Enbridge Energy Partners L.P. (EEP) reported its third quarter earnings of 86 cents per unit, beating the Zacks Consensus Estimate of 60 cents. The company’s profit stood at 71 cents in the year-ago period.

Total revenues for the quarter decreased nearly 51% year over year to $1.36 billion. The partnership declared an unchanged cash distribution of 99 cents per unit or $3.96 per unit annualized.

Volume in the partnership’s liquid systems increased 8.3% year over year to 2,055 thousand barrels per day (MBbl/d). All three of the partnership’s liquid systems (Lakehead, Mid-Continent and North Dakota) contributed to this year over year positive volume comparison. These systems accounted for 83%, 12% and 5%, respectively, of the total liquids transported during
the quarter.

Operating income in the Liquids segment increased more than 37% year over year to $132.7 million, primarily driven by transportation rate increases in connection with the completion of stage 2 of the partnership’s Southern Access Expansion. These positives were partially offset by higher depreciation and operating costs. Operating costs went up by $9.2 million from the year-ago quarter.

During the quarter, natural gas volumes decreased 8.6% from the year-earlier period to 2,298,000 MMBtu/d, driven mainly by the partnership’s East Texas and Anadarko systems. These systems accounted for approximately 59% of the partnership’s total natural gas volumes during the quarter. Operating income for the Natural Gas segment increased 32% year over year to $47.3 million driven by the lower costs.

The Marketing segment reported adjusted operating income of $0.2 million during the quarter, compared to $0.4 million in the year-ago quarter. This decrease was mainly on account of lower natural gas prices.

We believe the partnership will continue to develop its existing assets. The expansion and diversification of the partnership’s asset base over the past few years has created opportunities for internal growth projects. In addition, Enbridge expects to benefit from its expanded geographical scope, which added an extra layer of stability to its cash flows. Consequently, we recommend an Outperform rating.

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