buckeye, raised the regular quarterly partnership cash distribution by 5.6% to 93.75 cents per unit. The distribution is payable on February 26, 2010, to unit holders of record as on February 16, 2010. Buckeye’s annualized cash distribution is now $3.75 per unit.

Zacks Investment Research

(BPL) Buckeye Partners L.P. Rises on Cost Initiatives

Spectra’s experience of an earnings surprise for the preceding four quarters varies between 7.1% and 15.8%, with the average being 11.5%. There was no change in estimates over the last 7 days. However, over the last 30 days, 3 of the 7 analysts covering the stock have raised their estimates for 2010 while no analyst moved in the opposite direction.

Currently, the Zacks Consensus Estimate for full fiscal 2010 earnings is $1.49 per share, which is significantly higher than the full fiscal 2009 earnings of $1.18 per share.

Meanwhile, the U.S. Transmission segment posted quarterly earnings before interest and taxes (EBIT) of $204 million, up nearly 27% year over year. The segment benefited from the contribution of business expansion projects that came online last year. The Distribution segment reported an EBIT of $96 million, up approximately 7% year over year.

Western Canada Transmission & Processing segment reported an EBIT of $120 million, up 85% from the year-earlier level. This significant increase was driven by improved revenues in the fee-based gathering and processing business on the back of higher contracted volumes and expansion projects.

The Field Services segment reported an EBIT of $77 million, an increase of 12% from the year-earlier quarter due to higher commodity prices.

During the quarter, crude oil averaged approximately $76 per barrel, up nearly 29% year over year. The natural gas liquids (NGL) to crude relationship averaged 53% versus 46% in the fourth quarter of 2008.

At the end of the reported quarter, long-term debt stood at $8.95 billion. This represents a debt-to-capitalization ratio of 53.8%.

Management hinted that Spectra is on track to meet its financial goals for the year, including the 2010 diluted EPS target of $1.42. Based on the operational performance, new customer contracts and future expansion projects, we believe that Spectra remains in a position to fulfill its target of more than 12% return on capital employed this year. We currently have an Outperform rating on Spectra shares.

Zacks Investment Research

(SE) Spectra Energy’s Earnings Report Meets Expectations

NuStar’s quarterly earnings outperformance becomes even more impressive in the context of the recent downward revisions to its fourth-quarter estimates. Earnings estimates were trending down over the last few days, with the quarterly Zacks Consensus Estimate going down by a penny in the last 7 days alone. Overall, one of the 14 analysts covering the stock pulled back on projections during that time, with no upward revisions. Over the past month, analysts reduced their estimates for the reported quarter by 3 cents. However, NuStar has a history of reporting positive earnings surprises, with the current one being the 4th in the past fourth quarters. The average surprise during this time period is 13.6%, implying NuStar has surpassed the Zacks Consensus Estimate by 13.6% over the last four quarters.

Distribution Maintained

NuStar announced quarterly distribution of $1.065 per unit ($4.26 per unit annualized), representing a 0.7% increase over the year-earlier quarter and equal to the third quarter distribution. The distribution will be paid on Feb 12 to unit-holders of record on Feb 5, 2010. Distributable cash flow (DCF) available to limited partners for the fourth quarter was $57 million or 99 cents per unit, compared to $28.8 million or 53 cents per unit in the year-earlier quarter.

Transportation Segment

Quarterly throughput volumes in the Transportation segment were down 7.7% year over year to 924,086 barrels per day. The decline can be primarily attributed to the sale of low-performance pipeline assets and a fall in the refined products pipelines throughput, partially offset by increase in crude oil pipelines throughput.

Segmental revenues were down 3.5% to $80.9 million. Despite the lower volumes and revenue, NuStar had higher operating income in this segment, which increased 1.1% to $39.5 million, reflecting tariff rise (7.6% increase effective July 1, 2009) and lower operating expenses for the quarter.

Storage Segment

Throughput volumes in the Storage segment fell 4.9% year over year to 667,655 barrels per day. However, revenues increased approximately 8.2% to $127.2 million, driven by a 13.7% increase in the storage lease revenue. Quarterly operating income reached $40.2 million (6.0% year over year increase) due to the completion of expansion projects and lease contract renewals at higher rates, more than offsetting the lower throughput volumes.

Asphalt and Fuels Marketing

As a result of significantly higher asphalt margins ($5.34 compared to -$1.66 last year), the Asphalt and Fuels Marketing division recorded a much narrower loss compared to the year-earlier quarter. Segment operating loss, at $4.7 million, was $23.2 million lower than that incurred during the fourth quarter of 2008.

First Quarter Guidance

Looking ahead to the first quarter, NuStar guided towards stable results for its fee-based storage and transportation segments. The Transportation segment is likely to benefit from slightly higher volumes and tariff rate, while higher renewal rates and new projects should bode well for the Storage segment. In its asphalt operations, NuStar expects first quarter earnings to follow the typical seasonal pattern of decline, as sales and margins peter out. According to the partnership, EBITDA during the March quarter is likely to be in the range of $80 to $100 million.

Operating expenses are expected to be around $120 to $125 million, G&A expenses in the range of $27 to $28 million, DD&A expenses in the $38 to $39 million range, interest expense of $18 to $19 million and income tax expense in the range of $5 to $6 million.

Zacks Investment Research

(NS) NuStar Energy L.P. Reports Profit Growth

Enbridge declared an unchanged cash distribution of 99 cents per unit or $3.96 per unit annualized. Despite an increase in its net operating cash flow, the partnership’s cash distribution growth profile does not compare favorably with the other players in the MLP space. Last week, Sunoco Logistics Partners L.P. (SXL) raised its distribution rate by 2.3% sequentially.

Volume in the partnership’s liquid systems modestly decreased year over year to 2,029 thousand barrels per day (MBbl/d). The decrease was mainly due to lower transported volumes in the partnership’s Lakehead liquid systems, partially offset by increased volumes in the other two systems (Mid-Continent and North Dakota). These systems accounted for 82%, 12% and 6%, respectively, of the total liquids transported during?the quarter.

Operating income in the Liquids segment increased more than 23% year over year to $117.5 million, primarily driven by transportation rate increases in connection with the completion of stage 2 of the partnership’s Southern Access Expansion. The increased operating income was partially offset by higher operating costs. Operating costs went up by $10.8 million from the year-ago quarter.

During the quarter, natural gas volumes decreased nearly 22% from the year-earlier period to 2,117,000 MMBtu/d. All natural gas systems (East Texas, Anadarko and North Texas systems) were down on a year over year basis. These systems accounted for approximately 58%, 25% and 17%, respectively, of the partnership’s total natural gas volumes during the quarter. Operating income for the Natural Gas segment decreased more than 22% year over year to $27.8 million due to lower volumes, partially offset by lower operating costs.

The Marketing segment reported an adjusted operating income of $3.4 million during the quarter, down 48% from the year-ago quarter. This decrease was mainly on account of lower natural gas prices.
Management termed this year as a challenging period for the partnership despite improving energy fundamentals. Net income is expected to be in the range of $350 million and $380 million for the year.
Though the expansion and diversification of Enbridge’s asset base over the past few years has created opportunities for internal growth projects, we maintain our Neutral recommendation based on the partnership’s weak distribution growth prospects.

Zacks Investment Research

(EEP) Enbridge Energy Partners L.P. Reports In Line

Despite Sunoco Logistics’ earnings lag, estimates for the current quarter (first quarter of 2010) have been trending up over the last few days, with the quarterly Zacks Consensus Estimate going up by 4 cents in the last 7 days alone. Two of the nine analysts covering the stock have raised their estimates for the first quarter. With its stable fee-based revenue, geographically diverse assets and strong business fundamentals, Sunoco Logistics offers investors an opportunity to capture income growth through steadily rising cash distributions and capital appreciation.

Distribution Raised

However, the partnership raised its quarterly distribution by 2.3% sequentially and 10.1% year-over-year to $1.09 per unit or $4.36 per unit annualized, representing the 26th distribution increase in the past 27 quarters. Distributable cash flow decreased approximately 34% year-over-year to $50.2 million.

IDR Repurchase & Exchange

In a separate announcement, Sunoco Logistics and Sunoco Inc. (SUN) said they repurchased the incentive distribution rights (IDRs) held by the partnership’s general partner Sunoco Partners LLC (a subsidiary of Sunoco Inc.) in exchange for the issuance of a new class of IDRs and $201.2 million, secured by a promissory note.

Refined Products Pipeline System: Operating income in the Refined Products Pipeline System segment increased nearly 6% year-over-year to $10.2 million, primarily resulting from a $3.2 million increase in sales and other revenue. The revenue gains reflected contributions from the MagTex refined product pipeline and terminal systems and increased pipeline fees, partially offset by decreased volumes on the partnership’s northeastern pipelines.

Terminal Facilities: Sunoco’s Terminal Facilities business segment had an operating income of $20.5 million for the quarter, up more than 31% year-over-year, mainly resulting from an $8.8 million increase in sales and other operating revenue. The revenue growth was primarily driven by increased throughput, higher fees and additional tankage at the Nederland crude oil terminal, coupled with results from the acquisition of the MagTex refined product terminals. The positive contributions were somewhat offset by reduced volumes experienced in Sunoco Logistics’ refinery terminals, which resulted from the idling of the Eagle Point refinery.

Crude Oil Pipeline System: Operating income in the Crude Oil Pipeline System segment decreased more than 38% from the year-earlier level to $35.6 million, pulled down by lower lease acquisition performance. This more than offset the increase in the average price of West Texas Intermediate crude oil at Cushing, Oklahoma. During the quarter, crude oil prices increased to $76.17 per barrel from $58.75 per barrel in the year-earlier quarter.

Capital Expenditure & Balance Sheet

The partnership’s maintenance capital expenditure and expansion capital expenditure for the quarter totaled $16.8 million and $50.2 million, respectively. Sunoco Logistics expects its full-year 2010 maintenance capital expenditure to be approximately $32.0 million, down slightly from the 2009 figure of $32.2 million.

At the end of 2009, Sunoco had $868.4 million in long-term debt (consisting of $599.4 million of senior notes and $269.0 million of borrowing under the partnership’s credit facility), representing a net debt-to-capitalization ratio of approximately 50.2%.

Zacks Investment Research

(SXL) Sunoco Logistics Partners’ Profit Drops

The company is targeting diluted earnings per share of $1.42 this year with a 2010–2012 compounded annual EPS growth rate in the range of 8% to 10%. Spectra announced capital expansion projects of $900 million this year, with a return on capital employed of more than 12%. For the 2010–2014 period, these figures are at least $5 billion and 12%–14%, respectively.

Spectra has been successfully executing its capital expansion projects. The company had completed within budget all of its 10 scheduled expansion projects last year. These projects are earning returns above the high end of its stated range of 10%–12%, and management believes these will continue to provide earnings and cash flow for many years to come.

With a bolstered financial flexibility, the company is in good shape and ahead of the curve in terms of its portfolio of growth projects. Following the spin-off, Spectra has been gaining traction with its fee-based businesses. During the 2007–2009 timeframe, the company had placed into service 42 fee-based expansion projects totaling more than $3 billion.

Based on Spectra’s 2010 financial outlook and performance of expansion projects in the last few years, we view that the company will be able to generate sufficient cash flow that can be used to fund not only its dividends but also its operations and partially to finance maintenance and expansion capital.

Zacks Investment Research

(SE) Spectra Energy Sees 20% Earnings Growth Ahead

The company’s total reserve additions during the year were 573 billion cubic feet equivalent (Bcfe), with a reserve replacement ratio of 212%. Total company reserve replacement costs were $2.04 per million cubic feet equivalent (Mcfe). Domestic reserve replacement costs, before price-related revisions, totaled $1.57 per Mcfe.

El Paso and all other energy companies are compiling year-end reserve data using new guidelines from the U.S. Securities and Exchange Commission. The changes, meant to provide a greater clarity for investors, also afford companies an added flexibility in reporting. El Paso said the new rules had a minimal effect on its reserve reporting.

Average production in 2009 was 763 MMcfe/d, which was at the high end of its guidance of 745-765 MMcfe/d. The company’s year-end exit rate was approximately 750 MMcfe/d, driven primarily by strong production growth in the Haynesville Shale program, which had a year-end exit rate of approximately 150 MMcfe/d (gross) and 110 MMcfe/d (net).

During 2009, El Paso spent approximately $1.1 billion towards Exploration and Production (E&P) capital expenditures, which includes roughly $92 million for the acquisition of producing properties completed in late December and roughly $240 million for international expenditures.

El Paso has high-grade E&P assets and a large inventory of pipeline projects that offer significant value in the long run. The company has been able to preserve financial flexibility and drive down operating costs to retain the competitive edge under the present challenging business environment. El Paso has been continuously evaluating capital allocations to ensure that the on-track projects are value accretive.

Based in Houston, Texas, El Paso Corporation is a major player in both the natural gas transmission and exploration & production space in the U.S. The company principally operates in two business lines – Pipelines and E&P – which collectively account for the lion’s share of its revenues, incomes and cash flows.

Zacks Investment Research

(EP) El Paso Corporation Reports Year-end Reserves

According to the deal, Williams will sell pipeline assets in the Northeast, Gulf Coast and Rocky Mountain region to affiliate Williams Partners, L.P. (WPZ), which is primarily engaged in finding, producing, gathering, possessing and transporting natural gas. Williams will also contribute its limited and general partner interests in Williams Pipeline Partners L.P. (WMZ), another affiliate that owns and operates natural gas transportation and storage assets, into Williams Partners. However, Williams will keep its exploration and production business at the parent company level.

In exchange, Williams will receive cash proceeds of about $3.5 billion and 203 million Williams Partners LP units. This, together with $2 billion in assumed debt, makes up the major portion of the $12 billion deal. Williams will also increase its ownership in Williams Partners from 24% to 80%, while maintaining its 2% general partner interest. Following the transaction, which is expected to close later in the first quarter of 2010, Williams Pipeline Partners will no longer be publicly traded and will be merged with Williams Partners through an exchange offer.

We believe that the consolidation will allow Williams to simplify its structure, pay down debt, drive growth, and unlock value for the company’s shareholders. Post restructuring, Williams will be able to concentrate on its natural gas exploration and production operations.

On the other hand, the new, larger Williams Partners, with operations across the Gulf Coast, Rocky Mountains and into the northeast, will have a much strengthened operating and financial profile. The restructuring provides Williams Partners a substantial increase in the size and proportion of fee-based cash flows thereby, allowing the partnership to finance large projects and pursue investment and growth opportunities. Additionally, Williams Partners expects to hike its quarterly distribution to unitholders by 3.5% initially.

Following the revamp plan announcement, shares of Williams rallied $1.73, or 8.1%, to close at $23.10. Earlier in the day, the shares hit a 52-week high of $23.76. Williams Partners units climbed $5.60, or 18.2%, to $36.39, and hit a 52-week high of $36.40.

Zacks Investment Research

(WMB) Williams Companies Announces $12 Billion Restructuring to Consolidate Operations

Plains said it will register for the offering during the first quarter of 2010. The company plans to use the proceeds of the offering to repay debt and for general partnership purposes.

Plains intends to own 2% general partner interest and incentive distribution rights of PNGS. It also expects to retain a substantial portion of the MLP’s common and subordinated units.

A master limited partnership is a tax advantaged instrument in which the bulk of the company’s earnings are paid out to shareholders in the form of dividends.

Houston, Texas based Plains All American Pipeline L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The Partnership is also engaged in the development and operation of natural gas storage facilities.

In the third quarter of 2009, Plains reported revenues of $4.86 billion, down 45% year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter improved 5% to $234 million from $223 million a year ago.

For the fourth quarter, Plains expects adjusted EBITDA to be in the range of $240?$265 million and adjusted net income of $114?$143 million or 56?76 cents per unit. For the full year 2009, it expects adjusted EBITDA in the range of $985 million to just over $1 billion and adjusted net income of $520?$549 million or $2.88?$3.10 per unit.

Plains All American expects maintenance capital expenditures for the full year of 2009 to range from $85 million to $95 million. Based on the recent distribution announcement, the company expects the distribution per unit for 2009 to be slightly over $3.62 per common unit, an approximate 4% increase over the average distribution paid in 2008 of $3.50 per unit.

Zacks Investment Research

(PAA) Plains All American Pipeline L.P. Plans IPO

The acquisition consisted of oil assets with proved oil reserves of approximately 70 billion cubic feet equivalent at a price of $1.49 per thousand cubic feet equivalent. The company expects to quickly and efficiently integrate these assets into its existing operations. Furthermore, it expects to add more proved reserves to its credit by developing these assets.

El Paso has high-grade Exploration & Production assets and large inventory of pipeline projects that offer significant value in the long run. El Paso has been able to preserve financial flexibility and drive down operating costs to retain the competitive edge under the present challenging business environment. El Paso has been continuously evaluating capital allocations to ensure that the on-track projects are value accretive.

El Paso’s management has been actively divesting non-core assets and building a strong, more focused operation. We believe that El Paso’s management competencies and access to financing will enable successful execution its industry leading pipeline backlog going forward.

El Paso Cobased in Houston, Texas, is a major player in both the natural gas transmission and exploration and production space in the U.S. El Paso principally operates in two business lines – Pipelines and Exploration & Production (E&P) – which collectively account for its lion’s share of revenues, incomes and cash flows.

Zacks Investment Research

(EP) El Paso Corporation Ends 2009 With Strong Liquidity

The deal makes Plains the largest owner in Capline pipeline, with an aggregate interest of 43%, adding to the initial 22% interest it acquired in 2004.

The Capline pipeline is a 633-mile, 40-inch mainline crude oil pipeline that originates in St. James, Louisiana, and terminates in Patoka, Illinois. This system is one of the primary transportation routes for shipping crude oil and condensate to the Midwestern U.S., accessing approximately 3 million barrels per day of refining capacity in PADD II. Capline is a key transporter of sweet and light sour foreign crude to PADD II. It pipes about 1.1 million barrels per day, with about 470,000 barrels per day of capacity attributable to Plains All American’s interest.

Upon the completion of announced expansions, the partnership expects the existing St. James and Patoka terminal facilities in the Capline pipeline to have capacities of approximately 7 million barrels and 4 million barrels, respectively.

In the third quarter of 2009, Plains reported revenues of $4.86 billion, down 45% year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter improved 5% to $234 million from $223 million a year ago.

Plains All American had been very active during the quarter, delivering solid operating and financial results. During the quarter, it acquired the remaining 50% interest in the Natural Gas Storage business, raised approximately $1.2 billion in the capital markets at very attractive rates, and increased the annualized distribution by 6 cents to $3.68 per unit.

Headquartered in Houston, Texas, Plains All American Pipeline L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The Partnership is also engaged in the development and operation of natural gas storage facilities.

Zacks Investment Research

(PAA) Plains All American Pipeline L.P. Adds to Capline Stakes

Energy Transfer recently reported weaker-than-expected third quarter results as low natural gas prices adversely affected profitability. The partnership reported a loss per unit of 10 cents, significantly below the Zacks Consensus Estimate of a profit of 35 cents. Energy Transfer’s low growth and seasonal propane business also remain major liabilities, in our view. Given these headwinds, we expect Energy Transfer units to be under pressure in the medium- to long-term and rate the partnership as Underperform.

Dallas-based Energy Transfer Partners L.P. is a master limited partnership owning and operating a diversified portfolio of energy assets. The partnership’s natural gas operations include miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas.

Zacks Investment Research

(ETP) Energy Transfer Partners Offers Common Units

Most commodity investors know by now that natural gas prices took a major hit over the past two years.

And with production stalled around the world, very few people expect it to rise much more than the $2 per MMbtu it managed to climb this year.

But the natural gas industry still holds pockets of wealth, if you just know how to access them.

Since prices rose back to $5 per Mmbtu in late September after slumping since January, companies have recommitted to drilling projects and ramping up production.

For Atlas Pipeline Partners (NYSE: APL), which services the Midwest and Appalachian regions, that means revenue will soon follow.

By gathering, processing and transporting the commodity instead of selling it directly, Atlas brings in revenue based on fees and not on the price of the natural gas itself… putting the company solidly in the green just as long as production continues.

And considering how Atlas plays a vital role in extracting shale gas, it should do well for some time to come.

Clients Worth Bragging About

In all, Atlas owns 9,100 miles of pipeline connected to about 6,000 wells. And every year, it adds over 800 new wells in the Appalachian area, it’s main source of revenue.

Though it has eight natural gas processing plants and one treatment facility in the southwest, it focuses on the Appalachian Basin, which holds the most mature oil and gas production in the U.S. and makes for easy transportation to the energy-guzzling mid-Atlantic and northeastern states.

It has an enviable job there too, putting its pipelines to work for Atlas Energy Resources, LLC, the largest independent energy producer in the eastern U.S.

Atlas Energy has a steady business itself, with a solid operation and a sizable venture in Marcellus Shale, widely considered to be the natural gas resource of the future.

Atlas Pipeline also has a 49% joint venture with Williams Companies (NYSE: WMB), one of the largest natural gas producers in the country.

That business – Laurel Mountain Midstream, LLC – manages more than 1,800 miles of natural gas gathering pipelines and 7,400 wells, largely in the Marcellus Shale of southwest Pennsylvania.

Shares Set for a Boom

Aside from price recovery and the resulting growth in production, Atlas Pipeline has one more bonus to offer, this time in the form of dividends.

Since 2000, the company has added an average increase of 7 cents to its dividend payouts every year.

Furthermore, the price to revenue ratio is at a low of 0.28 and the price to book ratio is at 0.58, while the five-year annual dividend growth rate sits at 9.75% and the five-year annual revenue growth rate stands at 145%.

Anyway you look at it, and despite the slow rebound for natural gas prices, this stock is set to grow next year and well into the longer term.

Good investing,

Sheena Martin

View original at: Investment U

(APL) Transport Your Money Into This Natural Gas Industry

Under the terms of the agreement, ONEOK partners will contract for 60,000 barrels per day of fractionation capacity at Targa’s facility. Targa is currently expanding its fractionator capacity to 275,000 barrels per day from 215,000 barrels per day.

With the additional fractionation capacity, ONEOK Partners expects to better serve its NGL producers and customers from new supplies in the Mid-Continent, north Texas and Rocky Mountain regions. As part of the expansion, Targa Resources Partners and ONEOK Partners plan to construct interconnect facilities that link Targa Resources Partners’ fractionation facility with ONEOK Partners’ recently completed Arbuckle Pipeline and on to ONEOK Partners’ fractionation and storage facilities at Mont Belvieu. The Arbuckle Pipeline is a 440-mile raw NGL pipeline extending from southern Oklahoma through the Barnett Shale of north Texas.

Zacks Investment Research

(OKS) ONEOK Partners L.P. Signs Pact with Targa Resources Partners

On a distribution yield basis, Enbridge common units are currently trading at a discount to the peer pipeline MLP group average (higher yield = lower value). This represents a 369 basis points (bps) spread over the 10-year Treasury bond, compared to the peer group’s average spread of 358 bps. The discount reflects the partnership’s weak distribution-growth prospects.

However, with the partnership’s $6.3 billion organic growth program (2006–2010) largely completed, it only has limited outstanding financing requirements through 2010. Additionally, the expansion and diversification of the partnership’s asset base over the past few years has created opportunities for internal growth projects, in our view. These are enabling the partnership to underpin stable cash flows going forward.

Zacks Investment Research

(EEP) Enbridge Energy Partners L.P. Sports A Discounted Valuation

Known as the Fayetteville Express Pipeline, the 42-inch diameter conduit will have an initial transportation capacity of 2 billion cubic feet per day (Bcf/d). It will originate in Conway County, Arkansas, and run to the Trunkline Gas Company line in Panola County, Mississippi. Pending necessary regulatory approvals, construction on the $1.3 billion Fayetteville Express Pipeline is expected to begin in early 2010 with completion likely by late 2010 or early 2011.

Once in service, the Fayetteville Express Pipeline will provide shippers in the Fayetteville Shale producing region in Arkansas with much needed takeaway capacity, flexibility and access to markets.

Dallas-based Energy Transfer Partners L.P. is a master limited partnership owning and operating a diversified portfolio of energy assets. The partnership’s natural gas operations include miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas. Energy Transfer Partners is the operator of the Fayetteville Express Pipeline and is responsible for management of the project’s construction.

Kinder Morgan Energy Partners L.P., based in Houston, is the largest independent owner and operator of petroleum product pipelines in the U.S., transporting nearly 2 million barrels per day of gasoline, jet fuel, diesel fuel, and natural gas liquids. The partnership also has the capacity to transport 7 billion cubic feet/day (Bcf/d) of natural gas. It owns or operates more than 28,000 miles of pipeline and approximately 170 terminals. The terminals store petroleum products and chemicals, besides handling bulk materials such as coal and petroleum coke. The partnership is also the largest carbon dioxide marketer and transporter in the country.

Zacks Investment Research

(KMP) Kinder Morgan Energy Partners and Energy Transfer Partners’ Joint Venture Gets Green Light

Company Description

Enbridge is an energy transportation company based in Texas. The partnership delivers crude oil, petroleum, and nat gas through pipelines near the Gulf Coast and the Mid-Continental region.

Crushed Estimates

On Oct 29th, the company reported third-quarter results that saw a 44% increase in adjusted net income. This lead to net income per share of 86 cents, up from 71 cents.

The Zacks Consensus Estimate was just 60 cents heading into the report, making this the second earnings surprise in a row and the third in the past 4 quarters.

Project Underway

Currently the partnership expects to complete its most recent project, Alberta Clipper, in mid-2010. The 1,000 mile heavy crude pipeline from Canada to Wisconsin will have capacity of 450,000 Bpd at first, but could expand to 800,000.

Estimates Jump

After analysts heard the earnings news, the Zacks Consensus Estimate jumped to $2.73 for this year, up from $2.37. Next year’s forecasts average $2.98, up from $2.64. These levels are lower than last year’s $3.15, but the earnings momentum is quite strong.

Units are currently trading at just over 18 times forward earnings.

The Chart

Units of EEP continue to set new 52-week highs and are quickly approaching multi-year highs. Momentum came back strong after the recent dip. Take a look at the chart below.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

Zacks Investment Research

(EEP) Enbridge Energy Partners L.P. – Earnings Report Crushed Estimates

Weighed down by these factors, Energy Transfer posted a third-quarter 2009 loss. The partnership’s low growth and seasonal propane business also remain a major liability, in our view.

Given these headwinds, we expect Energy Transfer units to be under pressure in the medium- to long-term. The partnership’s discount valuation relative to the pipeline MLP group reflects its heightened risk profile.

Zacks Investment Research

(ETP) Energy Transfer Partners – Bear of the Day

Known as the Sundance Trail Expansion, the 30-inch diameter loop will provide 150,000 dekatherms of firm transportation capacity per day from the Greasewood and Meeker/White River Hubs in Rio Blanco County, Colorado to the Opal Hub area in Lincoln County, Wyoming . Additionally, the project will replace and enhance Northwest’s compression facilities at the Vernal Compressor Station in Uintah County, Utah. It is estimated that the Sundance Trail Expansion will cost roughly $65 million and is expected to be in service by November 2010.

Post completion, the project will offer the producers transportation capacity to move gas from one of the fastest-growing gas production fields in the Rockies to markets in the western U.S. At the Opal Hub (a key Rocky Mountain processing station), producers can access six interstate pipelines, including Northwest, providing enough supply options for transporting natural gas.

The Williams Companies, Inc. is an energy firm that primarily finds, produces, gathers, processes, and transports natural gas. The company divides its business into four segments: Exploration & Production (E&P), Midstream Gas & Liquids, Gas Pipeline, and Gas Marketing Services.

Northwest Pipeline GP is 35% owned by Williams Pipeline Partners L.P. (WMZ), Williams Companies’ master limited partnership that owns and operates natural gas transportation and storage assets.

Zacks Investment Research

(WMB) The Williams Companies’ Pipeline Project Approved

We currently have a Neutral recommendation on the stock. The economic downturn and the resultant commodity-price weakness, coupled with reduced access to the credit markets, led to lower spending by consumers and businesses on transportation fuels such as gasoline, aviation fuel and diesel. This translated into less transportation volumes for pipeline operators like Magellan, cutting away at its cash flows and distributions. Weighed down by these factors, the partnership reported weak third-quarter earnings, notwithstanding the record results from its terminals segment and contribution from the recent expansion projects.

Tulsa, Oklahoma-based Magellan is an MLP that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. In 2008, the partnership’s pipeline volumes comprised 52% gasoline, 39% distillates (which include diesel fuels and heating oil) and 9% Liquefied Petroleum Gas (LPG) and aviation fuel. Magellan conducts its operations in three segments: Petroleum Products Pipeline System, Petroleum Products Terminals, and Ammonia Pipeline System.

Zacks Investment Research

(MMP) Magellan Midstream Partners, L.P. Hits 52-Week High

Weighed down by these factors, Energy Transfer posted a third-quarter 2009 loss. The partnership’s low growth and seasonal propane business also remain a major liability, in our view.

Given these headwinds, we expect Energy Transfer units to be under pressure in the medium- to long-term. The partnership’s discounted valuation relative to the pipeline MLP group reflects its heightened risk profile.

Zacks Investment Research

(ETP) Energy Transfer Partners – Bear of the Day

The first portion of the project (Phase I), which provided an additional 40 Mdt/d, was placed into service in December 2008. Phase II construction included the addition/replacement of approximately 14 miles of 42-inch pipe, along with 8 compressor station upgrades at various locations in Pennsylvania and New Jersey .

The Transco natural gas pipeline is a 10,500-mile pipeline system that carries natural gas to markets all over the northeastern and southeastern U.S. The current expansion is expected to boost the total system capacity to approximately 8.6 billion cubic feet per day and will allow Williams to continue meeting the region’s growing energy needs by providing clean-burning natural gas in time for the winter heating season.

The Williams Companies, Inc. is an energy firm that primarily finds, produces, gathers, processes, and transports natural gas. The company divides its business into four segments: Exploration & Production (E&P), Midstream Gas & Liquids, Gas Pipeline, and Gas Marketing Services.

Zacks Investment Research

(WMB) The Williams Companies Completes 2nd Phase of Transco Pipeline

Through the expansion project, Williams expects to add 380,000 dekatherms of southbound, year-round firm transportation capacity on the Mobile Bay Lateral from Transco’s mainline at Station 85 near Butler, Alabama, to its interconnect with Gulfstream Natural Gas System in Coden, Alabama.

Williams estimates that the project will require a compression addition of 8,180 horsepower at Transco compressor station 85 and facility modifications at Station 83. It expects the project facilities to cost approximately $36 million.

Recently, the company’s Mobile Bay natural gas processing plant returned to service, processing between 100 million and 200 million cubic feet per day with volumes, after shutting due to lost production from Tropical Storm Ida. The plant did not sustain any damage from the storm, which was downgraded to a tropical depression after coming ashore near Mobile, Alabama. The plant is capable of processing of about 700 million cubic feet of supply per day.

Williams is an energy firm that finds, produces, gathers, processes, and transports natural gas. The company divides its business into four segments: Exploration & Production, Midstream Gas & Liquids, Gas Pipeline, and Gas Marketing Services. The company’s operations are primarily concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.

Zacks Investment Research

(WMB) Williams Companies Files with Federal Energy Regulatory Commission for Expansion

The partnership expects to use the proceeds of the public offering for general partnership purposes, including potential future acquisitions and growth capital expenditures. Net proceeds include the general partner’s ? NuStar GP Holdings LLC (NSH) ? proportionate capital contribution of $6.15 million. Pending the use of the proceeds for other purposes, the partnership intends to apply some or all of the net proceeds to reduce outstanding borrowings under its revolving credit facility.

NuStar Energy L.P. is a publicly traded limited partnership, with 8,417 miles of pipeline, 82 terminal facilities, four crude oil storage tank facilities and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

Zacks Investment Research

(NS) NuStar Energy Closes Public Offering

Distribution Maintained

Magellan maintained its quarterly distribution of 71 cents per unit ($2.84 per unit annualized), representing a 1.1% increase over the year-earlier quarter and equal to the second quarter distribution. The distribution will be paid on Nov 13 to unit-holders of record on Nov 6, 2009. Based on the current economic conditions, management expects to maintain the current quarterly distribution level throughout 2009.

Petroleum Products Pipeline System

In the Petroleum Products Pipeline System, quarterly operating margin (operating profits before affiliate G&A and D&A expenses) was $94.1 million, down marginally (0.4%) year-over-year. The decline reflected a $15.4 million fall in product margin and lower average transportation rates. These factors were almost offset by lower operating expenses, higher transportation volumes and higher fees for incremental storage, pipeline capacity leases and ethanol blending services.

Petroleum Products Terminals

In the Petroleum Products Terminals segment, operating margin was $27.7 million, up approximately 2.2% year-over-year. The positive comparison was on account of the effects of expansion projects at the partnership’s terminals, higher storage rates, and increased volumes, partly offset by higher operating expenses and lower product margin.

Ammonia Pipeline System

The partnership’s Ammonia Pipeline System reported an operating loss of $3.4 million, as against earnings of $362,000 in the third quarter of 2008. Segment results were adversely affected on account of additional maintenance work performed on the pipeline during the reported quarter.

Guidance

Management expects distributable cash flows for the full year to be approximately $310 million. The company guided towards fourth-quarter and full-year 2009 earnings per unit of 78 cents and $2.25, respectively. The partnership plans to spend approximately $510 million on growth projects in 2009, with expenditure of $160 million in future years required to complete these projects. Of the 2009 budget, Magellan spent about $396 million through the reported quarter. Additionally, the partnership continues to look out for more than $500 million of potential growth projects in the earlier stages of development.

Zacks Investment Research

(MMP) Magellan Midstream Partners L.P. Reports Weak Results

Total revenues for the quarter decreased nearly 51% year over year to $1.36 billion. The partnership declared an unchanged cash distribution of 99 cents per unit or $3.96 per unit annualized.

Volume in the partnership’s liquid systems increased 8.3% year over year to 2,055 thousand barrels per day (MBbl/d). All three of the partnership’s liquid systems (Lakehead, Mid-Continent and North Dakota) contributed to this year over year positive volume comparison. These systems accounted for 83%, 12% and 5%, respectively, of the total liquids transported during
the quarter.

Operating income in the Liquids segment increased more than 37% year over year to $132.7 million, primarily driven by transportation rate increases in connection with the completion of stage 2 of the partnership’s Southern Access Expansion. These positives were partially offset by higher depreciation and operating costs. Operating costs went up by $9.2 million from the year-ago quarter.

During the quarter, natural gas volumes decreased 8.6% from the year-earlier period to 2,298,000 MMBtu/d, driven mainly by the partnership’s East Texas and Anadarko systems. These systems accounted for approximately 59% of the partnership’s total natural gas volumes during the quarter. Operating income for the Natural Gas segment increased 32% year over year to $47.3 million driven by the lower costs.

The Marketing segment reported adjusted operating income of $0.2 million during the quarter, compared to $0.4 million in the year-ago quarter. This decrease was mainly on account of lower natural gas prices.

We believe the partnership will continue to develop its existing assets. The expansion and diversification of the partnership’s asset base over the past few years has created opportunities for internal growth projects. In addition, Enbridge expects to benefit from its expanded geographical scope, which added an extra layer of stability to its cash flows. Consequently, we recommend an Outperform rating.

Zacks Investment Research

(EEP) Enbridge Energy Partners L.P. Beats on Higher Volumes

Plains All American reported a 13% increase in the adjusted earnings for the Transportation segment due to higher average pipeline tariffs and increased pipeline loss allowance revenue. The Facilities segment income increased 48% driven by capacity increases from recently completed capital projects, recent acquisitions and higher average lease rates at various facilities. However, the income for the Marketing segment decreased 25% due to declines in margins partially offset by a favorable contango market and lower operating costs.

Revenue in the quarter dropped 45% to $4.86 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved 5% to $234 million from $223 million reported last year.

Plains All American has been very active during the quarter, delivering solid operating and financial results. During the quarter, it acquired the remaining 50% interest in the Natural Gas Storage business, raised approximately $1.2 billion in the capital markets at very attractive rates, and increased the annualized distribution by 6 cents to $3.68 per unit.

At quarter-end, the company’s balance sheet was strong, with over $1.6 billion of available liquidity, of which $260 million was used to prepay 7.125% notes. It had approximately 136.1 million units outstanding, long-term debt of $4.1 billion and an adjusted long-term debt-to-total capitalization ratio of 47%. Maintenance capital expenditures in the quarter were $12 million.

For the fourth quarter, the company guided adjusted EBITDA in the range of $240?$265 million and adjusted net income of $114?$143 million or 56?76 cents per unit. For the full year 2009, it expects adjusted EBITDA in the range of $985 million to just over $1 billion and adjusted net income of $520?$549 million or $2.88?$3.10 per unit.

Plains All American expects maintenance capital expenditures for the full year of 2009 to range from $85 million to $95 million. Based on the recent distribution announcement, the company expects the distribution per unit for 2009 to be slightly over $3.62 per common unit, an approximate 4% increase over the average distribution paid in 2008 of $3.50 per unit.

Zacks Investment Research

(PAA) Plains All American Pipeline L.P. In Line with Analyst Numbers

Distribution Maintained

Magellan maintained its quarterly distribution of 71 cents per unit ($2.84 per unit annualized), representing a 1.1% increase over the year-earlier quarter and equal to the second quarter distribution. The distribution will be paid on November 13 to unit-holders of record on November 6, 2009. Based on the current economic conditions, management expects to maintain the current quarterly distribution level throughout 2009.

Petroleum Products Pipeline System

In the Petroleum Products Pipeline System, quarterly operating margin (operating profits before affiliate G&A and D&A expenses) was $94.1 million, down marginally (0.4%) year over year. The decline reflected a $15.4 million fall in product margin and lower average transportation rates. These factors were almost offset by lower operating expenses, higher transportation volumes, and higher fees for incremental storage, pipeline capacity leases and ethanol blending services.

Petroleum Products Terminals

In the Petroleum Products Terminals segment, operating margin was $27.7 million, up approximately 2.2% year over year. The positive comparison was on account of the effects of expansion projects at the partnership’s terminals, higher storage rates, and increased volumes, which were partly offset by higher operating expenses and lower product margin.

Ammonia Pipeline System

The partnership’s Ammonia Pipeline System reported operating loss of $3.4 million, as against earnings of $362,000 in the third quarter of 2008. The segment results were adversely affected on account of additional maintenance work performed on the pipeline during the reported quarter.

Guidance

Management expects distributable cash flows for the full year to be approximately $310 million. The company guided towards fourth-quarter and full-year earnings per unit of 78 cents and $2.25 respectively. The partnership plans to spend approximately $510 million on growth projects in 2009, with expenditure of $160 million in future years required to complete these projects. Of the 2009 budget, Magellan spent about $396 million through the third quarter. Additionally, the partnership continues to look out for more than $500 million of potential growth projects in the earlier stages of development.

Zacks Investment Research

(MMP) Magellan Midstream Partners L.P. Reports Weak Results

Earnings before interest, taxes, depreciation and amortization (EBITDA), were $211.4 million in the quarter versus $252.6 million a year ago. Distributable cash flow (DCF) totaled $144.1 million ($1.24 per unit) form $191.0 million ($1.85 per unit) last year.

Operating income in the quarter declined 27% year over year to $144.7 million, due to lower realized commodity prices in the Natural Gas Gathering and Processing segment; narrower NGL product price differentials and prior-year operational measurement gains in the Natural Gas Liquids segment; and the impact of lower natural gas prices on retained fuel in the Natural Gas Pipelines segment.

Operating costs in the quarter increased to $105.1 million from $97.5 million last year, due to incremental costs associated with the operation of the Overland Pass Pipeline and the Arbuckle Pipeline, and higher operating expenses at fractionation facilities, including the expanded Bushton fractionator.

Equity earnings from investments decreased to $20.1 million in the quarter versus $29.4 million a year ago. Quarterly cash distribution increased to $1.09 per unit, payable Nov 13, 2009, to unitholders of record as of Oct 30, 2009. Capital expenditures were $169.4 million from $335.6 million in the third quarter 2008.

During the quarter, ONEOK Partners successfully completed its more than $2 billion capital investment program. These investments, coupled with additional opportunities identified for the next five years, establish a strong foundation for growth in both the fee-based earnings and distributions to unitholders.

ONEOK Partners raised its 2009 limited partners’ EPS guidance range to $3.40 to $3.60 from its previous range of $3.25 to $3.65. It now expects distributable cash flow to be in the range of $530-$550 million.

Zacks Investment Research
View original at: Zacks.com News Feed

(OKS) ONEOK Partners L.P. Ahead of Consensus Estimates

The U.S. Transmission segment posted earnings before interest and taxes (EBIT) of $239 million, up more than 10% year over year. The segment benefited from business expansion projects and capitalization of previously expensed project development costs. These positives were partially offset by lower gas processing revenues as a result of lower prices and volumes. Distribution segment reported EBIT of $48 million, up 9% year over year, driven by higher storage and transportation revenues.

Western Canada Transmission & Processing segment reported EBIT of $84 million, down 25.7% from the year-earlier level. Improved revenues in the fee-based gathering and processing business were more than offset by lower Empress System earnings, primarily as a result of lower fractionation spreads. Fractionation spreads at Empress System averaged $6.75 for the quarter, down 38% from the year-ago level.

Field Services segment reported EBIT of $45 million, decreased significantly from the year-earlier quarter due to lower commodity prices.

During the quarter, crude oil averaged approximately $68 per barrel, down more than 42% year over year. Natural gas liquids (NGL) to crude relationship averaged 42% versus 51% in third quarter 2008.

At the end of the reported quarter, long-term debt stood at $9.35 billion. This represents a debt-to-capitalization ratio of 55.5%.

Management hinted that Spectra is on track to meet the financial goals it had set for the year, including the 2009 EPS target of $1.15. Based on the operational performance and momentum of the company’s future expansion projects, we believe that Spectra remains in a position to experience earnings growth in 2010 and beyond.

Zacks Investment Research
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(SE) Spectra Energy Corporation Surpasses Consensus Estimates

However, on a year-over-year basis, NuStar’s earnings per unit plunged more than 60%, while revenue was down 31.5% to $1.3 billion. The negative comparison from the year-ago quarter was due to lower earnings from asphalt operations, hurt by a weaker product margin per barrel.

Distribution Raised

Importantly, NuStar declared a quarterly distribution of $1.065 per unit ($4.26 per unit annualized), representing an approximately 1% increase over the second quarter of 2009 and the third quarter of 2008. The distribution will be paid on November 12, 2009 to unitholders of record on November 5, 2009. Distributable cash flow (DCF) available to limited partners for the third quarter was $61.5 million or $1.13 per unit, compared to $156.4 million or $2.87 per unit in the year-earlier quarter.

Transportation Segment

Quarterly throughput volumes in the Transportation segment were down roughly 17.9% year-over-year to 862,912 barrels per day. The decline can be primarily attributed to the sale of low-performance pipeline assets as well as planned turnarounds and unplanned operational outages at several of its customers’ refineries.

Segmental revenue was down 3.9% to $78.0 million. Despite the lower volumes and revenue, NuStar had higher operating income in this segment, which increased 22.3% to $35.4 million, reflecting tariff rise (7.6% increase effective July 1, 2009) and lower operating expenses for the quarter.

Storage Segment

Throughput volumes in the Storage segment remained almost flat year-over-year at 708,281 barrels per day. However, revenue increased approximately 8.2% to $125.2 million, driven by a 13.1% increase in the storage lease revenue. Quarterly operating income reached $44.0 million (45.9% year-over-year increase) due to the completion of expansion projects and lease contract renewals at higher rates, more than offsetting the lower throughput volumes.

Asphalt and Fuels Marketing

As a result of soft demand (the derivative of a sluggish economy) and significantly lower asphalt margins (down 69.4% year-over-year), the Asphalt and Fuels Marketing division operating income dropped to $28.1 million (from $137.6 million in the year-earlier quarter).

Fourth Quarter Guidance

Looking ahead to the fourth quarter, NuStar guided towards strong results for its fee-based storage and transportation segments. The Transportation segment is likely to benefit from higher throughputs on the back of lighter refinery maintenance schedule, while higher renewal rates and previously completed projects should bode well for the Storage segment.

In its asphalt operations, NuStar expects fourth quarter earnings to follow the typical seasonal pattern of decline, as sales and margins peter out. According to the partnership, EBITDA during the December quarter is likely to be in the range of $80 to $100 million.

Operating expenses are expected to be around $135 million, G&A expenses in the range of $24 to $25 million, DD&A expenses in the $37 to $38 million range, interest expense of $18 to $19 million and income tax expense in the range of $4 to $5 million.

Zacks Investment Research
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(NS) NuStar Energy Beats Expectations – Raises Distribution

However, compared to the year-earlier period, Williams’ adjusted earnings per share plunged approximately 55% while revenue nosedived 34% to $2.1 billion, hurt by weak performance of the company’s Exploration and Production (E&P) business on the back of a sharp decline in natural gas prices from the year-ago level.

E&P

In the E&P business, total production was up approximately 4.9% year-over-year to 1,202 million cubic feet equivalent per day (MMcfe/d). Domestic volumes increased 4.7% year-over-year to 1,148 MMcfe/d, driven by strong contribution from the Piceance and other basins. For the third quarter of 2009, average daily net production from the Piceance basin and other basins were both up approximately 6% from the year-ago level.

Despite strong domestic production growth, the E&P segment’s operating profit of $106 million collapsed 71% from the year-ago level. This was mainly due to a 40% slump in the company’s domestic average realized natural gas price to $4.2 per thousand cubic feet equivalent (Mcfe). The segment profit was pulled down even more by higher depletion, depreciation and amortization expenses.

Midstream

Williams’ Midstream segment reported an operating profit of $222 million, down 3% from the year-ago level, primarily due to lower natural gas liquid (NGL) and olefin prices, partially offset by higher NGL equity sales volumes and higher fee-based revenues. Total equity NGL sales volumes increased approximately 16.5% year-over-year to 317 million gallons, mainly due to the absence of hurricane-related unfavorable impacts in the Gulf region that hampered results during the third quarter of 2008.

Gas Pipeline

Operating profit in the Gas Pipeline segment was $157 million, down more than 9% from the third quarter of 2008. This year-over-year decline can be attributed to higher operating costs.

Gas Marketing Services

The Gas Marketing Services segment reported a profit of $6 million after mark-to-market adjustments, compared to a loss of $45 million a year ago. The profit was a result of an increase in realized gains associated with storage contracts.

Capital Expenditure & Balance Sheet

During the quarter, Williams spent $752 million on capital expenditure. As of September 30, the company had a long-term debt of $8.3 billion, representing debt-to-capitalization ratio of 49.9%. Williams has a current cash balance of about $1.6 billion.

Guidance for 2009

Management guided towards full-year 2009 earnings of 95 cents – $1.00 per share (up from the previous guidance of 75 – 90 cents). Capital expenditure during the period is expected to be around $2.7 billion.

We currently rate Williams shares as Neutral.

Zacks Investment Research
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(WMB) Williams Companies Outperforms – Raises Outlook

Importantly, the partnership increased its quarterly distribution by 3% to $1.05 per unit ($4.20 annualized) from $1.02 per unit ($4.08 annualized) in the year-ago quarter. The new distribution is payable on Nov 13 to unitholders of record on Oct 30, 2009.

Kinder Morgan’s distributable cash flow for the quarter before one-time items was $320 million, up 14% year over year. Distributable cash flow per unit was $1.12, up nearly 3% year over year.

The Product Pipeline segment registered earnings before depreciation, depletion and amortization (DD&A) of $166.7 million, up 19% from the year-ago period, mainly driven by improved warehousing margins at West Coast terminal facilities, higher tariffs on the Pacific system and higher ethanol revenues on the Central Florida Pipeline as well as at Southeast Terminals.

Earnings before DD&A in the Natural Gas Pipelines segment were up 10% from the year-earlier level to $194.8 million, primarily driven by the outstanding performance of new pipeline projects. In the Carbon Dioxide segment, earnings before DD&A decreased more than 2% from the year-earlier level to $198.6 million, due to significantly lower crude oil prices.

The Terminals segment’s earnings before DD&A were $144 million, up 9% year-over-year, with higher liquids capacity at Houston Ship Channel operations and contributions from its Geismar , Louisiana , drumming facility which came online in the first quarter of 2009. The Kinder Morgan Canada segment produced earnings before DD&A of $47.7 million, up 20% year over year. This growth was mainly driven by higher throughput on the Trans Mountain pipeline system.

We believe Kinder Morgan’s stable, fee-based, well-diversified asset base is likely to continue leading to additional growth opportunities and also provide earnings and cash flow visibility. We expect a sound cash flow growth in the next year from full-year contribution of three large natural gas pipeline projects such as REX, MEP and Louisiana . In addition, the partnership’s recent acquisition of natural gas treating facilities of Crosstex possesses significant growth potential to add numbers to the bottom line.

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(KMP) Kinder Morgan Energy Partners Raises Distribution

Of the votes cast, approximately 97% of TEPPCO units were in favor of the merger, representing about 71% of TEPPCO’s total outstanding units. Also, approximately 96% of the unaffiliated TEPPCO unitholders have approved the merger. As per the merger agreement, TEPPCO unitholders will receive 1.24 Enterprise common units for each TEPPCO unit owned at the effective time of the merger.

TEPPCO unitholders have recognized the benefits and potential growth opportunities that will result by combining the complementary strengths of these two successful partnerships. The partnership believes that this merger would create improved access to financial resources, resulting in distribution increases for investors.

Enterprise has declared that the TEPPCO unitholder vote represents the final step in the process.

On Jun 29, Enterprise Products Partners and Enterprise GP Holdings L.P. (EPE) announced a definitive agreement to merge with TEPPCO Partners along with TEPPCO’s general partner. The combined partnership will operate under the “Enterprise” name and trade under the “EPD” ticker symbol.

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(TPP) TEPPCO Partners L.P. Unitholders Approve Merger

Distribution Raised

However, the partnership raised its quarterly distribution by 2.4% sequentially and 10.4% year-over-year to $1.065 per unit or $4.26 per unit annualized, representing the 25th distribution increase in the past 26 quarters. Distributable cash flow increased approximately 4% year-over-year to $54.4 million.

Refined Products Pipeline System

Operating income in the Refined Products Pipeline System segment increased more than 40% year-over-year to $13.3 million, primarily resulting from a $6.3 million increase in sales and other revenue. The revenue gains reflected contributions from the MagTex refined product pipeline and terminal systems and increased pipeline fees.

Terminal Facilities

Sunoco’s Terminal Facilities business segment had operating income of $20.7 million for the quarter, up nearly 51% year-over-year, mainly resulting from a $5.6 million increase in sales and other operating revenue. The revenue growth was primarily driven by increased throughput, higher fees and additional tankage at the Nederland crude oil terminal, coupled with results from the acquisition of the MagTex refined products terminals.

Crude Oil Pipeline System

Operating income in the Crude Oil Pipeline System segment decreased more than 25% from the year-earlier level to $25.9 million, pulled down by lower lease acquisition performance. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma, during the quarter decreased to $68.29 per barrel from $118.13 per barrel in the year-earlier quarter.

Capital Expenditure & Balance Sheet

The partnership’s maintenance capital expenditure and expansion capital expenditure for the quarter totaled $6.3 million and $82.1 million, respectively. Sunoco Logistics expects its full-year 2009 maintenance capital expenditure to be approximately $32.0 million.

At the end of the quarter, Sunoco had $889.4 million in long-term debt (consisting of $599.4 million of senior notes and $290.0 million of borrowing under the partnership’s credit facility), representing a net debt-to-capitalization ratio of approximately 51.0%.

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(SXL) Sunoco Logistics Results Miss Estimates – Distribution Raised

Apart from the sale, the companies entered into a tank lease and throughput agreement, allowing Holly to use the acquired tankage for a monthly payment and pipelines for a fee. Holly will maintain ownership of the remaining 2.8 million barrels of intermediate and finished petroleum product tankage that was acquired as part of Holly’s Tulsa refinery acquisition from Sunoco in June 2009.

Plains and Holly have also agreed to work together to identify and capture contango storage opportunities.

Plains All American Pipeline L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas as well as other natural gas related petroleum products. The partnership is also engaged in the development and operation of natural gas storage facilities.

Holly Corporation is an independent petroleum refiner and marketer producing high value light products such as gasoline, diesel fuel, jet fuel and high value specialty lubricants.

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(PAA) Plains All American Pipeline L.P. Buys Holly Corporation Assets

Sunoco Logistics reported solid second-quarter results, reflecting higher lease acquisition results, increased fees, and contributions from the recent MagTex acquisition. Importantly, the partnership increased its quarterly cash distribution by 11.2% year over year to the annualized rate of $4.16 per unit. With its stable fee-based revenue, geographically diverse assets, and strong business fundamentals, Sunoco Logistics offers investors an opportunity to capture income growth through steadily rising cash distributions and capital appreciation.

We also believe that the partnership’s synergistic relationship with its general partner, Sunoco Inc. (SUN) adds to its positive attributes by providing Sunoco Logistics with stable cash flows and consistent top-line growth opportunities.

At the same time, we remain concerned with Sunoco Logistics’ high throughput dependence upon its general partner, as any adverse development on that front (like the recent idling of the Eagle Point refinery) will severely impact the partnership’s financial performance.

We also remain worried on valuation grounds. On a distribution yield basis, Sunoco Logistics common units are currently trading at a premium to its peer pipeline MLP group average. This represents a 358 basis-point (bps) spread over the 10-year Treasury bond, compared to the peer group’s average spread of 455 bps. As such, we see limited room for upside from current levels and therefore rate Sunoco Logistics units as Neutral.

Our $61 price objective reflects an annualized distribution run rate of $4.37 per unit, 5% above current levels, and a target yield of 7.2%. Our yield assumption is based on a 345 bps spread over our 10-year Treasury bond yield expectation of 3.75%.

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(SXL) Sunoco Logistics Partners L.P. Fairly Priced

Company Description

TransMontaigne Partners provides storage and transportation services for companies producing refined petroleum products in the United States. The company was founded in 2005 and has a market cap of $345 million.

Shares of TLP are up huge over the last 6 months as energy prices have rallied with the overall market. The company also helped its cause with better than expected second-quarter results, reported on August 6.

Second-Quarter Results

Revenue was up $700,000 from last year to $35.8 million. Earnings came in at 59 cents per share, 14 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last 4 quarters by an average of 11 cents, or 24%.

Estimates Up

Estimates have been trending higher of the last few months, with the current year adding 18 cents and climbing to $2.09. The next-year estimate is also up 18 cents to $2.20, a modest 5%.

Valuation

Based on the current-year estimate, this stock has a P/E multiple of 13X, a discount to the overall market.

The Chart

Shares of TLP have been rallying big for the last 6 months, jumping from just above $14 in early March to a recent high above $28, where some short-term resistance has developed. Take a look below.

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(TLP) TransMontaigne Partners LP – Trades at a Discount to Overall Market

The planned conduit is estimated to cost approximately $250 million and will transport about 100,000 barrels of oil per day to a subsea connection on existing deepwater pipeline infrastructure. It will be located approximately 170 miles south of the Louisiana coast and reach depths of up to 5,900 feet below water.

The proposed Big Foot pipeline will complement Enbridge’s previously announced plans to build the Walker Ridge offshore natural gas pipeline in the area for $500 million. Thus the company has committed a total of $750 million in pipelines to service oil and gas exploration from the Gulf. Enbridge said that the equity component of the projects will be financed through internally generated cash flow and surplus balance-sheet equity.

We believe the Big Foot deal will further strengthen Enbridge’s position as the leading pipeline services provider in the deepwater Gulf of Mexico region, which has substantial production growth potential. Together with the Walker Ridge development, this will also ensure the extension of the company’s 10 percent-plus average growth rate well beyond 2013.

Enbridge, a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world’s longest crude oil and liquids pipeline system. The company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada’s largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State.

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(ENB) Enbridge Signs Gulf of Mexico Pipeline Deal

As part of the transaction, Kinder Morgan purchased approximately 290 amine-treating and dew-point control plants from natural gas company Crosstex. These plants are primarily located in Texas and Louisiana , with additional facilities in Mississippi , Oklahoma , Arkansas and Kansas.

Kinder Morgan will use these natural gas treatment plants in servicing its Texas Intrastate customers and to other producers in various supply basins, including the fast growing shale plays. Following the deal, Kinder Morgan has become the largest provider of contracted natural gas treating services in the country.

The Crosstex asset acquisition will allow the partnership to expand its natural gas business through the inclusion of additional fee-based assets that produce stable cash flows. Kinder Morgan expects the transaction to be immediately accretive and to add value to its business.

Houston-based Kinder Morgan Energy Partners L.P. is the largest independent owner and operator of petroleum product pipelines in the U.S. , transporting nearly 2 million barrels per day of gasoline, jet fuel, diesel fuel, and natural gas liquids. The partnership also has capacity to transport 7 billion cubic feet/day (Bcf/d) of natural gas. It owns or operates more than 26,000 miles of pipeline and approximately 170 terminals. The terminals store petroleum products and chemicals, besides handling bulk materials like coal and petroleum coke. Kinder Morgan is also the largest carbon dioxide marketer and transporter in the country.

We currently rate Kinder Morgan units as Neutral.

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(KMP) Kinder Morgan Energy Partners Completes Crosstex Energy Buy

The Transco natural gas pipeline is a 10,500-mile pipeline system that carries natural gas to markets all over the northeastern and southeastern U.S. The current expansion is expected to boost the total system capacity to almost 8.5 billion cubic feet per day.

Known as the 85 North expansion project, the new service would be implemented in two phases. The first phase would increase capacity by 90 Mdt/d by summer 2010, while the second phase would raise capacity by 218.5 Mdt/d by summer 2011. Phase I construction is slated to begin this fall, while work on the second phase is scheduled to get underway next summer.

The project, with an estimated cost of $248 million, will require construction of nearly 22 miles of 42-inch pipeline along with a new 20,500hp compressor facility in Anderson County, South Carolina, and modifications to existing compressor facilities.

The FERC approval will allow Williams to move forward with its plan for the 85 North project, which will connect ramped up volumes at Transco’s two new pipeline interconnects at Station 85 to growing downstream markets in the southeastern U.S. We currently rate Williams shares as Neutral.

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(WMB) Williams Companies to Expand Transco Pipeline

The partnership operates the largest intrastate pipeline system in Texas, with nearly 8,000 miles of pipeline in the state. The new pipeline, which runs from Maypearl to Henderson, will expand Energy Transfer’s take away capacity in Texas by 1.1 billion cubic feet per day (Bcf/d). It connects the partnership’s existing central and north Texas infrastructure to its east Texas pipeline network. With the addition of compression, the pipeline capacity may be expanded to over 1.75 Bcf/d.

The natural gas and propane gas distributor also announced the completion of the Rulison expansion project in Colorado, which includes the 10-mile, 24-inch Rulison pipeline and the Holmes Mesa compressor station (with more than 9,000 horsepower in compression) in Garfield County, Colorado.

These initiatives will increase the capacity of Energy Transfer’s South Parachute-Rifle pipeline system. Additionally, the project will create a new opening for producers to access the Meeker processing plant at the White River Hub. To begin with, the Rulison pipeline will add more than 70 million cubic feet per day (MMcf/d) of capacity that can be expanded to over 200 MMcf/d at a later stage.

We view these developments as an integral part of Energy Transfer’s overall expansion efforts to increase the takeaway capacity of its pipeline systems nationwide.

Dallas-based Energy Transfer Partners L.P. is a master limited partnership owning and operating a diversified portfolio of energy assets. The partnership’s natural gas operations include miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas.

We currently rate Energy Transfer units as Underperform.
Read the full analyst report on “ETP”
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(ETP) Energy Transfer Partners Completes Texas Pipeline

Kinder Morgan is purchasing approximately 290 amine-treating and dew-point control plants. These are predominantly located in Texas and Louisiana, with additional facilities in Mississippi, Oklahoma, Arkansas and Kansas.

Acquisitions remain a growth avenue for Kinder Morgan, and the partnership has been particularly active on this front. The latest on this front is the December 2008 purchase of a liquids terminal in Phoenix, Arizona from ConocoPhillips (COP) for roughly $29 million. In August 2008, Kinder Morgan also acquired 2 pipeline systems from Knight Inc. (a private entity that owns the partnership’s GP) for about $116 million in Kinder Morgan units. These transactions are already accretive to cash available for distribution to the unitholders.

The recently acquired Crosstex natural gas treating business is fee-based and non-regulated, which will produce a stable cash flow. Upon completion of the deal (expected in the fourth quarter of this year), the acquisition is expected to be accretive to cash distributable to unitholders. The partnership is expected to offer natural gas treating services to its Texas intrastate customers and to other producers in various supply basins, including the rapidly developing shale plays.

A focus on fee-based and diversified businesses enabled the partnership to spread out its business risks and provided it with a stable and growing earnings profile. We believe that midstream players such as Kinder Morgan – that have strategically located assets and that can connect growing supply sources with areas of increasing demand – are in a good position to achieve sustainable distribution growth. However, these positives are already reflected in Kinder Morgan’s valuation, leaving little room for upside from the current level. Consequently, we recommend a Neutral rating.

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(KMP) Kinder Morgan Acquires Crosstex Energy’s Gas Treating Business

The transaction comprises $90 million cash disbursement, distribution of 1.9 million common units of PAA at $90 million and deferred cash consideration of up to $40 million, which is conditional upon achievement of certain performance targets over the next few years. The deal is expected to close by Sept. 3.

As of June 30, PNGS had around $450 million in debt and nearly $52 million of cash. PAA will pay off the outstanding project finance debt by using the unit’s cash and available credit line.

Management is optimistic about the near-term and long-term prospects of the natural gas storage business and sees the deal to be accretive to earnings immediately. Moreover, it sees the deal enhancing Plains’ strategic flexibility going forward with regard to organic as well as inorganic growth objectives.

The cash flows from the PNGS business are fee-based and largely committed under long-term contracts running up to ten years. Plains continues to expand storage capacity at its Pine Prairie facility to boost cash flows from this division.

Plains closed at $47.25 on Friday, generating a distribution yield of 7.7% versus 7.0% of the peer group. We maintain our Neutral recommendation for the partnership.

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(PAA) Plains All American Pipeline Buys Stake in PAA Natural Gas Storage

The FERC had earlier alleged that Energy Transfer employed a complicated scheme to artificially suppress the price of physical natural gas at the Houston Ship Channel in September and November 2005, and then report the manipulated prices to a widely circulated trade magazine.

The FERC is claiming $69.9 million in disgorgement of profits, as well as interest, and $82 million in civil penalties associated with these market manipulation claims. At the time, Energy Transfer denied any wrongdoing.

We welcome the news of the settlement as we believe that prompt resolution of the issue is in the best interest of Energy Transfer’s customers and unitholders.

Dallas, Texas-based Energy Transfer Partners L.P. is a master limited partnership owning and operating a diversified portfolio of energy assets. The partnership’s natural gas operations includes miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas.

We currently rate Energy Transfer units as Underperform.

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(ETP) Energy Transfer Partners Settles Dispute

However, four environmental organizations have vowed to legally challenge the decision as they argue that the pipeline will bring greenhouse-gas intensive oil sands crude from Canada, thereby contributing to global warming.

The company, together with its 12% owned master limited partnership Enbridge Energy Partners LP (EEP), is developing the $3.2 billion Alberta Clipper project. It involves construction of a 1000 mile, 36-inch diameter, heavy crude oil pipeline from Hardisty, Alberta to Superior, Wisconsin, with an initial capacity of 450,000 barrels per day (Bbl/d), eventually expandable to 800,000 Bbl/d by adding pump and terminal stations.

Following receipt of the permit, Enbridge will immediately begin construction on the US leg of the project (approximately 330 miles of the new pipeline), expected to cost around $1.2 billion. The first part of the project (capacity of 450,000 Bbl/d) is expected to be in service by mid-2010.

Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America. It is also increasingly getting involved in natural gas transmission and midstream businesses. Enbridge owns and operates Canada’s largest natural gas distribution company and provides distribution services in Ontario, Quebec, New Brunswick and New York State. We currently have Neutral recommendation for both Enbridge and Enbridge Energy Partners.

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(ENB) Enbridge Secures Tar Sands Crude Oil Pipeline Permit