2 Bakken Beauties and One with Warts: Continental Resources, Inc. (CLR), Kodiak Oil & Gas Corp (USA) (KOG)

Earnings, distributions and capital gains, tough to beat

Enterprise Products Partners L.P. (NYSE:EPD) is a Motley Fool CAPS five star stock, and the chart below shows why. Steadily increasing distributions and capital gains supported by earnings make Enterprise a showcase investment.

Enterprise provides transportation services, primarily through pipeline assets, to energy producers in the US, including those shipping Bakken oil to Cushing, OK. Fiscal year 2012 saw Enterprise achieve record net income, earnings per share, and distributable cash flow. The company completed $2.9 billion in capex that began to generate revenue and another $2.4 billion is slated for 2013, and another $4.8 billion through the middle of 2015.

Enterprise shrewdly expands or builds pipelines typically only after securing long term contracts for their use, ensuring future revenue. Expanding its Seaway pipeline from Cushing to the Gulf Coast, and its recent announcement regarding a Gulf Coast ethane pipeline, exemplify this strategy.

2013 started well, with expanded operations from Enterprise’s LPG export terminal in Texas. Export capacity almost doubled from 4 million barrels/month to 7.5 million barrels/month. Capacity could grow to 10 million barrels/month by 2015. According to the company’s Q4 conference call, this expanded export capacity should improve prices for ethane, as well as other NGLs. So while Q4 2012 weakened relative to Q4 2011, Enterprise looks well positioned to deliver increasing revenues and distributions.

Final Foolish Thoughts

The chart below puts these three companies in perspective.

Continental Resources Inc. (NYSE:CLR) and Enterprise outperformed Kodiak, particularly since 2010. Enterprise pays a growing distribution, further adding value to shareholders. Kodiak Oil & Gas Corp (USA) (NYSE:KOG) delivered returns over five years, but as a conservative investor, I recommend waiting until they post consistent earnings before investing. Otherwise, you invest in hope rather than results. Particularly for income purposes, Enterprise stands above the rest. Bakken energy will enrich many, and Enterprise shareholders will surely be among them.

The article 2 Bakken Beauties and One with Warts originally appeared on Fool.com and is written by Robert Zimmerman.

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