Thursday February 14, 2013
by Roger Conrad, editor MLP Profits
Enterprise Products Partners LP (EPD) had a record year thanks to the high volumes resulting from production growth in the Eagle Ford and Haynesville Shale plays.
It also benefited from strong demand for natural gas liquids (NGL) from a resurgent petrochemicals industry.
While fourth-quarter gross margin for natural gas processing and NGL marketing fell $66 million, that was more than offset by fee-based revenue, including record pipeline volumes.
For full-year 2012, Enterprise generated $4.1 billion in distributable cash flow (DCF), an increase of 10 percent from the prior year. That enabled the MLP to boost its cumulative distribution by 5.6 percent year over year to $2.57 per unit.
Enterprise has increased its distribution for 34 consecutive quarters, with the latest quarterly distribution of $0.66 per unit representing a 6.5 percent increase from a year ago.
The MLP undertook $2.9 billion worth of growth projects last year, completing most of them on or below budget and on time or ahead of schedule.
Among these projects was the construction of a sixth NGL fractionator in Mont Belvieu, Texas, a major NGL hub near the Gulf Coast. Enterprise also expanded its natural gas and NGL pipeline systems in the Eagle Ford.
As for future growth, Enterprise has invested roughly $7.2 billion in major capital projects through 2015, with about a third scheduled to commence operations this year. A majority of these projects will generate fee-based revenue and will therefore be accretive to cash flows, starting sometime during the second quarter.
Management is continuing to transition its natural gas processing segment to a fee-based business. Fee-based natural gas volumes rose 15 percent during the fourth quarter to 4.7 billion cubic feet per day. All of these developments support distribution growth.
Currently yielding 4.7 percent, units of Enterprise Products Partners continue to rate a buy on dips to 55 or lower in the Conservative Portfolio.
Learn more about this financial newsletter at Roger Conrad's MLP Profits.