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Enbridge Energy Partners L.P. Reports Operating Results (10-Q)

November 01, 2012 | About:
10qk

10qk

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Enbridge Energy Partners L.P. (EEP) filed Quarterly Report for the period ended 2012-09-30.

Enbridge Energy Partners Lp has a market cap of $7.12 billion; its shares were traded at around $30 with a P/E ratio of 24.7 and P/S ratio of 0.8. The dividend yield of Enbridge Energy Partners Lp stocks is 7.3%. Enbridge Energy Partners Lp had an annual average earning growth of 3.1% over the past 10 years.

Highlight of Business Operations:

The operating revenue of our Liquids segment increased for the nine month period ended September 30, 2012 when compared with the same period in 2011, mostly due to higher average daily delivery volumes on our three systems when compared to the same period in 2011. The overall increase in average delivery volumes on our systems increased operating revenues by approximately $33.2 million for our Liquids segment. The total average daily deliveries from our liquid systems increased approximately 7%, to 2.252 million barrels per day, or Bpd, for the nine month period ended September 30, 2012 from 2.096 million Bpd for the same period in 2011. The increase in average deliveries on our liquids systems was primarily derived from increases of crude oil supplies from conventional sources as well as strong refinery utilization in the Petroleum Administration for Defense District II, or PADD II.

Revenue for our Natural Gas business is derived from the fees or commodities we receive from the gathering, transportation, processing and treating of natural gas and NGLs for our customers. We are exposed to fluctuations in commodity prices in the near term on approximately 30% to 40% of the natural gas, NGLs and condensate we expect to receive as compensation for our services. As a result of this unhedged commodity price exposure, our gross margin, representing revenue less cost of natural gas, generally increases when the prices of these commodities are rising and generally decreases when the prices are declining. For the three month period ended September 30, 2012, prices for natural gas and NGLs declined significantly when compared to prices for the same period in 2011. Changing industry fundamentals have resulted in significant downward pressure in current and forward NGL prices, specifically in ethane and propane. We expect the near term outlook for our natural gas segment will be negatively impacted by this recent decline in NGL prices, resulting in a reduction to our 2012 gross margin and the overall earnings of the Partnership.

A variable element of the operating results of our Natural Gas segment is derived from processing natural gas on our systems. Under percentage of liquids, or POL, contracts, we are required to pay producers a contractually fixed recovery of NGLs regardless of the NGLs we physically produce or our ability to process the NGLs from the natural gas stream. NGLs that are produced in excess of this contractual obligation in addition to the barrels that we produce under traditional keep-whole gas processing arrangements we refer to collectively as keep-whole earnings. Operating revenue less the cost of natural gas derived from keep-whole earnings for the three month period ended September 30, 2012 was $22.6 million, representing an increase of $10.6 million from the $12.0 million we produced for the same period in 2011.

In July 2009, we entered into a joint funding arrangement to finance construction of the United States segment of the Alberta Clipper Pipeline with several of our affiliates and affiliates of Enbridge, including our General Partner. The Alberta Clipper Pipeline was mechanically complete in March 2010 and was ready for service on April 1, 2010. In connection with the joint funding arrangement, we allocated earnings derived from operating the Alberta Clipper Pipeline in the amount of $14.0 million and $42.1 million to our General Partner for its 66.67% share of the earnings of the Alberta Clipper Pipeline for the three and nine month periods ended September 30, 2012. We allocated $12.2 million and $41.0 million for the same three and nine month periods

We allocated earnings derived from operating the Alberta Clipper Pipeline in the amount of $42.1 million to our General Partner for its 66.67% share of the earnings of the Alberta Clipper Pipeline for the nine month period ended September 30, 2012. We allocated $41.0 million for the same nine month period ended September 30, 2011. We have presented the amounts we allocated to our General Partner for its share of the earnings of the Alberta Clipper Pipeline in Net income attributable to noncontrolling interest on our consolidated statements of income.

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