Bloomberg News

Enterprise Products Profit Rises on Oil and Gas Volumes

May 01, 2014

Enterprise Products Partners LP (EPD:US), the biggest U.S. pipeline operator by market value, said first-quarter profit rose 6 percent as the U.S. shale drilling boom boosted demand for fuel transport.

Net income (EPD:US) climbed to $798.8 million, or 85 cents a share, from $753.5 million, or 83 cents, a year earlier, the Houston-based company said in a statement today. The per-share results beat analysts’ estimates for the quarter, as did revenue, which jumped 13 percent to $12.9 billion.

U.S. oil and natural gas production has surged to its highest level in decades, propelled by drilling in shale-rock formations such as the Eagle Ford in Texas and the Marcellus in Pennsylvania. Enterprise said its pipelines carried 5.1 million barrels a day of crude oil, propane, butane and other products in the quarter, a 14 percent increase over a year earlier.

“This is more of a supply-driven story at this point,” said Stewart Glickman, a New York-based analyst with S&P Capital IQ, in a telephone interview today. “They beat estimates and they beat pretty handily.”

The company benefited from $2.5 billion worth of projects that came online in the quarter, including the Atex pipeline carrying supplies from the Marcellus to the Texas Gulf Coast.

Higher Volumes

Kinder Morgan Energy Partners LP (KMP:US), the second-biggest pipeline company, reported rising revenue and cash flows on April 16, on the strength of higher gas volumes. Chief Executive Officer Richard Kinder told analysts on a conference call that supplies out of the Marcellus and Utica shale regions could reach “mind-boggling” levels, boosting pipelines that take a fee to transport the fuels.

Enterprise owns about 50,000 miles (80,450 kilometers) of on- and offshore pipelines, 14 billion cubic feet of gas storage capacity, processing plants and a marine transport business.

The results were announced before the start of regular trading on U.S. markets. Enterprise Products fell less than 1 percent to $73.03 at the close in New York.

Distributable cash flow (EPD:US) increased 19 percent in the quarter to $1.07 billion. The figure is watched closely by investors because Enterprise is a master-limited partnership, or MLP, a type of energy infrastructure company that distributes most of its cash to shareholders each quarter. Enterprise last month raised its quarterly distribution to unitholders by 6 percent to 71 cents.

“Results should be strong across the midstream industry as weather was cold, pipes ran as full as they have in years, storage was withdrawn to all-time lows in many cases,” and propane prices surged, Bradley Olsen, a Tudor, Pickering, Holt & Co. analyst in Houston, said in an April 15 note to clients.

To contact the reporter on this story: Alex Nussbaum in New York at +1-212-617-5406 or anussbaum1@bloomberg.net To contact the editors responsible for this story: Susan Warren at +1-214-954-9455 or susanwarren@bloomberg.net Stephen Cunningham, Will Wade


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