10-QPeriod: Q3 FY2008

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 10, 2008For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported a strong third quarter and first nine months of 2008, driven by higher commodity prices and increased volumes across its midstream energy segments. Total revenues surged significantly compared to the prior year, reflecting robust demand for its NGL, natural gas, and petrochemical services. The company demonstrated operational resilience, managing the impacts of Hurricanes Gustav and Ike by leveraging its insurance coverage and demonstrating effective cost management. Key financial highlights include substantial growth in gross operating margin, particularly in the NGL Pipelines & Services segment, bolstered by new facilities coming online. Despite increased interest expenses due to higher debt levels to support capital expenditures, EPD maintained healthy net income and earnings per unit. The company's balance sheet remains solid, with substantial assets and a manageable debt profile, supported by strong operating cash flows. EPD continues to invest in growth projects and joint ventures, signaling a positive outlook for future expansion and value creation for unitholders.

Financial Highlights

20 data points
Beta

Revenue

$6.30B

Net Income

$203.10M

3.2% Net Margin

Cash & Equivalents

$55.40M

Free Cash Flow

-$118.10M

Financial Statements
Beta
Revenue$6.30B
Operating Expenses$5.99B
Operating Income$319.10M
Interest Expense-$102.70M
Net Income$203.10M

Key Highlights

  • 1Total revenues increased significantly to $6.3 billion for Q3 2008 and $18.3 billion for the first nine months of 2008, up from $4.1 billion and $11.6 billion in the respective prior-year periods.
  • 2Gross operating margin rose to $478.9 million for Q3 2008 and $1.54 billion for the first nine months of 2008, reflecting strong performance across NGL, Onshore Natural Gas, and Petrochemical segments.
  • 3Net income attributable to limited partners increased by 84% to $167.6 million for Q3 2008 and by 108% to $620.5 million for the first nine months of 2008.
  • 4Earnings per unit (diluted) for limited partners were $0.38 for Q3 2008 and $1.42 for the first nine months of 2008, up from $0.20 and $0.66 respectively.
  • 5Total assets grew to $18.15 billion as of September 30, 2008, up from $16.61 billion at the end of 2007.
  • 6Long-term debt increased to $8.46 billion from $6.91 billion, primarily to fund capital expenditures and acquisitions.
  • 7The company incurred $46.0 million in repair costs related to Hurricanes Gustav and Ike, which are expected to be largely covered by insurance claims, impacting Q3 2008 results but managed through risk mitigation strategies.

Frequently Asked Questions

The substantial increase in revenues was primarily driven by higher energy commodity sales volumes and prices, particularly for NGLs, natural gas, and petrochemicals. Additionally, revenues benefited from the contribution of newly constructed assets, such as the Meeker and Pioneer natural gas processing plants.

Enterprise Products Partners experienced property damage and operational disruptions due to Hurricanes Gustav and Ike. The company incurred $46.0 million in repair costs for property damage and estimated a reduction in gross operating margin of $43.0 million due to supply interruptions and downtime. The company expects to file insurance claims to recover costs exceeding its allocated share of insurance deductibles and is evaluating potential business interruption claims.

As of September 30, 2008, Enterprise Products Partners had $8.46 billion in long-term debt, an increase from $6.91 billion at the end of 2007, primarily to fund capital expenditures and acquisitions. The company reported $55.4 million in unrestricted cash and $539.3 million in available credit under its revolving credit facility, indicating sufficient liquidity. Despite increased debt, the company's credit ratings remained investment grade, and it expressed confidence in its ability to access capital markets for future needs.

Equity earnings from unconsolidated affiliates increased significantly, particularly from the Jonah Gas Gathering Company and Cameron Highway Oil Pipeline Company, reflecting improved operations and higher transportation volumes. However, equity earnings from Poseidon Oil Pipeline Company and Deepwater Gateway, L.L.C. decreased due to hurricane-related downtime.