Lower natural gas liquids (NGL) prices weighed down 2Q2012 earnings for both DCP Midstream Partners LP (DPM) and Energy Transfer Equity LP (ETE), the companies’ executives said in separate conference calls with analysts Wednesday.

Weakness in NGL markets helped to drive down earnings for DPM, which reported $35 million (8 cents/share) in earnings for 2Q2012, a 36% decrease compared with 2Q2011 earnings of $55 million (30 cents). But the NGL segment “continues to experience substantial growth,” according to CEO Mark Borer. The second quarter results reflected normal seasonality and reduced volumes in DPM’s wholesale propane business due to lingering weather impacts, largely offset by the company’s accelerating growth, he said.

“Despite recent weakness in NGL prices, we have continued to see strong drilling in the liquids-rich areas. Our dry gas exposure is relatively limited, and where we are in dry gas basins we generally have contract structures that mitigate volume exposure such as the substantial ship or pay commitments in the Piceance Basin,” Borer said.

Last year bulging NGL supplies prompted general partner DCP Midstream LLC (DCP) to buy Seaway Products Pipeline Co. from ConocoPhillips in order to create NGL transportation capacity from the Midcontinent to higher-value markets on the Texas Gulf Coast (see Shale Daily, June 10, 2011). DCP said Monday it is in the process of doubling gas processing capacity in the Denver-Julesburg (DJ) Basin (see Shale Daily, Aug. 8). In total, DCP plans to increase its gathering and processing assets in the DJ Basin to nine gas processing plants with a total capacity of about 800 MMcf/d and natural gas liquids NGL production of 70,000 b/d.

During the second quarter DPM completed the previously announced $200 million drop-down of two nonoperated Mont Belvieu, TX, fractionators from DCP and acquired the Crossroads system from Penn Virginia Resource Partners LP for $63 million. The Crossroads system in Harrison County, TX, includes an 80 MMcf/d cryogenic processing plant and related facilities.

ETE’s net income for 2Q2012 fell to $74.5 million (19 cents/unit) versus $106.7 million (30 cents) for 1Q2012. The midstream segment saw its earnings before interest, taxes, depreciation and amortization slip to $93.4 million, “down slightly from second quarter of last year” and driven primarily by lower NGL prices and higher operating and general expenses, according to CFO Martin Salinas.

“Nonfee-based contracts and processing margins declined approximately 9% from last year as the impact of lower NGL prices was partially offset by increase in equity NGL volumes with the large portfolio of fee based growth projects expected to be online over the next six to 12 months,” Salinas said. “We expect our midstream segment to represent a larger portion of our overall business mix and contribute significantly to cash flow growth in late 2012 and into 2013.

“For the quarter, NGL produced volumes increased 63% from the prior year to almost 82,000 b/d, primarily driven from growth projects in the Eagle Ford Shale, which resulted in increased fee-based revenues of roughly $16.1 million,” Salinas said.

Earlier this year Energy Transfer Partners LP announced plans for a $5.3 billion purchase of Sunoco Inc. (see Shale Daily, May 1). Assuming final regulatory approval and a favorable vote from shareholders, that deal is expected to close in early- to mid-October, Salinas said. ETE is “actively evaluating more than $2 billion on growth capital projects in the midstream NGL and crude space, which could be announced over the next year or so and deliver additional distributable cash flow into 2008 to 2013 and into 2014, and we couldn’t be more excited about our ability to execute on these projects,” Salinas said.

ETE invested a total of $690 million in capital expenditures (capex) in 2Q2012, with a majority of that amount going to its midstream and NGL segments, he said. “As we plan for the remainder of 2012, we expect to spend between $1.15 billion and $1.3 billion of growth capex, which includes $450-500 million in our midstream segment, $700-800 million our NGL segment…”