CS Take on MLPs
Weekly Analysis
Rockin with OKS in the Bakken
23 pages, 35 exhibits
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OKS Bakken Field Trip Takeaways: 1) Activity in the Bakken Shale
remains brisk. 130 rigs are working in the North Dakota Bakken, second only
to the 149 rigs working in the Eagle Ford. 2) ~100 MMcf/d of natural gas is
being flared because of the lack of infrastructure, or about 25-30% of the gas
produced in the Bakken. 3) OKS is the largest independent processor in the
Bakken Shale and has 1.7 million acres dedicated. 4) OKS is investing $1.5-
1.8 bn through 2013 in the Bakken at returns of 5 -7 times EBITDA.
PAA Analyst Day: 1) Reiterated 3-5% distribution growth with potential
upside from a sizable acquisition, 2) Gaining a presence in the Eagle Ford
with crude oil pipeline and dock project, 3) $600 mn 2011 growth capex and
target of $400-600 mn annually, 4) Crude oil pipeline expansions primarily in
the Permian and Bakken, 5) Near-term challenges remain in gas storage,
but PAA positive on long-term value of strategic storage assets. See pg 4.
DCP Midstream to Bring More NGLs to Belvieu: Last week, DCP
Midstream LLC announced the purchase of Seaway Products Pipeline from
COP. DCP plans to expand and convert the pipeline to NGL service to bring
150 MBbls/d of NGLs from the Midcontinent to the Gulf Coast. The total cost
is estimated to be $750-850 mn and the project is expected to come online
in mid-2013. If this project proceeds, DCP would likely drop existing assets
down to its MLP, DPM, to help finance the project, in our view. |
