Enterprise Products Misses Profit Estimates as Costs Surge

(Reuters) — Enterprise Products Partners LP on Wednesday missed Wall Street estimates for quarterly profit, as costs jumped and the decline in U.S. crude production weighed on transportation volumes on its pipelines.

Enterprise Houston ship channel
Enterprise Houston ship channel

The COVID-19 pandemic has crushed global fuel demand and ended a boom in U.S. shale production, forcing pipeline companies that run oil from fields to refineries and export terminals to slash fees to ensure customers keep using their networks.

Enterprise, which operates natural gas and crude pipelines, among other energy infrastructure, said total expenses in the fourth quarter jumped 14% compared with the previous quarter.

Total crude pipeline transportation volumes fell to 2 million barrels per day (bpd) in the fourth quarter compared with 2.3 million bpd a year earlier.

Still, the company said it was encouraged by early signs of a rebound in the global economy, and had seen strong domestic and international demand for natural gas liquids, ethylene and propylene and also a recovery in demand for refined products.

Co-Chief Executive Officer Jim Teague criticized U.S. President Joe Biden's move to scrap TC Energy Corp's Keystone XL pipeline permit, saying it could boost flows on its Seaway pipeline but that it would deter energy security in North America.

"Limiting supply only makes Russia, OPEC and Iran richer and more powerful and it tells the 3 billion people on this planet that live in energy poverty, that U.S. politicians don't care about their quality of life," Teague said on an earnings call with analysts.

Enterprise's crude export volumes have declined but revenues were little changed as customers used its terminals and pipelines to market their crude locally in the Houston area, Chief Commercial Officer Brent Secrest said.

On a sequential basis, Enterprise reported a 66% slump in fourth-quarter profit, hit by an impairment charge of $800 million on some aging assets.

On an adjusted basis, the company posted a profit of 15 cents per unit, missing average market estimate of 50 cents, according to Refinitiv IBES.

Enterprise shares fell 1.3% to $20.81 in morning trade.

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