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Enterprise reports earnings gain, lowers capex plans

June 03/2020

MOSCOW (MRC) -- Enterprise Products Partners (Houston, Texas) reports first-quarter net income of USD1.375 billion, up 7% year-over-year (YOY) from USD1.280 billion, according to Chemweek.

Sales totaled USD7.482 billion, down 12% YOY from USD8.544 billion. Adjusted earnings per share of USD0.53 were in line with the average analyst estimate of USD0.52 as compiled by Refinitiv (New York). The company also says it has increased its credit access and lowered capital spending plans in response to the coronavirus disease 2019 (COVID-19) pandemic.

The first quarter began with good momentum, and this translated into our solid operational and financial results for the first quarter of 2020, says A. J. Teague, co-CEO of Enterprises general partner. However, conditions have deteriorated rapidly since early March owing to economic disruption related to the pandemic, says Teague, and the situation has been exacerbated by the OPEC+ price war. The recent OPEC+ agreement to reduce production is too little, too late, he adds.

The speed and intensity of this economic sudden stop for developed countries has been breathtaking, says Teague. We expect natural gas, NGL (natural gas liquids), and crude oil production to decline more rapidly than in previous supply shock cycles. We have not yet seen a material change to volumes across our system; however, we will not be immune. In past cycles, our integrated system and storage assets have provided our customers valuable flexibility as well as being a reliable hedge by allowing us to use uncontracted capacity to capture regional price spreads and contango opportunities to partially offset headwinds in some of our fee-based businesses due to declining production. We continue to see good demand pull from our petrochemical customers and in LPG exports.

In response, Enterprise has reduced its planned 2020 growth capital investments by approximately USD1 billion and a reduced sustaining capital spending by postponing USD100 million in discretionary, non-integrity related projects. The company also acquired an additional USD1.0 billion 364-day bank credit facility in early April, increasing its liquidity to about USD8.0 billion on a pro forma basis.

Enterprise reported total gross operating margin of USD2.0 billion for the first quarter of 2020 compared to USD2.1 billion for the first quarter of 2019.

The NGL pipelines & services segment reported gross operating margin of USD1.0 billion, up YOY from USD959 million. Total fee-based processing volumes declined 2%; equity NGL production decreased 9%; and NGL pipeline transportation volumes increased 9%. NGL marine terminal volumes increased 37%. Total NGL fractionation volumes increased 17% to a record 1,133 MMb/d.

The crude oil pipelines & services segment turned in gross operating margin of USD453 million, down YOY from USD662 million. Crude oil pipeline volumes increased 7% to a record 2.4 million BPD; crude oil marine terminal volumes increased 11%.

The natural gas pipelines & services segment reported gross operating margin of USD284 million, up YOY from USD264 million. Natural gas transportation volumes declined 2%.

The petrochemical & refined products services segment reported gross operating margin of USD279 million, up 15% YOY from USD243 million. Segment pipeline transportation volumes declined 12%, and refined products and petrochemical marine terminal volumes declined 20%. The contribution from octane enhancement and related plant operations, which includes the new isobutane dehydrogenation (iBDH) plant, totaled $69 million, up YOY from USD24 million on higher sales volumes and higher average sales margins; however, demand for octane enhancement products has materially decreased this quarter owing to pandemic-related decline in travel, says Enterprise. The propylene businesss contribution increased $6 million YOY as higher margins and volumes for the companys propane dehydrogenation (PDH) unit were offset somewhat by maintenance downtime for a Mont Belvieu propylene splitters. Total propylene production volumes were 98 MMb/d, up YOY from 90 MMb/d.

As MRC reported earlier, Enterprise Products Partners and LyondellBasell Industries said in September 2019 they had executed long-term contracts to support construction of EPD's second propane dehydrogenation plant at the Mont Belvieu, Tex. complex. The decision to build the PDH 2 plant stems from recently executed long-term polymer grade propane (PGP) supply contracts between Enterprise and LyondellBasell Industries N.V.

Besides, we remind that Enterprise Products Partners' Mont Belvieu PDH in Texas restarted from planned maintenance in the first week of December, 2019. The PDH unit went offline for maintenance on November 13, 2019. That day, the company said in a filing with the Texas Commission on Environmental Quality that the RAC "B" turbine shut down, which resulted in flaring. The flaring was estimated to last 72 hours. The unit has a capacity of 750,000 mt/year.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Enterprise Products Partners L.P. is an American midstream natural gas and crude oil pipeline company with headquarters in Houston, Texas. It acquired GulfTerra in September 2004. The company ranked No. 105 in the 2018 Fortune 500 list of the largest United States corporations by total revenue
Author:Margaret Volkova
Tags:PP, crude and gaz condensate, propylene, gas processing, petrochemistry, Enterprise Products, LyondellBasell, Rossiya, USA.
Category:General News
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