UPDATE: Credit Suisse Reiterates On Tallgrass Energy Partners LP As Pony Express Expansion Drives Further Upside

In a report published Friday, Credit Suisse analyst John Edwards reiterated an Outperform rating on Tallgrass Energy Partners LP (NYSE: TEP), and raised the price target from $48.00 to $53.00.

In the report, Credit Suisse noted, “Tallgrass announced its intent to add 400Mbpd of capacity to the Pony Express crude pipeline system, contingent on finding enough shipper interest to warrant an open season. Mgmt. mentioned that discussions with shippers are in progress for binding precedent agreements, following which an open season could commence in November. In our view, rising crude production in and around Pony Express' system should support it to successfully tie out these agreements. We are conservatively assigning a 50% probability (i.e. 200MBpd) to the project.

"Further, while the project is expected to become operational in 2H:16, committed shippers would have access to 100MBpd ofcapacity on the existing Pony Express system, thanks to drag reducing agents. In our view, this option of an earlier takeaway solution would motivate customers to sign contracts with Tallgrass. While we are holding our forecasts, we are adding the expected accretion (~$5/unit) from the expansion to our TP, after assigning a 50% probability to the project.”

Tallgrass Energy Partners LP closed on Thursday at $43.43.