As stated by other posters, cash is king with respect to MLP investments. And EPD is akin to the Secretariat of MLPs. This was another year of great results. Congrats to EPD and all unitholders.
With MLPs, earnings are inconsequential. What you have to look at is distributions and distribution coverage. Trying to figure price/earnings ratios tells you very little. Obviously, the partnership has to bring in enough money to pay the distribution which is the principle reason for owning the units. I know this seems counter-intuitive, but that's the way it works. If you didn't know this, don't feel bad. I just learned it myself. The last time I checked, the coverage ratio was about 1.6X (which is very strong relative to other MLPs.) I've been continually accumulating more units whenever the price drops, plus I take advantage of the 5% discount on the DRIP. If you do this, beware of the extremely high commissions that Wells Fargo charges to buy or sell units. (I do it through my Flagship account at Vanguard where I pay no commissions.)
Thanks for the summary post rrb1981. I think under the circumstances, EPD does indeed look solid and a *very* good hold for those with existing positions. I'm thinking of adding to my position. I missed that drop to $31, thought it might drop under $30. I'll be patient and see if I can catch $30 again to add more. This is absolutely one of the safest distributions one can find for those looking for cash flow (like me). Distribution growth keeps up with inflation too which is nice.
scabber - EPD processes and exports millions of dollars of propane. The cost feedstock for propane was down by about $1B last Q. The sale price was down by a couple million less. Thus revenues down by $998M and profit for that segment up $2M. Costco gasoline sales are down by about 35% this last quarter, but their profit is the same. Get it?
capt - Actually they came in right on projections. DCF was up a bit. The dom and gloom stuff simply misses the mark. EPD only short because of ethane bypass and that will change in 2w016 with new industrial plants.
I thought the conference call was extremely upbeat considering the current energy price complex. Management gave good concise answers to a analysts and their tone was positive. The market seems to agree right now.
Is at 38.8 mil bbl... record high is 51.6 mil bbl in Jan of 13
Its been growing at about 2 mil bbl a week since the beginning of Dec... but its up from a low of 18 mil bbl in the beginning of Aug
Just posted as food for thought with Seaway operating at 1/2 cap
As before you have been told to buy a one way ticket to Cuba; you can take part in socialism with Castro. When Obama is gone from the White House he can join you and Jimmy carter In Cuba!!
Sentiment: Strong Buy
well they aren't spending as much in December and that is because the effect of low oil prices is starting to make its way to their wallets
plus, the dollar may have peaked especially as the realization sets in that the Fed is not going to be doing much to rates as long as weak/weakening global economic conditions and deflation risk remain, but currency volatility likely as traders weigh fed rate rises with ECB QE?
meanwhile not a bad report for EPD I thought
You need to go to the National Association of Publiclly Traded Partnership and figure out what matters and what does not. Revenues are not a guideline and neither is earnings.
Looks like EPD had a fairly good 4Q, especially in light of the commodity turmoil.
DCF coverage was actually higher than I expected, coming in around 1.50x. Not only does that provide a nice cushion for the distribution, it provides them with equity growth capital. They held back $1.5 billion and spent $4.1 billion on expansions. That means they only needed to externally source around $2.6 billion, which means fewer equity offerings and less debt.
I do not know how long the malaise of low commodity prices will last, my guess is 12-18 months before oil gets back to $65-$70 (prices at which most producers can do well, especially with lower D&C costs coming). I believe EPD is one of the best situated midstream companies to ride through the storm.
I expect continued modest distribution increases, perhaps some slight slow down on projects, the backlog may diminish a bit but I look for EPD to trudge through '15 and into '16 in decent shape and perhaps by mid to late '16 the supply demand imbalance will be nearing equilibrium or have even swung the other direction as the Saudi's are now warning that underinvestment will cause an upward swing. Either way, if you want energy exposure without having to own a E&P, EPD offers a nice play on it, not totally insulated, but certainly offering critical, necessary services. Oil and gas production in the US may flatten, it might even fall in a year or so, but it isn't going away as the Saudi's don't have enough oil to supply the whole world, OPEC only controls around 40%. 2015 won't likely be a banner year, but I do expect them to survive and prosper again when pricing returns to levels that are consistent for sustainable supply.
Germans are spending their money while it has value.... Declining Euro means higher prices tomorrow so you buy today before it costs more the next
No different than what was going on in Russia
EPD's business isn't immune to falling crude, NGL and natural gas prices. They have commodity exposure, however, they have managed their business quite well, terming out much of their debt, running with excellent coverage and generally focusing on fee based assets. I expect them to report well above 1.0x coverage.
EPD is the largest MLP in the sector. They are going to take their lumps during the downturn, but should do well. I expect continued modest distribution growth of 4-5% over the next year.