Enbridge Energy Partners L.P.
) reported second-quarter 2014 adjusted earnings of 21 cents per
unit, which was below the Zacks Consensus Estimate of 23 cents. The
quarterly figure, however, increased 61.5% from the year-earlier
profit of 13 cents.
Total revenue in the quarter rose 11.9% to $1,871.1 million from
the year-ago level of $1,672.7 million but lagged the Zacks
Consensus Estimate of $2,155 million.
Enbridge declared quarterly cash distribution rate of 55.55 cents
per unit ($2.22 per unit annualized), up 2.1% from the preceding
Operating income in the Liquids segment jumped 38.7% to $232.8
million in the quarter from the year-earlier level of $167.9
million. The segment witnessed higher indexed transportation rates,
in addition to higher deliveries, primarily based on the Lakehead
and North Dakota systems. Further, contribution from growth
projects that were commissioned during 2013, in particular the
Bakken Pipeline Expansion, Bakken Berthold Rail, Bakken Access and
Lakehead system expansion projects, contributed to higher revenues.
The commissioning of a large component of its Eastern Access
program, especially the 160-mile segment of Line 6B replacement
project from Griffith, IN to Stockbridge, MI further added to
earnings. Nevertheless, this was more than offset by higher
operating and administrative expenses.
The partnership's volumes in the Liquids system rose 28.6% year
over year to 2,578 thousand barrels per day.
Operating income of the Natural Gas segment decreased nearly 51%
year over year to $7.7 million. The decline was primarily due to
lower natural gas throughput and natural gas liquids production
volumes on major systems resulting from reduced dry gas drilling
activity, delayed well completions in its East Texas region and
lower drilling activity in the Anadarko region. This was partially
mitigated by lower operating and administrative expenses.
During the quarter, Natural Gas throughput fell to 2,155,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,527,000 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 help to take forward its parent
company, Enbridge Inc.'s (
) initiative 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 its pipeline expansions for
quickening the movement of resources from the Bakken region.
However, we remain apprehensive about Enbridge Energy's midstream
natural gas business, which is sensitive to changes in natural gas
supply, demand fundamentals and commodity cycles associated with
gas processing margins.
At present, Enbridge Energy carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the oil and gas sector like Weatherford
International plc (
) and CNOOC Ltd (
), both sporting a Zacks Rank #1 (Strong Buy) are expected to
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