Enterprise Slightly Misses Estimates as Profit Dips

Enterprise Products Partners L.P. has reported net income attributable to common unitholders of $1.3 billion, or $0.60 per common unit on a fully diluted basis, for the third quarter, compared to $1.4 billion, or $0.62 per common unit, for the prior-year period.

The partnership’s revenues for the quarter were $12 billion, compared to $15.47 billion in the same period in 2022. Distributable Cash Flow was flat at $1.9 billion for the third quarters of 2023 and 2022. Distributions declared with respect to the quarter increased 5.3 percent to $0.50 per common unit, or $2.00 per common unit annualized, compared to distributions declared for prior-year period, Enterprise said in an earnings release Tuesday.

Enterprise slightly missed the Zacks Consensus Estimate of $0.60 per unit for the third quarter.

The partnership’s gross operating margin from its NGL Pipelines & Services segment was $1.2 billion for the quarter, compared to $1.3 billion for the prior-year quarter. Gross operating margin from its natural gas processing and related natural gas liquids (NGL) marketing business was $293 million for the quarter, compared to $485 million for the third quarter of 2022. Lower natural gas and NGL prices led to an aggregate decrease in average processing margins from most of the partnership’s processing plants, Enterprise said, as the weighted-average indicative NGL price for the quarter decreased 36 percent year over year to $0.61 per gallon from $0.95 per gallon.

The partnership’s Midland Basin natural gas processing plants reported a net $65 million year-over-year decrease in gross operating margin, primarily due to lower average processing margins, including the impact of hedging activities, and higher operating costs, partially offset by an increase in fee-based natural gas processing volumes. Meanwhile, fee-based processing volumes at its Midland Basin natural gas processing facilities increased 212 million cubic feet per day (MMcfpd) year over year, primarily due to processing volumes from our Poseidon natural gas processing plant, which was placed into service in July, Enterprise said.

Enterprise’s Delaware Basin processing plants reported a $35 million year-over-year decrease in gross operating margin, primarily due to lower average processing margins, including the impact of hedging activities, the partnership said.

Gross operating margin from Enterprise’s Crude Oil Pipelines & Services segment increased to $432 million for the quarter from $415 million in the prior-year period. Total crude oil pipeline transportation volumes increased to a record 2.6 million barrels per day (bpd) for the quarter, compared to 2.2 million bpd in the same period in 2022, according to the release.

For the partnership’s Natural Gas Pipelines & Services segment, gross operating margin was $239 million for the quarter, compared to $278 million in the year-ago period. Gross operating margin for the Petrochemical & Refined Products Services segment increased 28 percent year over year to a record $453 million for the third quarter of 2023.

Enterprise’s total capital investments in the third quarter were $826 million, which included $99 million of sustaining capital expenditures, while for the first nine months of 2023, its capital investments totaled $2.3 billion, which included $284 million of sustaining capital expenditures. The partnership expects growth capital investments and sustaining capital expenditures for the rest of the year to be approximately $3.0 billion and $400 million, respectively. For 2024, it projects growth capital investments to be in the range of $3.0 billion to $3.5 billion.

“Enterprise reported solid financial results for the third quarter of 2023”, A.J. Teague, co-chief executive officer of Enterprise’s general partner, said. “We handled record volumes across our midstream system including our liquids pipelines, natural gas pipelines, NGL fractionators and marine terminals. In total, our pipelines transported 12.2 million equivalent BPD and our marine terminals handled 2.1 million BPD of NGLs, crude oil, refined products and petrochemicals. These record volumes coupled with lower system-wide utility costs offset the impact of lower natural gas gathering and processing margins due to a decrease in natural gas and NGL prices compared to the third quarter of 2022”.

“Since the start of the third quarter, we completed construction and placed into service approximately $2.7 billion of capital projects including our twelfth NGL fractionator in Chambers County, Texas, our second PDH unit at our Chambers County facility and our Poseidon cryogenic natural gas processing plant in the Midland Basin. In addition, earlier this month we began operations at our Mentone 2 natural gas processing plant in the Delaware Basin”, Teague continued.

Teague also announced $3.1 billion of new growth capital projects in the partnership’s NGL Pipelines & Services segment. “In addition to these projects directly integrating with and complementing our entire NGL value chain, these investments also facilitate continued crude oil and natural gas production growth in the basin that will provide benefits to our crude oil and natural gas businesses. In total, we now have $6.8 billion of organic growth projects under construction. Once in service, these assets will provide new sources of cash flow that will support additional returns of capital to our partners”, he concluded.

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