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DCP Midstream (DCP) Gains Marginally Despite Q2 Earnings Miss

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DCP Midstream, LP DCP gained marginally despite reporting weak second-quarter 2021 earnings. It seems that investors are optimistic about the partnership after it reported that its overall position is sound while entering the second half of this year. The partnership is also transitioning to return additional value to unit holders.

The partnership reported second-quarter 2021 adjusted loss of 12 cents per unit, missing the Zacks Consensus Estimate of earnings of 57 cents and declining from the year-ago profit of 15 cents.

Revenues of $2,085 million missed the Zacks Consensus Estimate of $2,914 million. The top line, however, increased from $1,274 million in the year-ago quarter.

The partnership’s lower-than-expected results were owing to a decline in NGL pipelines throughput volumes. This was offset partially by increased wellhead volumes in the North.

DCP Midstream Partners, LP Price, Consensus and EPS Surprise

DCP Midstream Partners, LP Price, Consensus and EPS Surprise
DCP Midstream Partners, LP Price, Consensus and EPS Surprise

DCP Midstream Partners, LP price-consensus-eps-surprise-chart | DCP Midstream Partners, LP Quote

Operations

Logistics and Marketing

The segment recorded adjusted EBITDA of $194 million for the second quarter, down from the year-ago period’s $213 million. Lower NGL pipelines throughput volumes affected the segment. The negatives were partially offset by higher Southern Hills volumes.

Average NGL pipelines throughput for the quarter was 671 thousand barrels per day (Mbpd), lower than the year-ago level of 676 Mbpd. Fractionator throughput was recorded at 51 Mbpd, in line with the year-ago level.

Gathering and Processing

The segment reported adjusted EBITDA of $197 million for the second quarter, up from $158 million a year ago. Increased wellhead volumes in the North and favorable commodity prices aided the segment. A decline in Permian volumes partially negated the positives.

Average natural gas wellhead volumes for the quarter declined to 4,338 million cubic feet per day (MMcf/d) from the year-ago period’s 4,487 MMcf/d. NGL gross production increased to 409 Mbpd from 376 Mbpd in the year-ago quarter.

Total Expenses

Purchases and related costs significantly increased year over year for the quarter under review. Operating and maintenance expense rose to $165 million from $148 million in the second quarter of 2020.

Total operating costs and expenses for the second quarter were $2,169 million, up from the year-ago figure of $1,280 million.

Financials

For second-quarter 2021, total expansion capital expenditure and equity investments were $11 million. Sustaining capital for the quarter was $17 million. It generated excess free cash flow of $132 million in the second quarter.

At the end of second-quarter 2021, the partnership reported long-term debt of $5,388 million. Cash and cash equivalents were $5 million. It had current debt of $354 million, reflecting a debt to capitalization of 50.2%.

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Backed by strong results in the first half of this year, the partnership now expects to deliver toward the high end of its financial guidance for 2021.

By 2030, the partnership is planning to lower its Scope 1 and 2 greenhouse gas emissions by 30%. DCP Midstream added that by 2050, it is expecting to achieve net zero emissions.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation WLL, Continental Resources, Inc. CLR and PDC Energy, Inc. PDCE. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.


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Continental Resources, Inc. (CLR): Free Stock Analysis Report

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DCP Midstream Partners, LP (DCP): Free Stock Analysis Report

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