DCP Midstream Partners DPM reported third-quarter results that slightly exceeded our expectations, but we don't expect any change to our fair value estimate. The partnership generated $30.2 million of adjusted earnings before interest, taxes, depreciation, and amortization compared with $32.4 million last quarter and $17.8 million in the year-ago quarter, though the year-over-year comparison is skewed by hurricane impact. The partnership's core natural gas services segment delivered adjusted EBITDA of $34.0 million, essentially flat with the $34.5 million from the second quarter. Natural gas throughput was flat, but natural gas liquids gross production was up 8% quarter over quarter, thanks to internal growth projects, such as the East Texas expansion, that helped offset the impact of lower drilling activity. Reduced drilling in recent quarters will probably remain a drag on volume over the next few quarters, but the Collbran expansion expected to be in service in the fourth quarter, a third-party expansion that should add volume to the Seabreeze pipeline beginning in early 2010, and potential Haynesville volume for the East Texas system could all help buck the trend. Adjusted segment EBITDA for the smaller wholesale propane logistics and NGL logistics segments was up by a combined $3.8 million from the prior-year period, mostly because of a $3 million noncash accounting adjustment in the 2008 period rather than any major operational changes.Distributable cash flow of $21.2 million covered the flat $0.60 distribution 0.94 times, but year-to-date coverage of 1.10 times is above guidance and a solid showing for the year thus far, in our view. As a result of improving processing margins and execution on growth projects leading to distributable cash flow of $72 million year to date, DCP increased its 2009 distributable cash flow guidance from $75 million-$85 million to a minimum of $95 million.
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Analyst Notes
11-19-09 | 8:59AM DCP Buys Michigan Assets
08-07-09 | 3:07PM DCP Midstream Partners' 2Q Solid
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