CWEI Clayton Williams Energy, Inc.

Enterprise Products Partners L.P. (EPD) reported first-quarter 2014 adjusted earnings per limited partner unit of 75 cents, which managed to beat the Zacks Consensus Estimate of 74 cents but was lower than the year-ago quarterly earnings of 77 cents.

Transportation of more crude, natural gas and other commodities through its pipelines led to the earnings beat. Enterprise transported 8,580 million barrels per day (MBP/d) of natural gas liquids (NGL), crude oil, refined products and petrochemical products, up 5.6% on a year-over-year basis.

Quarterly distribution at Enterprise increased 6.0% year over year to 71 cents per common unit, or $2.84 per unit on an annualized basis. Distributable cash flow of $1.1 billion provided coverage of 1.6x. The partnership retained $418 million in cash flow, thereby reducing its financing needs.
    
Revenues in the quarter increased nearly 13.4% year over year to $12.9 billion and also came in ahead of the Zacks Consensus Estimate of $12.7 billion.

First Quarter Segmental Performance

Gross operating income in the NGL Pipeline & Services segment rose 31.5% year over year to $780.0 million.

Onshore Natural Gas Pipeline and Services’ gross operating income increased 15.2% year over year to $220.0 million.

Gross operating income from the Onshore Crude Oil Pipelines & Services segment fell 32.2% year over year to $160.0 million in the reported quarter.

Gross operating income in the Petrochemical & Refined Product Services segment fell to $130.0 million in the quarter from the year-earlier level of $171.0 million.

Gross operating margin for the Offshore Pipelines & Services segment was $39 million for the first quarter of 2014 compared with $41 million for the same quarter of 2013.

Financials

During the quarter, the partnership spent $980 million, including $78 million of sustaining capital expenditures. Total debt principal outstanding at the end of the quarter was $18.4 million.

Outlook

Enterprise Products is a core holding in a master limited partnership portfolio and focuses on projects that generate stable cash flow and contribute to its integrated value chain. While Enterprise increased its cash flow distribution by 6.0% in the reported quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth.

For 2014, the company expects continuing volume and gross operating margin growth from its NGL pipelines and fractionators; crude oil pipelines and storage facilities; and LPG and refined product export terminals businesses.

However, Enterprise remains vulnerable to macro conditions and unstable oil and gas prices, which in turn could hurt margins in NGL, natural gas and other businesses.

Enterprise currently holds a Zacks Rank #2 (Buy), implying that it is expected to perform better than the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the energy sector like Helmerich & Payne, Inc. (HP), Clayton Williams Energy, Inc. (CWEI) and Matrix Service Company (MTRX). All the stocks sport a Zacks Rank #1 (Strong Buy).




 

 
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