Midstream companies have grabbed investor attention recently, and for good reason. Oil and gas production volumes have increased across America, resulting in a massive build-out of midstream infrastructure and a ton of acquisitions.
Enterprise Products Partners (NYSE: EPD ) reports earnings on Thursday. The midstream company has been pretty busy over the past few months and there should be plenty of material to pour over in the fourth-quarter release. Here are three things to watch for when Enterprise reports.
1. NGL prices
Enterprise has a strong fee-based business model, but it is not immune to the effects of depressed commodity prices. Ethane and propane prices continued to flounder in the fourth quarter, which likely affected Enterprise's volumes. Look for management to give an update on the added propane export capacity the partnership expects to bring online this month, as well as the potential for it to add another propane dehydrogenation facility to its slate of future projects.
2. Volume recovery
Enterprise was hit with declining ethane volumes in the Rockies, and declining fractionation volumes at two of its facilities in Texas and Louisiana. Ethane may continue to be a problem, but it is an industrywide problem. Look for management to address not only how it affected Enterprise in the fourth quarter, but what the partnership expects going forward in 2013.
The big picture regarding volume still looks good for Enterprise. Last quarter's 17% increase in fee-based natural gas processing was huge for the partnership, and investors are hoping that number continues to climb.
3. Forward progress
Enterprise and Enbridge (NYSE: ENB ) increased the capacity of the Seaway pipeline, and while that won't affect its fourth-quarter results, it is indicative of the forward progress investors are hoping to see. The partnership has a multibillion expansion plan comprised of many pipeline and processing facilities that investors will need updates on. Particularly important are the projects in the Eagle Ford Shale play in Texas, as that region is expected to see a tremendous increase in oil and NGL production this year.
Analysts are expecting earnings of about $0.65 per unit, while revenue estimates range from a high of $13.61 billion to a low of $9.87 billion. Last quarter analysts anticipated earnings per unit of $0.60, but actual earnings came in higher at $0.66. Enterprise reports before the market opens on Thursday, with its conference call scheduled for 10:00 a.m. EST that morning. Interested investors can listen here, or click here to add Enterprise Products Partners to My Watchlist.
The growing production of natural gas from hydraulic fracturing and horizontal drilling is flooding the North American market and resulting in record-low prices for natural gas. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand new premium research report on the company.