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Quick Look: Enterprise Products Partners Q4 Results

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On January 28th, Enterprise Products released their Q4 results, and for first time, offered forward guidance in light of market volatility.   Below are the highlights from the earnings release and conference call comments



Q4 Distribution of $0.39 was covered by 1.3x of Distributable Cash Flow


Retained $302MM of DCF in Q4


Revenues declined 40% Quarter over Quarter, but costs were also reduced by 43%


Expect to increase 2016 Distributions to $1.61 for the year, or 5.2% higher than 2015


2.4% of Revenues are exposed to at risk E&P 


Permian volumes increasing, flat elsewhere, slight declines in Eagle Ford


2016 Capex expected to be $2.5 to $2.8B, including the final EFS installment payment.  Change from previously higher estimates is related to the timing rather than a reduction.



Management would not comment on how the growth capex will be funded specifically, but outlined the sources as retained cash flow, potential asset sales, debt/equity issuance or EPCO direct unit purchases


Management was asked about margin pressure, and responded that there are many conversations, but did not provide any specifics


Summary:  EPD produced another strong quarter in spite of the headwinds.  They do expect 2016 to be more challenging than 2015, but has still committed to a 5.2% distribution increase Year over Year.  Management clearly projects confidence with their ability to manage in a volatile production environment and offer a strong foundation of knowledge and experience.  They are focused on Demand pull projects other than the Permian pipeline, insulating themselves from producer uncertainty.  





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