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Enbridge Energy Partners’ 3Q15 Earnings Grew but Missed Estimates

Ruth King

Enbridge Energy Partners: How Did It Fare in 3Q15?

(Continued from Prior Part)

EEP missed EBITDA estimates

Enbridge Energy Partners’ (EEP) 3Q15 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $392 million, which is 8.2% lower than the consensus estimates.

Its adjusted EBITDA grew 12.2% compared to $349.1 million for 2Q15 and 1.5% compared to $386.1 million for 3Q14. Enbridge Energy Partners missed its consensus EBITDA estimates in eight out of the last ten quarters.

Factors contributing to EEP’s 3Q15 EBITDA growth

The graph above compares the consensus EBITDA estimates with Enbridge Energy Partners’ EBITDA over the last ten quarters. Enbridge Energy Partners forms ~1% of the Guggenheim Multi-Asset Income ETF (CVY). The following factors contributed to EEP’s EBITDA growth during the quarter:

  • An increase in transportation rates and higher deliveries on EEP’s liquids pipeline systems contributed to Enbridge Energy Partners’ EBITDA growth. Total liquids system deliveries increased 6.5% in the quarter over 3Q14.
  • Increased contributions from growth projects placed into service in 2014 and 2015. These included the Eastern Access Program and a phase of the US Mainline Expansion project.
  • Higher NGL (natural gas liquids) production volumes. Additionally, Enbridge Energy Partners’ EBITDA growth was contributed by higher storage margins and from seasonal optimization opportunities in NGL marketing.
  • Lower operating and administrative expenses due to cost reduction measures undertaken by EEP.
  • The above gains were partially offset by a decrease in natural gas system volumes. The decrease in volumes is primarily attributable to the continued low commodity price environment, which has resulted in reductions in drilling activity from producers in EEP’s areas of operations.

The low commodity price environment has impacted the performance of almost all natural gas gathering and processing MLPs, including Targa Resources (NGLS), MarkWest Energy Partners (MWE), Tallgrass Energy Partners (TEP), and Southcross Energy Partners (SXE).

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