Enbridge Q3 Earnings Lag, Revs Rise - Analyst Blog
October 31 2013 - 12:30PM
Zacks
Enbridge Energy Partners
L.P. (EEP) reported third-quarter 2013 adjusted earnings
of 9 cents per unit, lagging the Zacks Consensus Estimate of 26
cents. The quarterly figure was also lower than the year-earlier
profit of 29 cents.
The quarter’s total revenue increased 14.4% year over year to
$1,789.4 million from the year-ago level of $1,564.3 million. The
reported figure also beat the Zacks Consensus Estimate of $1,716.0
million.
Distribution
Enbridge declared quarterly cash distribution rate of 54.35 cents
per unit ($2.17 per unit annualized), level with the preceding
quarter.
Operational Performance
Operating income in the Liquids segment declined 2.1% to $150.2
million in the quarter from the year-earlier level of $153.5
million. The segment witnessed higher operating and administrative
expenses related to scheduled pipeline integrity initiatives. This
was partially offset by higher indexed transportation rates, in
addition to contributions from growth projects entering into
service earlier in the year.
The partnership’s volumes in the Liquids system increased 3.3% year
over year to 2,247 thousand barrels per day in the reported
quarter.
Operating income of the Natural Gas segment decreased 71.3% year
over year to $17.3 million. The decrease was primarily due to lower
NGL prices, in addition to lower NGL and natural gas volumes in the
systems.
During the quarter, Natural Gas throughput dropped to 2,391,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,627,000 MMBtu/d.
The Marketing segment registered operating loss of $0.5 million
versus an operating loss of $1.2 million in the prior-year quarter.
The improvement was primarily attributable to the expiration of
certain firm natural gas transportation demand fees on third party
pipelines and additional optimization opportunities from modestly
improved natural gas basis spreads.
Outlook
Enbridge Energy remains optimistic about its long-term growth. It
expects various organic projects to be commissioned in 2013 and
2014. These projects are characterized by their longer term and
lower risk. The partnership’s business model will assist the
initiative of its parent company – Enbridge Inc.
(ENB) – in increasing capacity in the Lakehead System and the
Eastern Access Projects with its commissioning scheduled for 2014.
The partnership is undertaking various growth initiatives in the
Liquids segment as witnessed by pipeline expansion for expediting
the movement of resources from the Bakken region.
However, we remain apprehensive about its midstream natural gas
business, which is sensitive to changes in natural gas supply,
demand fundamentals and commodity cycles associated with gas
processing margins.
Enbridge Energy carries a Zacks Rank #4 (Sell). However, there are
other stocks in the oil and gas sector – TransAtlantic
Petroleum Ltd (TAT) and Northern Oil and Gas,
Inc. (NOG) – which hold a Zacks Rank #1 (Strong Buy) and
are expected to perform better.
ENBRIDGE EGY PT (EEP): Free Stock Analysis Report
ENBRIDGE INC (ENB): Free Stock Analysis Report
NORTHRN OIL&GAS (NOG): Free Stock Analysis Report
TRANSATL PETROL (TAT): Free Stock Analysis Report
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