Enterprise Products Partners L.P. (NYSE: EPD) is among the largest and best run master limited partnerships (MLPs) in North America. So what are investors supposed to make of it falling short of earnings and revenue expectations for the fourth quarter? What investors may hold on to for 2015 is that the MLP recently raised its distribution for the 42nd consecutive time. Enterprise also hinted at higher distributions and growth ahead, and its operating costs were down sharply.

If Enterprise is among the best managed and the most highly regarded MLPs in North America, what do investors need to take away for MLPs as a whole? Is the sector not as immune to lower oil and gas prices as many investors had hoped?

Enterprise reported fourth-quarter earnings of $0.36 per unit before backing out items, and revenues were down 22% to $10.19 billion. Thomson Reuters had estimates of $0.37 in earnings per unit and $13.3 billion in revenue. We would also note that operating costs and expenses fell by almost 24% to $9.286 billion (versus $12.177 billion a year earlier).

The company currently expects growth capital expenditures of about $3.5 billion and sustaining capital expenditures of about $380 million. Enterprise also hinted that it can keep growing its distribution ahead.

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The ending note from CEO Michael Creel describes the current industry view as entering another commodity price cycle. He did not say that it is a lower commodity price cycle, but that is more than just implied. Creel said the following:

As we begin 2015, the energy sector is entering another commodity price cycle. We believe that Enterprise is well positioned to manage, adapt and prosper through this cycle. Our businesses are diversified and primarily fee-based. We enter 2015 with financial flexibility: $4.2 billion of liquidity; leverage consistent with our BBB+/Baa1 investment grade debt ratings; and healthy distribution coverage. We have over $6 billion of projects that will begin operations over the next two years and support continued distribution growth.

While 24/7 Wall St. did learn that some layoffs have been made in January, this was not addressed in the earnings call. It may be too small to make an announcement, and it could be skewed toward contractors and other efforts. The company declined to formally comment to us on the matter, but there was also no denial that layoffs had taken place.

Here is a brief segment by segment review of its operations for the fourth quarter of 2014, versus the fourth quarter of 2013:

• NGL Pipelines & Services: Gross operating margin for the segment was $705 million, versus $737 million for the same quarter of 2013.
• Onshore Natural Gas Pipelines & Services: Gross operating margin was $185 million, down from $187 million for the fourth quarter of 2013. Total onshore natural gas pipeline volumes were 12.3 TBtud in the fourth quarter of 2014, compared to 12.4 TBtud in the fourth quarter of 2013.
• Onshore Crude Oil Pipelines & Services: Gross operating margin from this segment increased by 40%, or $65 million, to $228 million from $163 million for the fourth quarter of 2013. Total onshore crude oil pipeline volumes were 1.3 million BPD for the fourth quarters of both 2014 and 2013.
• Petrochemical & Refined Products Services: Gross operating margin for increased 13% to $199 million from $175 million in the year-ago quarter.
• Offshore Pipelines & Services: Gross operating margin was $42 million, versus $28 million for the same quarter of 2013.

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Investors seem to be still trying to figure out how to interpret this earnings report. Enterprise traded lower after the report, but its units were down 0.8% at $33.03, and then were down more than 1% at $32.97 following Thursday’s opening bell, only to be up almost 1% to $33.62 a short time later. Its 52-week trading range is $16.08 to $41.38, and the consensus analyst price target ahead of earnings was $42.30.

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