Enterprise Products Partners L.P. (Enterprise) announced its financial results for the three months and year ended December 31, 2012. For the year ended 2012, Enterprise reported records for each of the following: net income of $2.4 billion; earnings per unit of $2.71 on a fully diluted basis; gross operating margin of $4.4 billion; and distributable cash flow of $4.1 billion, which included $1.2 billion of cash proceeds from sales of assets.
“Enterprise had another record year in 2012,” stated Michael A. Creel, president and CEO of Enterprise. “We benefited from record volumes in our fee-based businesses attributable to production growth, primarily in the Eagle Ford and Haynesville shale plays, and from strong domestic and international demand for NGLs, particularly from the U.S. petrochemical industry and exports.
In 2012, our integrated pipeline system transported a record 4.3 million barrels per day of NGLs, crude oil, refined products and petrochemicals and a record 14.5 trillion Btus per day of natural gas; while our NGL fractionators averaged a record 659,000 barrels per day and our processing plants handled a record 4.4 billion cubic feet per day of natural gas on a fee basis.”
“We generated $4.1 billion of distributable cash flow and increased our cash distributions with respect to 2012 by 5.6 percent to $2.57 per unit. Enterprise has increased its cash distribution rate for each of the last 34 consecutive quarters, the longest period for any of the publicly traded energy partnerships, and in excess of 5 percent for each of the last eight years. In 2012, we retained approximately $1.9 billion of cash flow to reinvest in our growth projects and reduce our need to issue additional equity. Excluding $1.2 billion of proceeds from the sales of non-core assets, our distributable cash flow was $2.9 billion, providing 1.3 times coverage of the distributions paid with respect to 2012,” said Creel.
“In 2012, we successfully completed and began operations for major growth projects totaling $2.9 billion of investment. Most of these projects were completed on or under budget and on time or ahead of schedule. During the fourth quarter of 2012, we completed $1.2 billion of large projects including our sixth NGL fractionator at Mont Belvieu, Texas in October 2012 and the expansion of our natural gas and NGL pipeline systems serving the Eagle Ford shale in South Texas. Earlier this week, we began commissioning the third train at our natural gas processing plant near Yoakum, Texas serving Eagle Ford shale producers. We expect this train to begin commercial operations at the beginning of March. These projects are contributing new sources of gross operating margin and distributable cash flow, and we expect to see the full benefit of these assets as volumes increase over the next few years,” continued Creel.
“Our commercial, engineering and operations teams are doing a great job developing growth and expansion opportunities to meet the needs of our energy producing and consuming customers. We have announced approximately $7.2 billion of major capital projects under construction that are scheduled to begin commercial operations from 2013 to 2015. Approximately $2.4 billion of these projects are expected to begin operations and start generating cash flow in 2013. The revenues associated with these projects are predominately fee-based and the larger projects have the additional assurance of demand revenues or minimum volume commitments,” stated Creel.
“In 2013, we expect continuing volume and gross operating margin growth from our fee-based natural gas processing activities, NGL pipelines and fractionators and crude oil pipelines and storage facilities as these growth projects begin operations. We also expect our natural gas processing margins will be lower in 2013 than 2012 due to lower ethane prices, and that our equity NGL production will be lower as our natural gas processing business continues to transition to a more fee-based business. We expect the growth in our fee-based businesses will offset the potential decrease in gross operating margin from the commodity portion of our natural gas processing business and, moreover, will support our distribution growth in 2013,” said Creel.
“Over the past three years, we have simplified our partnership structure to capture organizational and operational efficiencies while eliminating inherent conflicts of interest. We also lowered our cost of capital by eliminating our general partner’s incentive distribution rights. These actions improve the cash accretion associated with our growth capital projects for the benefit of our limited partners. We believe we are well capitalized and have good access to the capital markets to fund our capital program. We want to thank our debt and equity investors again for their continued support in 2012. Our activities are creating U.S. jobs and building infrastructure to support the development of North American energy resources that will reduce our nation’s reliance on imports. These investments also enhance the role and value of our partnership,” concluded Creel.
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