El Paso Pipeline Tops Earnings, Revs Short

Zacks

El Paso Pipeline Partners (EPB) announced first-quarter 2013 operating earnings of 58 cents per unit, surpassing the Zacks Consensus Estimate and the year-ago earnings  by 4 cents or 7.4%. The year-over-year increase was driven by higher demand for natural gas for power generation.

Total Revenue

Total revenue at the end of the first quarter was $386 million, down 1% from $390 million in the year-ago period. The results of the first quarter 2012 were adjusted to accommodate the effect of El Paso’s May 24, 2012 acquisition of Cheyenne Plains.

Quarterly revenues were lower than the Zacks Consensus Estimate of $399 million.

Highlights of the Release

The partnership’s operating and maintenance costs for the quarter were $71 million, a decline of $29 million from the prior-year quarter. This benefited the partnership’s operating income.

Operating income in the first quarter increased 12.2% year over year to $249 million.

The partnership’s quarterly cash distribution rate of 62 cents per unit was up 1.6% sequentially from 61 cents and 22% year over year from 51 cents.

2013 Forecast

The partnership expects to generate earnings before DD&A of $1.22 billion, up an estimated $40 million from the 2012 level.

El Paso Pipeline Partners expects to increase its annual cash distribution per unit by 13% year over year to $2.55.

Other Stocks to Consider

Atlas Pipeline Partners, L.P. (APL) is expected to release its first quarter results after the market close on Apr 29, 2013. The Zacks Consensus Estimate for the quarter is 37 cents.

Delek Logistics Partners, LP (DKL) is expected to release its first quarter results on May 7, after the market close on May 7, 2013. The Zacks Consensus Estimate for the quarter is 38 cents.

NuStar Energy L.P. (NS) is expected to release its first quarter results before the market open on Apr 24, 2013. The Zacks Consensus Estimate for the quarter is 45 cents.

Our View

The partnership has registered earnings surprises in three out of the last four quarters with an average beat of 4.99%. The long-term expected earnings growth rate for this stock is 5.0%.

The partnership is presently working to develop an LNG facility in Elba Island, which will open up a new window for LNG export.

Based in Houston, Texas, El Paso Pipeline Partners was founded in 2007. The partnership is involved in storage and transportation of natural gas across the United States. The partnership currently retains a short-term Zacks Rank #3 (Hold).
 

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