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Enterprise has over $5 billion in current growth projects

Ingrid Pan, CFA

Key points from Enterprise Products Partners' analyst day meeting (Part 2 of 8)

(Continued from Part 1)

Enterprise Products Partners growth projects

Enterprise Products Partners (EPD) highlighted in its recent presentation that it has recently put into places billions of dollars of growth projects, with a large multi-billion-dollar pipeline of projects currently under construction. Key points include the following:

  • $4.6 billion of projects put into service through 2013 and 1Q14
  • $5.5 billion of major projects to be completed from now through 2016, for a total of ~$10.1 billion spent from 2013 through 2016
  • Other potential growth projects identified and pending board approval

Most of the $10.1 billion of growth capex will be allocated towards EPD’s Natural Gas Liquids (NGL) Pipelines & Services segment (~57%). The remainder of the spending will be allocated towards Onshore Crude Pipelines & Services (~22%), Petrochemical and Refined Products and Services (~19%), and Offshore Pipelines & Services (~2%).

Note that EPD generated ~$4.8 billion of gross operating margin over 2013, with 52% from the NGL Pipelines & Services segment, 16% from Onshore Crude Oil Pipelines & Services, 16% Onshore Natural Gas Pipelines & Services, 13% Petrochemical & Refined Products Services, and 3% Offshore Pipelines and Services. While EPD’s Onshore Natural Gas Pipelines segment made up a significant portion of gross margin over 2013, the company hasn’t allocated significant growth capital towards this segment, as it has likely identified projects in other segments as generating higher returns and noted during its presentation that “natural gas pipeline volumes have tailed off just a little bit” through some of EPD’s natural gas transportation systems.

Enterprise Products Partners (EPD) is one of the largest midstream energy MLPs, and it’s a major component of the Alerian MLP ETF (AMLP), the Tortoise Infrastructure Energy Corp. (TYG) closed end fund (CEF), the ClearBridge Energy MLP Fund Inc. CEF (CEM), and the Kayne Anderson MLP Investment Co. CEF (KYN).

For more detail on where Enterprise plans to undertake major growth projects, please read on to the following parts of this series.

Continue to Part 3

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