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EPD’s Crude Oil Pipelines Segment Could Fuel Growth in 4Q15

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Jan. 22 2016, Updated 12:33 p.m. ET

EPD’s NGL Pipelines & Services segment

Enterprise Products Partners (EPD) carries out its operations through five reportable segments. NGL Pipelines & Services is its biggest segment. It contributed nearly half of EPD’s EBITDA[1. earnings before interest, tax, depreciation, and amortization] in 3Q15. The second segment of EPD’s Aegis Ethane Pipeline, completed in September, should contribute to the segment’s 4Q15 EBITDA.

Expansion of EPD’s liquefied petroleum gas export facility—completed in April 2015—and increased volumes on its ATEX and Aegis ethane pipelines could continue to contribute to the segment’s EBITDA in the quarter.

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EPD’s Crude Oil Pipelines & Services segment

The above graph shows the segmental contribution to Enterprise Products’ quarterly EBITDA since the start of 2014. EPD forms ~1.5% of the Multi-Asset Diversified Income ETF (MDIV). MDIV invests nearly 17% of its portfolio in MLPs. EPD’s 4Q15 EBITDA for its Crude Oil Pipelines & Services segment may grow due to the following:

  • the Rancho II Pipeline between Sealy, Texas, and the ECHO terminal in southeast Houston, placed in service in September
  • EFS Midstream’s assets, which EPD acquired in July 2015
  • the segment’s crude oil operations at the Houston Ship Channel terminal, part of the Oiltanking acquisition
  • the new Seaway Loop pipeline, which began service in December 2014

The contribution from EPD’s Natural Gas Pipelines and Services and Petrochemical and Refined Products Services segments may remain relatively flat in 4Q15. EPD sold its offshore Gulf of Mexico business on July 24, 2015, to Genesis Energy. So it should not have any contribution from its Offshore Pipelines and Services segment in 4Q15.

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