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How Did EPD’s NGL Pipelines and Services Segment Perform in 2Q15?

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NGL Pipelines and Services

Enterprise Products Partners (EPD) carries out its operations through five reportable segments. NGL Pipelines and Services is the MLP’s biggest segment. It contributed half of Enterprise Products’ EBITDA (earnings before interest, tax, depreciation, and amortization) in 2Q15.

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

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NGL Pipelines and Services segment’s EBITDA fell

The above chart shows the segment’s EBITDA over six quarters. The segment’s EBITDA fell ~4% in 2Q15 compared to the same quarter last year. The fall was due to lower gas processing margins and a fall in NGL production and transportation volumes—partly due to lower ethane recovery. Lower fractionation volumes and lower product blending revenue due to weak energy prices resulted in a fall in operating income from the segment’s NGL fractionation business.

Some other MLPs involved in fractionation are DCP Midstream Partners (DPM), Tallgrass Energy Partners (TEP), Southcross Energy Partners (SXE), and Western Gas Partners (WES). Western Gas Partners forms 3.70% of the Alerian MLP ETF (AMLP).

The declines in EBITDA were partially offset by higher income from Enterprise Products expanded and acquired assets. These included the NGL export terminal in the Houston Ship Channel, assets from the Oiltanking acquisition, the rise in the LPG (liquefied petroleum gas) export capacity, and higher volumes from the Front Range Pipeline and the Texas Express Pipeline and gathering system.

We’ll look at the performance of Enterprise Products’ other segments in the next part of the series.

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