The Enterprise is swiftly making its way ahead. Well, not the one led by Captain Kirk into outer space, but into different realms of the U.S. Enterprise Products Partners (NYSE: EPD) saw its second-quarter earnings jump 21% as it enjoyed staggering revenue growth this quarter. Shares jumped 8.6%. Here’s what you need to know.
A look at the numbers
Enterprise’s revenue for the quarter increased to $11.21 billion from $7.54 billion, up 49% on a year-over-year basis. Enterprise has emerged as one of the U.S.’s largest pipeline companies following its acquisition of Teppco Partners two years ago, and that integration has helped it post impressive quarterly results over the past few quarters.
Higher revenues helped push up operating income 19% to $632.8 million even as costs rose. The company’s net income rose to $433.7 million from $357.2 million, up 21% from last year.
A look at the books
Total debt increased to $14.09 billion from $12.72 billion a year ago. Enterprise has been looking to expand its operations as natural gas production in the U.S. grows -- particularly in the Eagle Ford shale play -- thus they have been taking on more debt to help fuel their operations. It has entered into deals with Anadarko Petroleum (NYSE: APC), EOG Resources (NYSE: EOG), and Chesapeake Energy (NYSE: CHK) to provide midstream services in South Texas’ shale.
However, paying off this debt doesn’t seem to be too much of a burden at present. Its interest coverage ratio stands at 4.6 times, which implies it is more or less comfortably placed to square off its short-term obligations.
Upcoming plans
To take advantage of rising natural gas production in the U.S., Enterprise has $5 billon worth of expansion plans lined up. Among these deals is one wherein it'll build a pipeline joining the oil storage home in Cushing and the refining center in Houston. It's looking for other partners after it recently canceled an initial deal with Energy Transfer Partners (NYSE: ETP) over the terms of the deal. Enterprise is also looking to acquire Duncan Energy Partners (NYSE: DEP), in which it already holds a 42% stake. This will add nearly 9,400 miles of gas pipelines to its collection.
The Foolish bottom line
I expect big things from this Houston-based company as it has been looking to expand its operations and increase its production as total natural gas consumption in the U.S. is expected to increase 14% by 2035. Enterprise is taking steps in the right direction to live long and prosper.
To see what Enterprise is up to and also find more analysis on it, click here to add it to your stock Watchlist.
Editor's Note: This article has been corrected to reflect the cancelation of the Cushing-Houston deal with Energy Transfer Partners.
