Unleash The Lumberjacks! DAPL And Tree Clearing

“The DC Circuit Court denied a plea by the Cheyenne River Sioux to have Dakota Access Pipeline (DAPL) construction stopped,” Baird’s Ethan H. Bellamy said in a note.

The analyst maintained an Outperform rating on Energy Transfer Partners LP (NYSE: ETP), with a price target of $45.

Tight Timeline

Bellamy also reported that the FERC had allowed for partial tree clearing for the Rover Pipeline to be started. This pipeline’s timeline is “precariously tight,” although it does allow for service in 2017 if the FERC staff moved “judiciously.”

The analyst believes that Judge James Boasberg’s ruling indicated that flowing oil, rather than the construction itself, would be needed to ask for an injunction or restraining order in his response to the objection raised by Cheyenne Sioux.

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The Dakota Access Pipeline attorneys suggested a shorter timeline for completion of as little as 30 days, which means that the pipeline could started earlier than expected in mid-Q2 2017, with the next hearing scheduled for February 27.

Tree Clearing

For the Rover Pipeline, tree clearing needs to be completed by March 31 to accommodate wildlife, otherwise Energy Transfer Partners would need to wait for a full year to start construction.

“ETP told us that it would take another 1-2 weeks for approval for the remaining route’s clearance,” the analyst stated.

Value Add

Bellamy estimates that these two megaprojects would contribute $6/unit to Energy Transfer Partners.

The analyst also believes that the closing of the joint venture sale of Dakota Access would be completed within the next day or so, which would unlock $2 billion in refinancing, “a critical balance sheet milestone.”

This would add to the incremental $1.4 billion project credit facility the company already has.