Enterprise Products Partners Shares New Details on SPOT at Analyst Day

One of the more interesting and material projects Enterprise Products Partners EPD has been engaged in over the past few years is the Sea Port Oil Terminal. SPOT is an offshore oil export terminal that could move up to 2 million barrels per day and materially change the demand-pull dynamics of oil toward the Gulf Coast if approved. SPOT has been a work in progress since 2019 and is not included in our model. If approved by Enterprise, we estimate it could contribute about $500 million in annual EBITDA based on a full cost of $3 billion-$4 billion. Enterprise has obtained several approvals already, and another license from the U.S. Maritime Administration could arrive this summer. As Enterprise has yet to make a final investment decision on SPOT, our $27.50 fair value estimate and wide moat rating are unchanged.

At its latest analyst day, Enterprise shared a few more details on the project’s progress. From a permitting perspective, the original January 2019 permit application of about 10,000 pages was expected to have a decision by January 2020; instead, the application increased to about 30,000 pages and cost $50 million before obtaining a decision in November 2022. The initial approvals are attracting customers compared with other projects that are not as far along in the permitting process. While contracting is in progress now, Enterprise is seeing interest from U.S. producers to anchor the terminal but also crude traders with shipping capacity seeking to take advantage of arbitrage opportunities. Enterprise remains open to a potential joint-venture partner.