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East Daley Calls a Strong Quarter for Enterprise

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The Daley Note: May 3, 2023

Enterprise Products (EPD) reported strong results for 1Q23 , beating the Street by $60MM and nearly matching East Daley Analytics’ financial forecast. The midstream company on Tuesday (May 2) posted 1Q23 Adj. EBITDA of $2,321MM vs our $2,325MM forecast in the EPD Financial Blueprint.

East Daley’s latest model updates suggested Enterprise would surprise to the high side. The EPD forecast in the Financial Blueprint and 1Q23 Earnings Preview was ~3% higher than the midpoint of consensus estimates. Reported 1Q23 Adj. EBITDA of $2,321MM was 2.6% higher than 1Q22 Adj. EBITDA of $2,257MM but lower than $2,376MM posted in 4Q22.

As we had called out in the EPD Earnings Preview, the beat was driven by strong results from the Natural Gas and Petrochemical segments. EPD reported record volumes through its natural gas pipelines and fee-based gas processing. Marine exports of NGLs, crude oil, refined products and petrochemicals also hit a record 2.3 MMb/d in March, EPD said.

While we expected lower oil, gas and NGL prices Q-o-Q to impact certain segments (i.e. by lowering pipeline loss allowance revenues and compressing G&P margins), we anticipated higher fee-based volumes in the Permian and Eagle Ford to absorb some of the decline.

EPD said total fee-based natural gas processing volumes increased 647 MMcf/d to a record 5.5 Bcf/d. Ahead of the report, we forecasted inlet volumes on EPD’s Texas assets to be 3% higher than 4Q22, led by the Navitas and Eagle Ford systems.

Additionally, we expected strength from EPD’s natural gas marketing business. The company holds ~300 MMcf/d of capacity on its Texas intrastate system and benefits from a wider spread between Waha and the Houston Ship Channel. The spread averaged $1.25/Mcf in 1Q23, slightly higher than 4Q22 (see chart). EPD reported GOM from its gas marketing business increased $24MM Y-o-Y in 1Q22, citing higher average sales margins from wide spreads. Picture4-May-03-2023-02-13-50-6601-AM

For more information on EPD and its assets, including our long-term view of the company outlook, access our latest Earnings Preview and Financial Blueprint on our client portal. – AJ O’Donnell Tickers: EPD.

1Q23 Earnings Previews Now Available in Energy Data Studio

East Daley Analytics has published 1Q23 Earnings Previews and Financial Blueprint Models for midstream companies in our coverage. Our industry-leading Blueprints provide historical and forecasted volumes and financial information for 1,300+ midstream infrastructure assets by individual company.

1Q23 Earnings Previews and updated Financial Blueprints models are now available for the following companies: AM, CEQP, DTM, ENB, ENLC, EPD, ET, ETRN, GEL, KMI, KNTK, MMP, MPLX, OKE, NS, PAA, PBA, SMLP, TRGP, TRP and WES.

Subscribers can access these reports on the Energy Data Studio platform. For more information about East Daley’s Financial Blueprints, please reach out.

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East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.

Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.

Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.

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Dirty Little Secrets reviews the outlook for Midstream and commodity markets in 2023 and the years ahead. East Daley discusses the outlook for crude oil, natural gas and NGLs and the impacts to midstream assets in our 2023 Dirty Little Secrets annual market report. Click here for a copy of the 2023 Dirty Little Secrets report.

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