Enbridge Energy Partners L.P.
) reported first-quarter 2014 adjusted earnings of 20 cents per
unit, in line with the Zacks Consensus Estimate. The quarterly
figure however deteriorated 4.8% from the year-earlier profit of
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Total revenue in the quarter was up 22.8% year over year at
$2,079.6 million from the year-ago level of $1,693 million. The
reported figure also surpassed 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 jumped 33% to $205.2
million in the quarter from the year-earlier level of $154.3
million. The segment witnessed higher indexed transportation
rates, in addition to higher deliveries primarily on the Lakehead
and North Dakota systems. Further, contributions from growth
projects that were commissioned during 2013, in particular Bakken
Pipeline Expansion, Bakken Berthold Rail, Bakken Access and
Lakehead system expansion projects, contributed to higher
revenues. This was more than offset by higher operating and
administrative expenses, higher pipeline integrity costs as well
as increased property tax and workforce costs.
The partnership's volumes in the Liquids system rose 12.4% year
over year to 2,456 thousand barrels per day.
Operating income of the Natural Gas segment decreased 67.2% year
over year to $8.8 million. The decrease was primarily due to
lower natural gas throughput and natural gas liquids production
volumes on major systems owing to reduced dry gas drilling
activity in its East Texas region, in addition to freeze-offs due
to extended cold weather conditions in certain areas of the
United States and the previously disclosed loss of a major
customer on the Anadarko system.
During the quarter, Natural Gas throughput dropped to 2,067,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,548,000 MMBtu/d.
Enbridge Energy remains optimistic about its long-term growth. It
expects various organic projects to be commissioned in 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 the 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 #4
(Sell). However, there are other stocks in the oil and gas sector
Boardwalk Pipeline Partners, LP
) - which hold a Zacks Rank #1 (Strong Buy) and are
expected to perform better.