Mr. Mark Maki reports
ENBRIDGE ENERGY PARTNERS, L.P. DECLARES DISTRIBUTION AND REPORTS EARNINGS FOR FIRST QUARTER 2015
Enbridge Inc.'s Enbridge Energy Partners LP will pay a cash distribution of 57 cents per unit, or $2.28 per unit on an annualized basis, on May 15, 2015, to unitholders of record as of the close of business on May 8, 2015.
First quarter highlights:
- Strong liquids pipeline system deliveries: approximately 17 per cent higher than first quarter 2014;
- First quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and distributable cash flow of $432.2-million and $253.7-million, respectively;
- Completed $1-billion Alberta Clipper drop-down acquisition from Enbridge;
- Minnesota administrative law judge recommends that the Minnesota Public Utility Commission (PUC) grant a certificate-of-need permit for the partnership's proposed Sandpiper pipeline project;
- Enbridge is progressing its review of potential transfer of U.S. liquids pipeline assets to the partnership.
"We are pleased with the partnership's solid start to 2015. Our first quarter financial performance is attributable to strong deliveries on our Lakehead and North Dakota liquids pipeline systems, complemented by strong cash flow contributions from the completion of portions of our multibillion-dollar organic growth program. We expect deliveries on our liquids pipeline systems to remain strong as we progress our market access programs, providing our customers with expanded pipeline connectivity to premium North American crude oil markets. Our expansion programs are predominantly underpinned by long-term, low-risk commercial structures, such as cost of service, and take or pay. These structures largely mitigate the sensitivity of our business's distributable cash flow to volume and commodity prices. Looking forward, our organic growth program is proceeding well, and we expect to place several projects into service during 2015 that will further increase our cash flows," said Mark Maki, president for the partnership.
"A key future growth project for the partnership is our joint-venture Sandpiper pipeline project. We are pleased by the positive recommendation made recently by a Minnesota administrative law judge, who recommended that the Minnesota PUC grant a certificate-of-need permit for Sandpiper. The Minnesota PUC is expected to take the administrative law judge's recommendation into account and render a decision on the Sandpiper certificate of need in June. A separate PUC review of the proposed pipeline route follows. Subject to regulatory approval, the pipeline is targeted to begin service in 2017. We welcome the judge's recommendation and appreciate the thoroughness of his review, in addition to the support received from communities, labour and business leaders.
"Finally, Enbridge continues to progress its review of a potential restructuring plan that would involve the transfer of U.S. liquids pipeline assets to the partnership, and we expect this review to be concluded around midyear. The partnership's current organic growth under way, together with the accelerated asset drop-down potential from our general partner, and future low-cost system expansion opportunities support our confidence in the partnership's long-term growth outlook," noted Mr. Maki.
COMPARATIVE EARNINGS STATEMENT
(dollars in millions except per-unit amounts)
Three months ended
March 31,
2015 2014
Operating revenue $ 1,428.6 $ 2,079.6
Operating expenses
Commodity cost 779.1 1,488.7
Environmental costs, net of recoveries 0.8 5.0
Operating and administrative 217.1 217.0
Power 63.6 50.4
Depreciation and amortization 128.4 103.8
Operating income 239.6 214.7
Interest expense 48.3 76.9
Allowance for equity used during construction 23.0 20.7
Other income (expense) 5.9 (0.8)
Income before income tax expense 220.2 157.7
Income tax expense 2.4 2.0
Net income 217.8 155.7
Less: Net income attributable to
Non-controlling interest 51.3 36.3
Series 1 preferred unit distributions 22.5 22.5
Accretion of discount on Series 1 preferred units 3.9 3.6
Net income attributable to general and limited
partner ownership interests in Enbridge Energy
Partners $ 140.1 $ 93.3
Less: Allocations to general partner 54.2 34.4
Net income allocable to common units and i-units $ 85.9 $ 58.9
Net income per limited partner unit (basic) $ 0.26 $ 0.18
Net income per common unit and i-unit (diluted) $ 0.26 $ 0.18
Comparison of quarterly results
Included herein are explanations for significant changes in the partnership's financial results, comparing the three-month period ended March 31, 2015, with the same period of 2014. The comparison refers to adjusted operating income, which excludes the effect of non-cash and non-recurring items.
ADJUSTED OPERATING INCOME
(dollars in millions)
Three months ended
March 31,
2015 2014
Liquids $ 272.4 $ 205.2
Natural gas 7.1 6.7
Corporate (4.0) 0.3
Adjusted operating income $ 275.5 $ 212.2
Liquids
First quarter adjusted operating income for the liquids segment increased $67.2-million to $272.4-million over the comparable period in 2014. Higher revenues in the first quarter were collectively attributable to an increase in transportation rates and higher deliveries on the company's liquids pipeline systems, in addition to meaningful contributions from growth projects placed into service in 2014. Total liquids system deliveries increased approximately 17 per cent over the same period from the prior year. The partnership placed approximately $2.5-billion of growth projects into service in 2014 through the completion of a large component of its eastern access program, specifically the Line 6B replacement project from Griffith, Ind., to the international border and the first phase of the company's mainline expansions. Collectively, these growth projects were the main drivers for the increase in revenues and system deliveries during the first quarter of 2015 over the comparable period in 2014.
LIQUIDS SYSTEMS VOLUMES
(thousand barrels per day)
Three months ended
March 31,
2015 2014
Lakehead 2,330 2,000
Mid-continent 199 211
North Dakota 342 245
Total 2,871 2,456
Natural gas
First quarter adjusted operating income for the natural gas segment was $400,000 higher compared with the same period of 2014. The increase in adjusted operating income was predominantly attributable to higher natural gas system volumes, as prior-year volumes were impacted by freeze offs due to unusual extreme weather conditions. Additionally, lower operating and administrative costs attributable to work force reductions and other cost-saving measures enacted in December, 2014, contributed to higher current-period operating income. The increase in operating income was partially offset by lower seasonal optimization opportunities in the company's natural gas marketing business, due to tighter natural gas basis differentials versus the prior year.
Three months ended
March 31,
2015 2014
Natural gas throughput
(million British thermal units per day)
East Texas 1,007,000 971,000
Anadarko 831,000 824,000
North Texas 287,000 272,000
Total 2,125,000 2,067,000
Natural gas liquids production
(barrels per day)
Total system production 81,046 80,899
Partnership financing
In March, 2015, the partnership closed an underwritten public offering and sale of eight million of its Class A common units, representing limited partner interests, at a price to the public of $36.70 per Class A common unit. The partnership received proceeds, net of underwriting commissions and offering costs, of approximately $288.6-million. The partnership used the net proceeds from the offering to finance a portion of its capital expansion projects and for general partnership purposes.
Enbridge Energy Management distribution
Enbridge Energy Management LLC today declared a distribution of 57 cents per share, payable on May 15, 2015, to shareholders of record on May 8, 2015. The distribution will be paid in the form of additional shares of Enbridge Energy Management, valued at the average closing price of the shares for the 10 trading days prior to the ex dividend date on May 6, 2015. Enbridge Management's sole asset is its approximate 14.6-per-cent limited partner interest in Enbridge Partners. Enbridge Management's results of operations, financial condition and cash flows depend on the results of operations, financial condition and cash flows of Enbridge Partners, which are summarized herein for the first quarter of 2015.
Management review of quarterly results
Enbridge Partners will host a conference call at 10 a.m. Eastern Time on Friday, May 1, 2015, to review its first quarter 2015 financial results. The call will be webcast live over the Internet and may be accessed on Enbridge Partners' website under events and presentations.
A replay will be available shortly afterward. Presentation slides and condensed financial statements will also be available at the Enbridge Energy Partners website, under events and presentations.
The audio portion of the live presentation will be accessible by telephone at 844-298-9821 (passcode: 24875823) and can be replayed for 14 days after the call by calling 855-859-2056 (passcode: 24875823). An audio replay will also be available for download in MP3 format from the Enbridge Energy Partners website.
We seek Safe Harbor.
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