Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three months ended
September 30, 2020.
Third Quarter
2020 Highlights
Three Months Ended September
30,
($ in millions, except per unit
amounts)
2020
2019
Operating income
$
1,383
$
1,474
Net income (1)
$
1,084
$
1,045
Fully diluted earnings per unit (1)
$
0.48
$
0.46
Cash flow from operations (2)
$
1,098
$
1,643
Total gross operating margin (3)
$
1,993
$
2,036
Adjusted EBITDA (3)
$
2,060
$
2,023
Free cash flow (2)(3)
$
430
$
1,025
Distributable cash flow (3)
$
1,647
$
1,640
(1)
Net income and fully diluted earnings per
unit for the third quarters of 2020 and 2019 included non-cash
asset impairment and related charges of approximately $77 million,
or $0.03 per unit, and $40 million, or $0.02 per unit,
respectively. For the nine months ended September 30, 2020 and
2019, net income and fully diluted earnings per unit included $90
million, or $0.04 per unit, and $51 million, or $0.02 per unit,
respectively, of non-cash asset impairment and related charges.
(2)
Net cash flow provided by operating
activities, or cash flow from operations (“CFFO”), and free cash
flow (“FCF”) include the impact of the timing of cash receipts and
payments related to operations as well as changes in working
capital in connection with our marketing activities. The net effect
of changes in operating accounts, which are a component of CFFO and
FCF, was a decrease of $603 million in the third quarter of 2020
compared to a decrease of $77 million in the third quarter of
2019.
(3)
Total gross operating margin, adjusted
earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”), FCF and distributable cash flow (“DCF”) are
non-generally accepted accounting principle (“non-GAAP”) financial
measures that are defined and reconciled later in this press
release.
- Gross operating margin, operating income and net income
attributable to common unitholders for the third quarter of 2020
included $38 million of non-cash, mark-to-market net losses on
financial instruments used in our hedging activities, compared to
$86 million of non-cash, mark-to-market net losses on such
instruments for the third quarter of 2019.
- Enterprise declared a $0.445 per common unit cash distribution
with respect to the third quarter of 2020, which represents a 0.6
percent increase compared to the distribution paid for the third
quarter of 2019. The cash distribution will be paid November 12,
2020 to common unitholders of record as of the close of business on
October 30, 2020.
- Enterprise reported DCF of $1.6 billion for the third quarter
of 2020, which provided 1.7 times coverage of the $0.445 per common
unit cash distribution and resulted in $669 million of retained
DCF. DCF for the first nine months of 2020 was $4.8 billion, which
provided 1.6 times coverage of the aggregate $1.335 per common unit
of cash distributions for that period and resulted in $1.8 billion
of retained DCF.
- CFFO was $1.1 billion for the third quarter of 2020, compared
to $1.6 billion for the third quarter of 2019. The net effect of
changes in operating accounts, including amounts used for working
capital related to marketing activities, is responsible for
substantially all of the decrease in CFFO between the two periods.
FCF for the third quarter of 2020 and twelve months ended September
30, 2020 was $430 million and $2.1 billion, respectively. The net
effect of changes in operating accounts reduced FCF by $603 million
and $740 million for the third quarter of 2020 and twelve months
ended September 30, 2020, respectively.
- Total capital investments, including sustaining capital, were
$705 million in the third quarter of 2020 and $2.7 billion for the
first nine months of 2020. Included in these investments were
sustaining capital expenditures of $83 million in the third quarter
of 2020 and $226 million in the first nine months of 2020.
Third Quarter
2020 Volume Highlights
Three Months Ended September
30,
2020
2019
NGL, crude oil, refined products &
petrochemical pipeline volumes (million BPD)
6.0
6.6
Marine terminal volumes (million BPD)
1.5
1.9
Natural gas pipeline volumes (TBtus/d)
13.1
14.5
NGL fractionation volumes (million
BPD)
1.4
1.0
Propylene plant production volumes
(MBPD)
83
105
Fee-based natural gas processing volumes
(Bcf/d)
4.1
4.7
Equity NGL production volumes (MBPD)
141
111
As used in this press release, “NGL” means natural gas liquids,
“BPD” means barrels per day, “MBPD” means thousand barrels per day,
“MMcf/d” means million cubic feet per day, “Bcf/d” means billion
cubic feet per day, “BBtus/d” means billion British thermal units
per day and “TBtus/d” means trillion British thermal units per
day.
“Enterprise’s integrated and diversified midstream energy system
generated solid operational and financial results despite another
challenging quarter for the U.S. energy industry,” said A. J. “Jim”
Teague, co-chief executive officer of Enterprise’s general partner.
“Similar to the second quarter of 2020, our fee-based businesses,
storage assets, marketing activities and cost control efforts led
to distributable cash flow of $1.6 billion and provided 1.7 times
coverage of our distribution to common unitholders. We also
benefitted from cash flows associated with the completion of two
NGL fractionators that began service during 2020. Volumetric
highlights for the third quarter of 2020 include total equivalent
pipeline volumes of approximately 9.5 million BPD, record NGL
fractionation volumes of 1.4 million BPD and NGL marine terminal
export volumes of 643 MBPD.”
“In comparing the third quarter of 2020 to the third quarter of
last year, we generated approximately $2 billion of gross operating
margin in both quarters. The performance of our marketing, storage,
NGL fractionation, NGL pipeline, petrochemical pipeline and Permian
gathering and processing businesses largely offset the impact of
lower margins, volumes and earnings from our natural gas gathering
and processing assets in the Rockies, South Texas and the
Haynesville and our crude oil pipelines and marine terminal.
Notably, our petrochemical services segment reported a $124 million
sequential improvement from the challenging second quarter of
2020,” stated Teague.
“During the third quarter of 2020, our commercial team responded
to customer requests and changing industry dynamics to amend
certain agreements that enabled us to increase volumetric
commitments over the long-term by utilizing existing pipeline
capacity and to cancel the Midland-to-ECHO 4 crude oil pipeline.
This action resulted in an $800 million reduction to capital
expenditures over the next two years. This was another example of
Enterprise working with customers for a ‘win/win’ deal that enabled
both Enterprise and our customers to better allocate capital during
the current economic cycle while retaining long-term, fee-based
volumes and revenues for our assets. In total, we have reduced our
planned growth capital expenditures for 2020 and 2021 by
approximately $1.5 billion in response to changing industry
conditions. We have also focused on cost control. For the first
nine months of this year, Enterprise’s operating costs are $260
million below budget and total sustaining capital expenditures for
2020 are expected to be $100 million lower than our original
budget. We were able to manage these costs lower without
sacrificing safety or operational integrity and reliability,”
continued Teague.
“The global economy is in the early stages of reopening from a
self-imposed sudden stop due to COVID-19. The pace of the recovery
varies country by country, community by community and business by
business. The current resurgence of the pandemic may temporarily
affect this progress in some regions. The development of vaccines
and therapeutic treatments are progressing rapidly. Even though the
pace of the pandemic and the economic recovery is still very
uncertain, the economic recovery is leading to a remarkable rebound
in the demand for energy and energy products from the lows of the
second quarter of 2020. Additionally, with the world still adding a
billion people every 12 years (the world population is currently
7.8 billion and counting) and populations in developing countries
wanting access to cleaner and more convenient sources of energy, we
believe demand for reliable U.S. energy, petrochemicals and related
products will continue to recover and resume long-term growth,”
continued Teague.
“This recovery in demand will also ultimately result in a price
signal for crude oil. Given the combination of the record
retrenchment in drilling and completion activities by U.S.
producers, refocused capital allocation and the effects of steep
decline curves resulting in a decrease in shale production, we
believe this price signal for higher crude oil prices could occur
as early as the second half of next year. In the interim, we
believe the midstream industry will be challenged in its
producer-facing businesses. The challenges and opportunities will
be different for each producing basin. Enterprise is well
positioned for the challenges and opportunities that come in this
type of environment. We believe our integrated, diversified and
fee-based business model, along with our strong balance sheet and
financial flexibility will enable us to successfully traverse this
period. Enterprise’s most important assets during these times are
our employees, their work ethic and their ingenuity. We especially
appreciate their resilience in managing through the challenges of
2020,” said Teague.
Review of Third Quarter 2020
Results
Enterprise reported total gross operating margin of $2.0 billion
for both the third quarters of 2020 and 2019. Below is a detailed
review of each business segment’s quarterly performance.
NGL Pipelines & Services – Gross operating margin
from the NGL Pipelines & Services segment was $1.0 billion for
both the third quarters of 2020 and 2019.
Enterprise’s natural gas processing and related NGL marketing
business reported gross operating margin of $257 million for the
third quarter of 2020 compared to $288 million of gross operating
margin for the third quarter of 2019. Enterprise’s natural gas
processing plants in South Texas, the Rockies, Louisiana and
Mississippi reported a $54 million decrease in gross operating
margin for the third quarter of 2020 compared to the third quarter
of last year, primarily attributable to lower volumes and
processing margins, including a $28 million loss related to hedging
activities. Certain plants in Louisiana and Mississippi were
impacted by lower Gulf of Mexico production as a result of shut-ins
associated with Hurricane Laura. The partnership’s natural gas
processing plants serving the Permian Basin reported a $5 million
increase in gross operating margin for the third quarter of 2020
compared to the third quarter of 2019, primarily attributable to a
345 MMcf/d increase in fee-based volumes including the Mentone
plant, which began operations in December 2019. Total fee-based
processing volumes were 4.1 Bcf/d in the third quarter of 2020
compared to 4.7 Bcf/d in the third quarter of 2019. Equity NGL
production increased 27 percent to 141 MBPD in the third quarter of
2020 from 111 MBPD in the same quarter of 2019.
Gross operating margin from NGL marketing activities increased
$17 million, primarily due to a $36 million increase from higher
sales volumes, partially offset by an $8 million decrease from
lower average sales margins and an $11 million decrease due to
non-cash mark-to-market activity. NGL marketing activities this
quarter benefited from the utilization of uncontracted storage
capacity.
Gross operating margin from the partnership’s NGL pipelines and
storage business for the third quarter of 2020 was $603 million, an
increase of $10 million compared to the third quarter of 2019. NGL
pipeline transportation volumes decreased by 111 MBPD to 3.4
million BPD in the third quarter of 2020. NGL marine terminal
volumes increased 7 percent to 643 MBPD in the third quarter of
2020 from 602 MBPD reported for the third quarter of 2019.
The partnership’s Western NGL pipelines that serve the Permian,
DJ Basin, and Rocky Mountain producers, which include the
Mid-America Pipeline System, Seminole pipeline, Chaparral System,
Shin Oak Pipeline, and the Texas Express and Front Range pipelines,
on a combined basis had an $11 million increase in gross operating
margin, primarily due to higher average transportation fees and
lower operating costs. This was partially offset by a combined 43
MBPD decrease in transportation volumes.
Gross operating margin from the Enterprise Hydrocarbons Terminal
(“EHT”) and related Channel Pipeline increased $8 million,
primarily due to a 45 MBPD increase in liquefied petroleum gas
(“LPG”) marine terminal export volumes and a 39 MBPD increase in
transportation volumes on the related Channel Pipeline. The
partnership completed an expansion of its LPG loading facilities at
EHT in the third quarter of 2019.
Gross operating margin for the third quarter of 2020
attributable to the Dixie, South Louisiana NGL and Lou-Tex NGL
pipelines decreased by a combined $11 million compared to the same
quarter in 2019 on a 154 MBPD decrease in volumes partially
attributable to the effects of Hurricane Laura related to shut-ins
of Gulf of Mexico production as well as power outages at certain
pump stations.
Enterprise’s NGL fractionation business reported gross operating
margin of $168 million for the third quarter of 2020 compared to
$127 million for the third quarter of 2019. Enterprise’s NGL
fractionation business reported a record 1.4 million BPD of
fractionation volumes in the third quarter of 2020. This increase
was primarily attributable to NGL fractionators in the Mont
Belvieu-area, including the partnership’s tenth and eleventh NGL
fractionators that were put into service in March and September of
2020, respectively.
Crude Oil Pipelines & Services – Gross operating
margin from the Crude Oil Pipelines & Services segment was $482
million for the third quarter of 2020 compared to $496 million for
the third quarter of 2019. Gross operating margin for both the
third quarters of 2020 and 2019 included $10 million of non-cash,
mark-to-market gains related to hedging activities. Total crude oil
pipeline transportation volumes were 1.7 million BPD for the third
quarter of 2020 compared to 2.3 million BPD for the third quarter
of 2019. Total crude oil marine terminal volumes were 662 MBPD for
the third quarter of 2020 compared to 987 MBPD for the third
quarter of 2019.
Gross operating margin from Enterprise’s Midland-to-ECHO
Pipeline System and related activities for the third quarter of
2020 decreased a net $41 million versus the third quarter in 2019,
primarily due to a $43 million decrease attributable to related
marketing and hedging activities. Total system transportation
volumes decreased 53 MBPD, or 8 percent, net to our interest, when
compared to the third quarter of 2019.
Gross operating margin from the South Texas Crude Oil Pipeline
System was down $16 million in the third quarter of 2020 compared
to the same quarter in 2019, due to lower transportation volumes of
83 MBPD. The partnership’s equity investment in the Eagle Ford
Crude Oil Pipeline decreased $9 million, also due to lower
transportation volumes of 44 MBPD. Enterprise’s share of gross
operating margin associated with Seaway Pipeline decreased $18
million, primarily due to lower average transportation fees and
volumes. Transportation and marine volumes on the Seaway Pipeline
decreased 269 MBPD and 75 MBPD, respectively, on a net basis.
Gross operating margin from crude oil export activities at EHT
on the Houston Ship Channel decreased $14 million, primarily due to
lower deficiency fees and volumes. Partially offsetting this
decrease is a $12 million increase in gross operating margin from
higher storage and other revenues, and lower operating costs.
Export volumes decreased by a net 183 MBPD.
Gross operating margin from other crude oil marketing activities
increased $92 million, primarily due to higher average sales
margins, including an $11 million benefit from non-cash,
mark-to-market activities.
Natural Gas Pipelines & Services – Gross operating
margin from the Natural Gas Pipelines & Services segment was
$208 million for the third quarter of 2020 compared to $259 million
for the third quarter of 2019. Total natural gas transportation
volumes were 13.1 TBtus/d this quarter compared to 14.5 TBtus/d for
the third quarter of last year.
Gross operating margin from Enterprise’s natural gas marketing
business decreased $35 million, primarily due to lower average
sales margins, including a $22 million decrease from non-cash,
mark-to-market activities. Sales margins were impacted by lower
regional natural gas price spreads across Texas, which were
indicatively $0.72 per MMBtu in the third quarter of 2020 versus
$1.36 per MMBtu in the third quarter of 2019.
Gross operating margin from the Acadian Gas System for the third
quarter of 2020 decreased $19 million, primarily due to $17 million
of benefits from settlements received in the third quarter of 2019,
and decreased reservation fees on the Haynesville Extension
Pipeline. Transportation volumes on the Acadian Pipeline System
decreased 302 BBtus/d, or approximately 11 percent.
Enterprise’s Permian Basin Gathering System reported a $9
million increase in gross operating margin for the third quarter of
2020 compared to the same quarter in 2019, primarily due to a 432
BBtus/d increase in gathering volumes, higher condensate sales
volumes and lower maintenance expenses.
Gross operating margin from the partnership’s largest natural
gas pipeline, the Texas Intrastate System decreased $2 million this
quarter compared to the third quarter of last year, primarily due
to lower capacity reservation fees and a 276 BBtus/d reduction in
transportation volumes, partially offset by lower maintenance
costs. Natural gas pipeline volumes for this system were 4.4
TBtus/d in the third quarter of 2020 compared to 4.7 TBtus/d in the
third quarter of 2019.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment increased 9 percent to $315 million for the third
quarter of 2020 from $288 million for the third quarter of 2019.
Gross operating margin for the third quarters of 2020 and 2019
included non-cash, mark-to-market losses of $21 million and $1
million, respectively. Total segment pipeline transportation
volumes increased 13 percent to 844 MBPD for the third quarter of
this year from 747 MBPD for the third quarter of last year.
The partnership’s propylene production and related businesses
reported gross operating margin of $133 million for the third
quarter of 2020, a $2 million increase, compared to the same
quarter of 2019. Gross operating margin associated with propylene
production facilities decreased by a combined $4 million compared
to the third quarter of last year. This was more than offset by
higher gross operating margin from our propylene marine export
terminal and certain propylene pipelines. Total propylene
production volumes were 83 MBPD for the third quarter of 2020
compared to 105 MBPD for the third quarter of 2019.
Enterprise’s refined products pipeline and related activities
reported a $27 million increase in gross operating margin for the
third quarter of 2020 compared to the same quarter in 2019,
primarily due to a $31 million increase in gross operating margin
from refined products marketing largely attributable to storage
optimization activities. The partnership’s TE Products Pipeline
System had an $8 million decrease in gross operating margin.
Gross operating margin from ethylene exports, pipelines, and
related services increased $14 million this quarter compared to the
third quarter of 2019. The partnership’s ethylene export terminal,
which was placed into partial service in December 2019, had gross
operating margin of $9 million in the third quarter of 2020.
Loading volumes for the third quarter were 15 MBPD net to our 50
percent interest at the terminal.
Gross operating margin from Enterprise’s octane enhancement and
related operations for the third quarter of 2020 decreased $15
million as a result of lower average sales margins and higher
operating expenses.
Capitalization
Total debt principal outstanding at September 30, 2020 was $30.1
billion, including $2.6 billion of junior subordinated notes to
which the nationally recognized debt rating agencies ascribe
partial equity content. At September 30, 2020, Enterprise had
consolidated liquidity of approximately $6.0 billion, which was
comprised of $5.0 billion of available borrowing capacity under our
revolving credit facilities and $1.0 billion of unrestricted cash
on hand.
Total capital investments for the third quarter of 2020 were
$705 million, which included $83 million of sustaining capital
expenditures. For the first nine months of 2020, Enterprise’s
capital investments totaled $2.7 billion, which included $226
million of sustaining capital expenditures. We currently expect our
growth capital investments for 2020 to approximate $2.9 billion,
net of cash contributions from noncontrolling interests. Sustaining
capital expenditures for 2020 are currently estimated to be
approximately $300 million. For 2021 and 2022, we currently expect
growth capital investments on sanctioned projects to be
approximately $1.6 billion and $800 million, respectively. These
estimates do not include capital investments associated with the
partnership’s proposed deep water offshore crude oil terminal
(“SPOT”), which remains subject to governmental approval.
Conference Call to Discuss Third
Quarter 2020 Earnings
Today, Enterprise will host a conference call to discuss third
quarter 2020 earnings. The call will be broadcast live over the
Internet beginning at 9:00 a.m. CT and may be accessed by visiting
the partnership’s website at www.enterpriseproducts.com.
Use of Non-GAAP Financial
Measures
This press release and accompanying schedules include the
non-GAAP financial measures of total gross operating margin, FCF,
DCF and Adjusted EBITDA. The accompanying schedules provide
definitions of these non-GAAP financial measures and
reconciliations to their most directly comparable financial measure
calculated and presented in accordance with GAAP. Our non-GAAP
financial measures should not be considered as alternatives to GAAP
measures such as net income, operating income, net cash flow
provided by operating activities or any other measure of financial
performance calculated and presented in accordance with GAAP. Our
non-GAAP financial measures may not be comparable to
similarly-titled measures of other companies because they may not
calculate such measures in the same manner as we do.
Company Information and Use of
Forward-Looking Statements
Enterprise Products Partners L.P. is one of the largest publicly
traded partnerships and a leading North American provider of
midstream energy services to producers and consumers of natural
gas, NGLs, crude oil, refined products and petrochemicals. Our
services include: natural gas gathering, treating, processing,
transportation and storage; NGL transportation, fractionation,
storage and export and import terminals; crude oil gathering,
transportation, storage and export and import terminals;
petrochemical and refined products transportation, storage, export
and import terminals and related services; and a marine
transportation business that operates primarily on the United
States inland and Intracoastal Waterway systems. The partnership’s
assets include approximately 50,000 miles of pipelines; 260 million
barrels of storage capacity for NGLs, crude oil, refined products
and petrochemicals; and 14 billion cubic feet of natural gas
storage capacity.
This press release includes forward-looking statements. Except
for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve certain risks and uncertainties, such as the partnership’s
expectations regarding future results, capital expenditures,
project completions, liquidity and financial market conditions.
These risks and uncertainties include, among other things, direct
and indirect effects of the COVID-19 pandemic, insufficient cash
from operations, adverse market conditions, governmental
regulations and other factors discussed in Enterprise’s filings
with the U.S. Securities and Exchange Commission. If any of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary
materially from those expected. The partnership disclaims any
intention or obligation to update publicly or reverse such
statements, whether as a result of new information, future events
or otherwise.
Enterprise Products Partners
L.P.
Exhibit A
Condensed Statements of Consolidated
Operations – UNAUDITED
($ in millions, except per unit
amounts)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
For the Twelve Months Ended
September 30,
2020
2019
2020
2019
2020
Revenues
$
6,922.0
$
7,964.1
$
20,155.5
$
24,783.9
$
28,160.8
Costs and
expenses:
Operating costs and expenses
5,571.2
6,573.7
16,001.9
20,394.3
22,669.4
General and administrative costs
50.3
55.5
162.8
160.2
214.3
Total costs and expenses
5,621.5
6,629.2
16,164.7
20,554.5
22,883.7
Equity in income of
unconsolidated affiliates
82.0
139.3
336.1
431.3
467.8
Operating
income
1,382.5
1,474.2
4,326.9
4,660.7
5,744.9
Other income
(expense):
Interest expense
(320.5
)
(382.9
)
(958.2
)
(950.2
)
(1,251.0
)
Other, net
2.9
(31.1
)
12.5
(111.4
)
20.9
Total other expense
(317.6
)
(414.0
)
(945.7
)
(1,061.6
)
(1,230.1
)
Income before income
taxes
1,064.9
1,060.2
3,381.2
3,599.1
4,514.8
Benefit from (provision for) income
taxes
19.1
(15.4
)
138.6
(37.4
)
130.4
Net
income
1,084.0
1,044.8
3,519.8
3,561.7
4,645.2
Net income
attributable to noncontrolling interests
(31.4
)
(25.6
)
(82.4
)
(67.3
)
(110.9
)
Net income
attributable to preferred units
*
–
*
–
*
Net income attributable to common
unitholders
$
1,052.6
$
1,019.2
$
3,437.4
$
3,494.4
$
4,534.3
* Amount is negligible
Per unit data (fully
diluted):
Earnings per unit
$
0.48
$
0.46
$
1.56
$
1.59
$
2.06
Average limited partner units outstanding
(in millions)
2,201.4
2,202.3
2,202.4
2,201.5
2,202.3
Supplemental
financial data:
Net cash flow provided by operating
activities
$
1,097.8
$
1,642.5
$
4,291.6
$
4,826.2
$
5,985.9
Cash flows used in investing
activities
$
633.7
$
1,086.3
$
2,564.2
$
3,372.8
$
3,766.9
Cash flows provided by (used in) financing
activities
$
(769.6
)
$
544.3
$
(1,006.3
)
$
(655.7
)
$
(2,295.7
)
Total debt principal outstanding at end of
period
$
30,146.4
$
28,196.4
$
30,146.4
$
28,196.4
$
30,146.4
Non-GAAP Distributable Cash Flow (1)
$
1,647.0
$
1,639.5
$
4,777.9
$
4,990.3
$
6,411.5
Non-GAAP Adjusted EBITDA (2)
$
2,060.2
$
2,023.1
$
6,000.1
$
6,097.9
$
8,019.5
Non-GAAP Free Cash Flow (3)
$
429.6
$
1,024.6
$
1,650.8
$
1,974.5
$
2,147.9
Gross operating margin by segment:
NGL Pipelines & Services
$
1,028.1
$
1,008.3
$
3,038.2
$
2,933.8
$
4,174.2
Crude Oil Pipelines & Services
481.8
496.2
1,569.1
1,671.7
1,985.2
Natural Gas Pipelines & Services
208.4
258.5
701.1
824.6
939.1
Petrochemical & Refined Products
Services
315.0
288.4
785.0
835.9
1,018.7
Total segment gross operating margin
(4)
2,033.3
2,051.4
6,093.4
6,266.0
8,117.2
Net adjustment for shipper make-up rights
(5)
(39.9
)
(15.3
)
(54.1
)
(15.7
)
(62.5
)
Non-GAAP total gross operating margin
(6)
$
1,993.4
$
2,036.1
$
6,039.3
$
6,250.3
$
8,054.7
(1)
See Exhibit E for reconciliation to GAAP
net cash flow provided by operating activities.
(2)
See Exhibit F for reconciliation to GAAP
net cash flow provided by operating activities.
(3)
See Exhibit D for reconciliation to GAAP
net cash flow provided by operating activities.
(4)
Within the context of this table, total
segment gross operating margin represents a subtotal and
corresponds to measures similarly titled within the financial
statement footnotes provided in our quarterly and annual filings
with the U.S. Securities and Exchange Commission (“SEC”).
(5)
Gross operating margin by segment for NGL
Pipelines & Services and Crude Oil Pipelines & Services
reflects adjustments for non-refundable deferred transportation
revenues relating to the make-up rights of committed shippers on
certain major pipeline projects. These adjustments are included in
managements’ evaluation of segment results. However, these
adjustments are excluded from non-GAAP total gross operating margin
in compliance with guidance from the SEC.
(6)
See Exhibit G for reconciliation to GAAP
total operating income.
Enterprise Products Partners
L.P.
Exhibit B
Selected Operating Data –
UNAUDITED
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
For the Twelve Months Ended
September 30,
2020
2019
2020
2019
2020
Selected operating
data: (1)
NGL Pipelines & Services, net:
NGL pipeline transportation volumes
(MBPD)
3,446
3,557
3,563
3,532
3,641
NGL marine terminal volumes (MBPD)
643
602
696
590
704
NGL fractionation volumes (MBPD)
1,350
1,003
1,357
990
1,373
Equity NGL production volumes (MBPD)
(2)
141
111
156
138
157
Fee-based natural gas processing volumes
(MMcf/d) (3,4)
4,105
4,724
4,299
4,729
4,415
Crude Oil Pipelines & Services,
net:
Crude oil pipeline transportation volumes
(MBPD)
1,739
2,321
2,008
2,315
2,072
Crude oil marine terminal volumes
(MBPD)
662
987
790
972
825
Natural Gas Pipelines & Services,
net:
Natural gas pipeline transportation
volumes (BBtus/d) (5)
13,131
14,474
13,322
14,341
13,438
Petrochemical & Refined Products
Services, net:
Propylene production volumes (MBPD)
83
105
84
99
86
Butane isomerization volumes (MBPD)
102
109
92
110
96
Standalone DIB processing volumes
(MBPD)
120
103
119
97
115
Octane enhancement and related plant sales
volumes (MBPD) (6)
35
33
34
33
34
Pipeline transportation volumes, primarily
refined products
and petrochemicals (MBPD)
844
747
780
742
770
Refined products and petrochemicals marine
terminal volumes (MBPD) (7)
226
297
249
344
249
Total, net:
NGL, crude oil, petrochemical and refined
products
pipeline transportation volumes (MBPD)
6,029
6,625
6,351
6,589
6,483
Natural gas pipeline transportation
volumes (BBtus/d)
13,131
14,474
13,322
14,341
13,438
Equivalent pipeline transportation volumes
(MBPD) (8)
9,485
10,434
9,857
10,363
10,019
NGL, crude oil, refined products and
petrochemical
marine terminal volumes (MBPD)
1,531
1,886
1,735
1,906
1,778
(1)
Operating rates are reported on a net
basis, which takes into account our ownership interests in certain
joint ventures, and include volumes for newly constructed assets
from the related in-service dates and for recently purchased assets
from the related acquisition dates.
(2)
Represents the NGL volumes we earn and
take title to in connection with our processing activities.
(3)
Volumes reported correspond to the revenue
streams earned by our gas plants. “MMcf/d” means million cubic feet
per day.
(4)
Fee-based natural gas processing volumes
are measured at either the wellhead or plant inlet in MMcf/d.
(5)
“BBtus/d” means billion British thermal
units per day.
(6)
Reflects aggregate sales volumes for our
octane additive and iBDH facilities located at our Mont Belvieu
complex and our high-purity isobutylene production facility located
adjacent to the Houston Ship Channel.
(7)
In addition to exports of refined
products, these amounts include loading volumes at our ethylene
export terminal
(8)
Represents total NGL, crude oil, refined
products and petrochemical transportation volumes plus equivalent
energy volumes where 3.8 million British thermal units (“MMBtus”)
of natural gas transportation volumes are equivalent to one barrel
of NGLs transported.
Enterprise Products Partners
L.P.
Exhibit C
Selected Commodity Price Information –
UNAUDITED
Polymer
Refinery
Natural
Normal
Natural
Grade
Grade
Gas,
Ethane,
Propane,
Butane,
Isobutane,
Gasoline,
Propylene,
Propylene,
$/MMBtu (1)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/pound (3)
$/pound (3)
2019 by quarter:
First Quarter
$3.15
$0.30
$0.67
$0.82
$0.85
$1.16
$0.38
$0.24
Second Quarter
$2.64
$0.21
$0.55
$0.63
$0.65
$1.21
$0.37
$0.24
Third Quarter
$2.23
$0.17
$0.44
$0.51
$0.66
$1.06
$0.38
$0.23
Fourth Quarter
$2.50
$0.19
$0.50
$0.68
$0.82
$1.20
$0.35
$0.21
2019 Averages
$2.63
$0.22
$0.54
$0.66
$0.75
$1.16
$0.37
$0.23
2020 by quarter:
First Quarter
$1.95
$0.14
$0.37
$0.57
$0.63
$0.93
$0.31
$0.18
Second Quarter
$1.71
$0.19
$0.41
$0.43
$0.44
$0.41
$0.26
$0.11
Third Quarter
$1.98
$0.22
$0.50
$0.58
$0.60
$0.80
$0.35
$0.17
2020 Averages
$1.88
$0.18
$0.43
$0.53
$0.56
$0.71
$0.31
$0.15
(1)
Natural gas prices are based on Henry-Hub
Inside FERC commercial index prices as reported by Platts, which is
a division of McGraw Hill Financial, Inc.
(2)
NGL prices for ethane, propane, normal
butane, isobutane and natural gasoline are based on Mont Belvieu
Non-TET commercial index prices as reported by Oil Price
Information Service.
(3)
Polymer grade propylene prices represent
average contract pricing for such product as reported by IHS
Chemical, a division of IHS Inc. (“IHS Chemical”). Refinery grade
propylene prices represent weighted-average spot prices for such
product as reported by IHS Chemical.
WTI
Midland
Houston
LLS
Crude Oil,
Crude Oil,
Crude Oil
Crude Oil,
$/barrel (1)
$/barrel (2)
$/barrel (2)
$/barrel (3)
2019 by quarter:
First Quarter
$54.90
$53.70
$61.19
$62.35
Second Quarter
$59.81
$57.62
$66.47
$67.07
Third Quarter
$56.45
$56.12
$59.75
$60.64
Fourth Quarter
$56.96
$57.80
$60.04
$60.76
2019 Averages
$57.03
$56.31
$61.86
$62.71
2020 by quarter:
First Quarter
$46.17
$45.51
$47.81
$48.15
Second Quarter
$27.85
$28.22
$29.68
$30.12
Third Quarter
$40.93
$41.05
$41.77
$42.47
2020 Averages
$38.32
$38.26
$39.75
$40.25
(1)
West Texas Intermediate (“WTI”) prices are
based on commercial index prices at Cushing, Oklahoma as measured
by the NYMEX.
(2)
Midland and Houston crude oil prices are
based on commercial index prices as reported by Argus.
(3)
Light Louisiana Sweet (“LLS”) prices are
based on commercial index prices as reported by Platts.
The weighted-average indicative market price for NGLs (based on
prices for such products at Mont Belvieu, Texas, which is the
primary industry hub for domestic NGL production) was $0.41 per
gallon during the third quarter of 2020 versus $0.39 per gallon for
the third quarter of 2019. Fluctuations in our consolidated
revenues and cost of sales amounts are explained in large part by
changes in energy commodity prices. A change in our consolidated
marketing revenues due to lower energy commodity sales prices may
not result in a similar change in gross operating margin or cash
available for distribution, since our consolidated cost of sales
amounts would also change due to comparable decreases in the
purchase prices of the underlying energy commodities.
The decline in commodity prices since the beginning of 2020 is
attributable to the ongoing effects of the COVID-19 pandemic.
Enterprise Products Partners
L.P.
Exhibit D
Free Cash Flow – UNAUDITED
($ in millions)
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
Free
Cash Flow (“FCF”)
Net cash flow provided by operating
activities (GAAP)
$
1,097.8
$
1,642.5
$
4,291.6
$
4,826.2
Adjustments to reconcile net cash flow
provided by operating activities to FCF
(addition or subtraction indicated by
sign):
Cash used in investing activities
(633.7
)
(1,086.3
)
(2,564.2
)
(3,372.8
)
Cash contributions from noncontrolling
interests
1.5
491.2
21.2
590.8
Cash distributions paid to noncontrolling
interests
(36.0
)
(22.8
)
(97.8
)
(69.7
)
FCF (non-GAAP)
$
429.6
$
1,024.6
$
1,650.8
$
1,974.5
For the Twelve Months
Ended September 30,
2020
2019
Net cash flow provided by operating
activities (GAAP)
$
5,985.9
$
6,677.2
Adjustments to reconcile net cash flow
provided by operating activities to FCF
(addition or subtraction indicated by
sign):
Cash used in investing activities
(3,766.9
)
(4,471.6
)
Cash contributions from noncontrolling
interests
63.2
606.9
Cash distributions paid to noncontrolling
interests
(134.3
)
(100.4
)
FCF (non-GAAP)
$
2,147.9
$
2,712.1
FCF is a measure of how much cash a business generates after
accounting for capital expenditures such as plants or pipelines. We
believe that FCF is important to traditional investors since it
reflects the amount of cash available for reducing debt, investing
in additional capital projects and/or paying distributions. Since
we partner with other companies to fund certain capital projects of
our consolidated subsidiaries, our determination of FCF
appropriately reflects the amount of cash contributed from and
distributed to noncontrolling interests.
Enterprise Products Partners
L.P.
Exhibit E
Distributable Cash Flow –
UNAUDITED
($ in millions)
For the Twelve Months
Ended September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
2020
Distributable Cash Flow (“DCF”)
Net income attributable to common
unitholders (GAAP)
$
1,052.6
$
1,019.2
$
3,437.4
$
3,494.4
$
4,534.3
Adjustments to net income attributable to
common
unitholders to derive DCF (addition or
subtraction indicated by sign):
Depreciation, amortization and accretion
expenses
513.4
493.6
1,545.1
1,456.7
2,037.7
Cash distributions received from
unconsolidated affiliates
146.7
170.6
462.3
485.1
608.5
Equity in income of unconsolidated
affiliates
(82.0
)
(139.3
)
(336.1
)
(431.3
)
(467.8
)
Asset impairment and related charges
77.0
39.5
90.4
51.3
171.9
Change in fair market value of derivative
instruments
37.7
85.8
(53.7
)
2.0
(28.5
)
Change in fair value of Liquidity Option
Agreement
–
38.7
2.3
123.1
(1.2
)
Deferred income tax expense (benefit)
(18.3
)
6.7
(149.0
)
10.9
(139.9
)
Sustaining capital expenditures (1)
(83.1
)
(90.8
)
(226.0
)
(232.5
)
(318.7
)
Other, net
(1.3
)
14.8
30.1
13.8
36.3
Operational DCF
1,642.7
1,638.8
4,802.8
4,973.5
6,432.6
Proceeds from asset sales
4.3
0.7
8.4
16.8
12.2
Monetization of interest rate derivative
instruments accounted for as cash flow hedges
–
–
(33.3
)
–
(33.3
)
DCF (non-GAAP)
1,647.0
1,639.5
4,777.9
4,990.3
6,411.5
Adjustments to reconcile DCF with net cash
flow provided by operating
activities (addition or subtraction
indicated by sign):
Net effect of changes in operating
accounts, as applicable
(603.0
)
(77.0
)
(692.0
)
(409.0
)
(740.4
)
Sustaining capital expenditures
83.1
90.8
226.0
232.5
318.7
Other, net
(29.3
)
(10.8
)
(20.3
)
12.4
(3.9
)
Net cash flow provided by operating
activities (GAAP)
$
1,097.8
$
1,642.5
$
4,291.6
$
4,826.2
$
5,985.9
(1)
Sustaining capital expenditures are
capital expenditures (as defined by GAAP) resulting from
improvements to and major renewals of existing assets. Such
expenditures serve to maintain existing operations but do not
generate additional revenues.
DCF is an important non-GAAP liquidity measure for our common
unitholders since it serves as an indicator of our success in
providing a cash return on investment. Specifically, this liquidity
measure indicates to investors whether or not we are generating
cash flows at a level that can sustain or support an increase in
our quarterly cash distributions. DCF is also a quantitative
standard used by the investment community with respect to publicly
traded partnerships because the value of a partnership unit is, in
part, measured by its yield, which is based on the amount of cash
distributions a partnership can pay to a common unitholder.
Enterprise Products Partners
L.P.
Exhibit F
Adjusted EBITDA - UNAUDITED
($ in millions)
For the Twelve Months
Ended September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
2020
Net income (GAAP)
$
1,084.0
$
1,044.8
$
3,519.8
$
3,561.7
$
4,645.2
Adjustments to net income to derive
Adjusted EBITDA
(addition or subtraction indicated by
sign):
Depreciation, amortization and accretion
in costs and expenses
496.0
479.7
1,497.6
1,415.9
1,976.0
Interest expense, including related
amortization
320.5
382.9
958.2
950.2
1,251.0
Cash distributions received from
unconsolidated affiliates
146.7
170.6
462.3
485.1
608.5
Equity in income of unconsolidated
affiliates
(82.0
)
(139.3
)
(336.1
)
(431.3
)
(467.8
)
Asset impairment and related charges
77.0
39.5
90.4
51.3
171.9
Provision for (benefit from) income
taxes
(19.1
)
15.4
(138.6
)
37.4
(130.4
)
Change in fair market value of commodity
derivative instruments
37.7
(9.1
)
(53.7
)
(92.9
)
(28.5
)
Change in fair value of Liquidity Option
Agreement
–
38.7
2.3
123.1
(1.2
)
Other, net
(0.6
)
(0.1
)
(2.1
)
(2.6
)
(5.2
)
Adjusted EBITDA (non-GAAP)
2,060.2
2,023.1
6,000.1
6,097.9
8,019.5
Adjustments to reconcile Adjusted EBITDA
to net cash flow provided by
operating activities (addition or
subtraction indicated by sign):
Interest expense, including related
amortization
(320.5
)
(382.9
)
(958.2
)
(950.2
)
(1,251.0
)
Deferred income tax expense (benefit)
(18.3
)
6.7
(149.0
)
10.9
(139.9
)
Net effect of changes in operating
accounts, as applicable
(603.0
)
(77.0
)
(692.0
)
(409.0
)
(740.4
)
Other, net
(20.6
)
72.6
90.7
76.6
97.7
Net cash flow provided by operating
activities (GAAP)
$
1,097.8
$
1,642.5
$
4,291.6
$
4,826.2
$
5,985.9
Adjusted EBITDA is commonly used as a supplemental financial
measure by our management and external users of our financial
statements, such as investors, commercial banks, research analysts
and rating agencies, to assess the financial performance of our
assets without regard to financing methods, capital structures or
historical cost basis; the ability of our assets to generate cash
sufficient to pay interest and support our indebtedness; and the
viability of projects and the overall rates of return on
alternative investment opportunities.
Since Adjusted EBITDA excludes some, but not all, items that
affect net income or loss and because these measures may vary among
other companies, the Adjusted EBITDA data presented in this press
release may not be comparable to similarly titled measures of other
companies. The GAAP measure most directly comparable to Adjusted
EBITDA is net cash flow provided by operating activities.
Enterprise Products Partners
L.P.
Exhibit G
Gross Operating Margin –
UNAUDITED
($ in millions)
For the Twelve Months
Ended September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
2020
Total gross operating margin
(non-GAAP)
$
1,993.4
$
2,036.1
$
6,039.3
$
6,250.3
$
8,054.7
Adjustments to reconcile total gross
operating margin to total operating
income (addition or subtraction indicated
by sign):
Depreciation, amortization and accretion
expense in operating
costs and expenses
(484.2
)
(467.1
)
(1,461.3
)
(1,380.8
)
(1,928.8
)
Asset impairment and related charges in
operating costs and expenses
(77.0
)
(39.4
)
(90.4
)
(51.2
)
(171.9
)
Net gains attributable to asset sales in
operating costs and expenses
0.6
0.1
2.1
2.6
5.2
General and administrative costs
(50.3
)
(55.5
)
(162.8
)
(160.2
)
(214.3
)
Total operating income (GAAP)
$
1,382.5
$
1,474.2
$
4,326.9
$
4,660.7
$
5,744.9
We evaluate segment performance based on our financial measure
of gross operating margin. Gross operating margin is an important
performance measure of the core profitability of our operations and
forms the basis of our internal financial reporting. We believe
that investors benefit from having access to the same financial
measures that our management uses in evaluating segment
results.
The term “total gross operating margin” represents GAAP
operating income exclusive of (i) depreciation, amortization and
accretion expenses, (ii) impairment charges, (iii) gains and losses
attributable to asset sales, and (iv) general and administrative
costs. Total gross operating margin includes equity in the earnings
of unconsolidated affiliates, but is exclusive of other income and
expense transactions, income taxes, the cumulative effect of
changes in accounting principles and extraordinary charges. Total
gross operating margin is presented on a 100 percent basis before
any allocation of earnings to noncontrolling interests. The GAAP
financial measure most directly comparable to total gross operating
margin is operating income.
Total gross operating margin excludes amounts attributable to
shipper make-up rights as described in footnote (5) to Exhibit A of
this press release.
Enterprise Products Partners
L.P.
Exhibit H
Capital Investments – UNAUDITED
($ in millions)
For the Twelve Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
2020
Capital investments:
Capital expenditures
$
695.7
$
1,041.3
$
2,671.6
$
3,302.1
$
3,901.2
Investments in unconsolidated
affiliates
2.6
40.2
9.9
100.1
21.4
Other investing activities
6.5
6.0
19.0
11.3
23.8
Total capital investments
$
704.8
$
1,087.5
$
2,700.5
$
3,413.5
$
3,946.4
The following table summarizes the non-cash mark-to-market gains
(losses) for the periods indicated:
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2020
2019
2020
2019
Mark-to-market gains (losses) in gross
operating margin:
NGL Pipelines & Services
$
(12.0)
$
(0.7)
$
11.4
$
(0.1)
Crude Oil Pipelines & Services
10.1
9.8
28.9
95.0
Natural Gas Pipelines & Services
(14.8)
1.3
10.0
1.3
Petrochemical & Refined Products
Services
(21.0)
(1.3)
3.4
(3.3)
Total mark-to-market impact on gross
operating margin
(37.7)
9.1
53.7
92.9
Mark-to-market loss in interest
expense
–
(94.9)
–
(94.9)
Total
$
(37.7)
$
(85.8)
$
53.7
$
(2.0)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201028005557/en/
Randy Burkhalter, Vice President, Investor Relations, (713)
381-6812 Rick Rainey, Vice President, Media Relations, (713)
381-3635
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