Crosstex Energy L.P. (Nasdaq:XTEX) has budgeted nearly $300 million in capital for growth projects in 2012, with the funds spent to expand the company's natural gas liquids, crude oil and gathering and processing businesses during the year.
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2012 Growth Capital
Crosstex Energy has allocated $294 million in capital spending in 2012, with the majority of the funds spent to expand the company's natural gas liquids business.
Its businesses are spread across the Midstream area, and include nearly 3,000 miles of natural gas gathering and transmission pipeline, natural gas processing plants, fractionators and natural gas liquids pipelines. These assets are located mostly in Texas and Louisiana.
SEE: Oil And Gas Industry Primer
Cajun Sibon Expansion
The company has a two phase expansion planned for the Cajun Sibon natural gas liquids pipeline in Texas, and plans to spend $175 million on this project in 2012. The pipeline will run 130 miles across Texas and Louisiana and will be in operation in 2013. It will also add to the company's fractionation assets as part of this project.
The first phase of Cajun Sibon will have a capacity of 70,000 barrels per day, and ultimately reach a capacity of 120,000 barrels per day when the second part of the expansion is completed in 2014.
It is also planning growth projects in the Permian Basin, and will spend $45 million here in 2012. The company is involved in a joint venture with Apache Corp (NYSE:APA) to construct a cryogenic processing plant to handle production in the area. The plant is expected to be operating by June 2012.
Crosstex recently purchased the Mesquite rail terminal in the Permian Basin to handle natural gas liquids. The facility is operational and may be expanded by the company in the future.
SEE: What Determines Oil Prices?
Howard Energy Partners
The company owns a 30.6% interest in Howard Energy Partners, which owns pipelines and other assets in south Texas. The partnership recently purchased midstream assets that serve the Eagle Ford Shale and plans to use this network as a platform for future growth. Quanta Services (NYSE:PWR) and General Electric (NYSE:GE) also have an ownership stake in Howard Energy Partners.
Operators that are active in the Eagle Ford Shale are ramping up development fairly quickly and need to secure gathering, processing and transportation services to handle future production. Anadarko Petroleum (NYSE:APC) just signed an agreement with a private midstream oil and gas company that is building a pipeline expansion in south Texas.
SEE: A Guide To Investing In Oil Markets
The Bottom Line
Crosstex Energy is riding the frenzied growth in domestic oil and gas drilling that has gripped the United States over the last two years. This boom should last for years and provide ample growth for this company and many others in the industry.
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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.