Enterprise Products Partners L.P. (NYSE: EPD) is set to report its fourth-quarter earnings Thursday morning. The giant master limited partnership (MLP) has an infrastructure and toll road model in the energy business, and it is one of the best run among its peers. The question is no longer whether MLPs have to worry about the lower price of oil, but how much. Another key issue we will be looking for is whether layoffs inside of Enterprise or with its contractors will be announced with the earnings report.

Before any panic sets in about the layoffs, the company and its workers, and investors and market observers, have to understand that paradigm shifts in commodity prices just tend to create an unfortunate scenario in which companies have to do whatever they can to lower their operating costs. That includes “rightsizing headcounts.”

So, what is expected from Enterprise with its earnings? Thomson Reuters is calling for $0.37 in earnings per unit, with a 1.6% rise in revenues to $13.3 billion.

One key issue we will focus on is the pending acquisition of Oiltanking Partners L.P. (NYSE: OILT), with a vote due in mid-February. Yahoo lists the market cap at close to $3.7 billion, with a distribution yield-equivalent of roughly 2.5%. That compares to a market cap of almost $64 billion and a distribution yield-equivalent of 4.2% for Enterprise.

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Reuters ran a note in mid-January that low oil prices have the MLP’s Seaway Twin pipeline not running at full capacity. This is part of a pipeline network that ultimately helps get crude oil from Canada down to refiners along the Gulf Coast. Bloomberg also recently reported that Enterprise may be bidding on a pipeline operator in the Eagle Ford Shale basin in Texas.

So, what else is there besides potential layoffs to consider? Enterprise’s stock (unit) chart brings up at least some concern. The MLP challenged its 50-day and 200-day moving average in the final days of 2014 and the first day of 2015, and that was up around $36.50 at the time. The more recent peak was around $36.50, but that was after the MLP dropped to about $31 in the selling panic on January 14.

On a longer-term basis, the crash in oil prices was harsh enough that the peak above $40 last September has been followed by a wave of lower highs (see chart on page 2). The good news is that $31 has acted as strong support in October, December and January.

So, about the layoffs. We have perceived this as a potential scenario. 24/7 Wall St. has learned that some layoffs have taken place. The issue is that the number simply may be too small to be addressed by the company. It also may be that Enterprise has shed contractors rather than letting go of too many employees, or some combination thereof. When companies and entities have to cut costs, they often turn to cutting overtime hours and cutting how many contractors they use outside of their core employee base.

Enterprise’s last headcount was close to 6,700, although that number may have changed since. Almost two weeks ago we did confirm with Randy Burkhalter, Enterprise’s head of investor relations, that he had heard some layoffs had taken place. The number was unspecified, and it was also not clear whether these were headcount cuts by the company or a trimming of contractors — or both.

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On January 28, 2015, we also spoke with Rick Rainey, head of Media Relations for Enterprise. He said that the company would decline to comment on internal personnel matters. That being said, there was no formal denial at all that internal layoffs or contractor terminations had taken place.

Other calls and inquiries to Enterprise management about the layoffs were not returned. We recently placed a call to a Wall Street analyst who could not formally comment on the record. His take was that he would not be surprised at all if many companies in the space are starting to quietly trim workers and costs, even if no formal announcements are made.

The biggest question for MLP investors is the distribution, the MLP equivalent of dividends for income investors. Enterprise said on January 6, 2015, that it was raising its distribution by over 5% from a year earlier to $0.37 per unit, for an annualized payout of $1.48. In actuality, the prior quarterly distribution in October was $0.356 per unit. This was touted as Enterprise’s 51st distribution increase since coming public in 1998, and more importantly it was the 42nd consecutive quarterly increase.

So, how does $1.48 per year stack up with lower oil prices and a challenging environment? Enterprise’s annual expectations from Thomson Reuters are $1.49 in earnings per unit for 2014 and $1.52 per unit for 2015. The issue to consider on top of raw earnings is that MLPs also include a return of capital component in their distributions. That creates some tax advantages for traditional income-oriented investors, and it allows for MLPs to often pay out more than they make in raw earnings.

24/7 Wall St. recently outlined how lower oil prices have started to have an impact at the local level in Houston, Texas. It turns out that many oil and gas firms along the spectrum are cutting capex for 2015. We have started to see news reports of layoffs from the likes of Schlumberger, Halliburton, Apache and others.

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It goes without saying that employees, certainly those directly affected by a rightsizing event, are not fans of layoffs. That is just not always the case for investors.

Plummeting oil was treated as an anomaly at first. Now companies are starting to make plans for much lower oil prices to remain in place for a much longer period.

If oil remains under $50, or anywhere close to it, history and common sense would dictate that we have almost certainly just seen the start of oil and gas sector layoffs, cost cutting, lower capex, pressuring suppliers, pushing out contracts and projects, and more efforts.

Many analysts have continued to operate under the belief that the top players, and Enterprise is one of those top players in the sector, can continue to maintain their payouts and distributions. One recent call was from J.P. Morgan, and a similar call was made in December by Merrill Lynch. Lower oil may allow for dividends and distributions to be maintained, but it may be harder and harder to expect that MLPs and oil giants will be able to keep raising their dividends and distributions ahead.

If you want confirmation of dividends and distributions in trouble, just look to the Cushing MLP Total Return Fund (NYSE: SRV) and its recent dividend cut. The fund blamed the lower distribution on reduced earnings from its investments in certain upstream MLPs that were negatively impacted by “the recent substantial downturn in crude oil and natural gas prices” and on its leverage. Last week this fund was trading above $6, and now it is barely above $4. Fortunately, Enterprise was not listed among its top 10 holdings or about 55% of the total fund weighting.

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Enterprise’s mid-Wednesday trading was down 1.3% at $34.05 ahead of earnings. The consensus analyst price target is $42.30, and the 52-week range is $30.71 to $41.38.

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