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Enterprise Products’ Distributable Cash Flow Rose 23% in 1Q18

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Enterprise Products Partners’ 1Q18 earnings

Enterprise Products Partners (EPD) reported its 1Q18 results on April 30. The company reported 23% YoY (year-over-year) growth in its distributable cash flow for the quarter. Enterprise Products Partners’ adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 19% from $1.41 billion in 1Q17 to $1.69 billion in 1Q18. Enterprise Products Partners’ Petrochemical & Refined Products Services business contributed to the earnings growth for the quarter.

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Growth drivers

“Enterprise’s pipelines had volume increases in crude oil, NGL and natural gas production from the Permian basin and the resurgence of the Rocky Mountains and Haynesville Shale regions,” said Jim Teague, CEO of Enterprise Products Partners’ general partner.

In 1Q18, the Petrochemical & Refined Products Services segment’s earnings grew 50% YoY. The growth in the segment’s earnings was driven by higher sales margins at its propylene fractionators, lower commissioning costs for its PDH (propane dehydrogenation) facility, and increased propylene production, butane isomerization, octane enhancement, and high-purity isobutylene volumes.

Enterprise Products Partners’ NGL Pipelines & Services segment’s earnings grew 3% YoY in 1Q18. The segment accounted for 56% of Enterprise Products Partners’ EBITDA for the quarter. Enterprise Products Partners’ Natural Gas Pipelines & Services segment’s earnings rose 16% YoY.

Crude Oil Pipelines & Services segment

Enterprise Products’ Crude Oil Pipelines & Services segment’s earnings fell 17% YoY. While the segment’s crude oil pipelines and terminal volumes rose, its earnings fell due to mark-to-market losses on hedges due to the Midland to Houston spreads widening. The company expects the losses to reverse as hedges are settled.

A third party has acquired a 20% interest in Enterprise Products Partners’ Midland to Sealy pipeline. The Crude Oil Pipelines & Services segment’s EBITDA fell by $24 million in 1Q18. Lower sales margins and non-cash losses due to widening spreads impacted the segment’s marketing activities during the quarter.

Plains All American Pipeline (PAA) is scheduled to report its 1Q18 earnings on May 8. Magellan Midstream Partners (MMP) is scheduled to report its results on May 3.

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