The ups and downs of Enterprise Products Partners’ 4Q14 results (Part 7 of 13)

(Continued from Part 6)

Petrochemical & Refined Products Services segment

In the previous section, we looked at Energy Transfer Products’ (EPD) Onshore Natural Gas Pipelines & Services and Onshore Crude Oil Pipelines & Services segments. In this article, we’ll cover the 4Q14 operating performances for EPD’s Petrochemical & Refined Products Services and Offshore Pipelines & Services segments.

Petrochemical & Refined Products Services segment

Operating profit for the Petrochemical & Refined Products Services segment increased by 13.4% to $198.6 million in 4Q14 compared to the year-ago quarter. The following are some reasons operating profits improved:

• Propylene fractionation, octane enhancement, and high-purity isobutylene operation contributed to operating income improvements.

• Operating profit for 4Q14 was $25 million higher due to higher sales margin and sales volumes.

• Operating profit for refined products pipelines was $17 million, which benefited from increased business activities at the Oiltanking Partners’ Beaumont terminal.

Profits decreased and offset overall segment profit growth due to lower byproduct sales revenues. Revenues declined due to lower commodity prices in 4Q14 in EPD’s butane isomerization business.

Volume analysis

Below is a summary of Petrochemical & Refined Products Services’ volume analysis:

1. Propylene fractionation volumes remained almost unchanged at 81 thousand barrels per day (or MBPD) in 4Q14.

2. Octane enhancement and high-purity isobutylene volumes decreased to 22 MBPD in 4Q14 from 24 MBPD in 4Q13.

3. Refined products pipelines and related services business volumes increased 18% to 694 MBPD for 4Q14 compared to 590 MBPD.

Offshore Pipelines & Services segment

Operating profit in EPD’s Offshore Pipelines & Services segment increased 50% to $42 million in 4Q14 from $28 million recorded in 4Q13. The segment’s SEKCO Oil Pipeline, which began operations in July 2014, reported $7 million of gross operating profit. The SEKCO Pipeline, a joint venture between EPD and Genesis Energy, L.P. (GEL), is a 149-mile crude oil gathering pipeline serving producers in the Lucius oil and gas field in deepwater central Gulf of Mexico.

Profit growth was partially offset by lower profit due to 24% lower natural gas volumes on the Independence Trail Pipeline.

Among Enterprise Products Partners’ (EPD) peers, diluted EPS (earnings per share) for Kinder Morgan Energy Inc. (KMI) decreased 73%. EPD is 10% of the Alerian MLP ETF (AMLP), and KMI is 4.5% of the Energy Select Sector SPDR ETF (XLE). Williams Companies (WMB) is a component of XLE.