Oppenheimer Reiterates Perform Rating On ETP

Oppenheimer is reiterating its Perform rating on Energy Transfer Partners (NYSE: ETP) after the announcement of a JV with Regency Energy Partners LP (NASDAQ: RGNC) and concurrent acquisition of Dreyfus assets for $1.35B (net).

“While we acknowledge the strategic value of the asset package purchased, we are concerned that the JV paid a rich multiple,” Oppenheimer writes. “Given ETP's high cost of capital (almost 40% of all distributions are paid to ETE), we believe this deal will be minimally accretive to DCFPU and have updated our model to reflect the acquisition.

“The transaction does not change our view that meaningful distribution growth at ETP will be difficult to achieve going forward. In addition, ETP has not communicated its plans to permanently finance the acquisition, which we believe will require a common equity issuance.”

Energy Transfer Partners closed Wednesday at $51.93.