Enbridge Energy Partners L.P.
) reported first-quarter 2013 adjusted earnings of 21 cents per
unit, beating the Zacks Consensus Estimate of 18 cents. The
quarterly figure however deteriorated 25% from the year-earlier
profit of 28 cents.
Total revenue in the quarter was down almost 7% year over year at
$1,693.0 million from the year-ago level of $1,819.5 million. The
reported figure also came below the Zacks Consensus Estimate of
Enbridge declared quarterly cash distribution rate of 54.35 cents
per unit ($2.17 per unit annualized), level with the preceding
Operating income in the Liquids segment fell 3% to $154.3 million
in the quarter from the year-earlier level of $159.0 million. The
segment witnessed higher indexed transportation rates, in
addition to higher storage revenues from the Partnership's
Cushing storage facilities. This was more than offset by lower
deliveries primarily on liquids North Dakota system and higher
operating and administrative expenses.
The partnership's volumes in the Liquids system dropped 5.7% year
over year to 2,186 thousand barrels per day in the reported
Operating income of the Natural Gas segment decreased 49.7% year
over year to $26.4 million. The decrease was primarily due to
lower NGL prices, in addition to ethane rejection at some plants
predominantly situated in the Midcontinent.
During the quarter, Natural Gas throughput dropped to 2,548,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,576,000 MMBtu/d.
The Marketing segment registered an operating income of $0.4
million versus an operating loss of $3.2 million in the
prior-year quarter. The increase was primarily due to non-cash
charges that were recorded to reduce the cost basis of natural
gas inventory to net realizable value. Performance also was
boosted by the expiration of natural gas transportation demand
fees on a third party pipeline.
Enbridge Energy remains optimistic about its long-term growth. It
expects various organic projects to be commissioned in 2013 and
2014. These projects are characterized by their longer term and
lower risk. The partnership's business model will prove
beneficial in assisting the initiative of its parent company -
) - to increase capacity in the Lakehead System and the
Eastern Access Projects with its commissioning scheduled for
2014. The partnership is undertaking various initiatives to grow
in the Liquids segment as witnessed by pipeline expansions for
expediting movement of resources from the Bakken region.
However, we remain apprehensive about its midstream natural gas
business, which is sensitive to changes in natural gas supply,
demand fundamentals and commodity cycles associated with gas
processing margins. Enbridge Energy carries a Zacks Rank #5,
which is equivalent to a short-term Strong Sell rating. However,
there are other stocks in the oil and gas sector -
EPL Oil & Gas, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to
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