El Paso Pipeline Partners (EPB) announced second-quarter 2013 operating earnings of 43 cents per unit, lagging the Zacks Consensus Estimate of 47 cents by 8.5% and the year-ago earnings of 46 cents by 6.5%.
Total Revenue
Total revenue at the end of the second quarter was $359 million, down 2.1% from $367 million in the year-ago period. Quarterly revenues were 6.1% lower than the Zacks Consensus Estimate of $382 million.
Highlights of the Release
The partnership’s operating and maintenance costs for the quarter were $80 million, a 37% decline from the prior-year quarter. This benefited the partnership’s operating income.
Operating income of El Paso Pipeline increased 22.5% year over year in the second quarter to $212 million.
The partnership sold units worth $64 million during the quarter under its at-the-market equity program. The partnership issued units aggregating $86 million in the first six months of 2013.
2013 Forecast
El Paso Pipeline Partners expects to pay $2.55 per unit as cash distribution in 2013, a 13% increase from the 2012 disbursement level.
Other Stocks to Consider
Atlas Pipeline Partners, L.P. (APL) is expected to release its first quarter results after the market close on Aug 5, 2013. The Zacks Consensus Estimate for the quarter is 42 cents.
Delek Logistics Partners, LP (DKL) is expected to release its second quarter results after the market close on Aug 6, 2013. The Zacks Consensus Estimate for the quarter is 45 cents.
NuStar Energy L.P. (NS) is expected to release its second quarter results before the market open on Jul 26, 2013. The Zacks Consensus Estimate for the quarter is 23 cents.
Our View
El Paso Pipeline Partners missed our estimates after beating our expectation in the three previous quarters. The successful completion of the projects implemented by El Paso will increase its natural gas transport capacity thereby opening up new avenues for earnings growth. This justifies our long-term expected earnings growth rate of 3.0% for this stock.
The partnership was able to sign a contract with Royal Dutch Shell plc (RDS.A) for the construction and operation of the proposed Elba Liquefaction Project. After completion, this project will have liquefaction capacity of approximately 2.5 million tonnes per year. Given the increasing usage and demand for natural gas globally, we believe it will create a new window for LNG export for the partnership.
Based in Houston, Texas, El Paso Pipeline Partners was founded in 2007. The partnership is involved in storage and transportation of natural gas across the U.S. The market cap of the partnership is $9.31 billion and it currently retains a short-term Zacks Rank #3 (Hold).
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