Friday, September 5, 2014

DCP Midstream Partners: This Dropdown-Powered Growth Story Deserves Your Attention

This article was originally published by Seeking Alpha on August 27, 2014

Summary: DCP Midstream Partners is backed by a joint venture of Spectra Energy and Phillips 66. DCP Midstream Partners' latest quarterly results came in well below analysts’ estimates. However, there are several factors at work that will continue to support DCP Midstream Partners' growth in the coming years.

DCP Midstream Partners (NYSE:DPM) is a nine-year-old master limited partnership formed by DCP Midstream LLC and operates mainly in Midcontinent, Eagle Ford, DJ Basin and the Permian Basin. The partnership comes with an enviable track record of increasing its distributions for 15 consecutive quarters, and it might continue going this way.

Who is DCP Midstream?

DCP Midstream LLC is a 50-50 joint venture between Spectra Energy (NYSE:SE) and Phillips 66 (NYSE:PSX). With processing volumes of 8.5 million BTU of gas per day and NGL production of 450,000 barrels per day, DCP Midstream LLC is the biggest natural gas processor and the leading producer of natural gas liquids in the U.S. The company owns 20.6% limited partner interest and 2.1% general partner interest in the MLP.

DCP Midstream Partners, on the other hand, operates in three segments: natural gas services in which the company provides various services such as gathering, processing and transportation of natural gas and fractionating NGLs, NGL logistics and wholesale propane logistics segments.

The natural gas services segment forms the backbone of the partnership's operations. In the previous quarter, DCP Midstream Partners generated more than 90% of its revenues from natural gas services, nearly 7% from … read full article at Seeking Alpha