Enterprise Products Partners LP (NYSE: EPD) posted impressive first-quarter results, generating enough cash flow to cover its distribution by 1.5 times. This $450 million in retained casjh flow funded about 45 percent of the partnership’s growth-related capital expenditures over this three-month period.
Management reiterated its goal of growing the MLP’s distributable cash flow to the point that the midstream operator can fund the equity portion of its capital needs internally, a huge point of differentiation in today’s market.
Three of Enterprise Products Partners’ four business lines increased their gross margin on a year-over-year basis. The natural-gas segment benefited from higher volumes in the Haynesville Shale and Jonah Field, while the petrochemical and refined-product segment enjoyed strong throughput and exports. Volumes on Enterprise Products Partners’ crude oil pipelines and marine terminals reached a record level during the quarter, though gross margins took temporary a hit from hedging activities. The natural gas liquids (NGL) segment posted record quarterly results on higher gas-processing margins and increased throughput on its pipelines and at its export facilities.
Although the first quarter represents a period of seasonal strength for Enterprise Products Partners, the start-up of the Orla gas-processing plant in the Delaware Basin, the propane dehydrogenation unit and Midland-to-ECHO pipeline should drive further upside as the year goes on.
Enterprise Products Partners’ growth prospects for the next two years also look bright, with the blue-chip MLP pursuing projects to support expanding petrochemical capacity on the Gulf Coast and increase its ability to export crude oil, refined products, natural gas liquids and ethylene. Pulling this off while funding a growing proportion of its capital expenditures internally should unlock significant value for unitholders.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Aug. 31, 2021
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.