Enterprise Products Partners LP on Sept. 9 announced it would cancel the 450,000 bbl/d Midland-to-ECHO 4 crude oil pipeline project (M2E4). The move includes amended agreements with certain customers that allow the company to use existing pipelines to support crude oil transportation.

The amendments also provide for the reduction of near-term volume commitments in exchange for extending the term of the agreements.

Simmons Energy called it “a sensible move in light of excess Permian long haul crude oil pipeline capacity.” The analysts noted that, based on currently sanctioned projects, Enterprise expects growth capex (net of contributions from JV partners) to be $2.8 billion in 2020, compared to prior guidance of $2.5 billion to $3 billion. For 2021, growth capex will be $1.6 billion, compared to prior guidance of $2.5 billion and $900 million in 2022, compare to prior guidance of about $1.5 billion.

Tudor, Pickering, Holt & Co. also applauded the move.

“With M2E4 previously not expected to enter service until (the second half of 2021), material improvement in near-term cash flow outweighs more modest impact on 2022 earnings and we continue to rank the equity as our preferred holding among U.S. large caps,” the analysts wrote.

Enterprise said it does not expect approval in 2020 for its SPOT offshore oil terminal, 30 miles offshore Freeport, Texas. As a result of the cancellation, the company expects to record an impairment charge of about $45 million to its earnings for third-quarter 2020.

“We are very proud of our commercial team for responding and working with our customers to amend these long-term agreements,” A.J. “Jim” Teague, co-CEO of Enterprise’s general partner, said in a statement. “This is another example of Enterprise working with customers for a ‘win/win’ solution that allows our customers and Enterprise to better allocate capital during the challenging times of the current economic cycle while retaining long-term, fee-based volumes and revenues for our assets. The capital savings from the cancellation of M2E4 will accelerate Enterprise toward being discretionary free cash flow positive, which would give us the flexibility to reduce debt and return additional capital to our partners, including through buybacks.”