2012-01-30
Enterprise Gets Ratings Upgrade on Strong Cash Flow, Expansion
Moody's Investors Service has upgraded Enterprise Products Operating LLC's (EPO) senior unsecured ratings to Baa2 from Baa3 and its junior subordinated notes to Baa3 from Ba1.
The rating outlook remains positive.
EPO is the primary operating subsidiary of Enterprise Products Partners LP (Enterprise) and issues substantially all of Enterprise's debt.
Enterprise's operations included natural gas gathering, processing, transportation and storage; natural gas liquids fractionation, transportation and storage; oil pipelines; offshore production platform services; transportation and storage of refined products; gathering, transportation, marketing and storage of crude oil; and petrochemical services.
"The upgrade to Baa2 reflects Enterprise's strong execution on its large capital expansion program, growing cash flows and good leverage metrics," said Pete Speer, Moody's vice president.
"The positive outlook points to the potential that continued execution on its organic growth projects while maintaining a strong financial profile could result in another ratings upgrade for Enterprise in 2013," he added.
Moody's pointed out that Enterprise's assets are highly interconnected and have direct links to key markets for the various commodity products that Enterprise processes and transports.
The partnership has a straightforward corporate structure and low overall cost of capital due to its elimination of incentive distribution rights for its General Partner.
Enterprise's timely equity issuances, high levels of retained distributable cash flow relative to peers, steady disposition of its equity interests in Energy Transfer Equity LP and strong earnings growth has enabled the partnership to end 2011 with Debt/EBITDA under 4x despite growth capital expenditures in excess of $3.5 billion.
In addition, the owner of the partnership's general partner, EPCO Holdings Inc. (EPCO), has reduced its debt at a faster-than-expected pace, reducing the secondary debt burden on Enterprise's assets and lowering the overall family leverage metrics.
Enterprise's large asset footprint has enabled it to continue to seize on producer demand for new infrastructure driven by rising natural gas liquid and oil production from development of shale and other unconventional reservoirs.
Consequently, the partnership's capital expenditures will remain at high levels in 2012 and into 2013.
"We also expect EPCO to continue to significantly reduce its debt levels over the next two years," Enterprise said.
"If Enterprise continues to complete its capital projects largely within budget, achieve the forecasted fee-based earnings growth and sustain strong leverage metrics then the ratings could be upgraded to Baa1 in 2013," it said.
Debt/EBITDA, including EPCO debt, sustained at or below 4x would be supportive of an upgrade.
While unlikely given current trends, a ratings downgrade is possible if Enterprise's commodity price exposure resulted in materially higher cash flow volatility than anticipated; if the partnership were to expand into activities that significantly increase its business risk; or if the capital projects experience large cost overruns and delays.
Debt/EBITDA above 4.5x on a sustained basis could result in a ratings downgrade.
2012-01-27
Plains to Build New N.D. Gas Processing Plant, Ready Spring 2013
Plains Gas Solutions (PGS) plans to construct a cryogenic gas processing plant with deep cut ethane plus recoveries and specification product fractionation capability at its existing Ross complex near Ross, N.D., its parent company Plains All American Pipeline said in a press statement.
The new gas plant is expected to process 50-75 million cubic feet per day (MMCFD) of gas and is set to be in service in the spring of 2013.
The Ross complex has access to Plains' expanding Bakken area crude and NGL operations.
PGS has executed a letter of intent with an anchor customer to provide long- term natural gas supply for the plant, and is in active negotiations with additional potential customers to appropriately size the facility, Plains said.
The new facility will be capable of producing stabilized condensate, purity ethane, specification propane, as well as a butane plus raw-make NGL stream, and will deliver pipeline quality residue gas into Williston Basin Interstate Pipeline Company's transmission system at the tailgate of the facility, the company said.
In addition to the gas plant, PAA's Ross Complex already includes rail- loading and storage facilities, Plains said.
The NGL portion and the first phase of the crude portion of the rail facility were recently commissioned with a design capacity to trans-load 8,500 b/d NGLs and 20,000 b/d of crude.
The second phase of the crude facility is targeted to be in service by the fourth quarter of 2012.
It will provide unit train loading capability of up to 65,000 b/d and will be served by a new 16-mile, 10" crude pipeline extending from PAA's Robinson Lake pipeline near Stanley, N.D. to the Ross Complex, the company said.
2012-01-25
Canada Considering Nat Gas Pipeline Extension
Canada's National Energy Board is considering NOVA Gas Transmission Ltd.'s application to extend the Komie North portion of its natural gas system in northeastern British Columbia and northwestern Alberta.
The project includes the construction and operation of two new pipeline sections and related facilities.
The Komie North Section would be located approximately 110 km north of Fort Nelson, B.C. This first leg of the project would consist of building approximately 97 km of 914 mm (36 inch) outside diameter pipeline with a starting point near the proposed Fortune Creek Meter Station with a tie-in point on the Horn River Mainline (Cabin Section) near the Encana Cabin Gas Plant.
The Chinchaga Section would be about 76 km northwest of Manning, AB. This second segment involves the construction of approximately 33 km of 1,219 mm (48 inch) outside diameter pipeline and would be built alongside the existing Chinchaga Lateral Loop No. 3 from the Chinchaga Meter Station to a tie-in point at the Meikle River Compressor Station.
NGTL is proposing to start clearing during winter 2012-2013, proceed with construction during fall and winter 2013-2014 and be ready for operation by the second quarter of 2014.
NGTL is a wholly-owned subsidiary of TransCanada.