8-KEarnings & ResultsOther EventsExhibits & Filings

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Financial Results (Jul 28, 2016)

Filed July 28, 2016For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) filed an 8-K on July 27, 2016, reporting its financial and operating results for the second quarter and the first half of 2016. While overall revenues and gross operating margins saw a decrease compared to the prior year, driven by lower commodity prices and volumes in certain segments like Crude Oil Pipelines & Services, the company demonstrated resilience in other areas. The NGL Pipelines & Services segment was a strong performer, showing an increase in gross operating margin due to record NGL transportation volumes and growth in ethane pipeline volumes and LPG export terminal activity. Despite some headwinds from cancelled LPG loadings, the company anticipates these will be offset by cancellation fees and increased propylene export volumes. The company also made significant capital investments during the quarter, totaling approximately $884 million, including sustaining capital expenditures. Investors should note the comparative year-over-year performance, with a decline in reported revenues and net income, though net income attributable to limited partners saw a modest increase. The company's balance sheet shows an increase in total assets and partners' equity, alongside a slight rise in total debt. The report also provides segment-level performance details, highlighting strengths in NGL logistics and challenges in crude oil marketing and certain natural gas services.

Key Highlights

  • 1Second quarter 2016 revenues decreased to $5,617.8 million from $7,092.5 million in Q2 2015, and six-month revenues decreased to $10,623.1 million from $14,565.0 million.
  • 2Net income attributable to limited partners increased slightly to $558.5 million in Q2 2016 from $551.0 million in Q2 2015, and for the six months, it increased to $1,219.7 million from $1,187.1 million.
  • 3NGL Pipelines & Services segment gross operating margin increased 11% to $719 million in Q2 2016 compared to $651 million in Q2 2015, driven by record NGL transportation volumes and growth in ethane and LPG exports.
  • 4Crude Oil Pipelines & Services segment gross operating margin decreased to $177 million in Q2 2016 from $236 million in Q2 2015, impacted by lower crude oil marketing margins and reduced volumes on the South Texas Crude Oil Pipeline System.
  • 5Total capital investments for Q2 2016 were approximately $884 million, including $58 million of sustaining capital expenditures.
  • 6Total debt principal outstanding increased slightly to $22,999.9 million as of June 30, 2016, from $22,738.5 million as of December 31, 2015.
  • 7The company reported a decrease in total segment gross operating margin (non-GAAP) to $1,254.2 million in Q2 2016 from $1,312.3 million in Q2 2015.

Frequently Asked Questions

The decrease in overall revenues for the second quarter and first half of 2016 was primarily due to lower commodity prices and, in some segments like Crude Oil Pipelines & Services, reduced transportation and marketing volumes compared to the same periods in 2015.

The NGL Pipelines & Services segment was a strong performer, with gross operating margin increasing by 11% year-over-year in Q2 2016. This growth was driven by record NGL transportation volumes, increased ethane pipeline volumes from new projects like ATEX and Aegis, and a significant increase in LPG export volumes due to capacity expansion at its Houston Ship Channel marine terminal.

While Enterprise experienced some LPG loading cancellations for July and August 2016, the company expects that the associated cancellation fees and increased export volumes of polymer grade propylene (PGP) will more than offset any decrease in gross operating margin from the LPG cancellations.

Enterprise Products Partners invested approximately $884 million in total capital expenditures during the second quarter of 2016. This figure includes $58 million allocated to sustaining capital expenditures, indicating continued investment in maintaining and expanding its infrastructure.