Enterprise (EPD) Gains Slightly Since Posting Q1 Earnings Beat

Enterprise Products Partners L.P. EPD units have gained marginally since it reported strong first-quarter earnings on May 2.

The company reported first-quarter 2022 adjusted earnings per limited partner unit of 60 cents, beating the Zacks Consensus Estimate of 52 cents. However, the bottom line declined from the year-ago quarter’s 64 cents per share.

Total quarterly revenues of $13,008 million surpassed the Zacks Consensus Estimate of $11,053 million. The top line significantly increased from $9,155 million in the prior-year quarter.

The better-than-expected earnings were driven by higher contributions from the NGL Pipelines & Services business. The positives were partially offset by a decline in gathering volumes in the Natural Gas Pipelines and Services segment.

Enterprise Products Partners L.P. Price, Consensus and EPS Surprise

Enterprise Products Partners L.P. Price, Consensus and EPS Surprise

Enterprise Products Partners L.P. price-consensus-eps-surprise-chart | Enterprise Products Partners L.P. Quote

Segmental Performance

Pipeline volumes in NGL, crude oil, refined products and petrochemicals were recorded at 6.5 million barrels per day (bpd), higher than the year-ago quarter’s 6 million bpd. Natural gas pipeline volumes were 16.4 trillion British thermal units per day (TBtus/d), up from 13.7 TBtus/d a year ago. Also, marine terminal volumes increased to 1.6 million bpd from the year-ago quarter’s 1.5 million bpd.

Gross operating income at NGL Pipelines & Services increased from $1,086 million in the year-ago quarter to $1,225 million primarily due to higher average sales margins and an increase in pipeline transportation volumes.

Natural Gas Pipelines and Services’ gross operating income decreased to $220 million from $535 million in the year-ago quarter. The downside was due to a decline in gathering volumes.

Crude Oil Pipelines & Services recorded a gross operating income of $415 million, which increased from $400 million in the prior-year quarter due to a rise in pipeline transportation volumes from the Midland-to-ECHO Pipeline System. Lower operating expenses and higher ancillary service revenues from its Midland and ECHO crude oil terminals also aided the segment.

Gross operating income at Petrochemical & Refined Products Services amounted to $404 million compared with $282 million a year ago primarily due to higher average sales margins from the partnership’s propylene production and related activities. Improved sales volumes from the octane enhancement business also aided the segment.

Cash Flow

Adjusted distributable cash flow was $1,837 million, up from $1,737 million a year ago, and provided coverage of 1.8X. The partnership retained $814 million of distributable cash flow in the March-end quarter. The partnership generated a negative free cash flow of $1,427 million against a free cash flow of $1,349 million in the year-ago quarter.

Financials

For first-quarter 2022, Enterprise’s total capital expenditure was $3.6 billion.

As of Mar 31, 2022, its outstanding total debt principal was $29.8 billion. Enterprise’s consolidated liquidity amounted to $3.9 billion, down sequentially from $7.3 billion. The total liquidity amount included unrestricted cash on hand and available borrowing capacity under its revolving credit facility.

Outlook

For 2022, Enterprise reiterated its growth capital spending guidance at $1.5 billion. The partnership continues to expect sustaining capital expenditure of $350 million. It currently has $4.6 billion worth of major capital projects under construction.

Zacks Rank & Other Stocks to Consider

The partnership currently has a Zacks Rank #2 (Buy).

Investors interested in the energy sector might look at the following companies that turned in strong bottom-line numbers in the first quarter and presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation RRC reported first-quarter 2022 adjusted earnings of $1.18 per share, beating the Zacks Consensus Estimate of $1.15 per share. The strong quarterly earnings can be attributed to higher realizations of commodity prices.

As of Mar 31, 2022, it had total debt of $1,829.7 million. It had a debt-to-capitalization of 53.3%. In the first quarter, Range Resources’ board of directors approved a $500-million share repurchase program.

Hess Corporation HES reported first-quarter 2022 earnings per share of $1.30, beating the Zacks Consensus Estimate of $1.12. The higher commodity price realizations backed the strong quarterly results.

As of Mar 31, 2022, Hess had $1,370 million in cash and cash equivalents. Its long-term debt was recorded at $7,934 million at the first-quarter end. The current maturity of the long-term debt is $22 million.

Upstream operator PDC Energy PDCE reported adjusted earnings per share of $3.66, comfortably surpassing the Zacks Consensus Estimate of $3.18. The outperformance can be primarily attributed to better-than-anticipated production volumes and higher commodity prices.

PDC Energy is using the excess cash from a supportive environment to reward investors with dividends and buybacks. As part of that, PDCE’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders. PDC Energy returned $110 million to its shareholders in the first quarter through dividends and buybacks.

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