Enterprise reports drop in quarterly profits but record year

Enterprise Products Partners Thursday reported net income of $617 million for the fourth quarter, down from the same period in 2011.

Chief Operating Officer Jim Teague attributed the drop to lower prices for natural gas liquids.

But he said  various companies’ proposals for new  ethylene crackers ultimately will drive up demand and said the company’s other opportunities — including expansion of its pipeline system in the Eagle Ford shale — will fuel future growth.

Despite the drop in fourth-quarter profit, Enterprise reported record-setting results for the year, with net income of $2.4 billion and earnings per unit of $2.71 for 2012. That compares with net income of $2.1 billion and earnings per unit of $2.38 for 2011.

Quarterly earnings were 68 cents per unit, down from 82 cents per unit for the fourth quarter of 2011 but beating analysts’ estimates.

In announcing the results, the company focused on the completion of a number of projects, including a natural gas liquids fractionator at Mont Belvieu on the Texas coast last fall and the expansion of its pipeline system in the Eagle Ford shale in South Texas.

“2012 was a record year for Enterprise,” President and CEO Michael Creel told analysts in a conference call to discuss the earnings.

The Houston-based company reported a gross operating margin for the quarter of $1.2 billion, up from $1.1 billion for the fourth quarter of 2011.

Its unit price was down slightly in pre-market trading but recovered and was up slightly by early afternoon.

Analysts quizzed executives about its Seaway pipeline, which carries crude oil from Cushing, Okla., to the Gulf Coast. The pipeline, a joint venture of Enterprise and Calgary, Alberta-based Enbridge, had carried oil north to Cushing since 1995 but was reversed last fall to relieve a glut at Cushing and serve refineries along the coast.

The company said the flow has been as high as 380,000 barrels per day since an expansion was completed earlier this month, although it varies.

William Ordemann, group senior vice president, said Enterprise is building a new lateral pipeline to alleviate bottlenecks on the Seaway, drawing crude from the end of the Seaway to Enterprise’s terminal on the Houston Ship Channel.

That should be completed in the second half of 2013.

Enterprise has grown dramatically since an initial public offering 15 years ago, with assets of about $34 billion. Its operations include 50,700 miles of pipelines, storage capacity for 190 million barrels of natural gas liquids, refined products and crude oil, as well as 14 billion cubic feet of natural gas, 25 natural gas processing plants, 58 tug boats and 125 barges, six offshore hub platforms and 20 natural gas liquids and propylene fractionators.