Kinder Morgan Energy Partners LP (KMP) & An Earnings Recap

Again, the big, diverse companies like Kinder Morgan Energy Partners LP (NYSE:KMP) and had a much easier time compensating for these losses than Enbridge and ONEOK, Inc. (NYSE:OKE).

That point leads us into our next trend. Fee-based business is on the rise in the midstream industry. By securing fee-based transportation or processing contracts, midstream companies avoid commodity risk altogether, which explains why almost every midstream project coming online — pipelines, terminals, treatment centers, fractionators, etc — is doing so supported by fee-based agreements.

Enbridge Energy Partners, L.P. (NYSE:EEP) drove its Eagle Ford fee-based business up 38% alone in the first quarter. Management is reporting that the overall fee-based increases at Enterprise are enough to mitigate commodity risk in its other segments. Again, size and diversity are crucial here.

Plains All American is another midstream that had a very strong first-quarter, and continues to pump its cash into building up its fee-based business. Management is dedicating 99% of its capital expenditures to fee-based projects, so don’t expect this trend to die down anytime soon.

Foolish takeaway
It was a very strong first quarter for the most part, and the midstream industry remains full of some excellent opportunities for investors. For the next few years, the strongest, best-run companies in this bunch are going to continue to crank out excellent results based on the surge in domestic energy production.

The article Earnings Round-Up: The Midstream Industry’s Strong Q1 originally appeared on Fool.com and is written by Aimee Duffy.

Motley Fool contributor Aimee Duffy has no position in any stocks mentioned. If you have the energy, follow Aimee onTwitter, where she goes by @TMFDuffy.The Motley Fool recommends Enterprise Products Partners L.P. and ONEOK Partners, L.P.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.