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How Enterprise Products Partners’ Segments Will Perform in 2Q15

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NGL Pipelines & Services

Enterprise Products Partners (EPD) carries out its operations through five reportable segments. NGL Pipelines & Services is the company’s biggest segment. It contributed ~60% of the company’s EBITDA (earnings before interest, tax, depreciation, and amortization) in 1Q15.

EPD’s NGL Pipelines & Services segment processes natural gas and fractionates and markets NGLs (natural gas liquids). The segment transports and stores NGLs and related products. The segment also operates NGL export and import terminals.

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Enterprise Products’ NGL Pipelines & Services segment’s EBITDA declined by 11% year-over-year in 1Q15. The decline was primarily attributed to lower sales margins and natural gas processing margins, compared to the same quarter a year ago. Weaker energy commodity prices might impact the segment’s 2Q15 results as well.

Increased loading capacity at EPD’s Houston Ship Channel LPG export terminal announced in April 2015 should benefit the segment’s EBITDA for the quarter.

Onshore Natural Gas Pipelines & Services

Enterprise Products’ Onshore Natural Gas Pipelines & Services segment’s EBITDA declined by ~7% in 1Q15 compared to 1Q14. The decline was primarily driven by lower natural gas prices and lower revenues from condensate sales. The segment’s contracts are indexed to natural gas prices. This might impact EBITDA for 2Q15 as well.

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Onshore Crude Oil Pipelines & Services

EPD’s Onshore Crude Oil Pipelines & Services segment’s EBITDA increased by 34% in 1Q15 compared to the same quarter a year ago. The increase in the segment’s EBITDA was attributed to assets from the Oiltanking Partners acquisition and to revenues from the new Seaway Pipeline. These should help the segment’s EBITDA growth in 2Q15 as well.

The above graph shows the contribution of EPD’s five segments to its EBITDA in 1Q15 and 1Q14.

Petrochemical & Refined Products Services

EPD’s Petrochemical & Refined Products Services segment’s EBITDA increased by 34% in 1Q15 compared to 1Q14, mainly because of the Oiltanking Partners acquisition. While this should drive EBITDA in 2Q15 as well, lower energy prices might hurt margins.

The performance of Williams Partners (WPZ), Enbridge Energy Partners (EEP), Spectra Energy Partners (SEP), Sunoco Logistics Partners (SXL), and Energy Transfer Partners (ETP) was also affected by low energy prices in 1Q15.

Enterprise Products Partners, Energy Transfer Partners, and Buckeye Partners (BPL) together form ~22% of the Alerian MLP ETF (AMLP).

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