Oil and natural gas transporter Enbridge Energy Partners L.P. (EEP) reported fourth-quarter 2014 adjusted earnings of 27 cents per unit, which came a penny below the Zacks Consensus Estimate. The quarterly figure, however, increased from the year-earlier profit of 12 cents.
Total revenue in the quarter rose to $2,071.7 million from the year-ago level of $1,962 million and was ahead of the Zacks Consensus Estimate of $1,940 million.
Segment Performance
Liquids: Adjusted operating income in the Liquids segment increased 64.9% to $306.4 million from $185.8 million in the year-ago quarter. The upside came from higher transportation rates and increase in deliveries on all of the partnership’s liquids pipeline systems. Total liquids system transportation volumes spiked 20% from the fourth quarter of 2013 on the back of crude oil supply growth in western Canada and the Bakken Formation, together with pipeline expansion initiatives pressed into service.
Enbridge finished a major portion of its Eastern Access Program (particularly the Line 6B Replacement project) in two phases in 2014. The 160-mile section of the Line 6B Replacement project – from Griffith, IN to Stockbridge, MI –started operations on May 1, while the remaining 50-mile portion (to Sarnia, Ontario) went online on Sep 30. Moreover, the initial phase of the Line 61 Mainline Expansion began service August 1, 2014. Together, these growth ventures helped in improving the Liquids segment operating performance over the prior-year period.
The partnership’s volumes in the Liquids system rose 19.8% year over year to 2,771 thousand barrels per day.
Natural Gas: The Natural Gas unit reported adjusted income of $5.1 million in the reported quarter versus $4.4 million a year ago. The upside was predominantly due to better storage margins spurred by the sale of liquids product inventory in Enbridge’s marketing operations, plus a fall in operating costs. These factors were somewhat offset by lower natural gas throughput and decreased gross margin due to lower NGL prices.
During the quarter ended Dec 31, 2014, natural Gas throughput fell to 2,211,000 million British thermal units per day (MMBtu/d) from the year-earlier level of 2,222,000 MMBtu/d.
Distribution
Earlier, Enbridge raised its fourth quarter 2014 cash distribution by 2.7% sequentially and 4.9% year over year to 57 cents per unit ($2.28 per unit annualized).
Guidance
Enbridge hopes this year’s adjusted operating income will be 12% higher that that of 2014 – in the range of $1.68–$1.78 billion, while expecting distributable cash flow to increase 15% year over year to $900–$960 million.
Zacks Rank
Enbridge Energy currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Better-ranked energy pipeline operators like Delek Logistics Partners L.P. (DKL), Valero Energy Partners L.P. (VLP) and EnLink Midstream Partners L.P. (ENLK) are worth consideration. While Delek Logistics and Valero Energy carry a Zacks Rank #1 (Strong Buy), EnLink sports a Zacks Rank #2 (Buy).
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