Enbridge Beats Earnings, Falls Y/Y - Analyst Blog
02 Maggio 2013 - 12:10PM
Zacks
Enbridge Energy Partners
L.P. (EEP) reported first-quarter 2013 adjusted earnings
of 21 cents per unit, beating the Zacks Consensus Estimate of 18
cents. The quarterly figure however deteriorated 25% from the
year-earlier profit of 28 cents.
Total revenue in the quarter was down almost 7% year over year at
$1,693.0 million from the year-ago level of $1,819.5 million. The
reported figure also came below the Zacks Consensus Estimate of
$1,745.0 million.
Distribution
Enbridge declared quarterly cash distribution rate of 54.35 cents
per unit ($2.17 per unit annualized), level with the preceding
quarter.
Operational Performance
Operating income in the Liquids segment fell 3% to $154.3 million
in the quarter from the year-earlier level of $159.0 million. The
segment witnessed higher indexed transportation rates, in addition
to higher storage revenues from the Partnership's Cushing storage
facilities. This was more than offset by lower deliveries primarily
on liquids North Dakota system and higher operating and
administrative expenses.
The partnership’s volumes in the Liquids system dropped 5.7% year
over year to 2,186 thousand barrels per day in the reported
quarter.
Operating income of the Natural Gas segment decreased 49.7% year
over year to $26.4 million. The decrease was primarily due to lower
NGL prices, in addition to ethane rejection at some plants
predominantly situated in the Midcontinent.
During the quarter, Natural Gas throughput dropped to 2,548,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,576,000 MMBtu/d.
The Marketing segment registered an operating income of $0.4
million versus an operating loss of $3.2 million in the prior-year
quarter. The increase was primarily due to non-cash charges that
were recorded to reduce the cost basis of natural gas inventory to
net realizable value. Performance also was boosted by the
expiration of natural gas transportation demand fees on a third
party pipeline.
Outlook
Enbridge Energy remains optimistic about its long-term growth. It
expects various organic projects to be commissioned in 2013 and
2014. These projects are characterized by their longer term and
lower risk. The partnership’s business model will prove beneficial
in assisting the initiative of its parent company –
Enbridge Inc. (ENB) – to increase capacity
in the Lakehead System and the Eastern Access Projects with its
commissioning scheduled for 2014. The partnership is undertaking
various initiatives to grow in the Liquids segment as witnessed by
pipeline expansions for expediting movement of resources from the
Bakken region.
However, we remain apprehensive about its midstream natural gas
business, which is sensitive to changes in natural gas supply,
demand fundamentals and commodity cycles associated with gas
processing margins. Enbridge Energy carries a Zacks Rank #5, which
is equivalent to a short-term Strong Sell rating. However, there
are other stocks in the oil and gas sector – Tesco
Corporation (TESO) and EPL Oil & Gas,
Inc. (EPL) – which hold a Zacks Rank #1 (Strong Buy) and
are expected to perform better.
ENBRIDGE EGY PT (EEP): Free Stock Analysis Report
ENBRIDGE INC (ENB): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
TESCO CORP (TESO): Free Stock Analysis Report
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