Market Developments Good For EnLink

Citi analysts Mirek Zak and Faisel Khan told their clients in a research note they expect increased rig activity than they had initially expected. Their confidence came on the back of different producers transacting to EnLink. For instance, Pioneer would add three rigs to 15,000 acreages following the acquisition of acreage from Devon.

Moreover, the analysts believe the sale of asset offered capital to increase the rig to EnLink dedicated STACK acreage. As a result, there would be increased acreage in the third quarter with the possibility of adding further in the fourth quarter. Also, the brokerage pointed out that Marathon Oil's acquisition of PayRock Energy would boost MPC's STACK acreage.

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The two analysts said, "We believe that the increased focus on natural gas and refined product exports to Mexico by various midstream players bodes well for ENLK finding a buyer for its ~31 percent interest in Howard Energy Partners. We believe a sale would raise enough capital to fund ENLK's ~$200 million funding gap in 2016, helping avoid a potential equity issuance later in the year."

The Citi analysts stated in case the transaction failed to consummate, they still see Howard Energy as a good investment. They pointed out the company's successful demonstration on open seasons on projects for reaching such an opinion.

Similarly, for EnLink Midstream Partners LP ENLK, the brokerage maintained its Buy Rating and increased the price target to $17 from $16.

EnLink Midstream was down 1.75 percent at $15.13 at time of writing.