Why EPD’s revenues fell, but volumes increased in 3Q14

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Revenues and profit

The NGL Pipelines & Services segment’s revenues fell 4.8% to $4.02 billion in 3Q14—from $4.23 billion recorded last year. However, operating profit increased 11.3% to $711.5 million in the third quarter—from $637 million last year.

Higher fee-based processing volumes in the natural gas processing segment, and higher processing margins at certain plants, helped the higher operating income.

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The growth in operating income was partially offset by lower natural gas liquid (or NGL) marketing operating profit—due to lower margins and transportation volume and lower ethane recoveries. NGL’s volume and margin were negatively affected by higher maintenance downtime at its liquefied petroleum gas (or LPG) export facility.

NGL Volume chart

NGL Pipelines & Services segment’s volume analysis

In this segment of EPD, natural gas processing volume for 3Q14 increased to five billion cubic feet per day (or Bcf/d) from 4.7 Bcf/d in 2Q13. Also, EPD’s ATEX ethane pipeline transported ~66 thousand barrels per day of ethane. It generated a $35 million operating margin. The pipeline started commercial service in January 2014.

Among its peers, net income for Kinder Morgan Energy Partners (KMP) increased 39.8%, net income for Spectra Energy (SE) decreased by 23.6%, and net income for Energy Transfer Partners (ETP) decreased by 3.7% in 3Q14—compared to the same quarter last year. Some of these companies are part of the Alerian MLP ETF (AMLP).

In the next part of the series, we’ll discuss how EPD’s other sections performed. Read our article “Enterprise Products Partners’ business segments and assets” to learn more about the segments.

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