Enbridge Energy Partners Declares Distribution and
Reports Earnings for First Quarter 2011
HOUSTON, TX, Apr 29, 2011 (MARKETWIRE via COMTEX) --
Enbridge Energy Partners, L.P. (NYSE: EEP) (NYSE: EEQ)
("Enbridge Partners" or "the Partnership") today declared a
cash distribution of $0.51375 per unit payable May 13, 2011 to unitholders of record on May 6, 2011. The Partnership's key
financial results for the first quarter of 2011, compared to the same period in
2010, were as follows:
Three
months ended
March 31,
-----------------------
(unaudited, dollars in millions
except per unit amounts)
2011
2010
---------- ----------
Net income
$ 117.1 $ 115.4
Net income per unit**
0.38
0.42
---------- ----------
Adjusted EBITDA*
283.7
242.1
Adjusted net income
99.0
102.5
Adjusted net income per unit**
0.31
0.37
---------- ----------
* Includes non-controlling interest
** Adjusted for the 2-for-1 unit
split effective April 21, 2011
Adjusted net income reported above eliminates the
impact from: (a) insurance recoveries of $35 million associated with the
incidents on lines 6A and 6B; (b) unusual winter conditions on our natural gas
segment estimated at $9.2 million; (c) proceeds of $9 million received from
settlement of a claim; and (d) non-cash, mark-to-market net gains and losses;
among other adjustments. See Non-GAAP Reconciliations table below for a
detailed description of adjustments.
"We are making good progress on our strategies
and growth initiatives that support our annual distribution growth target rate
of 2 to 5 percent. We continue to aggressively expand our North Dakota liquids
system to support robust volume growth from the Bakken
oil play. In January, we added 23,500 barrels per day of capacity to our North
Dakota system and expect to add a further 25,000 barrels per day in the second
quarter and 120,000 barrels per day by early 2013," said Mark Maki,
president of the Partnership's management company.
"With respect to our natural gas strategy, we
continue to build on our already strong position in the Texas Haynesville with
our recently announced expansion projects. In April, we reached agreement with
major natural gas producers to provide gathering, treating and transmission
services in Shelby, Sabine, San Augustine and Nacogdoches counties," added
Maki.
COMPARATIVE EARNINGS STATEMENT
Three months ended
March 31,
-----------------------
(unaudited, dollars in millions
except per unit amounts)
2011
2010
---------- ----------
Operating revenue
$ 2,288.9 $ 1,931.2
Operating expenses:
Cost of natural gas
1,829.5
1,524.2
Environmental costs
(34.6)
4.6
Operating and administrative
162.5
131.4
Power
35.6
32.3
Depreciation and amortization
88.4
67.9
---------- ----------
Operating income
207.5
170.8
Interest expense
79.4
59.3
Other income
6.0
16.8
---------- ----------
Income before income tax
expense
134.1
128.3
Income tax expense
2.3
2.2
---------- ----------
Net income
131.8
126.1
Less: Net income attributable to noncontrolling
interest
14.7
10.7
---------- ----------
Net income attributable to general
and limited
partner ownership interests in Enbridge
Energy Partners, L.P.
$ 117.1 $ 115.4
Less: Allocations to General Partner
20.4
16.2
---------- ----------
Net income allocable to Limited
Partners
$
96.7 $ 99.2
Weighted average Limited Partner
units
(millions)(1) 252.8
235.8
---------- ----------
Net income per Limited Partner unit
(dollars)(1) $ 0.38 $ 0.42
---------- ----------
(1) Adjusted for the 2-for-1 unit
split issued April 21, 2011
COMPARISON OF QUARTERLY RESULTS
Following are explanations for significant changes in
the Partnership's financial results, comparing the first quarter of 2011 with
the first quarter of 2010. The comparison refers to adjusted operating income,
which excludes the effect of non-cash and nonrecurring items (see Non-GAAP
Reconciliations section below).
Three months ended
Adjusted
Operating Income
March 31,
-----------------------
(unaudited, dollars in
millions)
2011
2010
---------- ----------
Liquids
$ 149.7 $ 125.1
Natural Gas
41.1
26.4
Marketing
3.0
5.9
Corporate
(1.1)
-
---------- ----------
Adjusted operating income
$ 192.7 $ 157.4
---------- ----------
Liquids - First quarter 2011 adjusted operating income
for the Liquids segment increased to $149.7 million from $125.1 million from
the comparable period in 2010. The increase of $24.6 million in adjusted operating
income was primarily driven by the transportation rate increase that became
effective in April 2010 associated with the completion and start up of our
Alberta Clipper Pipeline. Also impacting the Liquid segment's adjusted
operating income were higher average daily volumes delivered from all of our
major liquids systems partially offset by increases in operating and
administrative, power and depreciation expenses associated with the additional
assets we placed into service in 2010.
Volumes increased for the first quarter 2011 as
compared to the same period in 2010, as illustrated in the table below,
primarily due to the increases of crude oil supplies from upstream production
facilities associated with the ongoing development of the Alberta Oil Sands
coupled with the additional transportation capacity provided by our Alberta
Clipper Pipeline which was completed and available for service subsequent to
the first quarter of 2010.
Three months ended
Liquids Systems Deliveries
March 31,
-----------------------
(thousand barrels per day)
2011
2010
---------- ----------
Lakehead
1,743
1,624
Mid-Continent
218
206
North Dakota
175
167
---------- ----------
Total
2,136
1,997
---------- ----------
Natural Gas - Quarterly adjusted operating income for
the Natural Gas segment was $41.1 million for the three month period ended
March 31, 2011, an increase of $14.7 million from the $26.4 million of adjusted
operating income for the same period in 2010. The increase in adjusted
operating income was primarily due to increased natural gas and NGL volumes and
related increase in fees on our Anadarko and Elk City systems as a result of
growth in the Granite Wash play and on our East Texas system due to new assets
being placed in service to capture the growing natural gas production from the
Haynesville shale play. Partially offsetting the additional operating income
derived from the volume growth on our systems were additional costs associated
with the expansion of our operations including the Elk City Natural Gas
Gathering and Processing system we acquired in September 2010 and the common
carrier trucking company we acquired in October 2010 and increases in operating
and administrative costs of $24.0 million during the three month period ended
March 31, 2011 as compared with the same period in 2010, primarily due to an
increase in workforce-related costs, and maintenance activities.
Three months ended
Natural Gas Throughput
March 31,
-----------------------
(MMBtu per
day)
2011
2010
---------- ----------
East Texas
1,315,000
1,195,000
Anadarko (1)
929,000
547,000
North Texas
339,000
347,000
---------- ----------
Total
2,583,000
2,089,000
---------- ----------
(1) Average daily volumes for the three
month period ended March 31, 2011
include 216,000 MMBtu/d of volumes associated with our acquisition of
the Elk City Natural Gas
Gathering and Processing System, referred to
as the Elk City system.
Marketing - The Marketing segment reported adjusted
operating income of $3.0 million for the three month period ended March 31,
2011, a decrease of $2.9 million from the $5.9 million of adjusted operating
income for the same period of 2010. The decrease is largely attributable to
narrower natural gas price differentials between market centers.
Interest Expense and Other Income - Non-operating
items associated with construction of the Alberta Clipper Pipeline, including
capitalized interest of $4.3 million and other income of $14.3 million recognized
as an allowance for equity during construction, contributed to net income
during the first quarter of 2010. Similar non-operating items were not present
during the first three months of 2011 due to completion of the Alberta Clipper
Pipeline. Additionally, Partnership financing activities in 2010 to term out
the Alberta Clipper Pipeline construction loan produced approximately $15.3
million of additional interest expense for the three month period ended March
31, 2011 in relation to the same period of 2010.
ENBRIDGE ENERGY MANAGEMENT DISTRIBUTION
Enbridge Energy Management, L.L.C. (NYSE: EEQ)
declared a distribution of $0.51375 per share on a split adjusted basis payable
May 13, 2011 to shareholders of record on May 6, 2011. The distribution will be
paid in the form of additional shares of Enbridge Energy Management valued at
the average closing price of the shares for the 10 trading days prior to the
ex-dividend date on May 4, 2011.
MANAGEMENT REVIEW OF QUARTERLY RESULTS
Enbridge Partners will review its quarterly financial
results and business outlook in an Internet presentation, commencing at 10 a.m.
Eastern Time on April 29, 2011. Interested parties may watch the live webcast
at the link provided below. A replay will be available shortly afterward.
Presentation slides and condensed unaudited financial statements will also be
available at the link below.
EEP Earnings Release: www.enbridgepartners.com/Q
Alternate Webcast Link:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=63707&eventID=3724194
The audio portion of the presentation will be
accessible by telephone at (866) 202-3109 (Passcode:
42143925) and can be replayed until July 29, 2011 by calling (888) 286-8010 (Passcode: 39310232). An audio replay will also be available
for download in MP3 format from either of the website addresses above.
NON-GAAP RECONCILIATIONS
Adjusted net income and adjusted operating income for
the principal business segments are provided to illustrate trends in income
excluding derivative fair value losses and gains and other nonrecurring items
that affect earnings. The derivative non-cash losses and gains result from
marking to market certain financial derivatives used by the Partnership for
hedging purposes that do not qualify for hedge accounting treatment in
accordance with the authoritative accounting guidance as prescribed under
generally accepted accounting principles in the United States.
Three months ended
Adjusted Earnings March
31,
-----------------------
(unaudited, dollars in millions
except per unit amounts)
2011
2010
---------- ----------
Net income
$ 131.8 $ 126.1
Lines 6A and 6B incident expenses,
net of recoveries
(35.0)
-
Lawsuit settlement
(9.0)
-
Impact from unusual winter
conditions
9.2
-
Expired joint tariff revenues
-
(4.8)
Noncash derivative fair value
(gains) losses
-Liquids
4.6
1.2
-Natural Gas
9.1
(10.2)
-Marketing
2.9
0.4
-Corporate
0.1
0.5
Net income attributable to noncontrolling interest (14.7) (10.7)
---------- ----------
Adjusted net income
99.0
102.5
Less: Allocations to General
Partner
20.0
16.0
---------- ----------
Adjusted net income allocable to
Limited Partners
79.0
86.5
Weighted average units
(millions)(1) 252.8
235.8
---------- ----------
Adjusted net income per Limited
Partner unit
(dollars)(1)
$
0.31 $ 0.37
---------- ----------
(1) Adjusted for the 2-for-1 unit
split effective April 21, 2011
Three months ended
Liquids
March 31,
-----------------------
(unaudited, dollars in
millions)
2011
2010
---------- ----------
Operating income
$ 185.7 $ 128.7
Lines 6A and 6B incident expenses,
net of recoveries
(35.0)
-
Lawsuit settlement
(5.6)
-
Expired joint tariff revenues -
(4.8)
Noncash derivative fair value
losses
4.6
1.2
---------- ----------
Adjusted operating income
$ 149.7 $ 125.1
---------- ----------
Three months ended
Natural Gas
March 31,
-----------------------
(unaudited, dollars in
millions)
2011
2010
---------- ----------
Operating income
$
22.8 $ 36.6
Impact from unusual winter
conditions
9.2 $ -
Noncash derivative fair value losses
(gains)
9.1
(10.2)
---------- ----------
Adjusted operating income
$
41.1 $ 26.4
---------- ----------
Three months ended
Marketing
March 31,
-----------------------
(unaudited, dollars in
millions)
2011
2010
---------- ----------
Operating income $ 0.1 $ 5.5
Noncash derivative fair value
losses
2.9
0.4
---------- ----------
Adjusted operating income
$ 3.0 $ 5.9
---------- ----------
Adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) is used as a supplemental financial measurement
to assess liquidity and the ability to generate cash sufficient to pay interest
costs and make cash distributions to unitholders. The
following reconciliation of net cash provided by operating activities to
adjusted EBITDA is provided because EBITDA is not a financial measure recognized
under generally accepted accounting principles.
Three months ended
Adjusted EBITDA
March 31,
-----------------------
(unaudited, dollars in
millions)
2011
2010
---------- ----------
Net cash provided by operating
activities
$ 260.1 $ 208.6
Expired joint tariff revenues
-
(4.8)
Changes in operating assets and
liabilities,
net of cash acquired
(64.4) (43.1)
Interest expense*
79.3
58.8
Income tax expense
2.3
2.2
Settlement of interest rate
swaps/treasury locks
-
13.2
Environmental Liabilities, net of
accrued insurance recoveries**
(0.6)
-
Impact from unusual winter
conditions
9.2
-
Lawsuit settlement
(9.0)
-
Other
6.8
7.2
---------- ----------
Adjusted EBITDA
$ 283.7 $ 242.1
---------- ----------
* Interest expense excludes unrealized mark-to-market
net losses of
$0.1 million and $0.5 million for
the three months ended March 31, 2011
and 2010, respectively.
** Excludes $35 million of insurance
recoveries accrued at March 31, 2011,
received in April 2011.
LEGAL NOTICE
This news release includes forward-looking statements
and projections, which are statements that do not relate strictly to historical
or current facts. These statements frequently use the following words,
variations thereon or comparable terminology: "anticipate,"
"believe," "continue," "estimate,"
"expect," "forecast," "intend," "may,"
"plan," "position," "projection,"
"strategy" or "will." Forward-looking statements involve
risks, uncertainties and assumptions and are not guarantees of performance.
Future actions, conditions or events and future results of operations may
differ materially from those expressed in these forward-looking statements.
Many of the factors that will determine these results are beyond Enbridge
Partners' ability to control or predict. Specific factors that could cause
actual results to differ from those in the forward-looking statements include:
(1) changes in the demand for or the supply of, forecast data for, and price
trends related to crude oil, liquid petroleum, natural gas and NGLs, including
the rate of development of the Alberta Oil Sands; (2) Enbridge Partners'
ability to successfully complete and finance expansion projects; (3) the
effects of competition, in particular, by other pipeline systems; (4)
shut-downs or cutbacks at facilities of Enbridge Partners or refineries,
petrochemical plants, utilities or other businesses for which Enbridge Partners
transports products or to whom Enbridge Partners sells products; (5) hazards
and operating risks that may not be covered fully by insurance; (6) changes in
or challenges to Enbridge Partners' tariff rates; (7) changes in laws or
regulations to which Enbridge Partners is subject, including compliance with
environmental and operational safety regulations that may increase costs of
system integrity testing and maintenance.
Reference should also be made to Enbridge Partners'
filings with the U.S. Securities and Exchange Commission; including its Annual
Report on Form 10-K for the most recently completed fiscal year and its
subsequently filed Quarterly Reports on Form 10-Q, for additional factors that
may affect results. These filings are available to the public over the Internet
at the SEC's web site (www.sec.gov) and at the Partnership's web site.
About Enbridge Energy Partners, L.P.
Enbridge Energy Partners, L.P.
(www.enbridgepartners.com) owns and operates a diversified portfolio of crude
oil and natural gas transportation systems in the United States. Its principal
crude oil system is the largest transporter of growing oil production from
western Canada. The system's deliveries to refining centers and connected
carriers in the United States account for approximately 12 percent of total
U.S. oil imports; while deliveries to Ontario, Canada satisfy approximately 60
percent of refinery demand in that region. The Partnership's natural gas
gathering, treating, processing and transmission assets, which are principally
located onshore in the active U.S. Mid-Continent and Gulf Coast area, deliver
approximately 2.5 billion cubic feet of natural gas daily.
Enbridge Energy Management, L.L.C.
(www.enbridgemanagement.com) manages the business and affairs of the
Partnership and its sole asset is an approximate 14 percent interest in the
Partnership. Enbridge Energy Company, Inc., an indirect wholly owned subsidiary
of Enbridge Inc. of Calgary, Alberta, (NYSE: ENB) (TSX: ENB) (www.enbridge.com)
is the general partner and holds an approximate 25 percent interest in the
Partnership.
FOR FURTHER INFORMATION PLEASE
CONTACT
Investor Relations Contact:
Douglas Montgomery
Toll-free: (866) EEP INFO or (866)
337-4636
E-mail: eep@enbridge.com
Media Contact:
Terri Larson
Telephone: (713) 353-6317
E-mail: usmedia@enbridge.com
Website: www.enbridgepartners.com
SOURCE: Enbridge Energy Partners, L.P.
mailto:eep@enbridge.com
mailto:usmedia@enbridge.com
http://www.enbridgepartners.com