It's no secret that Energy Transfer Partners (NYSE:ETP) is coming up a little bit short of investors' expectations right now. The midstream master limited partnership has held off on increasing its unit distributions for some time now, much to the chagrin of unitholders. Many are holding on to the hope that an increase will come next year, and I have created a premium report on Energy Transfer Partners to help investors examine its future.
Following is an excerpt from the report, which focuses on the main risks facing the company. It's just a sample of one section, but we hope you enjoy.
- Continued cutbacks in dry gas production will hurt volumes across its system. Though ETP picked up 5,400 miles of crude oil pipelines from Sunoco, the bulk of its transportation system, some 24,000 miles, is still dedicated to natural gas. If low gas prices persist in the U.S. and producers continue to move rigs to oil plays, ETP will feel it.
- Commodity prices can impact certain segments of ETP's business. For example, in the second quarter of 2012 lower natural gas liquids prices negatively affected ETP's midstream segment. Though some of those losses were mitigated by increased NGL volumes, the only true way to avoid commodity risk is to increase the percentage of fee-based revenue streams.
- Increased asset complexity may prove to be a challenge for ETP's management. The company has no prior experience with the marketing and retail assets it acquired from Sunoco. Though many analysts anticipate that ETP will jettison the Sunoco service stations, no concrete plan has been announced. If ETP continues to hold those assets and can't manage them properly, the affects will certainly show up on the balance sheet.
- Civic and environmental opposition have stalled many major pipeline projects over the past year. Once almost unheard of in energy friendly regions like the Gulf Coast, midstream companies must now acknowledge that the days of rubber stamp project approvals are over, and public opposition can inhibit growth. Energy Transfer has begun to anticipate this risk, keeping the proposed reversal of its Trunkline pipeline system largely under wraps. The partnership plans to switch part of the line from natural gas to crude oil, and reverse the flow of the pipe so that it carries crude south to the Gulf Coast. It has made no public announcement of these plans, but is quietly seeking approval from the Federal Energy Regulatory Commission.
Looking for more guidance?
That was just a sample of our new premium report on Energy Transfer Partners. If you're weighing whether the company is a buy or sell, the report is an essential resource for investors seeking more information on the company. Not only that, but the report also comes with updated quarterly guidance and dives into upcoming catalysts on the horizon. To get started, simply click here now.
Fool contributor Aimee Duffy has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.