Second-quarter EBITDA estimates
Wall Street analysts’ second-quarter consensus EBITDA estimate for Energy Transfer Partners is $1909.1 million. The second-quarter estimate is 19.3% more than the adjusted EBITDA in the second quarter of 2017 and 1.5% more than the adjusted EBITDA in the first quarter. The partnership beat its earnings estimate in the previous quarter. The first-quarter EBITDA estimate for Energy Transfer Partners was $1855.8 million, while the adjusted EBITDA was $1881.0 million—a 1.4 % beat.
Energy Transfer Equity’s earnings mainly depend on distribution income from its subsidiaries. Therefore, Energy Transfer Partners’ EBITDA growth drives Energy Transfer Equity’s earnings. Energy Transfer Partners’ second-quarter EBITDA growth year-over-year is expected to be driven by the following factors.
- strong natural gas and crude oil throughput volumes due to strong production growth, particularly in the Permian region
- higher non-fee-based processing and fractionation margins due to higher crude oil prices
- contribution from expansion projects placed into service including Bakken pipeline and Rover pipeline projects
- a strong performance at the partnership’s crude oil acquisition and marketing business due to the wider WTI spreads
The above increase might be offset by:
- sale of the compression business
- halt on the Mariner East 1 pipeline
- higher operating and maintenance expenses related to expansion projects placed into service
- lower throughput volumes and natural gas pipeline systems
In the next two parts, we’ll discuss Energy Transfer Partners’ second-quarter operating performance drivers. In this series, we’ll discuss the key expectations and analysts’ recommendations for Energy Transfer Partners and Energy Transfer Equity.