On Thursday, BofA Securities adjusted its outlook on Enterprise Products Partners L.P. (NYSE:EPD), a leading North American provider of midstream energy services. The firm's analyst increased the share price target to $32.00 from the previous $31.00, while reiterating a Buy rating.
The update from BofA Securities follows Enterprise Products Partners' recent one-hour update call, which served as an alternative to the company's usual annual Houston analyst day. During the call, Enterprise Products shared a broadly positive fundamental forecast, particularly highlighting the prospects of the Permian Basin.
Enterprise Products estimates that crude production in the Permian will reach 7.5 million barrels per day by the end of 2030, marking a slight decrease from earlier projections. However, the company emphasized that the estimates for natural gas liquids (NGL) and gas production over the same period remain consistent, as the basin is expected to yield a higher gas to oil ratio.
The company made a comparison to Kinder Morgan (NYSE:KMI) Texas Pipeline LLC (KNTK), noting the trend towards drilling in gassier, yet still predominantly oil-focused benches within both the Delaware and Midland sub-basins. This drilling approach is significant because associated gas typically has lower decline rates than oil, which supports Enterprise Products' strategy to transport NGL volumes from the wellhead to export facilities at scale.
Enterprise Products Partners aims to continue expanding its hydrocarbon export capabilities, with a target to achieve 100 million barrels per month. The company's focus on the Permian Basin and its infrastructure to support NGL and gas exports underscores its strategic position in the energy market.
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