Enterprise Products profit rises as oil, gas volumes grow


Enterprise Products profit rises as oil, gas volumes grow


HOUSTON (Bloomberg) -- Enterprise Products Partners said first-quarter profit rose 6% as the U.S. shale drilling boom boosted demand for fuel transport.

Net income climbed to $798.8 mn, or 85 cents a share, from $753.5 mn, or 83 cents, a year earlier, Enterprise Products said in a statement. The per-share results beat analysts’ estimates for the quarter, as did revenue, which jumped 13% to $12.9 bn.

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 Products said its pipelines carried 5.1 MMbpd of crude oil, propane, butane and other products in the quarter, a 14% 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. “They beat estimates and they beat pretty handily.”

The company benefited from $2.5 bn 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, reported rising revenue and cash flows on April 16, on the strength of higher gas volumes. CEO 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 Products owns about 80,450 kms of on-and offshore pipelines, 14 Bcf of gas storage capacity, processing plants and a marine transport business.

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

Distributable cash flow increased 19% in the quarter to $1.07 bn. The figure is watched closely by investors because Enterprise Products is a master-limited partnership, or MLP, a type of energy infrastructure company that distributes most of its cash to shareholders each quarter. Enterprise Products previous month raised its quarterly distribution to unitholders by 6% 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be strong across the midstream industry as weather was cold, pipes ran as full as they have in years, storage was withdrawn to all-time lows in many cases,” and propane prices surged, Bradley Olsen, a Tudor, Pickering, Holt & Co. analyst in Houston, said in an April 15 note to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.

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