Enbridge Energy Partners L.P.
) reported third-quarter 2013 adjusted earnings of 9 cents per
unit, lagging the Zacks Consensus Estimate of 26 cents. The
quarterly figure was also lower than the year-earlier profit of
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The quarter's total revenue increased 14.4% year over year to
$1,789.4 million from the year-ago level of $1,564.3 million. The
reported figure also beat 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 declined 2.1% to $150.2
million in the quarter from the year-earlier level of $153.5
million. The segment witnessed higher operating and
administrative expenses related to scheduled pipeline integrity
initiatives. This was partially offset by higher indexed
transportation rates, in addition to contributions from growth
projects entering into service earlier in the year.
The partnership's volumes in the Liquids system increased 3.3%
year over year to 2,247 thousand barrels per day in the reported
Operating income of the Natural Gas segment decreased 71.3% year
over year to $17.3 million. The decrease was primarily due to
lower NGL prices, in addition to lower NGL and natural gas
volumes in the systems.
During the quarter, Natural Gas throughput dropped to 2,391,000
million British thermal units per day (MMBtu/d) from the
year-earlier level of 2,627,000 MMBtu/d.
The Marketing segment registered operating loss of $0.5 million
versus an operating loss of $1.2 million in the prior-year
quarter. The improvement was primarily attributable to the
expiration of certain firm natural gas transportation demand fees
on third party pipelines and additional optimization
opportunities from modestly improved natural gas basis spreads.
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 assist the
initiative of its parent company -
) - in increasing capacity in the Lakehead System and the Eastern
Access Projects with its commissioning scheduled for 2014. The
partnership is undertaking various growth initiatives in the
Liquids segment as witnessed by pipeline expansion 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
Enbridge Energy carries a Zacks Rank #4 (Sell). However, there
are other stocks in the oil and gas sector -
TransAtlantic Petroleum Ltd
Northern Oil and Gas, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to