uploads///ebitda vs consensus estimates

Enbridge Energy: What Are Its Plans for Its Natural Gas Business?


May. 3 2016, Published 1:13 p.m. ET

Earnings grow

Enbridge Energy Partners (EEP) reported its 1Q16 results on May 2, 2016. The company reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $466.2 million for the quarter. This is 4.4% higher than the estimated $446.6 million. The 1Q16 EBITDA is 7.9% higher than EEP’s 1Q15 EBITDA. The EBITDA growth was driven by increased deliveries on EEP’s liquids pipeline system. EEP’s distributable cash flow for 1Q16 was $244.5 million, 3.6% lower than the cash flow in 1Q15.

The above graph compares EEP’s EBITDA with consensus estimates over ten quarters. EEP beat EBITDA estimates in seven out of the last ten quarters. Enbridge Energy Partners forms ~1% of the Guggenheim Multi-Asset Income ETF (CVY).

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EEP’s 1Q16 distributions

EEP declared distributions for 1Q16 on April 29. Its 1Q16 distribution per unit was unchanged from its 4Q15 distribution. The company did not increase distribution in the third and fourth quarters of 2015 either.

Peer Enterprise Products Partners (EPD) increased its 1Q16 distributions by 1.3%. Plains All American Pipeline (PAA) announced flat 1Q16 distributions, and Tallgrass Energy Partners (TEP) has announced a 10.2% increase in its 1Q16 per unit distribution.

EEP evaluates strategic alternatives for its natural gas business

Enbridge Energy Partners announced that it is evaluating strategic alternatives for its investments in Midcoast Energy Partners (MEP). Enbridge Energy Partners’ natural gas assets are owned by Midcoast Energy Partners, and EEP owns 48.4% of Midcoast Energy Partners. EEP’s natural gas business has been facing headwinds for some time. The business was negatively affected by low commodity prices, which resulted in reduced drilling activity from producers in EEP’s areas of operations.

According to the company, the various strategic alternatives under consideration include “asset sales; mergers, joint ventures, reorganizations or recapitalizations; and further reductions in operating and capital expenditures for the Natural Gas business.”


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