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Enterprise Products Partners sold 1.5 billion dollars in senior notes, which are a type of debt that must be paid back before other obligations. The offering is split into two equal parts, with one half due in 2032 and the other in 2037.
This is a routine way for a large pipeline operator to manage its cash. By locking in these long-term loans, the company can pay off older debt or fund its current 6.3 billion dollar backlog of construction projects. While this adds to the company's total debt, its ability to generate steady fees from moving oil and gas makes it well-equipped to handle these payments.
Source: Business Wire
After Enterprise Products Partners reported October results, we updated our fair value. We raised our projections for the volume of energy products moving through the company's pipelines after natural gas processing in the Permian Basin reached 4.6 billion cubic feet per day. We have added the global demand for high-purity octane and gasoline additives to what we track. We also adjusted our expectations for the company's total debt levels after its leverage ratio remained at 3.3 times earnings.
Oil prices dropped on Monday as diplomatic efforts between the U.S. and Iran reduced concerns about potential supply disruptions in the Middle East. While falling energy prices often drag down the stocks of oil producers, this company operates more like a toll road for energy. Because it earns most of its money from fees for moving and storing oil and gas, its profits depend more on how much fuel is flowing through its pipes than on the price of a barrel. As long as American production remains high, the company's cash flow tends to stay steady even when market prices swing.
Source: WSJ
The company reported a record quarter, earning about 1.6 billion dollars in profit. Its network of pipelines and terminals acted like a busy toll road for American energy, with volumes rising across its natural gas and crude oil systems. This growth allowed the company to generate 2.3 billion dollars in cash flow, which is more than enough to cover its payouts to owners while still leaving 1.1 billion dollars to reinvest in new projects.
Management raised the quarterly payout to owners by about 3 percent and spent 112 million dollars buying back its own units. The company is keeping its debt levels low while finishing several large expansion projects in the Permian Basin. For long-term owners, this quarter shows the business is successfully growing its capacity to move and export energy without overstretching its finances.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company is scheduled to share its third-quarter performance on October 29. Analysts are looking for profit of about $0.75 per share on revenue of roughly 15 billion dollars. Beyond the numbers, the focus will be on how much energy is moving through its network. It is worth watching for updates on its new projects in the Permian Basin and whether export demand for natural gas liquids remains high enough to keep its terminals busy.
Management has a long history of hitting its targets by a small margin. This steady record shows they have a firm grip on their costs and can be trusted to deliver what they promise.
| Expectation | |
|---|---|
| EPS | $0.80 |
| Revenue | $15.87B |
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