What were the primary drivers of the significant revenue and income increase in Q2 2001?

The substantial increase in revenues and operating income was primarily driven by the acquisition of Acadian Gas and equity investments in natural gas pipelines, alongside strong performance in the company's natural gas processing segment. The processing segment benefited significantly from commodity hedging gains, which helped mitigate the impact of fluctuating commodity prices and lower equity NGL production volumes.

How has Enterprise Products Partners' (EPD) debt structure changed, and what is the impact on the company?

EPD's long-term debt increased significantly to $855.6 million as of June 30, 2001, up from $403.8 million at the end of 2000. This was mainly due to the issuance of $450 million in 7.50% Senior Notes in January 2001. The proceeds were used for acquisitions and capital projects. While this increases financial leverage, the company has adequate credit facilities and a shelf registration statement for future funding needs.

What is the company's strategy regarding recent acquisitions, and what is the outlook for these new assets?

EPD has strategically expanded its natural gas pipeline business through the acquisition of Acadian Gas and equity interests in Gulf of Mexico systems. These assets are expected to provide fee-based revenue streams and benefit from the anticipated long-term increase in natural gas demand. Management views these acquisitions as complementary to its existing midstream services and a key part of its growth strategy.

What is the impact of the adoption of SFAS 133 on EPD's financial reporting?

The adoption of SFAS 133 (Accounting for Derivative Instruments and Hedging Activities) on January 1, 2001, has led to the recording of financial instruments (commodity and interest rate swaps) at fair value. While this introduces some non-cash volatility to earnings due to mark-to-market accounting for commodity instruments, the company views these instruments as effective hedges. For interest rate swaps, they were dedesignated as hedging instruments, leading to fair value adjustments on the balance sheet and amortization to earnings over time.

EPD/EPDU 10-Q Quarterly Report Q2 FY2001 — Revenue, Net Income, EPS

Summary

Enterprise Products Partners L.P. (EPD) reported a strong second quarter and first half of 2001, with significant growth driven by strategic acquisitions and favorable market conditions in the NGL and natural gas sectors. Revenues increased substantially year-over-year, and operating income saw a significant boost, partly due to effective commodity hedging strategies and the successful integration of recent acquisitions. The company expanded its natural gas pipeline footprint with the acquisition of Acadian Gas and equity investments in Gulf of Mexico systems. These moves, along with ongoing growth in its core fractionation and processing segments, position EPD for continued fee-based revenue generation and operational scale. Despite some market price volatility, EPD demonstrated resilience, with management expressing confidence in its ability to fund future growth through operating cash flow, debt, and equity issuances, while also continuing to increase distributions to unitholders.

Key Highlights

1Revenue increased by 60% to $968.4 million for the three months ended June 30, 2001, compared to $604.0 million for the same period in 2000.
2Operating income more than doubled, increasing by 118% to $109.1 million for the three months ended June 30, 2001, from $50.0 million in the prior year.
3Significant acquisitions were completed in early 2001, including Acadian Gas for $226 million and equity investments in four Gulf of Mexico natural gas pipeline systems for $112 million, expanding the company's pipeline segment.
4Gross operating margin in the Processing segment saw a substantial increase to $68.1 million from $18.5 million, heavily influenced by $64.7 million in net hedging gains during Q2 2001.
5Total debt increased significantly from $403.8 million at December 31, 2000, to $855.6 million at June 30, 2001, largely due to the issuance of $450 million in Senior Notes.
6The company declared an increased quarterly distribution rate to $0.5875 per Unit, effective for the second quarter of 2001.
7Despite some challenges like lower NGL fractionation volumes and MTBE price declines, overall performance was robust, driven by strong demand in natural gas pipelines and isomerization services.

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q2 Ended Jun 30, 2001

Summary

Key Highlights

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