Boardwalk Pipeline Partners, LP (BWP), Loews Corporation (L): Why a Supportive Parent Company Is Key to Success

When I was a kid we had this family joke that my brother and I could always go to the “Bank of Dad” to bail us out when we were short on funds. Not only that, but our dad was also great about co-signing on loans for us so that we were able to establish credit early on. The support of our parents proved to be very beneficial to our success in life.

That’s why when I look at Boardwalk Pipeline Partners, LP (NYSE:BWP), I can’t help but be reminded of the importance of having a supportive parent. Boardwalk Pipeline Partners, LP (NYSE:BWP)’s parent, Loews Corporation (NYSE:L), reminds me a lot of my own parents in how it goes above and beyond to ensure that Boardwalk Pipeline Partners, LP (NYSE:BWP) is a success. The relationship is a real competitive advantage that investors shouldn’t overlook.

In the past, Loews Corporation (NYSE:L) has helped Boardwalk Pipeline Partners, LP (NYSE:BWP) to grow its business by using its financial firepower to acquire stakes in the assets Boardwalk Pipeline Partners, LP (NYSE:BWP) wants to acquire. This enables Boardwalk to move quickly to acquire an asset it wants without having to worry about funding. When it’s in a better position it can acquire the stake that Loews Corporation (NYSE:L) took.

For example, last year Loews Corporation (NYSE:L) helped Boardwalk Pipeline Partners, LP (NYSE:BWP) on a $625 million deal whereby a wholly owned subsidiary of Loews Corporation (NYSE:L) took a 67% stake in the asset. Shortly thereafter Boardwalk purchased the remaining interest. It’s this arrangement with Loews Corporation (NYSE:L) that enables Boardwalk to grow faster than it would if it was on its own.

Not only that, but Loews is now going the extra mile to ensure that an important project Boardwalk is working on is a success. Earlier this year, Boardwalk signed a joint venture agreement with Williams Companies, Inc. (NYSE:WMB) surrounding the Bluegrass Pipeline. The proposed project would take natural gas liquids from the Marcellus and Utica to the Gulf Coast. It’s the second such project as it follows in the footsteps of Enterprise Products Partners L.P. (NYSE:EPD) ATEX Express, but as the following chart shows, there is more than enough room for both projects.

Source: Williams Investor Presentation (link opens a PDF)