Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6513
    -0.0023 (-0.35%)
     
  • OIL

    82.52
    +1.17 (+1.44%)
     
  • GOLD

    2,226.10
    +13.40 (+0.61%)
     
  • Bitcoin AUD

    108,829.67
    +514.16 (+0.47%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6021
    -0.0009 (-0.15%)
     
  • AUD/NZD

    1.0895
    +0.0015 (+0.14%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,301.92
    +21.08 (+0.12%)
     
  • FTSE

    7,968.10
    +36.12 (+0.46%)
     
  • Dow Jones

    39,768.68
    +8.60 (+0.02%)
     
  • DAX

    18,495.23
    +18.14 (+0.10%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     

DCP Midstream (DCP) Q4 Earnings Miss on Lower Guadalupe Profits

DCP Midstream, LP DCP reported fourth-quarter 2020 adjusted earnings of 34 cents per unit, missing the Zacks Consensus Estimate of 47 cents. In the year-earlier quarter, the midstream energy player reported a loss of 8 cents per unit.

Decreased profits from Guadalupe and Sand Hills affected the bottom line for the fourth quarter. The negatives were partially offset by increased income from Southern Hills and new earnings from the Cheyenne Connector. Lower costs and expenses also boosted the profit levels.

Revenues of $1,785 million missed the Zacks Consensus Estimate of $2,472 million. Moreover, the figure declined from $1,929 million in the year-ago quarter. This was caused by lower NGL fractionator throughput and average natural gas wellhead volumes.

DCP Midstream Partners, LP Price, Consensus and EPS Surprise

DCP Midstream Partners, LP Price, Consensus and EPS Surprise
DCP Midstream Partners, LP Price, Consensus and EPS Surprise

DCP Midstream Partners, LP price-consensus-eps-surprise-chart | DCP Midstream Partners, LP Quote

Operations

Logistics and Marketing

The segment recorded operating income of $158 million for the fourth quarter, up from the year-ago period’s $149 million. Higher profits from Southern Hills and new income from the Cheyenne Connector boosted the sector’s performance. This was partially offset by decreased profits from Guadalupe and Sand Hills.

ADVERTISEMENT

Average NGL pipelines throughput for the quarter was 610 thousand barrels per day (Mbpd), higher than the year-ago level of 599 Mbpd. Fractionator throughput, however, decreased to 54 Mbpd from the year-ago level of 58 Mbpd.

Gathering and Processing

The segment reported net income of $85 million for the fourth quarter compared with $12 million a year ago. Decreased operating costs boosted the segment, which was partially offset by a decline in volumes in the South and Midcontinent regions.

Average wellhead volumes for the quarter declined to 4,442 million cubic feet per day (MMcf/d) from the year-ago period’s 4,998 MMcf/d. However, NGL gross production rose to 414 Mbpd from 404 Mbpd in the year-ago quarter.

Total Expenses

Total operating costs and expenses for the fourth quarter were $1,740 million, down from the year-ago quarter’s $1,977 million. Purchases and related costs, as well as operating and maintenance expenses decreased for the quarter under review. This was partially offset by increased general and administrative expenses.

Financials

For fourth-quarter 2020, total expansion capital expenditure and equity investments were $12 million. Sustaining capital for the quarter was $22 million. It generated excess free cash flow of $85 million in the fourth quarter.

At the end of fourth-quarter 2020, the partnership reported long-term debt of $5,119 million, and cash and cash equivalents of only $52 million. Moreover, it had current debt of $505 million.

View

In the DJ Basin, the partnership brought online Latham 2 Offload, with a capacity of 225 MMcf/d, at 2020-end. Throughout 2021, it is expected to maintain stable distribution at $1.56 per unit on an annualized basis.

Due to the coronavirus pandemic, DCP Midstream is expected to take a conservative approach through 2021 in regard to volumes and pricing of commodities. The partnership expects adjusted EBITDA for 2021 in the range of $1,120-$1,260 million, the midpoint of which is below the 2020 level of $1,252 million. It expects excess free cash flow to rise more than 60% in 2021 to $310-$460 million from the 2020 level of $237 million.

DCP Midstream expects expansion capital expenditures and equity investments within $25-$75 million in 2021, significantly down from $205 million in 2020. Sustaining capital expenditures for 2021 is estimated within $45-$85 million. The metric was $45 million in 2020.

It expects NGL pipeline volumes to rise this year supported by higher ethane recovery. However, overall profits might get affected by decreasing Guadalupe earnings. Also, Gathering and Processing volumes are expected to decline in 2021.

Zacks Rank & Key Picks

The partnership currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Cactus, Inc. WHD, ConocoPhillips COP and Altus Midstream Company ALTM, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cactus’ bottom-line estimates for 2021 have witnessed two upward revisions and no downward movement in the past 30 days.

ConocoPhillips’ sales for 2021 are expected to increase 54% year over year.

Altus Midstream’s bottom line for 2021 is expected to increase 380.5% year over year.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.

Click here to download this report FREE >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ConocoPhillips (COP) : Free Stock Analysis Report

Cactus, Inc. (WHD) : Free Stock Analysis Report

ALTUS MIDSTREAM (ALTM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research