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Strategies & Market Trends : Value Investing
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To: Jim P. who wrote (39985)11/11/2010 10:24:41 AM
From: E_K_S  Read Replies (1) of 78673
 
Hi Jim -

I have WPZ on my MLP watch list. The company carries a lot of debt which seems to be typical of these midstream companies. You might also check out EPD as they have gathering & processing operations in the same area.

Enterprise Products Partners L.(NYSE: EPD)
Williams Partners L.P. Common U(NYSE: WPZ)

finance.yahoo.com

I started a small position in EPD in October and will add more if prices drop 10%. Based on the forward PE's of both companies WPZ seems to be the best value (but still a bit expensive). I will look at a starter position in WPZ on a 5% drop in the $42.00-$43.00 price range.

I really like the sector especially for it's growth potential. I wonder if there might be a better play by finding those E&P companies that have built their own gathering and processing facilities and are ready to sell their JV interests to a larger operator. Usually they sell up to a 50% interest which requires the JV partner to make a large lump sum payment. Usually the small E&P developer will rally on such an announcement and the JV partner is able to lock in more capacity for their distribution & processing operation(s).

Any thought of some names of smaller E&P developers in the region that have built (or are building) their own gathering & processing system(s) that might be ready to sell to a larger operator? I think this is where the value is hiding.

EKS
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