Enterprise Products Partners: Driving Margin Growth with Fee-Based Revenues

Enterprise Products Partners (EPD) benefits from its diversified asset base and stable fee-based revenue streams, accounting for 78-82% of its gross operating margin. This structure supports high utilization rates and operational efficiency across multiple commodity value chains. EPD's fee-based contracts provide predictable cash flows insulated from commodity price volatility, enabling the partnership to maintain investment-grade credit metrics and consistent distribution growth. Kinder Morgan (KMI) and MPLX LP also benefit from their fee-based revenue streams, which account for a significant portion of their cash flow mix and provide predictable income streams even during market volatility.

Enterprise Products Partners (EPD) and Kinder Morgan (KMI) have been leveraging the stability of fee-based revenue streams to bolster their financial performance and growth prospects. EPD, a leading energy infrastructure company, benefits significantly from its diversified asset base and stable fee-based revenue streams, which account for approximately 78-82% of its gross operating margin [1]. This structure supports high utilization rates and operational efficiency across multiple commodity value chains, from production and processing to transportation, storage, and export.

EPD's fee-based contracts, such as pipeline tariffs, fractionation, storage, and terminal services, provide predictable cash flows largely insulated from commodity price volatility. This stability allows EPD to maintain investment-grade credit metrics, support consistent distribution growth for 27 consecutive years, and reinvest in high-return organic growth projects. By anchoring earnings in fee-based activities while leveraging its expansive asset footprint, EPD enhances its competitive positioning and long-term value creation potential [1].

Kinder Morgan (KMI) also benefits from its substantial base of stable, fee-based revenues, which account for roughly 26% of its cash flow mix. These fixed fees are collected regardless of commodity prices, ensuring predictable income streams even during market volatility. More than 40% of these revenues come from highly stable refined product operations, underpinning KMI’s ability to fund growth projects and shareholder returns [1].

MPLX LP similarly enjoys the stability of long-term, fee-based contracts, particularly from its gathering, processing, and NGL infrastructure. Its newly acquired Northwind Midstream assets, supported by minimum volume commitments averaging 13 years, are expected to deliver above-average rates due to higher CO2 and H2S treating requirements. This structure enhances cash flow resilience, enabling MPLX to sustain mid-single-digit EBITDA growth while supporting consistent distribution increases [1].

The Public Sector Pension Investment Board recently reduced its stake in Kinder Morgan, Inc. by 57.4%, selling 696,349 shares. This reduction, along with insider selling activity by vice presidents John W. Schlosser and Sital K. Mody, indicates a strategic shift in the investment portfolio [2]. Despite this, Kinder Morgan's dividend yield remains attractive at 4.4%, and the company continues to maintain a strong financial position with a market cap of $59.02 billion and a price-to-earnings ratio of 21.77 [2].

In conclusion, fee-based revenue streams play a crucial role in the financial stability and growth of energy infrastructure companies like EPD, KMI, and MPLX. These stable income streams provide predictable cash flows and mitigate the risks associated with commodity price volatility, enabling these companies to maintain investment-grade credit metrics and support consistent distribution growth.

References:
[1] https://www.nasdaq.com/articles/can-enterprise-products-fee-based-revenues-drive-margin-growth
[2] https://www.marketbeat.com/instant-alerts/filing-public-sector-pension-investment-board-sells-696349-shares-of-kinder-morgan-inc-nysekmi-2025-08-13/