Will EPD's $5.6B Project Backlog Translate Into Higher Margins?

Enterprise Products Partners EPD is forging ahead with its streamlined $5.6-billion capital project portfolio, down from the previous $7.6 billion, as several projects have already been brought online. Most organic growth capital projects are expected to become operational by the end of 2025, with a final in-service date no later than 2026.

The major infrastructure projects include the Orion and the Mentone West gas processing plant in the Permian Basin, both of which are already in operation. By the fourth quarter of 2025, EPD expects to put online the Bahia NGL Pipeline, Fractionator 14 and the Neches River export terminal.

Bringing these assets into service in 2025 will deliver substantial benefits to EPD. These projects will contribute to increased fee-based revenue streams, as most of EPD's contracts have built-in escalation clauses to mitigate inflation impacts. The expansions in gas processing and fractionation capabilities will enable the partnership to handle growing production volumes, especially from the Permian Basin, one of the most prolific hydrocarbon regions in the United States. This will boost throughput and help secure long-term commitments from producers and downstream customers.

In the first half of 2025, about 81% of EPD’s gross operating margin was derived from fee-based sources, reinforcing the partnership’s defensive earnings profile. This fee-based model significantly cushions Enterprise Products from short-term commodity price volatility and remains a fundamental driver behind its ability to consistently grow distributions for 27 consecutive years, maintaining growth even through the 2008 financial crisis, the 2015 oil collapse and the coronavirus pandemic.

Are KMI & MPLX’s Project Pipelines Driving Growth?

Kinder Morgan KMI reported a project backlog of $9.3 billion at the end of the second quarter of 2025, with about 93% tied to natural gas infrastructure. About $7.6 billion in backlog (excluding CO2 enhanced oil recovery and gathering and processing projects) is expected to deliver an average first full-year project EBITDA multiple of 5.6 times. KMI plans to spend $2.3 billion annually on capital projects, going forward.

MPLX LP MPLX has committed more than $5 billion in 2025 for growth initiatives, with nearly 90% of this capital allocated to natural gas and NGL services. This substantial investment includes both organic growth capital totaling $1.7 billion, and bolt-on mergers and acquisitions valued at $3.5 billion. These developments are concentrated in key basins such as the Permian, Marcellus and Utica, which are central to MPLX's long-term growth and export strategies.

EPD’s Price Performance, Valuation & Estimates

EPD units have gained 6.5% over the past year, outpacing 3.7% growth of the composite stocks belonging to the industry.

From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.09X. This is below the broader industry average of 11.36X.

The Zacks Consensus Estimate for EPD’s 2025 earnings has been revised downward over the past 30 days.

EPD currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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