Enterprise Voyages Ahead
The Enterprise is swiftly making its way ahead. Well, not the one led by Captain Kirk into outer space, but into different realms of the U.S. Enterprise Products Partners (NYS: EPD) saw its second-quarter earnings jump 21% as it enjoyed staggering revenue growth this quarter. Shares jumped 8.6%. Here's what you need to know.
A look at the numbers
Enterprise's revenue for the quarter increased to $11.21 billion from $7.54 billion, up 49% on a year-over-year basis. Enterprise has emerged as one of the U.S.'s largest pipeline companies following its acquisition of Teppco Partners two years ago, and that integration has helped it post impressive quarterly results over the past few quarters.
Higher revenues helped push up operating income 19% to $632.8 million even as costs rose. The company's net income rose to $433.7 million from $357.2 million, up 21% from last year.
A look at the books
Total debt increased to $14.09 billion from $12.72 billion a year ago. Enterprise has been looking to expand its operations as natural gas production in the U.S. grows -- particularly in the Eagle Ford shale play -- thus they have been taking on more debt to help fuel their operations. It has entered into deals with Anadarko Petroleum (NYS: APC) , EOG Resources (NYS: EOG) , and Chesapeake Energy (NYS: CHK) to provide midstream services in South Texas's shale.
However, paying off this debt doesn't seem to be too much of burden at present. Its interest coverage ratio stands at 4.6 times, which implies it is more or less comfortably placed to square off its short-term obligations.
To take advantage of rising natural gas production in the U.S., Enterprise has $5 billon worth of expansion plans lined up. Among these deals is one with Energy Transfer Partners (NYS: ETP) wherein it'll build a pipeline joining the oil storage home in Cushing and the refining centre in Houston. Enterprise is also looking to acquire Duncan Energy Partners (NYS: DEP) , in which it already holds a 42% stake. This will add nearly 9,400 miles of gas pipelines to its collection.
The Foolish bottom line
I expect big things from this Houston-based company as it has been looking to expand its operations and increase its production as total natural gas consumption in the U.S. is expected to increase 14% by 2035. Enterprise is taking steps in the right direction to live long and prosper.
To see what Enterprise is up to and also find more analysis on it, click here to add it to your stock Watchlist.
At the time this article was published Shubh Datta doesn't own any shares in the companies mentioned above.Motley Fool newsletter services have recommended buying shares of Chesapeake Energy and Enterprise Products Partners. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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