US Enterprise Q4 net income falls 15%, operating income down 9.5%

31 January 2013 15:03  [Source: ICIS news]

HOUSTON (ICIS)--Enterprise Products' 2012 fourth-quarter net income fell 15% year on year and operating income fell 9.5%, partly because of lower natural gas liquids (NGL) prices and production in its marketing business, the US-based mid-stream services firm said on Thursday.

Fourth-quarter net income in 2011 benefited from $108m (€80m) in gains on asset sales, while the 2012 fourth quarter included $27m in asset impairment and similar charges, the company added.

Enterprise said that its natural gas processing and related NGL marketing business reported a $66m year-on-year decrease in gross operating margin on lower NGL prices and equity NGL production.

Enterprise’s net income for the three months ended 31 December was $617.4m, down from $725.8m in the same period a year ago. Operating income was $822.7m, down from $909.2m, on revenues of $11.0bn, down from $11.6bn.

Nevertheless, Enterprise reported record a gross operating margin of $1.16bn for the fourth quarter, driven by NGL, crude oil, refined products and petrochemical pipeline volumes, NGL fractionation volumes, and record fee-based natural gas processing volumes, it said.

“The fourth quarter of 2012 demonstrated the benefits of our investments in fee-based businesses serving the growing shale plays,” CEO Michael Creel said.

“We benefited from record volumes in our fee-based businesses attributable to production growth, primarily in the Eagle Ford and Haynesville shale plays, and from strong domestic and international demand for NGLs, particularly from the US petrochemical industry and exports," Creel added.

As for its 2013 outlook, Enterprise expects continuing volume and gross operating margin growth from its fee-based natural gas processing operations, NGL pipelines, as well as its fractionators and crude oil pipelines and storage facilities, Creel said.

“We also expect our natural gas processing margins will be lower in 2013 than 2012 due to lower ethane prices, and that our equity NGL production will be lower as our natural gas processing business continues to transition to a more fee-based business.”

“We expect the growth in our fee-based businesses will offset the potential decrease in gross operating margin from the commodity portion of our natural gas processing business,” he added.

($1 = €0.74)

By: Stefan Baumgarten
+1 713 525 2653

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