Enterprise Products Partners L.P. (NYSE:EPD)‘ combined 2012 and (estimated) 2013 growth budget is $7.8 billion. It expects to spend $1.9 billion – nearly one-fourth of that — on the Eagle Ford over the period. That’s a lot for a huge company that does business all over the country. The Eagle Ford is obviously a big focus for Enterprise Products Partners L.P. (NYSE:EPD).
With long term debt of $15.5 billion and annual cash flow from operations of $1.2 billion, the company’s balance sheet is riskier than ONEOK’s, but it also offers better growth and higher dividends. All in all, the company isn’t cheap. It’s trading for more than 20 times free cash flow. But that’s the price of growth.
An octopus with many arms
Kinder Morgan Management, LLC (NYSE:KMR) is the third-largest energy company in America, with a total combined enterprise value of over $110 billion. It’s got assets in or near most of the major hydrocarbon-producing regions in the country, including the Bakken, Marcellus and Eagle Ford Shales.
Kinder Morgan Management, LLC (NYSE:KMR) spent $142 million to buy 42 acres of land so it can build a new ship dock connected to its Galena Park Terminal in the Houston Ship Channel, including 1.4 million barrels of storage tanks. It bought another 20 acres next to its Pasadena terminal for a future crude-condensate shipping and storage terminal, with 1.2 million barrels of storage. It will also build a new barge dock to help relieve congestion.
Kinder Morgan Management, LLC (NYSE:KMR) owns the Camino Real natural gas and oil gathering pipeline system in the Eagle Ford. It also owns 25% of EagleHawk Field Services and 50% of Eagle Ford Gathering, providing natural gas and condensate gathering, processing, and transportation in the Eagle Ford. Kinder Morgan Management, LLC (NYSE:KMR) is currently trading for roughly seven times free cash flow. That’s dirt-cheap.
My Foolish takeaway
Energy based MLPs are a great investment option. They offer both a “utility like” reliable stream of income, with a great upside potential as the gas business in the U.S will reach new highs. All three MLPs above exhibit a strong balance sheet, consistent cash flow stream, and a rewarding upside potential.
I believe that of all three, Oneok Partners LP (NYSE:OKS) will end up as the most successful MLP. It currently has a relatively low dividend yield (only 5.7%) which leaves plenty of room for a possible dividend hike. In addition, I believe that ONEOK’s investment in the first pipeline ever to transport NGLs from the Williston Basin to key market centers will prove to be a true bonanza for the company and its shareholders. NGL is a fast-growing business and ONEOK puts an great focus on it. Invest accordingly.
The article Earn Great Income With Upside Potential originally appeared on Fool.com and is written by Shmulik Karpf.
Shmulik Karpf has no position in any stocks mentioned. The Motley Fool recommends ONEOK Partners, L.P. Shmulik is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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