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.
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 email@example.com To contact the editors responsible for this story: Susan Warren at +1-214-954-9455 or firstname.lastname@example.org Stephen Cunningham, Will Wade