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World 'Trying to Calibrate' to U.S. Ethane Exports, Says Enterprise's Teague

Another expansion of Enterprise Products Partners LP's liquefied petroleum gas (LPG) export facility on the Houston Ship Channel is slated to come online during the second half of this year. Meanwhile, the partnership is seeing record LPG export volumes, and the world is developing a taste for natural gas liquids (NGL), particularly ethane, executives said.

"Another bright spot in the LPG export business is the global demand for U.S. butane," said COO Jim Teague during an earnings conference call Thursday. "U.S. natural gas liquids, not just propane, are rapidly evolving into global markets.

"Our ethane export facility is progressing well and is on schedule for the second quarter of next year. Meanwhile, significant ethane shipping capacity is being built and the world is trying to calibrate to the U.S. now having plentiful ethane available for export. We are 80% contracted for this facility. We have negotiations under way with a number of parties. I'm confident that we'll be sold out by the time it comes up.

"The amount of natural gas demand coming on over the next three years is undeniable, and it's impressive. NGLs with sizable good markets, including petrochemicals and exports, are being added. We are in a tough environment, but we're confident we're going to continue to deliver, and we believe that the future is bright."

Enterprise reported net income for the second quarter of $557 million compared to $647 million for the second quarter of 2014. Net income attributable to limited partners for the second quarter of 2015 was 28 cents/unit compared to 34 cents/unit for the second quarter of 2014. The second quarter of 2015 included noncash asset impairment and related charges of $119 million, or 6 cents/unit, of which $95 million was attributable to the company's offshore Gulf of Mexico business, which was classified as held for sale at June 30, 2015.

"Enterprise reported record liquid pipeline transportation volumes and LPG export volumes, which led to solid results for the second quarter of 2015," said Michael A. Creel, CEO of Enterprise's general partner. "We also benefited from steady performance from our fee-based businesses, contributions from assets acquired from Oiltanking, the expansion of the Seaway crude oil pipeline and lower operating expenses. These led to a 3% increase in gross operating margin and a 5% increase in distributable cash flow, excluding proceeds from asset sales and insurance recoveries, which enabled us to increase the quarterly distribution for the 44th consecutive quarter and provide 1.3 times coverage of the distribution this quarter."

Enterprise generated distributable cash flow (DCF) of $988 million for the second quarter compared to $954 million for the second quarter of 2014. DCF for the second quarter of 2015 provided 1.3 times coverage of the cash distribution to be paid Aug. 7. The partnership retained $238 million of DCF for the second quarter.

The partnership has more than $8.3 billion of projects under construction that will begin operations between now and the end of 2017, including $2.4 billion of capital projects expected to be completed in the second half of 2015. These include the additional expansion of the LPG export facility, the remaining phases of the Aegis ethane pipeline and the Mont Belvieu brine capacity expansion.

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