10-QPeriod: Q2 FY2015

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 7, 2015For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported its financial results for the second quarter and the first six months of 2015. The company experienced a significant decline in revenues compared to the prior year, primarily driven by lower commodity prices for NGLs, crude oil, petrochemicals, and refined products, which more than offset increases in sales volumes. Despite lower revenues, the company managed its operating costs effectively, resulting in a slight increase in net cash flows provided by operating activities for the first six months of 2015 compared to the same period in 2014. A major strategic development was the completion of the sale of its Offshore Gulf of Mexico Business in July 2015, which is viewed as a non-core asset. The company also made significant capital investments, including the acquisition of EFS Midstream LLC and announced plans for new pipeline projects. These activities reflect a continued focus on expanding and optimizing its midstream energy infrastructure. The company maintained compliance with its debt covenants and ended the period with a solid liquidity position.

Financial Statements
Beta
Revenue$7.09B
Cost of Revenue$5.26B
Gross Profit$1.83B
Operating Expenses$6.40B
Operating Income$800.30M
Interest Expense$240.40M
Net Income$551.00M
Shares Outstanding (Diluted)2.00B

Key Highlights

  • 1Total revenues decreased significantly in the second quarter and first six months of 2015 compared to 2014, primarily due to lower commodity prices across NGLs, crude oil, petrochemicals, and refined products.
  • 2Net cash flows provided by operating activities saw a slight increase of $29.7 million for the first six months of 2015 compared to the prior year, reaching $1,901.6 million.
  • 3The company completed the sale of its Offshore Gulf of Mexico Business for approximately $1.53 billion in cash, classifying it as a non-strategic asset sale.
  • 4Capital expenditures increased significantly in the first six months of 2015, driven by major growth projects at export terminals and the acquisition of EFS Midstream LLC for $2.15 billion.
  • 5Enterprise Products Partners L.P. issued $2.5 billion in senior notes in May 2015 to refinance existing debt and fund general corporate purposes.
  • 6The company continues to grow its asset base through strategic projects, including pipeline expansions and new processing facilities, with approximately $2.4 billion in growth capital projects expected to be completed in the remainder of 2015.
  • 7Distributable cash flow for the first six months of 2015 was $2,017.2 million, with a distribution coverage ratio of 1.4x, indicating the company's ability to cover its distributions to limited partners.

Frequently Asked Questions

EPD experienced a significant decrease in total revenues for both the second quarter and the first six months of 2015 compared to the same periods in 2014. This decline was primarily driven by substantially lower market prices for natural gas, NGLs, crude oil, and refined products. While lower commodity prices also reduced the cost of sales, the revenue impact was more pronounced.

EPD completed the sale of its Offshore Gulf of Mexico Business, which it deemed non-core. The company also continued to invest heavily in growth projects, including expansions of its NGL export terminal and pipeline infrastructure, and made a significant acquisition with EFS Midstream LLC in the Eagle Ford Shale. These actions demonstrate a focus on expanding and modernizing its midstream energy services network.

Enterprise Products Partners L.P. maintained a solid liquidity position with $5.55 billion in consolidated liquidity at June 30, 2015, comprising unrestricted cash and available borrowing capacity. The company issued $2.5 billion in senior notes in May 2015, primarily to refinance maturing debt and for general corporate purposes. EPD remained in compliance with its debt covenants throughout the period.

EPD anticipates total capital spending of approximately $2.3 billion for the remainder of 2015, with $200 million allocated to sustaining capital expenditures. This spending is focused on growth projects, including major expansions at export terminals and pipeline development, aimed at capitalizing on anticipated increases in natural gas and NGL production.