How Are EPD’s Segments Expected to Perform in 2Q16?



NGL Pipelines & Services segment

Enterprise Products Partners (EPD) carries out its operations through five reportable segments. NGL Pipelines & Services is its biggest segment and contributed 59% of EPD’s EBITDA (earnings before interest, tax, depreciation, and amortization) in 1Q16. EBITDA for the segment increased 13% in 1Q16. The final phase of segment’s Aegis ethane pipeline, completed in December 2015, should continue to contribute to the segment’s EBITDA in 2Q16.

The new cryogenic natural gas processing facility in New Mexico started in early May 2016, meanwhile, and should contribute to the segment’s 2Q16 EBITDA. The plant is supported by long-term, fee-based agreements and has a capacity of 200 MMcf (million cubic feet) per day of natural gas processing.

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Crude Oil Pipelines & Services segment

The above graph shows the segmental contribution to Enterprise Products’ quarterly EBITDA since the start of 2014. EPD’s Crude Oil Pipelines & Services segment’s 1Q16 EBITDA was 6% lower than in 1Q15. While EFS Midstream’s assets should contribute to the segment’s 2Q16 EBITDA, lower sales margins may continue to impact segment’s crude oil marketing activities.

Magellan Midstream Partners (MMP) and Plains All American Pipeline (PAA)—the two big MLPs operating crude oil pipelines—are both scheduled to report their 2Q16 results on August 2.

Other segments

Lower volumes and fees may continue to hurt EPD’s Natural Gas Pipelines and Services segment’s 2Q16 EBITDA. Likewise, lower sales margins and volumes may continue to pressure its Petrochemical and Refined Products Services segment’s EBITDA in 2Q16.

Now let’s look at EPD’s natural gas gathering and processing activities in relation to its operating income.


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