10-QPeriod: Q2 FY2008

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 11, 2008For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported a significant increase in revenues and net income for the six months ended June 30, 2008, compared to the same period in the prior year. This growth was driven by higher commodity prices and increased volumes across its NGL, natural gas, and petrochemical segments, largely benefiting from new asset operationalization and favorable market conditions. The company also successfully expanded its debt financing, issuing $1.1 billion in senior notes to support its growth initiatives and temporarily reduce revolving credit facility borrowings. Despite strong operational performance, EPD faced increased interest expenses due to higher debt levels and capital expenditures. The company is actively managing its portfolio, with notable investments in new facilities and ongoing projects aimed at expanding its midstream energy infrastructure. Investors should note the company's continued focus on growth, supported by a solid liquidity position and access to capital markets.

Financial Highlights

20 data points
Beta

Revenue

$6.34B

Net Income

$263.30M

4.2% Net Margin

Cash & Equivalents

$24.70M

Free Cash Flow

-$394.50M

Financial Statements
Beta
Revenue$6.34B
Operating Expenses$5.98B
Operating Income$374.30M
Interest Expense-$95.80M
Net Income$263.30M

Key Highlights

  • 1Total revenues increased by approximately 59.7% to $12.02 billion for the six months ended June 30, 2008, from $7.54 billion in the prior year period.
  • 2Net income more than doubled to $522.9 million for the six months ended June 30, 2008, compared to $254.2 million in the same period of 2007.
  • 3Gross operating margin saw a substantial increase of 51.4% to $1.06 billion for the six months ended June 30, 2008.
  • 4The NGL Pipelines & Services segment was the largest contributor to gross operating margin, showing a 52.0% increase.
  • 5Capital expenditures for property, plant, and equipment were $1.07 billion for the first six months of 2008, reflecting ongoing investment in growth projects.
  • 6Long-term debt increased to $7.77 billion at June 30, 2008, from $6.91 billion at December 31, 2007, mainly due to new senior note issuances.
  • 7The company paid $508.9 million in distributions to its partners during the six months ended June 30, 2008.

Frequently Asked Questions

Revenue growth was primarily driven by higher energy commodity sales volumes and prices across the NGL, natural gas, and petrochemical marketing activities. Additionally, the commencement of operations at newly constructed assets, such as the Meeker and Pioneer natural gas processing plants, contributed significantly to the revenue increase.

The company's long-term debt increased from $6.91 billion at the end of 2007 to $7.77 billion at June 30, 2008. This increase was largely due to the issuance of $1.1 billion in senior notes in April 2008 to fund capital expenditures and temporarily reduce borrowings under its revolving credit facility. The company maintains an investment-grade credit rating and expects to access capital markets for future growth.

The company continues to invest in its growth strategy, with significant capital spending on property, plant, and equipment. For the six months ended June 30, 2008, capital expenditures were $1.07 billion, and management forecasted approximately $756.6 million for the remainder of 2008. These investments are focused on expanding midstream energy infrastructure and capitalizing on expected increases in natural gas and crude oil production.

The filing mentions ongoing litigation, including a class action lawsuit concerning certain transactions with TEPPCO, which the company believes is without merit. It also notes a letter from the DOJ regarding an ammonia release for which Magellan has agreed to indemnify EPO. The company states it is unaware of any other significant litigation that would have a material adverse effect on its financial position.