10-QPeriod: Q1 FY2011

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 10, 2011For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported a solid first quarter for 2011, demonstrating revenue growth and improved profitability compared to the prior year. Total revenues increased by approximately 19% to $10.18 billion, driven by higher volumes and prices across key products like crude oil and NGLs, although natural gas prices saw a decline. Net income attributable to partners reached $420.7 million, a significant increase from $69.9 million in the first quarter of 2010, reflecting strong operational performance and efficient management of costs. The company's operational segments generally performed well, with NGL Pipelines & Services and Onshore Natural Gas Pipelines & Services showing notable increases in gross operating margin. EPD continued its strategic growth initiatives, including significant capital expenditures on pipeline extensions and expansions, underscoring its commitment to expanding its midstream infrastructure network. The company also announced a proposed merger with Duncan Energy Partners, which is expected to enhance its scale and operational synergies.

Financial Highlights

43 data points
Beta

Revenue

$10.18B

13.4% Gross Margin

Net Income

$420.70M

4.1% Net Margin

EPS (Diluted)

$0.24

Total Assets

$31.82B

Cash & Equivalents

$150.40M

Free Cash Flow

$89.20M

Financial Statements
Beta
Revenue$10.18B
Cost of Revenue$8.82B
Gross Profit$1.36B
Operating Expenses$9.57B
Operating Income$624.90M
Interest Expense$183.80M
Net Income$420.70M
EPS (Basic)$0.26
EPS (Diluted)$0.24
Shares Outstanding (Basic)1.63B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1Total revenues increased by 19% year-over-year to $10.18 billion.
  • 2Net income attributable to partners rose substantially to $420.7 million from $69.9 million in the prior year's quarter.
  • 3Gross operating margin improved across most segments, notably NGL Pipelines & Services and Onshore Natural Gas Pipelines & Services.
  • 4Capital expenditures increased significantly to $717.7 million, primarily driven by growth projects in key shale plays.
  • 5The company announced plans for significant pipeline expansions, including an Eagle Ford Shale crude oil pipeline extension and a joint venture crude oil pipeline from Cushing to Houston.
  • 6A definitive merger agreement was entered into with Duncan Energy Partners, aiming to create a more integrated and efficient entity.
  • 7EPD maintained compliance with its debt covenants and reported ample liquidity with $150.4 million in unrestricted cash and $2.38 billion in available borrowing capacity.

Frequently Asked Questions

The revenue increase was primarily driven by higher volumes and, with the exception of natural gas, higher energy commodity sales prices. Crude oil sales revenue saw a significant increase due to both higher prices and volumes, and NGL sales revenues also rose due to improved pricing.

The NGL release and fire at the West Storage location of the Mont Belvieu facility in February 2011 resulted in one fatality and significant property damage. While the company has largely restored operational capabilities at its Mont Belvieu plants, the West Storage location remains partially inoperative, with repairs expected to continue into 2012. The company recorded $5.0 million for its insurance deductible in Q1 2011 and estimates total costs related to the incident will approximate $150 million. The company will seek reimbursement from its insurance carriers.

The proposed merger with Duncan Energy Partners is intended to enhance Enterprise Products Partners' scale, operational synergies, and overall midstream infrastructure network. The transaction is expected to create a more integrated entity, offering efficiencies and potential cost savings.

The company maintained compliance with its debt covenants. At March 31, 2011, EPD had $150.4 million in unrestricted cash and $2.38 billion in available borrowing capacity under its credit facilities. The company expects to fund its ongoing operations and capital expenditures through operating cash flows, borrowings, and potential equity and debt issuances.