Enbridge Energy Partners L.P.
) reported fourth-quarter 2012 adjusted earnings of 18 cents per
unit, missing the Zacks Consensus Estimate of 26 cents. The
quarterly figure also deteriorated 43.8% from the year-earlier
profit of 32 cents. The lower natural gas liquids price
realization as well as throughput affected the partnership's
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Full-year 2012 adjusted earnings came in at 99 cents per unit,
missing our expectation of $1.05 and falling 28.8% from the
year-ago profit level of $1.39.
Total revenue in the quarter was down 14.7% year over year at
$1,771.2 million from the year-ago level of $2,076.7 million. The
reported figure, however, beat the Zacks Consensus Estimate of
For the full year, total revenue decreased 26.4% to $6,706.1
million from the year-ago level of $9,109.8 million but surpassed
our expectation of $6,529.0 million.
Enbridge declared its cash distribution rate of 54.35 cents per
unit ($2.17 per unit annualized), level with the preceding
Operating income in the
segment plunged 17.6% to $133.0 million in the quarter from the
year-earlier level of $161.5 million. The segment witnessed lower
average daily volumes, mainly due to lower volumes on its liquids
pipeline systems and higher operating and administrative
expenses, partially offset by higher revenues from an increase in
index transportation rates as well as higher storage revenues
from the partnership's Cushing storage facilities.
The partnership's volumes in the Liquids system dropped 3.3% year
over year to 2,117 thousand barrels per day in the reported
Operating income of the
segment decreased 16.5% year over year to $42.9 million in the
fourth quarter, as a result of lower revenues resulting from
lower natural gas and natural gas liquids prices. Further, lower
volumes on its East Texas system and higher operating and
administrative expenses suppressed the earnings.
During the quarter, Natural Gas throughput dropped to 2,564,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,692,000 MMBtu/d.
segment registered an operating loss of $1.4 million versus an
operating loss of $1.2 million in the prior-year quarter. The
weak natural gas price environment was largely responsible for
this lackluster performance. Again, the restricted scope of
recognizing benefits from price differences between receipt and
delivery locations where natural gas is bought and sold by the
segment also depressed the results.
Enbridge Energy remains positive 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 its parent company's -
) - initiative of increasing capacity in the company's 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
On the flip side, Enbridge Energy recently reported an oil
release from Line 14, which forms part of the partnership's
Lakehead System. The reason of the spill remains unclear.
Further, 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 #3,
which is equivalent to a short-term Hold rating. However, there
are other stocks in the oil and gas sector -
Cabot Oil & Gas Corp
Memorial Production Partners L.P.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to