What caused the significant drop in net income for the first quarter of 2002?

The primary driver for the net loss of $17.2 million in Q1 2002, compared to a net income of $52.3 million in Q1 2001, was a $45.1 million loss from commodity hedging activities. This represents a significant shift from the $5.6 million gain recorded in the prior year's first quarter, primarily due to volatile natural gas prices impacting the effectiveness of their hedging strategy.

What were the key strategic initiatives undertaken during the quarter?

The company made substantial investments in its infrastructure by acquiring Diamond-Koch's Mont Belvieu storage assets for $129.6 million and its propylene fractionation business for $239.0 million. These acquisitions, totaling $368.6 million, are expected to strengthen their position in the vital Gulf Coast petrochemical market and contribute to future growth.

How has the company managed its debt and liquidity?

The company increased its long-term debt to $1.17 billion by the end of Q1 2002, largely due to borrowings for the recent acquisitions. In April 2002, they amended their credit facilities, increasing borrowing capacity and gaining flexibility in covenant ratios, partly in response to the hedging losses. Despite the quarterly loss, the company maintains an investment-grade credit rating and believes it has sufficient liquidity and capital resources to meet its ongoing needs and growth objectives.

What is the outlook for the remainder of 2002?

Management anticipates that second quarter 2002 equity NGL production will be similar to Q1 2001 levels, with improvements expected later in the year as production platforms return to full capacity. Propylene fractionation facilities are expected to operate near capacity with improving margins. The company is also exploring a conversion of its MTBE facility (BEF) to alkylate production due to increasing regulatory scrutiny on MTBE.

EPD/EPDU 10-Q Quarterly Report Q1 FY2002 — Revenue, Net Income, EPS

Summary

Enterprise Products Partners L.P. (EPD) reported a net loss of $17.2 million for the first quarter ended March 31, 2002, a significant decrease from a net income of $52.3 million in the same period of the prior year. This downturn was largely driven by a substantial $45.1 million loss on commodity hedging activities, a reversal from a $5.6 million gain in Q1 2001, exacerbated by volatile natural gas prices. Despite this, the company made significant strategic acquisitions, purchasing Diamond-Koch's Mont Belvieu storage and propylene fractionation assets for a total of $368.6 million, which are expected to contribute positively to future earnings and expand its presence in the key Gulf Coast petrochemical market. Total revenues for the quarter decreased to $671.3 million from $838.3 million in the prior year, primarily due to lower NGL prices, although this was partially offset by increased volumes and contributions from the Acadian Gas acquisition. The company's pipeline segment demonstrated strong performance with record gross operating margin. Management is actively managing its financial instruments strategy following the hedging losses and has amended its credit facilities for increased flexibility. Despite the quarterly loss, the company is proceeding with its growth strategy and announced a two-for-one unit split, demonstrating confidence in future performance.

Key Highlights

1Net loss of $17.2 million for Q1 2002, a decline from $52.3 million net income in Q1 2001.
2Significant $45.1 million loss on commodity hedging activities, a reversal from a $5.6 million gain in Q1 2001.
3Completed strategic acquisitions of Diamond-Koch's storage and propylene fractionation assets for $368.6 million.
4Total revenues decreased to $671.3 million from $838.3 million year-over-year, driven by lower NGL prices.
5Strong performance in the Pipelines segment, achieving record gross operating margin.
6Announced a two-for-one split of Limited Partner Units, effective May 15, 2002.
7Amendments to credit facilities in April 2002 provide increased financial flexibility.

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2002

Summary

Key Highlights

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