Despite setting several operational records in the second quarter, Enterprise Products Partners saw its earnings sag as lower commodity prices took their toll.
“Enterprise had a successful second quarter and reported resilient financial results despite the impacts of lower prices for crude oil, natural gas, NGLs and petrochemicals as a result of uneven global economic and manufacturing activity due in part to higher interest rates,” said A.J. “Jim” Teague, co-CEO of the company’s general partner, during an Aug. 1. earnings call.
The company also updated new pipelines and projects put into service in the second quarter and outlined upcoming infrastructure it is pursuing, including an NGL facility and pipeline expansions in the Permian Basin.
The company reported net income attributable to common unitholders of $1.3 billion, or 57 cents per unit, down from $1.4 billion, or 64 cents per unit, in the same period year-over-year.
Enterprise reported distributable cash flow of $1.7 billion in the quarter, down from $2 billion a year ago. Adjusted cash flow provided by operating activities was $1.9 billion, down from $2.1 billion in 2022.
Capital investments totaled $784 million in the second quarter, $683 million of which were growth capex and $101 million were sustaining capex, the company said.
Pipeline, project updates
Enterprise reported several operational records in the second quarter, including natural gas pipeline volumes, NGL fractionation volumes and 11.9 MMboe/d in total pipeline volumes. The company completed construction and began operations on $2.5 billion of organic growth projects that are expected to produce additional cash flows in the coming quarters.
Enterprise said it expects to invest between $2.4 billion and $2.8 billion on organic growth opportunities for all of 2023, with sustaining capex for the year at about $400 million. The capital outlook is slightly higher than the company’s previous guidance of $2.3 billion to $2.5 billion.
Since the beginning of the second quarter, Enterprise completed and placed four major projects into operation. The 275-mile Haynesville Extension pipeline added 400 MMcf/d to the Acadian natural gas pipeline system. The system links natural gas supplies from the Haynesville Shale and offshore Gulf of Mexico to local gas distribution companies, electric utility plants and industrial customers primarily in Louisiana’s Baton Rouge-New Orleans corridor.
In December 2022, Enterprise announced plans to build two natural gas processing plants in the Midland Basin. One of those, the Poseidon cryogenic NGL plant, was placed into operation in the quarter. In addition, it placed its 12th NGL fractionator and second propane dehydrogenation plant into operations, both in Chambers County, Texas.
The expansion of the NGL fractionator in Chambers County adds an additional 150,000 bbl/d of nameplate capacity. The plant is supported by long-term customer agreements and increases the capacity to 1.2 MMbbl/d in Chambers County. Nationwide, the company now has about 1.7 MMbbl/d of NGL fractionation capacity, Enterprise said.
“The addition of our newest fractionator is being driven by growing domestic NGL production in the Permian Basin as new natural gas processing plants are brought online,” Teague said.
“We recently began service at our sixth gas processing plant in the Midland Basin, with three other Permian Basin gas plants expected to come online by the end of the first quarter of 2024,” he said. The additional volumes will provide feedstock for the petrochemical and refining industries. The plant will also produce propane for export.
Projects coming online
Enterprise said it has another $4.1 billion in major organic growth projects still under construction. The company is on schedule to complete its Mentone II natural gas processing plant in the Delaware Basin in the fourth quarter. It also plans to complete the first phase of the Texas Western products pipeline system by the end of the year.
The company plans to put its Midland Basin Leonidas Plant into operation in first-quarter 2024.
The Mentone III NGL plant is expected to be in service in first-quarter 2024, while the Mentone II project should be completed by year-end 2023, the company said.
The Poseidon and Leonidas plants will have the capacity to process 300 MMcf/d of natural gas and extract more than 40,000 bbl/d of NGL. Both are supported by long-term acreage dedication agreements, the company said.
During the call, Enterprise said the expansion of its Shin Oak NGL pipeline is expected to be finished by the first half of 2025. Enterprise owns 67% of pipeline, which stretches 670 miles from Orla, Texas, in the Permian Basin to the company’s NGL fractionation and storage complex in Chambers County. In August 2022, Enterprise announced plans to expand its Shin Oak NGL pipeline capacity by about 275,000 bbl/d to about 825,000 bbl/d.
The company’s ethane and propane export terminal in Beaumont, Texas, is expected to be in service by the second half of 2025 or the first half of 2026.
The company said its Enterprise Hydrocarbon Terminal (EHT) on the Houston Ship Channel will be finished by the end of the first half of 2025. The terminal will be able to load refrigerated cargos of low-ethane propane and/or butane onto multiple tanker vessels simultaneously.
In April 2022, the company announced plans to build a new ethane export terminal in Orange County, Texas. That project is expected to be completed in 2025.
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