Top Picks 2017: Enlink Midstream Partners

01/05/2017 6:00 am EST

Focus: STOCKS

Elliott Gue

Editor and Publisher, Energy and Income Advisor and Capitalist Times

Our Top Pick for income is an MLP operating in two of the most prolific and economic shale fields in the US -- the Permian Basin of West Texas and New Mexico and the STACK/SCOOP fields of Oklahoma, observes Elliott Gue, editor of Energy and Income Advisor.

EnLink Midstream Partners (ENLK) is sponsored by independent oil and gas exploration giant Devon Energy (DVN), the owner of this acreage.

These basins offer superior economics and EnLink’s close relationship with Devon provides leveraged exposure to the upstream operator’s accelerating activity in these plays.

Including rigs run by Devon and other producers, 12 units are drilling actively in EnLink Midstream Partners’ service territory as of the end of 2016.

Since acquiring and integrating privately held Tall Oak Midstream earlier this year, EnLink Midstream Partners has grown the throughput volumes on its gas-processing plants in central Oklahoma by about 85 percent.

The start-up of its Chisholm II plant will give the MLP 800 million cubic feet per day of processing capacity in the region, up from 350 million cubic feet per day in 2015.

In addition, EnLink Midstream Partners’ exposure to growing production of natural gas liquids (NGL) bodes well for its Cajun-Sibon system in Louisiana, which fractionates the mixed NGL stream and provides connections to key end markets on the Gulf Coast.

This tailwind should help the Cajun-Sibon system to operate at full capacity in the second quarter of 2017 and create additional growth opportunities. With a yield of 8.5%, Enlink rates a buy under $20.

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