Midstream giant Enterprise Products Partners (EPD) has attracted significant investor interest because of its simplified structure, 51 consecutive quarters of dividend growth and strong coverage — $2.7 billion in retained cash in the past three years. The company, with a market capitalization of $58 billion, has also quietly continued to build out its large integrated midstream network despite the plunge in commodity prices, investing almost $18 billion in organic growth projects and acquisitions in 2014-16. The end result is impressive: Enterprise is now connected to every major U.S. shale basin, every U.S. ethylene cracker and 90% of the refineries east of the Rocky Mountains. As a result, the company is well positioned to benefit from the recovery in oil and gas production, especially in the Permian Basin and Eagle Ford Shale; the surge in hydrocarbon exports; and the rapid growth of the U.S. petrochemical industry. Today we discuss highlights from the second part of our new Spotlight analysis of EPD, which focuses on the company’s Crude Oil Pipelines & Services, Natural Gas Pipelines & Services and Petrochemical & Refined Products Services segments.
Spotlight is a joint venture of RBN Energy and East Daley Capital Advisors. With the support of Oil & Gas Financial Analytics, Spotlight provides deep dives into the fundamentals that shape the outlook for midstream energy companies. Spotlight should not be viewed as investment advice. Spotlight is included as part of our Drill Down Report series, which is available to RBN Backstage Pass members. For more about Spotlight, see the link at the end of this blog.
Enterprise Products Partners L.P. is a publicly traded (NYSE: EPD) master limited partnership (MLP) that operates an integrated U.S. network of natural gas, natural gas liquid (NGL), crude oil, petrochemical and refined product midstream infrastructure. In 2016, EPD generated $23 billion in revenue and $5.2 billion in earnings before interest, taxes, depreciation and amortization (EBITDA). Part 1 of our Spotlight analysis focused on Enterprise’s 19,670 miles of NGL pipelines, NGL and related product storage facilities, 15 NGL fractionators, and liquefied petroleum gas (LPG) and ethane export terminals and related operations. In Part 2, we zero in on EPD’s other three business segments, which accounted for 43%, or $2.2 billion, of the company’s total gross operating margin in 2016:
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