What was Enterprise Products Partners L.P.'s financial performance in the first quarter of 2004?

Enterprise Products Partners L.P. reported a strong first quarter in 2004. Revenues increased by approximately 15% year-over-year to $1.7 billion, driven by higher NGL marketing revenues and sales volumes. Net income saw a significant jump, more than doubling to $58.5 million, compared to $40.5 million in the first quarter of 2003. This performance was also aided by a $7 million benefit from a cumulative effect of a change in accounting principle.

What is the status of the proposed merger with GulfTerra?

The company continues to work towards completing its proposed merger with GulfTerra. While several conditions must be met, including regulatory and unitholder approvals, Enterprise Products Partners anticipates the transaction will be finalized in the second half of 2004. This merger is expected to significantly expand the company's operations and asset base.

How did the company manage commodity price risk, particularly in its Processing segment?

Enterprise Products Partners has successfully restructured its natural gas processing agreements. It has transitioned away from traditional 'keepwhole' contracts, which exposed the company to significant commodity price volatility, to new arrangements such as fee-based contracts, hybrid contracts with margin-sharing provisions, and 'percent-of-liquids' agreements. This strategic shift is designed to provide a more consistent revenue stream and reduce direct commodity price risk for the company.

What is the company's liquidity position and how is it managing its debt?

The company's liquidity appears sound. As of March 31, 2004, it had $52.8 million in cash and cash equivalents and significant borrowing capacity under its revolving credit facilities. In May 2004, subsequent to the quarter-end, EPD completed an equity offering that raised approximately $307 million. These proceeds were used to fully repay its $225 million Interim Term Loan and to temporarily reduce borrowings under its credit facilities, thereby strengthening its financial position.

EPD/EPDU 10-Q Quarterly Report Q1 FY2004 — Revenue, Net Income, EPS

Summary

Enterprise Products Partners L.P. (EPD) reported its first-quarter 2004 results, showcasing a significant increase in revenues and net income compared to the prior year. Total revenues rose by approximately 15% to $1.7 billion, driven by higher NGL marketing revenues and sales volumes. Net income more than doubled to $58.5 million, bolstered by a cumulative effect of accounting change that added $7 million. The company continues to progress on its significant proposed merger with GulfTerra, with expected completion in the second half of 2004, which is poised to substantially expand its operations. Operationally, EPD demonstrated resilience and strategic adaptation, particularly in its Processing segment, where it successfully transitioned away from traditional 'keepwhole' contracts to more favorable fee-based and percent-of-liquids arrangements. This strategic shift is expected to provide more consistent revenue and reduce commodity price risk. The company also highlighted strong performance in its Pipelines and Fractionation segments, with increased throughput and expanded capacity contributing to robust gross operating margins. Looking ahead, EPD is focused on integrating the potential GulfTerra acquisition and managing its capital structure effectively, as evidenced by a recent equity offering used to repay debt.

Key Highlights

1Revenue increased by 15% year-over-year to $1.7 billion, primarily driven by higher NGL marketing revenues and sales volumes.
2Net income more than doubled to $58.5 million, compared to $40.5 million in the prior year's first quarter.
3A cumulative effect of change in accounting principle for a subsidiary resulted in a $7 million benefit, positively impacting net income.
4The company is progressing with its proposed merger with GulfTerra, expecting completion in the second half of 2004, which will significantly expand its asset base.
5EPD successfully transitioned its Processing segment away from 'keepwhole' contracts to fee-based and percent-of-liquids arrangements, reducing commodity price risk and stabilizing revenue.
6Gross operating margin for the Pipelines segment increased significantly, supported by higher throughput and equity earnings from GulfTerra GP.
7A new equity offering in May 2004 raised approximately $307 million, which was used to repay an interim term loan and reduce revolving credit facility borrowings, strengthening the company's liquidity.

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2004

Summary

Key Highlights

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