Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Enbridge Energy Partners is selling a 12.6% interest in its mid-stream natural gas business Midcoast Operating, L.P. to Midcoast Energy Partners, L.P. (NYSE:MEP) for $350 million. This is a drop-down of assets. After the deal Enbridge Partners will retain 48.4% of the limited partnership Midcoast Operating.
Now what: One of the goals here is to increase liquidity to fund a multi-billion dollar liquids pipeline at Enbridge Partners while still holding an economic interest in the mid-stream natural gas business. Incrementally the deal will add liquidity, but the bigger driver of value long-term comes from a pipeline replacement plan that could cost $7.5 billion. At the end of the day, I don't think this fundamentally changes the investment thesis in any of these three companies, it just shifts assets around -- something oil and gas companies are doing a lot of these days.
Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Enbridge Energy Partners. 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.
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