El Paso Pipeline Partners (EPB) announced fourth-quarter 2013 operating earnings of 48 cents per unit, lagging the Zacks Consensus Estimate of 51 cents by 5.9% and the year-ago earnings of 62 cents by 22.6%.
Operating earnings in 2013 were $1.86 per unit, lagging the Zacks Consensus Estimate of $1.89 by 1.6% and the year-ago earnings of $2.15 by 13.5%.
The partnership’s earnings in the second half of 2013 were impacted by two rate case settlements that resulted in lower rates on the Southern Natural Gas (SNG) and Wyoming Interstate Company (WIC) pipelines.
Total Revenue
Total revenues at the end of the fourth quarter were $391 million, up marginally from $390 million in the year-ago period. Quarterly revenue was 2.9% higher than the Zacks Consensus Estimate of $380 million.
Total revenue at the end of 2013 were $1.5 billion, down from $1.51 billion reported in 2012.
Highlights of the Release
The partnership’s operating and maintenance costs for the year were $329 million, a 15.4% decline from the prior-year quarter. This benefited the partnership’s operating income.
Operating income of El Paso Pipeline increased 3.9% year over year in 2013 to $895 million.
El Paso Pipeline distributed $2.55 per unit in 2013, a 13% hike over the 2012 distribution level.
2014 Forecast
El Paso Pipeline Partners expects to pay $2.60 per unit as cash distribution in 2014, a 2% increase from the 2013 disbursement level.
The partnership expects its regulated pipeline and storage assets, along with its LNG business, to generate earnings before DD&A of almost $1.3 billion, an increase of roughly $90 million year over year.
Other Upcoming Releases
Enterprise Products Partners LP (EPD) is expected to release its fourth quarter results before the market open on Jan 30, 2014. The Zacks Consensus Estimate for the quarter is 70 cents.
Summit Midstream Partners, LP (SMLP) is expected to release its fourth quarter results after the market close on Mar 10, 2014. The Zacks Consensus Estimate for the quarter is 36 cents.
Delek Logistics Partners, LP (DKL) is expected to release its fourth quarter results after the market close on Mar 3, 2014. The Zacks Consensus Estimate for the quarter is 60 cents.
Our View
El Paso Pipeline Partners missed our estimates yet again in the wake of adverse regulatory settlement from two rate cases. The positive contribution from the Elba Express Pipeline was a breather for the partnership.
Given the increasing use and demand for natural gas globally, expansion projects of the partnership in excess of $1.3 billion are likely to benefit the unitholders of El Paso Pipeline Partners over the long run.
Based in Houston, Texas, El Paso Pipeline Partners was founded in 2007. The market cap of the partnership is $7.42 billion and it currently carries a short-term Zacks Rank #3 (Hold).
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