DCP Midstream Partners, LP (DPM) is expected to act as the funding vehicle for its general partner, DCP Midstream LLC, which will provide visibility into future growth as the MLP grows annual distribution and maintains a well-positioned asset base, says Elvira Scotto, Director at RBC Capital Markets.
“DCP Midstream Partners is also a gathering-and-processing MLP, and we view it as a transformational story. Its general partner, DCP Midstream LLC, is the largest producer of natural gas liquids in the U.S. and has a well-positioned asset base with significant growth opportunities over the next few years,” Scotto said.
Scotto says a large part of the revenue at DPM comes from fees, lowering its exposure to shifts natural gas prices, and she expects the MLP to increase the dividend in the coming years.
“Importantly, about 90% of DCP Midstream’s anticipated 2013 margins are either fee-based or hedged, which mitigates commodity-price exposure. For DCP Midstream Partners, we expect about 7% to 8% annual distribution growth over the next couple of years,” Scotto said.
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