Enterprise reports earnings for 1Q20

Enterprise reported net income attributable to limited partners of US$1.4 billion, or US$0.61 per unit on a fully diluted basis, for the first quarter of 2020 compared to US$1.3 billion, or US$0.57 per unit on a fully diluted basis, for the first quarter of 2019. Net income for 1Q20 included an aggregate US$187 million, or US$0.08 per unit, of deferred income tax benefits associated with the settlement on 5 March, 2020, of the Liquidity Option Agreement and the subsequent accounting for the related deferred tax liability.

Net cash flow provided by operating activities, or cash flow from operations (CFFO), was US$2.0 billion for the first quarter of 2020 compared to US $1.2 billion for the first quarter of 2019. Free Cash Flow (FCF) increased 78% to US$3.4 billion for the twelve months ending March 31, 2020 versus $1.9 billion for the twelve months ending 31 March, 2019. Distributions declared with respect to 1Q20 increased 1.7% to US$0.445 per unit, or $1.78 per unit annualized, compared to the first quarter of 2019. Enterprise’s distributions with respect to the first quarter of 2020 represent a 49% payout ratio of CFFO. Enterprise’s total CFFO payout ratio, including repurchases of common units, with respect to the first quarter of 2020 was 56%.

Distributable Cash Flow (DCF) was US$1.6 billion for the first quarters of both 2020 and 2019. DCF provided 1.6 times coverage of the distribution declared with respect to 1Q20. Enterprise retained US$574 million of DCF for 1Q20.

“We would like to thank the healthcare professionals on the frontlines and those in the laboratories for their compassion, tireless efforts, courage and creativity in treating those stricken with COVID-19 and developing therapies and vaccines,” said A. J. “Jim” Teague, co-CEO of Enterprise’s general partner. “We would also like to thank first responders and local, state and federal officials for making the many tough calls to keep our communities safe and functioning during this pandemic. I would also like to recognize our employees for their hard work, flexibility and ingenuity in keeping our midstream energy system performing reliably and responding to our customers’ needs for logistical services during these challenging times.”

Teague added, “Enterprise entered 2020 in the strongest financial position in our company’s history in terms of the credit quality of our customers, fee-based contracts, credit ratings, leverage, cash flow coverage of our distributions and liquidity. The first quarter began with good momentum and this translated into our solid operational and financial results for the first quarter of 2020. However, following March 6, 2020, as the coronavirus pandemic expanded, shelter-in-place mandates and travel restrictions quickly resulted in historic demand destruction for refined products and a collapse in crude oil demand. At the same time, OPEC+ exacerbated the situation by increasing production to begin a price war in part targeting the US energy industry, its jobs and its investors. These events led to the unprecedented collapse in the May 2020 West Texas Intermediate crude oil futures contract that traded as low as a negative US$40 per barrel before settling at US$10.01 per barrel on 21 April, a 76% decline from its closing price on 6 March.”

“While OPEC+ recently agreed to reduce production by approximately 9.7 million bpd beginning in May 2020, this is too little, too late. The OPEC+ production cut is a fraction of the estimated 25 million bpd of crude oil demand destruction associated with the coronavirus.”

Read the article online at: https://www.worldpipelines.com/business-news/01052020/enterprise-reports-earnings-for-1q20/