8-KOther Events

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Corporate Update (May 3, 2013)

Filed May 3, 2013For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported its first quarter 2013 financial results, showcasing a notable increase in net income attributable to limited partners, rising to $753.5 million ($0.83 per unit) from $651.3 million ($0.73 per unit) in the prior year's first quarter. This growth was driven by a broad increase in revenues, particularly in crude oil marketing, natural gas marketing, and Petrochemical & Refined Products Services, partially offset by a decrease in NGL marketing due to lower prices. The company also highlighted significant investments in infrastructure expansion, including plans for crude oil storage and distribution in Southeast Texas, the development of a Gulf Coast ethane pipeline, and an expansion of its LPG export facility, all aimed at capitalizing on growing North American production and shifting market dynamics. Operationally, EPD experienced a 12% increase in NGL, crude oil, refined products, and petrochemical pipeline transportation volumes. Key segments like Onshore Crude Oil Pipelines & Services and Petrochemical & Refined Products Services showed substantial gross operating margin growth, driven by higher volumes and improved market conditions. While the NGL Pipelines & Services segment saw a decrease in margin primarily due to lower NGL prices and Rocky Mountain production, growth in South Texas processing plants and NGL pipeline/storage businesses partially compensated. The company also reported significant capital expenditures of $914 million for the quarter, including $57 million for sustaining projects, and received $131 million from asset sales and insurance recoveries.

Key Highlights

  • 1Net income attributable to limited partners increased by 15.7% year-over-year to $753.5 million, or $0.83 per unit, up from $651.3 million, or $0.73 per unit, in Q1 2012.
  • 2Total revenues grew to $11,383.1 million from $11,252.5 million in Q1 2012, driven by strong performance in crude oil marketing and Petrochemical & Refined Products Services.
  • 3Onshore Crude Oil Pipelines & Services segment saw a significant increase in gross operating margin, up 405% to $236.4 million from $39.3 million in Q1 2012, due to higher volumes and marketing margins.
  • 4The Petrochemical & Refined Products Services segment's gross operating margin rose 74% to $170.9 million from $97.8 million, boosted by improved performance in octane enhancement and refined products services.
  • 5EPD announced plans to expand crude oil storage and distribution infrastructure in Southeast Texas, adding 4.0 MMBbls of capacity and 55 miles of pipelines, expected to be completed by Q4 2014.
  • 6The company plans to build the Enterprise Aegis Pipeline, a 270-mile ethane pipeline originating from Mont Belvieu, Texas, to serve Gulf Coast petrochemical plants, with operations expected to begin in 2014.
  • 7An expansion of the Houston Ship Channel LPG export terminal was completed in March 2013, increasing export loading capacity for propane and butane by approximately 87.5%.

Frequently Asked Questions

The primary drivers for the increase in net income were strong performance in the Onshore Crude Oil Pipelines & Services segment, which saw a significant increase in gross operating margin due to higher volumes and marketing margins, and the Petrochemical & Refined Products Services segment, also boosted by higher volumes and improved market conditions. Revenue growth across several areas, particularly crude oil marketing, also contributed positively.

EPD is actively investing in infrastructure to handle the increasing North American crude oil production. This includes planned expansions for crude oil storage and distribution in Southeast Texas, aiming to connect producers with refineries and displace imports. The company is also expanding its ECHO storage facility and marine terminal access to provide a comprehensive distribution solution.

The Aegis Pipeline is designed to deliver ethane to petrochemical plants on the U.S. Gulf Coast, capitalizing on the abundant supply of natural gas liquids from shale production. The expansion of the LPG export terminal enhances EPD's ability to export propane and butane to international markets, further leveraging the growth in North American NGL production and meeting global demand.

The NGL Pipelines & Services segment experienced a decrease in gross operating margin primarily due to lower NGL prices and reduced processing volumes in the Rocky Mountains. However, growth in South Texas processing plants and increased NGL pipeline volumes partially offset this decline. The Offshore Pipelines & Services segment also saw a decrease in gross operating margin due to lower demand fee revenues and volumes, impacted by lingering effects of the 2010 offshore drilling moratorium.