Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three months ended
March 31, 2019.
Enterprise reported record net income attributable to limited
partners of $1.3 billion, or $0.57 per unit on a fully diluted
basis, for the first quarter of 2019 compared to $901 million, or
$0.41 per unit on a fully diluted basis, for the first quarter of
2018. Net cash flow provided by operating activities (referred to
in this press release as “cash flow from operations” or “CFFO”) was
$1.2 billion for both the first quarters of 2019 and 2018.
Enterprise used $560 million of cash for working capital purposes
during the first quarter of this year compared to $203 million used
for working capital purposes during the first quarter of 2018. Free
Cash Flow (“FCF”), increased 89 percent to $1.9 billion for the
twelve months ending March 31, 2019 versus the comparable period
ending March 31, 2018. FCF is defined as CFFO less net cash used in
investing activities plus net cash contributions from
noncontrolling interests.
Distributable Cash Flow (“DCF”) increased 18 percent to a record
$1.6 billion for the first quarter of 2019 compared to the first
quarter of 2018. DCF provided 1.7 times coverage of the
distribution declared with respect to the first quarter of 2019.
Distributions declared with respect to the first quarter of 2019
increased 2.3 percent to $0.4375 per unit compared to the same
period in 2018. This is the partnership’s 59th consecutive
quarterly distribution increase. Enterprise retained $665 million
of DCF for the first quarter of 2019, a 47 percent increase from
$452 million of DCF retained for the first quarter of 2018.
First Quarter 2019
Highlights
Three months endedMarch 31,
2019 2018 ($ in millions, except per unit amounts)
Operating income $ 1,626 $ 1,139 Net income attributable to limited
partners $ 1,261 $ 901 Fully diluted earnings per unit $ 0.57 $
0.41 CFFO (1) $ 1,160 $ 1,234
Total gross operating margin (2)
$ 2,134 $ 1,586
Adjusted EBITDA (2)
$ 1,986 $ 1,687
FCF (2)
$ 3 $ 99
DCF (2)
$ 1,628 $ 1,386 (1) CFFO includes the impact of the timing
of cash receipts and payments related to operations. For the first
quarters of 2019 and 2018, the net effect of changes in operating
accounts, which are a component of CFFO, were reductions of $560
million and $203 million, respectively. (2) Total gross operating
margin, adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), FCF and 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 limited partners for the
first quarter of 2019 included $96 million of non-cash,
mark-to-market gains on financial instruments used in our hedging
activities primarily related to crude oil and natural gas regional
price spreads compared to $137 million in non-cash, mark-to-market
losses in the first quarter of 2018.
First Quarter Volume
Highlights
Three months endedMarch 31,
2019 2018 NGL, crude oil, refined products &
petrochemical pipeline volumes (million BPD)
6.5
6.1
Marine terminal volumes (million BPD) 1.8 1.6 Natural gas pipeline
volumes (TBtu/d) 14.2 13.0 NGL fractionation volumes (MBPD) 969 824
Fee-based natural gas processing volumes (Bcf/d) 5.3 4.4 Equity NGL
production volumes (MBPD) 154 165 As used in this
press release, “NGL” means natural gas liquids, “BPD” means barrels
per day, “MBPD” means thousand barrels per day, “Bcf/d” means
billion cubic feet per day; and “TBtu/d” means trillion British
thermal units per day.
- Capital investments were $1.2 billion
during the first quarter of 2019, including $62 million of
sustaining capital expenditures.
“Enterprise reported an exceptional first quarter of 2019,” said
A. J. “Jim” Teague, chief executive officer of Enterprise’s general
partner. “First, I would like to recognize the extraordinary
efforts and teamwork of our engineering, operations, distribution
and commercial groups to complete the conversion of one of the
Seminole NGL pipelines into crude oil service and the construction
of our Shin Oak NGL pipeline ahead of schedule. They accomplished
these achievements while being responsible in terms of landowner
relations, the environment and safety. These projects in
combination with strong performance from our existing assets
enabled us to turn a ‘solid’ first quarter into a ‘record’ first
quarter, with eleven operational and financial records. Both
Adjusted EBITDA and DCF, which exclude the effects of non-cash,
mark-to-market earnings, increased 18 percent to $2.0 billion and
$1.6 billion, respectively.
“Overall business fundamentals remain strong for the
partnership’s integrated midstream system. We continue to benefit
from production increases in the Permian and Haynesville shale
regions, while demand for U.S. crude oil, NGLs and refined products
remains strong in both domestic and international markets. Our
crude oil marine terminals reported record volumes of nearly
900,000 barrels per day in the first quarter of 2019 despite the
temporary closure of the Houston Ship Channel. With Permian crude
oil volumes forecasted to increase by approximately 700,000 barrels
per day in 2019, we believe substantially all of this increase in
volumes will be destined for international markets. In addition, we
expect approximately 300,000 barrels per day of new ethane demand
from ethylene facilities on the U.S. Gulf Coast forecasted to begin
operations during the remainder of 2019,” said Teague.
“Through April 2019, we placed $1.9 billion of growth capital
projects into service. We have another $5.0 billion of major growth
assets under construction of which we expect to put $3.5 billion of
these projects into service between now and the end of the year.
These projects include a third train at the Orla natural gas
processing complex in the Permian, a tenth NGL fractionator and an
isobutane dehydrogenation (iBDH) plant at our Mont Belvieu complex.
In addition, we have a number of projects under development
including crude oil, natural gas, NGL and petrochemical pipelines,
natural gas processing plants in the Permian, a second PDH
facility, and our Texas deep water crude oil port. With the
flexibility to self-fund our equity needs and strong balance sheet,
we believe these new projects will enable us to increase cash flow
per unit and the equity value of our partnership.”
Review of First Quarter 2019
Results
Enterprise reported a 35 percent increase in gross operating
margin to $2.1 billion for the first quarter of 2019 compared to
$1.6 billion for the first quarter of 2018. Included in gross
operating margin for the first quarter of 2019 were net non-cash,
mark-to-market gains of $96 million, while gross operating margin
for the first quarter of 2018 included net non-cash, mark-to-market
losses of $137 million. We estimate gross operating margin for the
first quarter of 2019 was reduced by approximately $40 million
related to the impact to our marine terminal activities from the
temporary closure of the Houston Ship Channel. We expect to make up
substantially all of these volumes and the associated gross
operating margin in the second quarter of 2019. Below is a review
of each business segment’s performance for the first quarter of
2019.
NGL Pipelines & Services – Gross operating margin
from the NGL Pipelines & Services segment increased 8 percent
to $959 million for the first quarter of 2019 from $885 million for
the first quarter of 2018.
Gross operating margin from Enterprise’s natural gas processing
business and related NGL marketing activities increased 18 percent
to $293 million for the first quarter of 2019, compared to $249
million for the first quarter of 2018. Gross operating margin from
the partnership’s natural gas processing plants increased
approximately $20 million this quarter compared to the first
quarter last year. Our Permian Basin natural gas processing plants
reported a $19 million increase, primarily due to higher fee-based
processing volumes and contribution from the Orla plant, which
commenced operations in May 2018. Gross operating margin from the
partnership’s South Texas natural gas processing plants increased
$13 million due to higher processing margins and fees. Gross
operating margin from our Rocky Mountain processing plants
decreased $17 million primarily due to lower equity NGL production,
processing margins and deficiency fees. Total fee-based processing
volumes increased 0.9 Bcf/d, or 21 percent, to a record 5.3 Bcf/d
for the first quarter of 2019 compared to the first quarter of
2018. Total equity NGL production was 154 MBPD for the first
quarter of 2019 compared to 165 MBPD for the first quarter of 2018.
Gross operating margin from Enterprise’s NGL marketing activities
increased $25 million, primarily due to higher average sales
margins and net gains from non-cash mark-to-market earnings this
quarter compared to the same quarter last year.
Gross operating margin from the partnership’s NGL pipelines and
storage business increased $48 million, or 9 percent, to $557
million for the first quarter of 2019 compared to the first quarter
of last year. NGL pipeline transportation volumes increased 149
MBPD to 3.4 million BPD for the first quarter of 2019. The
partnership’s total NGL marine terminal volumes were 540 MBPD for
the first quarter of 2019 compared to 575 MBPD for the first
quarter of 2018.
Enterprise’s Mont Belvieu NGL storage business reported a $29
million increase in gross operating margin for the first quarter of
2019 compared to the first quarter of 2018 primarily due to an
increase in revenues. Combined, our ATEX ethane pipeline and
Morgan’s Point ethane export terminal reported an $8 million
increase in gross operating margin for the first quarter of 2019
primarily due to a 14 MBPD and 18 MBPD, respectively, increase in
volumes compared to the first quarter of 2018. Gross operating
margin at the Enterprise Hydrocarbons Terminal (“EHT”) on the
Houston Ship Channel decreased $5 million, primarily due to a 49
MBPD decrease in LPG loadings in the first quarter of 2019 as the
result of the temporary closure of the ship channel.
Gross operating margin from the Shin Oak NGL pipeline, which
commenced operations in February 2019, contributed $8 million to
gross operating margin this quarter on 79 MBPD of transportation
volumes during the quarter.
Enterprise’s NGL fractionation business reported gross operating
margin of $109 million for the first quarter of 2019 compared to
$127 million for the first quarter of 2018. Gross operating margin
from our Hobbs NGL fractionator decreased $21 million compared to
the first quarter of 2018 primarily due to major maintenance
activities completed in February 2019. Total NGL fractionation
volumes increased 145 MBPD, or 18 percent, to 969 MBPD in the first
quarter of 2019 compared to the first quarter of last year.
Crude Oil Pipelines & Services – Gross operating
margin from the partnership’s Crude Oil Pipelines & Services
segment was a record $662 million for the first quarter of 2019
compared to $220 million for the first quarter of 2018. Gross
operating margin for the first quarter of 2019 included $100
million of non-cash, mark-to-market gains on financial instruments
related to hedging activities while gross operating margin for this
segment in the first quarter of 2018 included non-cash,
mark-to-market losses of $130 million. Total crude oil pipeline
volumes increased 12 percent to a record 2.2 million BPD for the
first quarter of 2019 compared to the first quarter of 2018. Total
crude oil marine terminal volumes increased 40 percent to a record
886 MBPD for the first quarter of this year compared to the first
quarter of last year.
Gross operating margin from our Midland-to-ECHO 1 pipeline
system and related business activities increased by $221 million in
the first quarter of 2019 compared to the same quarter in 2018. The
improvement includes a $181 million increase in non-cash,
mark-to-market earnings on financial instruments executed to hedge
the regional price spread between Midland and Houston crude oil
prices compared to the first quarter of 2018. Midland-to-ECHO 1
pipeline volumes increased 15 percent to a net 456 MBPD for the
first quarter of 2019 compared to the first quarter of 2018.
During the first quarter of 2019, we completed the repurposing
of one of our Seminole NGL pipelines into crude oil service, now
referred to as the Midland-to-ECHO 2 pipeline. This pipeline began
limited service in February 2019 and began full commercial
operations effective April 1, 2019. Gross operating margin from
this pipeline was $17 million in the first quarter of 2019.
Gross operating margin from other crude oil marketing activities
increased $132 million, primarily due to higher sales margins which
accounted for $84 million of the increase and higher non-cash,
mark-to-market earnings, mostly attributable to narrowing regional
price spreads affecting hedges of transportation capacity from
Midland to Houston.
Enterprise’s share of gross operating margin associated with
Seaway pipeline increased $22 million for the first quarter of 2019
compared to the same quarter in 2018 on higher transportation fees
and volumes, primarily from the expansion of the pipeline system
completed the first quarter of 2019. Gross operating margin from
our West Texas System and equity investment in the Eagle Ford Crude
Oil pipeline system increased by a combined $27 million, primarily
due to higher volumes. Gross operating margin from the EHT marine
terminal for the first quarter of 2019 increased $10 million
compared to the first quarter last year on higher crude oil export
volumes.
Natural Gas Pipelines & Services – Enterprise’s
Natural Gas Pipelines & Services segment reported a 34 percent,
or $66 million, increase in gross operating margin to a record $264
million for the first quarter of 2019 compared to the first quarter
of 2018. Total natural gas transportation volumes were a record
14.2 TBtu/d for the first quarter of 2019 compared to 13.0 TBtu/d
for the first quarter of 2018.
Gross operating margin from the Texas Intrastate system
increased 28 percent, or $23 million, to $107 million for the first
quarter of 2019. This increase was primarily due to higher firm
capacity fees and volumes in the first quarter of 2019. Natural gas
pipeline volumes for this system were 4.6 TBtu/d for the first
quarter of 2019 compared to 4.4 TBtu/d for the same quarter last
year.
Enterprise’s natural gas marketing business reported a $34
million increase in gross operating margin primarily due to higher
average sales margins and higher non-cash mark-to-market earnings.
Gross operating margin from our gathering assets in and near the
Haynesville Shale production area increased $9 million for the
first quarter of 2019 compared to the first quarter of 2018,
primarily due to higher fees and volumes. Total volumes for the
Haynesville-area systems, which are benefiting from a resurgence in
demand, increased 0.6 TBtu/d to 1.6 TBtu/d in the first quarter of
2019 compared to the first quarter last year.
Gross operating margin from Enterprise’s Permian natural gas
gathering system increased $8 million to $17 million in the first
quarter of 2019 compared to the same quarter in 2018. Gathering
volumes on the Permian system increased 0.5 TBtu/d to 1.0 TBtu/d.
The Jonah and Piceance gathering systems reported a combined $5
million decrease in gross operating margin for the first quarter of
2019, primarily due to lower volumes.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment was $243 million for the first quarter of 2019
compared to $272 million for the first quarter of 2018. Total
segment pipeline transportation volumes were 810 MBPD for the first
quarter of 2019 compared to 852 MBPD for the first quarter of last
year. Refined products and petrochemical marine terminal volumes
were 338 MBPD for the first quarter of 2019 compared to 370 MBPD
for the same quarter of last year.
The partnership’s propylene business reported gross operating
margin of $102 million for the first quarter of 2019 compared to
$129 million in the first quarter of 2018. Approximately $51
million of this decrease in gross operating margin was attributable
to lower sales margins, fees and volumes at Enterprise’s Mont
Belvieu propylene fractionators. Gross operating margin from
Enterprise’s PDH facility, which operated at approximately 80
percent of capacity during the quarter, increased $23 million for
the first quarter of 2019 versus the first quarter in 2018
primarily due to a 40 percent increase in production volumes. The
PDH facility completed its commissioning (or start up) phase and
began full commercial operations in April 2018. Total propylene
production volumes were 90 MBPD for the first quarter of 2019
compared to 98 MBPD for the first quarter of last year.
Gross operating margin for Enterprise’s butane isomerization and
related operations was $24 million for the first quarter of 2019
compared to $25 million for the first quarter of 2018. Gross
operating margin for Enterprise’s octane enhancement and
high-purity isobutylene business was $24 million for the first
quarter of 2019 compared to $32 million for the first quarter of
2018, primarily due to lower volumes, partially offset by higher
sales margins.
Capitalization
Total debt principal outstanding at March 31, 2019 was $27.1
billion, including $2.7 billion of junior subordinated notes, to
which the debt rating agencies ascribe partial equity content. At
March 31, 2019, Enterprise had consolidated liquidity of
approximately $4.7 billion, which was comprised of unrestricted
cash on hand and available borrowing capacity under our revolving
credit facilities.
Total capital spending in the first quarter of 2019 was $1.2
billion, which included $62 million of sustaining capital
expenditures. For 2019, we currently expect to invest approximately
$3.4 billion to $3.8 billion for growth capital expenditures and
approximately $350 million for sustaining capital expenditures. We
expect to receive approximately $625 million in cash contributions
from non-controlling interests in 2019 associated with ownership
interests in the Shin Oak NGL pipeline and ethylene marine
terminal.
In the first quarter of 2019, Enterprise purchased approximately
1.9 million of its common units in the open market for
approximately $52 million, or approximately $27.83 per unit. These
purchases more than offset the 1.5 million units issued through the
partnership’s distribution reinvestment and employee unit purchase
plans in February 2019.
Conference Call to Discuss First
Quarter 2019 Earnings
Enterprise will host a conference call today to discuss first
quarter 2019 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 49,200 miles of pipelines; 260 million
barrels of storage capacity for NGLs, crude oil, refined products
and petrochemicals; and 14 Bcf 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,
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 March
31,
For the TwelveMonths
EndedMarch 31,
2019 2018 2019
Revenues
$ 8,543.5 $ 9,298.5 $ 35,779.2
Costs and
expenses:
Operating costs and expenses 7,019.7 8,222.7 30,194.3 General and
administrative costs 52.2 53.0
207.5 Total costs and expenses 7,071.9
8,275.7 30,401.8
Equity in income of
unconsolidated affiliates
154.6 115.7 518.9
Operating
income
1,626.2 1,138.5 5,896.3
Other income
(expense):
Interest expense (277.2 ) (252.1 ) (1,121.8 ) Other, net
(56.3 ) 30.2 (99.6 ) Total other
expense, net (333.5 ) (221.9 )
(1,221.4 )
Income before income
taxes
1,292.7 916.6 4,674.9 Provision for income taxes (12.3 )
(5.1 ) (67.5 )
Net
income
1,280.4 911.5 4,607.4
Net income
attributable to noncontrolling interests
(19.9 ) (10.8 ) (75.2 )
Net income
attributable to limited partners
$ 1,260.5 $ 900.7 $ 4,532.2
Per unit data (fully
diluted):
Earnings per unit $ 0.57 $ 0.41 $ 2.07
Average limited partner units outstanding (in millions)
2,199.5 2,177.2
2,192.5
Supplemental
financial data:
Net cash flow provided by operating activities $ 1,160.4
$ 1,233.6 $ 6,053.1 Cash flows used in
investing activities $ 1,174.5 $ 1,119.1
$ 4,337.0 Cash flows provided by (used in) financing
activities $ (288.5 ) $ 30.8 $ (1,824.2 )
Total debt principal outstanding at end of period $ 27,115.6
$ 25,618.5 $ 27,115.6 Non-GAAP
Distributable Cash Flow (1) $ 1,628.4 $ 1,385.5
$ 6,232.3 Non-GAAP Adjusted EBITDA (2) $
1,985.8 $ 1,686.6 $ 7,522.1
Non-GAAP Free Cash Flow (3) $ 2.7 $ 99.2
$ 1,904.7 Gross operating margin by segment: NGL
Pipelines & Services $ 959.2 $ 884.9 $ 3,905.0 Crude Oil
Pipelines & Services 662.3 220.0 1,953.6 Natural Gas Pipelines
& Services 264.3 197.9 957.6 Petrochemical & Refined
Products Services 242.6 271.9
1,028.5 Total segment gross operating margin
(4) 2,128.4 1,574.7 7,844.7 Net adjustment for shipper make-up
rights (5) 5.3 11.5
28.5 Non-GAAP total gross operating margin (6) $
2,133.7 $ 1,586.2 $ 7,873.2
Capital spending: Capital expenditures $ 1,148.9 $ 946.5 $ 4,425.6
Cash used for business combinations, net of cash received -- 149.8
0.8 Investments in unconsolidated affiliates 29.1 37.9 104.8 Other
investing activities 2.7 0.9
7.2 Total capital spending $ 1,180.7
$ 1,135.1 $ 4,538.4
(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 MonthsEnded March
31,
For the TwelveMonths
EndedMarch 31,
2019 2018 2019
Selected operating
data: (1)
NGL Pipelines & Services, net: NGL pipeline
transportation volumes (MBPD) 3,436 3,287 3,556 NGL marine terminal
volumes (MBPD) 540 575 584 NGL fractionation volumes (MBPD) 969 824
971
Equity NGL production (MBPD) (2)
154 165 151
Fee-based natural gas processing (MMcf/d)
(3)
5,299 4,364 5,017 Crude Oil Pipelines & Services, net: Crude
oil pipeline transportation volumes (MBPD) 2,227 1,997 2,154 Crude
oil marine terminal volumes (MBPD) 886 634 747 Natural Gas
Pipelines & Services, net:
Natural gas pipeline transportation
volumes (BBtus/d) (4)
14,197 13,021 14,017 Petrochemical & Refined Products Services,
net: Propylene production volumes (MBPD) 90 98 95 Butane
isomerization volumes (MBPD) 111 113 106 Standalone DIB processing
volumes (MBPD) 93 78 92 Octane additive and related plant
production volumes (MBPD) 28 26 27 Pipeline transportation volumes,
primarily refined products
and petrochemicals (MBPD)
810 852 869 Refined products and petrochemicals marine terminal
volumes
(MBPD)
338 370 344 Total, net: NGL, crude oil, petrochemical and refined
products
pipeline transportation volumes (MBPD)
6,473 6,136 6,579 Natural gas pipeline transportation volumes
(BBtus/d) 14,197 13,021 14,017
Equivalent pipeline transportation volumes
(MBPD) (5)
10,209 9,563 10,268 NGL, crude oil, refined products and
petrochemical
marine terminal volumes (MBPD)
1,764 1,579 1,675 (1) Operating rates
are reported on a net basis, which takes into account our ownership
interests, 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) “BBtus/d” means billion British thermal units per day. (5)
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
The following tables presents selected
average index prices for natural gas and selected NGL,
petrochemical products and crude oil for the periods indicated:
Polymer Refinery Natural Normal
Natural Grade Grade Gas, Ethane,
Propane, Butane, Isobutane, Gasoline,
Propylene, Propylene, $/MMBtu
$/gallon $/gallon $/gallon
$/gallon $/gallon $/pound
$/pound (1) (2) (2) (2) (2) (2) (3) (3)
2018 by
quarter: 1st Quarter $ 3.01 $ 0.25 $ 0.85 $ 0.96 $ 1.00 $ 1.41
$ 0.53 $ 0.33 2nd Quarter $ 2.80 $ 0.29 $ 0.87 $ 1.00 $ 1.20 $ 1.53
$ 0.52 $ 0.37 3rd Quarter $ 2.91 $ 0.43 $ 0.99 $ 1.21 $ 1.25 $ 1.54
$ 0.60 $ 0.45 4th Quarter $ 3.65 $ 0.35
$ 0.79 $ 0.91 $ 0.94 $
1.22 $ 0.51 $ 0.35
2018
Averages $ 3.09 $ 0.33 $ 0.88
$ 1.02 $ 1.10 $ 1.43
$ 0.54 $ 0.38
2019 by
quarter: 1st Quarter $ 3.15 $ 0.30
$ 0.67 $ 0.82 $ 0.85 $
1.16 $ 0.38 $ 0.24
(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 $/barrel $/barrel
$/barrel (1) (2) (2) (3)
2018 by quarter: 1st
Quarter $ 62.87 $ 62.51 $ 65.47 $ 65.79 2nd Quarter $ 67.88 $ 59.93
$ 72.38 $ 72.97 3rd Quarter $ 69.50 $ 55.28 $ 73.67 $ 74.28 4th
Quarter $ 58.81 $ 53.64 $ 66.34
$ 66.20
2018 Averages $ 64.77 $
57.84 $ 69.47 $ 69.81
2019 by quarter: 1st Quarter $ 54.90 $ 53.70
$ 61.19 $ 62.35
(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 $0.66 per
gallon during the first quarter of 2019 versus $0.77 per gallon for
the first quarter of 2018. Fluctuations in our consolidated
revenues and cost of sales amounts are explained in large part by
changes in energy commodity prices. A change in our consolidated
marketing revenues due to higher energy commodity sales prices may
not result in a similar change in gross operating margin or cash
available for distribution, since our consolidated cost of sales
amounts would also change due to comparable increases in the
purchase prices of the underlying energy commodities.
Enterprise Products Partners
L.P.
Exhibit D
Free Cash Flow – UNAUDITED
($ in millions)
For the Three Months
Ended March 31,
2019 2018
Free Cash Flow
(“FCF”)
Net cash flow provided by operating activities (GAAP) $
1,160.4 $ 1,233.6 Adjustments to reconcile net cash flow provided
by operating activities to FCF
(addition or subtraction indicated by
sign):
Cash used in investing activities (1,174.5 ) (1,119.1 ) Cash
contributions from noncontrolling interests 34.8 0.1 Cash
distributions paid to noncontrolling interests (18.0 )
(15.4 )
FCF (non-GAAP) $ 2.7 $
99.2
For the Twelve Months
Ended March 31,
2019 2018 Net cash flow provided by
operating activities (GAAP) $ 6,053.1 $ 5,024.3 Adjustments to
reconcile net cash flow provided by operating activities to FCF
(addition or subtraction indicated by
sign):
Cash used in investing activities (4,337.0 ) (3,961.2 ) Cash
contributions from noncontrolling interests 272.8 0.3 Cash
distributions paid to noncontrolling interests (84.2 )
(54.5 )
FCF (non-GAAP) $ 1,904.7
$ 1,008.9
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 we receive from
noncontrolling interests.
Enterprise Products Partners
L.P.
Exhibit E Distributable Cash Flow – UNAUDITED
($ in millions)
For the Three MonthsEnded March
31,
For the TwelveMonths
EndedMarch 31,
2019 2018 2019
Distributable
Cash Flow (“DCF”)
Net income attributable to limited partners (GAAP) $
1,260.5 $ 900.7 $ 4,532.2 Adjustments to net income attributable to
limited partners to derive DCF
(addition or subtraction indicated by
sign):
Depreciation, amortization and accretion expenses 474.5 425.9
1,840.2 Cash distributions received from unconsolidated affiliates
143.5 122.4 550.5 Equity in income of unconsolidated affiliates
(154.6 ) (115.7 ) (518.9 ) Change in fair market value of
derivative instruments (96.3 ) 136.9 (216.8 ) Change in fair value
of Liquidity Option Agreement 57.8 7.5 106.4 Gain on step
acquisition of unconsolidated affiliate -- (37.0 ) (2.4 ) Subtract
sustaining capital expenditures (1) (61.6 ) (66.3 ) (316.2 ) Other,
net 2.9 8.5 74.9
Subtotal DCF, before proceeds from asset sales and
monetization of
interest rate derivative instruments
accounted for as cash flow hedges
1,626.7 1,382.9 6,049.9 Proceeds from asset sales 1.7 1.1 161.8
Monetization of interest rate derivative instruments accounted
for as cash flow hedges
-- 1.5 20.6
DCF (non-GAAP) $ 1,628.4 $ 1,385.5 $ 6,232.3 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 (559.8 )
(203.1 ) (340.5 ) Sustaining capital expenditures 61.6 66.3 316.2
Other, net 30.2 (15.1 )
(154.9 )
Net cash flow provided by operating activities
(GAAP) $ 1,160.4 $ 1,233.6 $
6,053.1 (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 limited
partners 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 unitholder.
Enterprise Products Partners
L.P.
Exhibit F Adjusted EBITDA - UNAUDITED
($ in millions)
For the Three MonthsEnded March
31,
For the TwelveMonths EndedMarch
31,
2019 2018 2019 Net income
(GAAP) $ 1,280.4 $ 911.5 $ 4,607.4 Adjustments to net
income to derive Adjusted EBITDA
(addition or subtraction indicated by
sign):
Depreciation, amortization and accretion in costs and expenses
461.1 403.5 1,780.9 Interest expense, including related
amortization 277.2 252.1 1,121.8 Cash distributions received from
unconsolidated affiliates 143.5 122.4 550.5 Equity in income of
unconsolidated affiliates (154.6 ) (115.7 ) (518.9 ) Provision for
income taxes 12.3 5.1 67.5 Change in fair market value of
derivative instruments (96.3 ) 136.8 (216.9 ) Change in fair value
of Liquidity Option Agreement 57.8 7.5 106.4 Gain on step
acquisition of unconsolidated affiliate -- (37.0 ) (2.4 ) Other,
net 4.4 0.4 25.8
Adjusted EBITDA (non-GAAP) 1,985.8 1,686.6 7,522.1
Adjustments to reconcile Adjusted EBITDA to net cash flow provided
by operating activities (addition or subtraction indicated by
sign): Interest expense, including related amortization (277.2 )
(252.1 ) (1,121.8 ) Net effect of changes in operating accounts, as
applicable (559.8 ) (203.1 ) (340.5 ) Other, net 11.6
2.2 (6.7 )
Net cash flow
provided by operating activities (GAAP) $ 1,160.4
$ 1,233.6 $ 6,053.1
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 Three MonthsEnded March
31,
For the TwelveMonths
EndedMarch 31,
2019 2018 2019 Total gross
operating margin (non-GAAP) $ 2,133.7 $ 1,586.2 $
7,873.2 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
(450.9 ) (394.3 ) (1,743.6 ) Asset impairment and related charges
in operating costs and expenses (4.8 ) (0.9 ) (54.4 ) Net gains
attributable to asset sales in operating costs and expenses 0.4 0.5
28.6 General and administrative costs (52.2 )
(53.0 ) (207.5 )
Total operating income (GAAP)
$ 1,626.2 $ 1,138.5 $ 5,896.3
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005312/en/
Randy Burkhalter, Vice President, Investor Relations, (713)
381-6812
Rick Rainey, Vice President, Media Relations, (713) 381-3635
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