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Enterprise Products Partners L.P. Message Board

  • upn42 upn42 Jun 12, 2012 2:12 PM Flag

    NGL price decline-EPD 80% fixed fees

    Can anyone explain the effect that NGL price decline has had on MLP's.Un- hedged upstreams are probably hurting but EPD with 80% of it's margins coming from fixed fees should be affected to a lesser degree.

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    • The market has historically always treated G&P MLPs as if they were producing oil and NG and selling at the spot price. The question going forward is if the oil/NG differential narrows then EPD and others will be impacted. The bigger issue is the myth that companies are going to stop production if oil goes under $75. Demand is really very inflexible and companies have huge fixed expenses and contracts to deliver futures product.


    • G&Ps as a group tend to have less hedging and are probably exposed more than E&Ps to the NGL price decline. As to the details we will find out with the Q2 earnings.

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