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Enterprise barrels through with 'pretty good quarter'; low propane prices drive innovation

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Enterprise barrels through with 'pretty good quarter'; low propane prices drive innovation

EnterpriseProducts Partners LP was able to stabilize its operating marginsduring an extremely difficult quarter for the oil and gas industry, CEO A.James Teague said.

During Enterprise's first-quarter earnings call April28, Teague said Enterprise kept its gross operating margin steady compared tothe first quarter of 2015 at $1.3 billion but increased its distributable cashflow to $1.1 billion from $1 billion.

Teague said the partnership's NGL pipelines andservices segment increased revenue by $89 million year over year, to $784million, which he credited to Enterprise's overall growth strategy. "Thesenumbers reflect the ramp-up of new assets, including ATEX, Aegis, Front Rangeand Texas Express, but these numbers also reflect our success in being veryaggressive and adding incremental volumes by using the strength of our valuechain," he said. "Our NGL export volumes were up substantially,reflecting the new LPG assets we put in service in December, and ourfractionation volumes increased 5% to 836,000 barrels a day from 798,000barrels a day in the first quarter of 2015. That fractionation increase isevidence of our using the strength of our value chain to bring incrementalvolumes. That's one place we realize those results."

A sharp decline in the price of propane following apeak in early 2014 has not only benefited end users of the fuel but has alsodriven new product innovation and created opportunities to market it to newconsumers.

Although inventories of propane are relatively low atthe moment and volatility can be expected by the time next winter rolls around,a repeat of the severe increase in prices during the winter of 2013/14 isseen as unlikely. Manufacturersof retail and commercial propane-consuming products have continued to innovateas a result.

"With lower prices, we've now reentered a periodof opportunity to really drive a rebound in traditional propane markets,"Mike Sloan, principal at ICF International, said at the National Propane GasAssociation's Southeastern Convention & International Propane Expo inNashville on April 8. "At least for the next couple years, there's achance to get the message out about what an attractive economic product propanecan be."

The propane market fell more than 2 cents per gallonin the week ended April 29 as production of the commodity rose to a new record,but stronger action in crude oil was able keep prices from falling further.

Lone Star pipeline grade propane at Mont Belvieudeclined 2.35 cents to trade at 45.60 cents per gallon in the week ended April29, while non-LST propane lost 2.30 cents to trade at 45.55 cents per gallon.Prices at the hub in Conway, Kan., fell 2.20 cents, and traded at 42.50 centsper gallon.

The frac spread increased 0.23 cent to 21.23 cents pergallon on April 28 and compared to 21.00 cents per gallon on April 21, accordingto data from S&P Global Market Intelligence. Prices of natural gas rose0.5% between the two dates while the price of the average NGL barrel gained0.9%.

AmericanMidstream Partners LP has acquired interests in Gulf of Mexicomidstream infrastructure for about $225 million.

The assets include interests in the Destin natural gaspipeline and the Tri-States and Wilprise NGL pipelines, which both carry richgas from the eastern Gulf of Mexico, American Midstream said in an April 25news release. The pipeline assets were acquired from an affiliate of AmericanMidstream's general partner.

American Midstream also acquired a majority interestin the Henry Gas gathering system and other Gulf of Mexico crude, natural gasand saltwater onshore and offshore pipelines from , as well as anincremental 1% interest in the Delta House production system from an affiliateof its general partner, boosting its total ownership to about 14%.