A dramatically improved commodity price environment helped drive strong results in 2Q2021 for Enterprise Products Partners LP, and looking ahead management anticipates an “extended recovery cycle” for the oil and gas industry.
The Houston-based midstreamer’s 2Q2021 results “reflect the ongoing recovery in demand for hydrocarbons” as the global economy emerges from Covid-19 restrictions, co-CEO Jim Teague said during a conference call with analysts Wednesday.
Compared to the cratering crude oil prices and shrinking rig counts this time a year ago, in 2021 “the environment and sentiment are completely different,” the executive said.
Now, West Texas Intermediate crude prices have been trading north of $70/bbl.
“Natural gas has more than doubled from $1.75/MMBtu to around $4,” Teague said. “Rig counts have returned to 500 and growing. Producers are self-financing their capital, paying down debt and returning funds to their shareholders.”
Prices and volumes are up “considerably” in 2021, and Enterprise’s infrastructure assets are “leading the way” amid increases in gathering and processing, pipeline transportation and exports, according to Teague.
“We have been outspoken about why we have been bullish on prices for well over a year and have been preparing accordingly,” Teague said. “The global inventory excesses that came with the global pandemic for the most part have been exhausted, and it’s nice to see both supply and demand participating in what we believe will be a very strong extended recovery cycle.
“We expect continued upside in demand, both in the U.S. and globally, and appropriate production increases from a healthy” exploration and production industry in the United States.
In the Natural Gas Pipelines & Services segment, Enterprise reported total natural gas transportation volumes of 14.2 trillion Btu/d for 2Q2021, up from 13.0 trillion Btu/d in the year-ago quarter.
Gross operating margin totaled $202 million for the segment, versus $209 million a year ago. That total included a $32 million year/year increase in gross operating margin for the partnership’s Permian Basin Gathering System driven by higher average condensate sales prices and volumes, as well as higher natural gas gathering volumes.
Enterprise’s natural gas marketing business saw gross operating margin slide $27 million year/year in 2Q2021 on lower average sales margins, management said.
As for the Texas Intrastate System, gross operating margin fell $7 million year/year. Management attributed the decrease primarily to lower capacity reservation fees, which were partially offset by higher storage and other fees and higher transportation volumes. Natural gas pipeline volumes totaled 5.1 trillion Btu/d for the Texas Intrastate System during the quarter, up from 4.1 trillion Btu/d in the year-ago period.
NGL Pipelines & Services gross operating margin climbed 13% to $1.1 billion for the quarter. Fee-based processing volumes increased to 4.2 Bcf/d for the quarter from 4.1 Bcf/d a year ago. Equity natural gas liquids (NGL) production climbed to 198,000 b/d from 188,000 b/d in the year-ago quarter.
NGL pipeline transportation volumes were 3.4 million b/d, versus 3.5 million b/d in 2Q2020, while NGL marine terminal volumes totaled 665 million b/d, versus 701 million b/d in the prior year. NGL fractionation volumes totaled 1.2 million b/d, flat year/year.
The Crude Oil Pipelines & Services segment saw gross operating margin total $419 million in 2Q2021, versus $634 million in 2Q2020. Enterprise reported total crude oil pipeline transportation volumes of 2.0 million b/d for the quarter, up from 1.9 million b/d a year ago. Crude oil marine terminal volumes totaled 770,000 b/d, versus 726,000 b/d in the prior year quarter.
Petrochemical & Refined Products Services gross operating margin increased to $326 million from $192 million a year ago, with total pipeline transportation volumes for the segment reaching a record 977,000 b/d.
Enterprise reported net income for the quarter of $1.146 billion (50 cents/unit), versus net income of $1.061 billion (47 cents/unit) in the year-ago quarter.
Cash flow from operations was $2.0 billion in the second quarter, up from $1.2 billion in 2Q2020. Distributable cash flow was $1.6 billion in 2Q2021, unchanged from the prior year quarter.
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