Enterprise Products Partners L.P. (EPD), a midstream energy company, Monday reported higher fourth-quarter profit, driven by strong revenues and a favorable impact from one-time items. The company said the revenue growth was driven by higher sales volumes and energy prices.
Enterprise Products reported fourth-quarter net income attributable to the company of $406.1 million or $0.60 per unit, compared with $228 million or $0.43 per unit a year ago. Net income was $439 million, up from $275 million in the prior-year quarter.
On average, 12 analysts polled by Thomson Reuters expected earnings of $0.49 per share for the quarter. Analysts' estimate typically excludes one-time items.
Enterprise Products said results for 2009 and 2008 have been recast to reflect the merger of Teppco Partners, L.P. with Enterprise as a reorganization of entities under common control in a manner similar to a pooling of interests. The merger was completed on October 26, 2009.
The company also said that net income for the fourth quarter of 2009 was positively impacted by items totaling approximately $49 million or $0.08 per unit. These items include the benefit of $24 million or $0.04 per unit related to the settlement of a rate case for Mid-America pipeline, $16 million or $0.03 per unit of proceeds received from insurance associated with the effects of Hurricanes Ike and Katrina, and $9 million or $0.01 per unit for insurance proceeds associated with the repairs of the flex joint on the Independence Trail pipeline in 2008.
For the preceding third quarter, Enterprise Products reported net income attributable to the company of $212.9 million or $0.36 per unit.
Enterprise Products' fourth-quarter revenues increased to $8.40 billion from $5.93 billion in the year-ago quarter primarily driven by an increase in sales volumes and energy prices. Four analysts had a consensus revenue estimate of $6.24 billion for the quarter. For the most recent quarter, the company's revenues were $4.60 billion.
Volumes of natural gas liquid, or NGL, crude oil, refined products and petrochemical pipeline rose 15% to 4.3 million barrels per day. Total natural gas pipeline volumes were 11.5 trillion British thermal units per day, or TBtud, up 2% from the same quarter in 2008.
The company attributed the growth in NGL, crude oil, refined products and petrochemical pipeline volumes to the Shenzi, Cameron Highway and Poseidon crude oil pipelines, the Mid-America and Seminole pipelines, and the NGL import/export terminal on the Houston Ship Channel and its associated pipeline.
NGL fractionation volumes increased 5% to 477 thousand barrels per day, or mbpd. Equity NGL production was 120 mbpd.
Gross operating margin was $865 million, up 33% from $651 million for the fourth quarter of 2008. This improvement was supported by the overall improvement in economic activity in the U.S. and globally, strong demand for NGLs by the petrochemical industry as an attractive alternative to more costly crude oil derivatives, natural gas and NGL production growth in the Rockies, and the rebound of crude oil, natural gas and NGL production from the Gulf of Mexico, which had been severely impacted by the effects of Hurricanes Gustav and Ike in the fourth quarter of 2008, Enterprise Products noted.
Based on business segments, NGL Pipelines & Services reported gross operating margin of $510.6 million, up from $354.1 million a year ago. Equity NGL production for the fourth quarter increased to 120 mbpd from 108 mbpd last year.
Onshore Natural Gas Pipelines & Services' gross operating margin declined to $110 million from $137.1 million in the previous year. Total onshore natural gas pipeline volumes were up 2% to 10.2 TBtud from 10.1 TBtud for the same quarter of 2008.
Onshore Crude Oil Pipelines & Services' gross operating margin reached $37.7 million, higher than $22.7 million in the prior-year quarter. Crude oil transportation volumes were 672 mbpd, compared to 715 mbpd last year.
Offshore Pipelines & Services recorded quarterly gross operating margin of $97.5 million, up from $53.7 million in the same quarter last year. Total offshore oil pipeline volumes grew to 387 mbpd from 109 mbpd in the same quarter of fiscal 2008.
Petrochemical & Refined Product Services generated fourth-quarter gross operating margin of $109.1 million, higher than last year's $83.8 million. Transportation volumes for the refined products and terminal business were 706 mbpd, compared with 712 mpbd a year ago. Propylene fractionation volumes increased 29% to 71 mbpd in the quarter. Related petrochemical pipeline transportation volumes grew to 104 mbpd from 93 mbpd in the fourth quarter of 2008.
Further, Enterprise Products' butane isomerization business reported isomerization volumes of 93 mbpd, up from 90 mbpd in the fourth quarter of 2008. Octane enhancement production increased to 13 mbpd from 12 mbpd in the prior-year quarter.
The company said it increased its cash distribution rate for the fourth quarter to $0.56 per unit, or $2.24 per unit on an annualized basis. This represents a 5.7% increase from the distribution rate paid with respect to the fourth quarter of 2008. The fourth-quarter distribution is payable on February 4.
Further, Enterprise Products stated that Affiliates of Enterprise Products Co., a private company controlled by Dan Duncan and the largest unitholder of Enterprise Products Partners L.P., have expressed their willingness to consider investing up to $200 million during 2010 to purchase additional partnership units from the company. This includes their commitment to reinvest $50 million through Enterprise Products' distribution reinvestment plan for the distribution to be paid on February 4 to purchase additional common units.
For fiscal 2009, Enterprise Products reported net income attributable to the company of $1.03 billion or $1.73 per unit, compared with $954 million or $1.84 per share in the previous year. Revenues declined to $25.51 billion from $35.47 billion a year ago. Wall Street analysts projected full-year earnings of $1.60 per share on revenues of $18.12 billion.
Among others in the sector, Spectra Energy Corp. (SE) is set to announce its fourth-quarter results on Feb 4. Street analysts forecast earnings of $0.34 per share on revenues of $1.22 billion.
Another peer, Williams Companies, Inc. (WMB) is expected to earn $0.33 per share for the fourth quarter when it announces results on February 18. They also project revenues of $2.34 billion.
Dynegy Inc. (DYN) is estimated to report a loss of $0.13 per share in the fourth quarter on revenues of $474.65 million.
EPD closed Friday's trading at $30.67, down $0.37, on a volume of 1.34 million shares.
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