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.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
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.

Business Summary
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.

Permian Basin
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.

Fast Growth
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.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Options & Futures

    How To Buy Oil Options

    Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange.
  2. Stock Analysis

    The Top 5 Oil and Gas Penny Stocks for 2016 (XCO, CHK)

    Learn more about the oil and gas industry outlook, and discover the top five oil and gas penny stocks investors should consider for 2016.
  3. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  4. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  5. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
  6. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  7. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  8. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  9. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  10. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
Trading Center