UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number:  1-14323

ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
76-0568219
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
1100 Louisiana Street, 10th Floor
Houston, Texas 77002
    (Address of Principal Executive Offices, including Zip Code)
(713) 381-6500
(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of Each Class
Trading Symbol(s)
Name of Each Exchange On Which Registered
Common Units
EPD
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☑  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 
Accelerated filer
Non-accelerated filer   
Smaller reporting company
Emerging growth company   
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No  

There were 2,185,178,603 common units of Enterprise Products Partners L.P. outstanding at the close of business on April 30, 2021. 
ENTERPRISE PRODUCTS PARTNERS L.P.
TABLE OF CONTENTS

 
 
Page No.
 
 
2
 
3
 
4
 
5
 
6
 
 
 
8
 
9
 
9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

PART I.  FINANCIAL INFORMATION.

ITEM 1.  FINANCIAL STATEMENTS.

EN TERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)

   
March 31,
2021
   
December 31,
2020
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
229.4
   
$
1,059.9
 
Restricted cash
   
105.0
     
98.2
 
Accounts receivable – trade, net of allowance for credit losses
of $47.3 at March 31, 2021 and $46.5 at December 31, 2020
   
5,779.9
     
4,802.6
 
Accounts receivable – related parties
   
7.0
     
5.6
 
Inventories (see Note 3)
   
3,703.3
     
3,303.5
 
Derivative assets (see Note 13)
   
323.0
     
228.6
 
Prepaid and other current assets
   
436.5
     
411.0
 
Total current assets
   
10,584.1
     
9,909.4
 
Property, plant and equipment, net (see Note 4)
   
42,102.4
     
41,912.8
 
Investments in unconsolidated affiliates (see Note 5)
   
2,449.8
     
2,429.2
 
Intangible assets, net (see Note 6)
   
3,259.8
     
3,309.1
 
Goodwill (see Note 6)
   
5,448.9
     
5,448.9
 
Other assets
   
1,138.5
     
1,097.3
 
Total assets
 
$
64,983.5
   
$
64,106.7
 
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Current maturities of debt (see Note 7)
 
$
1,513.4
   
$
1,325.0
 
Accounts payable – trade
   
830.7
     
704.6
 
Accounts payable – related parties
   
85.1
     
149.5
 
Accrued product payables
   
7,053.0
     
5,395.4
 
Accrued interest
   
224.2
     
455.6
 
Derivative liabilities (see Note 13)
   
239.4
     
349.2
 
Other current liabilities
   
593.1
     
608.7
 
Total current liabilities
   
10,538.9
     
8,988.0
 
Long-term debt (see Note 7)
   
27,145.9
     
28,540.7
 
Deferred tax liabilities (see Note 15)
   
482.8
     
464.7
 
Other long-term liabilities
   
696.4
     
686.6
 
Commitments and contingent liabilities (see Note 16)
   
     
 
Redeemable preferred limited partner interests: (see Note 8)
               
    Series A cumulative convertible preferred units (“preferred units”)
        (50,412 units outstanding at March 31, 2021 and 50,138 units outstanding
         at December 31, 2020)
   
49.3
     
49.3
 
Equity: (see Note 8)
               
Partners’ equity:
               
Common limited partner interests (2,185,178,603 units issued and outstanding at March 31, 2021, 2,182,308,958 units issued and outstanding at December 31, 2020)
   
26,108.6
     
25,766.6
 
Treasury units, at cost
   
(1,297.3
)
   
(1,297.3
)
Accumulated other comprehensive income (loss)
   
181.0
     
(165.2
)
Total  partners’ equity
   
24,992.3
     
24,304.1
 
Noncontrolling interests in consolidated subsidiaries
   
1,077.9
     
1,073.3
 
Total equity
   
26,070.2
     
25,377.4
 
Total liabilities, preferred units, and equity
 
$
64,983.5
   
$
64,106.7
 


See Notes to Unaudited Condensed Consolidated Financial Statements.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
 (Dollars in millions, except per unit amounts)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Revenues:
           
Third parties
 
$
9,141.1
   
$
7,466.5
 
Related parties
   
14.2
     
16.0
 
Total revenues (see Note 9)
   
9,155.3
     
7,482.5
 
Costs and expenses:
               
Operating costs and expenses:
               
Third party and other costs
   
7,229.3
     
5,735.3
 
Related parties
   
324.1
     
325.0
 
Total operating costs and expenses
   
7,553.4
     
6,060.3
 
General and administrative costs:
               
Third party and other costs
   
21.5
     
23.0
 
Related parties
   
34.8
     
32.5
 
Total general and administrative costs
   
56.3
     
55.5
 
Total costs and expenses (see Note 10)
   
7,609.7
     
6,115.8
 
Equity in income of unconsolidated affiliates
   
148.9
     
140.8
 
Operating income
   
1,694.5
     
1,507.5
 
Other income (expense):
               
Interest expense
   
(322.8
)
   
(317.5
)
Change in fair market value of Liquidity Option
   
     
(2.3
)
Interest income
   
1.1
     
7.2
 
Other, net
   
(0.2
)
   
0.9
 
Total other expense, net
   
(321.9
)
   
(311.7
)
Income before income taxes
   
1,372.6
     
1,195.8
 
Benefit from (provision for) income taxes (see Note 15)
   
(10.0
)
   
179.2
 
Net income
   
1,362.6
     
1,375.0
 
Net income attributable to noncontrolling interests
   
(21.3
)
   
(24.9
)
Net income attributable to preferred units
   
(0.9
)
   
 
Net income attributable to common unitholders
 
$
1,340.4
   
$
1,350.1
 
 
               
Earnings per unit: (see Note 11)
               
Basic and diluted earnings per common unit
 
$
0.61
   
$
0.61
 

















See Notes to Unaudited Condensed Consolidated Financial Statements.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED
COMPREHENSIVE INCOME
(Dollars in millions)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
 
           
Net income
 
$
1,362.6
   
$
1,375.0
 
Other comprehensive income (loss):
               
Cash flow hedges: (see Note 13)
               
Commodity hedging derivative instruments:
               
Changes in fair value of cash flow hedges
   
(461.2
)
   
475.1
 
Reclassification of losses (gains) to net income
   
616.1
     
(155.6
)
Interest rate hedging derivative instruments:
               
Changes in fair value of cash flow hedges
   
182.9
     
(278.1
)
Reclassification of losses to net income
   
8.6
     
9.6
 
Total cash flow hedges
   
346.4
     
51.0
 
Other
   
(0.2
)
   
(0.1
)
Total other comprehensive income
   
346.2
     
50.9
 
Comprehensive income
   
1,708.8
     
1,425.9
 
Comprehensive income attributable to noncontrolling interests
   
(21.3
)
   
(24.9
)
Comprehensive income attributable to preferred units
   
(0.9
)
   
 
Comprehensive income attributable to common unitholders
 
$
1,686.6
   
$
1,401.0
 





























See Notes to Unaudited Condensed Consolidated Financial Statements.


ENTERPRISE PRODUCT S PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Operating activities:
           
Net income
 
$
1,362.6
   
$
1,375.0
 
Reconciliation of net income to net cash flows provided by operating activities:
               
Depreciation and accretion
   
425.4
     
414.0
 
Amortization of intangible assets
   
36.1
     
39.6
 
Amortization of major maintenance costs for reaction-based plants
   
2.6
     
 
Other amortization expense
   
60.9
     
55.4
 
Impairment of assets other than goodwill (see Note 4)
   
65.6
     
1.6
 
Equity in income of unconsolidated affiliates
   
(148.9
)
   
(140.8
)
Distributions received from unconsolidated affiliates attributable to earnings
   
111.9
     
126.9
 
Net losses attributable to asset sales and related matters
   
10.9
     
0.1
 
Deferred income tax expense (benefit)
   
4.6
     
(184.1
)
Change in fair market value of derivative instruments
   
(15.6
)
   
(29.5
)
Change in fair market value of Liquidity Option
   
     
2.3
 
Non-cash expense related to long-term operating leases (see Note 16)
   
9.3
     
10.0
 
Net effect of changes in operating accounts (see Note 17)
   
99.0
     
341.7
 
Other operating activities
   
(1.3
)
   
 
Net cash flows provided by operating activities
   
2,023.1
     
2,012.2
 
Investing activities:
               
Capital expenditures
   
(679.0
)
   
(1,079.5
)
Investments in unconsolidated affiliates
   
(1.3
)
   
(3.3
)
Distributions received from unconsolidated affiliates attributable to the return of capital
   
18.6
     
10.3
 
Proceeds from asset sales
   
6.2
     
0.6
 
Other investing activities
   
(1.5
)
   
0.2
 
Cash used in investing activities
   
(657.0
)
   
(1,071.7
)
Financing activities:
               
Borrowings under debt agreements
   
7,531.8
     
5,411.8
 
Repayments of debt
   
(8,741.8
)
   
(3,406.6
)
Debt issuance costs
   
     
(28.4
)
Monetization of interest rate derivative instruments
   
75.2
     
(33.3
)
Cash distributions paid to common unitholders (see Note 8)
   
(981.7
)
   
(974.2
)
Cash payments made in connection with distribution equivalent rights
   
(7.0
)
   
(5.8
)
Cash distributions paid to noncontrolling interests
   
(29.8
)
   
(29.9
)
Cash contributions from noncontrolling interests
   
13.1
     
5.2
 
Repurchase of common units under 2019 Buyback Program (see Note 8)
   
(13.9
)
   
(140.1
)
Other financing activities
   
(35.7
)
   
(33.6
)
Cash provided by (used in) financing activities
   
(2,189.8
)
   
765.1
 
Net change in cash and cash equivalents, including restricted cash
   
(823.7
)
   
1,705.6
 
Cash and cash equivalents, including restricted cash, at beginning of period
   
1,158.1
     
410.0
 
Cash and cash equivalents, including restricted cash, at end of period
 
$
334.4
   
$
2,115.6
 









See Notes to Unaudited Condensed Consolidated Financial Statements.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
(Dollars in millions)

 
 
Partners’ Equity
             
   
Common
Limited
Partner
Interests
   
Treasury
Units
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests in
Consolidated
Subsidiaries
   
Total
 
 Balance, December 31, 2020
 
$
25,766.6
   
$
(1,297.3
)
 
$
(165.2
)
 
$
1,073.3
   
$
25,377.4
 
   Net income
   
1,340.4
     
     
     
21.3
     
1,361.7
 
   Cash distributions paid to common unitholders
   
(981.7
)
   
     
     
     
(981.7
)
   Cash payments made in connection with distribution equivalent rights
   
(7.0
)
   
     
     
     
(7.0
)
   Cash distributions paid to noncontrolling interests
   
     
     
     
(29.8
)
   
(29.8
)
   Cash contributions from noncontrolling interests
   
     
     
     
13.1
     
13.1
 
   Amortization of fair value of equity-based awards
   
38.8
     
     
     
     
38.8
 
   Repurchase and cancellation of common units under
      2019 Buyback Program (see Note 8)
   
(13.9
)
   
     
     
     
(13.9
)
   Cash flow hedges
   
     
     
346.4
     
     
346.4
 
   Other, net
   
(34.6
)
   
     
(0.2
)
   
     
(34.8
)
   Balance, March 31, 2021
 
$
26,108.6
   
$
(1,297.3
)
 
$
181.0
   
$
1,077.9
   
$
26,070.2
 



 
 
Partners’ Equity
             
   
Common
Limited
Partner
Interests
   
Treasury
Units
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests in
Consolidated
Subsidiaries
   
Total
 
Balance, December 31, 2019
 
$
24,692.6
   
$
   
$
71.4
   
$
1,063.5
   
$
25,827.5
 
Net income
   
1,350.1
     
     
     
24.9
     
1,375.0
 
Cash distributions paid to common unitholders
   
(974.2
)
   
     
     
     
(974.2
)
Cash payments made in connection with distribution equivalent rights
   
(5.8
)
   
     
     
     
(5.8
)
Cash distributions paid to noncontrolling interests
   
     
     
     
(29.9
)
   
(29.9
)
Cash contributions from noncontrolling interests
   
     
     
     
5.2
     
5.2
 
Amortization of fair value of equity-based awards
   
39.1
     
     
     
     
39.1
 
Repurchase and cancellation of common units under
   2019 Buyback Program (see Note 8)
   
(140.1
)
   
     
     
     
(140.1
)
Common units issued to Skyline North Americas, Inc. in connection with
   settlement of Liquidity Option (see Note 8)
   
1,297.3
     
     
     
     
1,297.3
 
Treasury units acquired in connection with settlement of Liquidity Option,
   at cost (see Note 8)
   
     
(1,297.3
)
   
     
     
(1,297.3
)
Cash flow hedges
   
     
     
51.0
     
     
51.0
 
Other, net
   
(33.6
)
   
     
(0.1
)
   
0.1
     
(33.6
)
Balance, March 31, 2020
 
$
26,225.4
   
$
(1,297.3
)
 
$
122.3
   
$
1,063.8
   
$
26,114.2
 














See Notes to Unaudited Condensed Consolidated Financial Statements.  For information regarding Unit History,
Accumulated Other Comprehensive Income (Loss), see Note 8.
6


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KEY REFERENCES USED IN THESE
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references to “we,” “us” or “our” within these Notes to Unaudited Condensed Consolidated Financial Statements are intended to mean the business and operations of Enterprise Products Partners L.P. and its consolidated subsidiaries.  

References to the “Partnership” mean Enterprise Products Partners L.P. on a standalone basis.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of the Partnership, and its consolidated subsidiaries, through which the Partnership conducts its business.  We are managed by our general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors (the “Board”) of Enterprise GP;  (ii) Richard H. Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.

References to “EPCO” mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.  The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are:  (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO; and (iii) Mr. Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as directors of EPCO.

We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees.  EPCO, together with its privately held affiliates, owned approximately 32.2% of the Partnership’s common units outstanding at March 31, 2021.

With the exception of per unit amounts, or as noted within the context of each disclosure,
the dollar amounts presented in the tabular data within these disclosures are
stated in millions of dollars.
7


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Partnership Organization and Operations

We are a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.”  Our preferred units are not publicly traded.  We were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products.  We are owned by our limited partners (preferred and common unitholders) from an economic perspective.   Enterprise GP, which owns a non-economic general partner interest in us, manages our Partnership.  We conduct substantially all of our business operations through EPO and its consolidated subsidiaries.

Our fully integrated, midstream energy asset network (or “value chain”) links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States (“U.S.”), Canada and the Gulf of Mexico with domestic consumers and international markets.  Our midstream energy operations include:

natural gas gathering, treating, processing, transportation and storage;

NGL transportation, fractionation, storage, and marine terminals (including those used to export liquefied petroleum gases, or “LPG,” and ethane);

crude oil gathering, transportation, storage, and marine terminals;

propylene production facilities (including propane dehydrogenation (“PDH”) facilities), butane isomerization, octane enhancement, isobutane dehydrogenation (“iBDH”) and high purity isobutylene (“HPIB”) production facilities;

petrochemical and refined products transportation, storage, and marine terminals (including those used to export ethylene and polymer grade propylene (“PGP”); and

a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. 

Like many publicly traded partnerships, we have no employees.  All of our management, administrative and operating functions are performed by employees of EPCO pursuant to an administrative services agreement (the “ASA”) or by other service providers.  See Note 14 for information regarding related party matters.

Our results of operations for the three months ended March 31, 2021 are not necessarily indicative of results expected for the full year of 2021.  In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation.  Although we believe the disclosures in these financial statements are adequate and make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

These Unaudited Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2020  (the “2020 Form 10-K”) filed with the SEC on March 1, 2021.




8


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 2.  Summary of Significant Accounting Policies

Apart from those matters described in this footnote, there have been no updates to our significant accounting policies since those reported under Note 2 of the 2020 Form 10-K.

Allowance for Credit Losses

We estimate our allowance for credit losses (formerly, the allowance for doubtful accounts) at each reporting date using a current expected credit loss model, which requires the measurement of expected credit losses for financial assets (e.g., accounts receivable) based on historical experience with customers, current economic conditions, and reasonable and supportable forecasts.  We may also increase the allowance for credit losses in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties.

The following table presents our allowance for credit losses activity since December 31, 2020:

Allowance for credit losses, December 31, 2020
 
$
46.5
 
Charged to costs and expenses
   
0.2
 
Charged to other accounts
   
1.1
 
Deductions
   
(0.5
)
Allowance for credit losses, March 31, 2021
 
$
47.3
 

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets that sum to the total of the amounts shown in the Unaudited Condensed Statements of Consolidated Cash Flows.

   
March 31,
2021
   
December 31,
2020
 
Cash and cash equivalents
 
$
229.4
   
$
1,059.9
 
Restricted cash
   
105.0
     
98.2
 
Total cash, cash equivalents and restricted cash shown in the
  Unaudited Condensed Statements of Consolidated Cash Flows
 
$
334.4
   
$
1,158.1
 

Restricted cash primarily represents amounts held in segregated bank accounts by our clearing brokers as margin in support of our commodity derivative instruments portfolio and related physical purchases and sales of natural gas, NGLs, crude oil, refined products and power.  Additional cash may be restricted to maintain our commodity derivative instruments portfolio as prices fluctuate or margin requirements change.  See Note 13 for information regarding our derivative instruments and hedging activities.


Note 3.  Inventories

Our inventory amounts by product type were as follows at the dates indicated:

   
March 31,
2021
   
December 31,
2020
 
NGLs
 
$
1,707.8
   
$
1,888.1
 
Petrochemicals and refined products
   
1,151.0
     
642.6
 
Crude oil
   
825.7
     
758.1
 
Natural gas
   
18.8
     
14.7
 
Total
 
$
3,703.3
   
$
3,303.5
 

9


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Due to fluctuating commodity prices, we recognize lower of cost or net realizable value adjustments when the carrying value of our available-for-sale inventories exceeds their net realizable value.  The following table presents our total cost of sales amounts and lower of cost or net realizable value adjustments for the periods indicated:

 
For the Three Months
Ended March 31,
 
 
2021
 
2020
 
Cost of sales (1)
 
$
6,263.0
   
$
4,823.0
 
Lower of cost or net realizable value adjustments recognized in cost of sales
   
10.0
     
38.0
 

(1)
Cost of sales is a component of “Operating costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.  Fluctuations in these amounts are primarily due to changes in energy commodity prices and sales volumes associated with our marketing activities.


Note 4.  Property, Plant and Equipment

The historical costs of our property, plant and equipment and related balances were as follows at the dates indicated:

 
 
Estimated
Useful Life
in Years
   
March 31,
2021
   
December 31,
2020
 
Plants, pipelines and facilities (1)
   
3-45
(5)
 
$
50,036.0
   
$
49,972.8
 
Underground and other storage facilities (2)
   
5-40
(6)
   
4,231.4
     
4,207.5
 
Transportation equipment (3)
   
3-10
     
199.2
     
204.9
 
Marine vessels (4)
   
15-30
     
929.6
     
932.7
 
Land
           
372.1
     
371.9
 
Construction in progress
           
2,055.3
     
1,807.7
 
   Subtotal
           
57,823.6
     
57,497.5
 
Less accumulated depreciation
           
15,805.9
     
15,584.7
 
   Subtotal property, plant and equipment, net
           
42,017.7
     
41,912.8
 
Capitalized major maintenance costs for reaction-based
   plants, net of accumulated amortization (7)
           
84.7
     
 
   Property, plant and equipment, net
         
$
42,102.4
   
$
41,912.8
 

(1)
Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; laboratory and shop equipment and related assets.
(2)
Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets.
(3)
Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(4)
Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(5)
In general, the estimated useful lives of major assets within this category are: processing plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; buildings, 20-40 years; office furniture and equipment, 3-20 years; and laboratory and shop equipment, 5-35 years.
(6)
In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years.
(7)
For reaction-based plants, we use the deferral method when accounting for major maintenance activities.  Under the deferral method, major maintenance costs are capitalized and amortized over the period until the next major overhaul project.   On a weighted-average basis, the expected amortization period for these costs is 2.8 years.

Property, plant and equipment at March 31, 2021 and December 31, 2020 includes $69.0 million and $69.7 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.  The following table presents information regarding our asset retirement obligations, or AROs, since December 31, 2020:

ARO liability balance, December 31, 2020
 
$
149.5
 
Liabilities incurred
   
 
Liabilities settled
   
 
Revisions in estimated cash flows
   
(1.1
)
Accretion expense
   
1.7
 
ARO liability balance, March 31, 2021
 
$
150.1
 
10


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Of the $150.1 million total ARO liability recorded at March 31, 2021, $11.3 million was reflected as a current liability and $138.8 million as a long-term liability.

The following table summarizes our depreciation and accretion expense and capitalized interest amounts for the periods indicated:

 
For the Three Months
Ended March 31,
 
 
2021
 
2020
 
Depreciation expense (1)
 
$
423.7
   
$
412.2
 
Accretion expense (1)
   
1.7
     
1.8
 
Capitalized interest (2)
   
19.6
     
30.5
 

(1)
Depreciation and accretion expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.
(2)
We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase.  The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life as a component of depreciation expense.  When capitalized interest is recorded, it reduces interest expense from what it would be otherwise.

Asset impairment charges

In March 2021, we entered into agreements to sell a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System, to a third party for $40.0 million in cash.  The transaction closed and was effective on April 1, 2021.  In total, we recognized an impairment charge of $43.4 million, which reflects the write down of $36.6 million of property, plant and equipment and $6.8 million of intangible assets (see Note 6).  The impairment charge attributable to this transaction primarily reflects the reclassification of the underlying assets and liabilities (at their estimated fair values) to their respective held-for-sale accounts at March 31, 2021. The remainder of our impairment charges for the three month periods ended March 31, 2021 and 2020 are attributable to the complete write-off of assets that are no longer expected to be used or constructed.

Asset impairment charges related to operations are a component of “Third party and other costs” within the “Operating costs and expenses” section of our Unaudited Condensed Statements of Consolidated Operations.

We are closely monitoring the recoverability of our long-lived assets, investments in unconsolidated affiliates and goodwill in light of the adverse economic effects of the coronavirus disease 2019 (“COVID-19”) pandemic.  If the adverse economic impacts of the pandemic persist for longer periods than currently expected, these developments could result in the recognition of non-cash impairment charges in the future.




11


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 5.  Investments in Unconsolidated Affiliates

The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated.  We account for these investments using the equity method.

   
March 31,
2021
   
December 31,
2020
 
NGL Pipelines & Services
 
$
664.6
   
$
671.6
 
Crude Oil Pipelines & Services
   
1,749.5
     
1,723.7
 
Natural Gas Pipelines & Services
   
32.5
     
31.4
 
Petrochemical & Refined Products Services
   
3.2
     
2.5
 
Total
 
$
2,449.8
   
$
2,429.2
 

The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
NGL Pipelines & Services
 
$
28.1
   
$
32.7
 
Crude Oil Pipelines & Services
   
118.9
     
107.3
 
Natural Gas Pipelines & Services
   
1.4
     
1.6
 
Petrochemical & Refined Products Services
   
0.5
     
(0.8
)
Total
 
$
148.9
   
$
140.8
 


Note 6.  Intangible Assets and Goodwill

Identifiable Intangible Assets

The following table summarizes our intangible assets by business segment at the dates indicated:

   
March 31, 2021
   
December 31, 2020
 
 
 
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
   
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
 
NGL Pipelines & Services:
                                   
Customer relationship intangibles
 
$
447.8
   
$
(224.5
)
 
$
223.3
   
$
447.8
   
$
(221.3
)
 
$
226.5
 
Contract-based intangibles
   
162.6
     
(57.8
)
   
104.8
     
162.6
     
(55.0
)
   
107.6
 
Segment total
   
610.4
     
(282.3
)
   
328.1
     
610.4
     
(276.3
)
   
334.1
 
Crude Oil Pipelines & Services:
                                               
Customer relationship intangibles
   
2,195.0
     
(306.1
)
   
1,888.9
     
2,195.0
     
(291.6
)
   
1,903.4
 
Contract-based intangibles
   
283.1
     
(253.2
)
   
29.9
     
283.1
     
(249.9
)
   
33.2
 
Segment total
   
2,478.1
     
(559.3
)
   
1,918.8
     
2,478.1
     
(541.5
)
   
1,936.6
 
Natural Gas Pipelines & Services:
                                               
Customer relationship intangibles
   
1,350.3
     
(521.1
)
   
829.2
     
1,350.3
     
(512.2
)
   
838.1
 
Contract-based intangibles
   
231.1
     
(179.1
)
   
52.0
     
470.7
     
(403.8
)
   
66.9
 
Segment total
   
1,581.4
     
(700.2
)
   
881.2
     
1,821.0
     
(916.0
)
   
905.0
 
Petrochemical & Refined Products Services:
                                               
Customer relationship intangibles
   
181.4
     
(69.7
)
   
111.7
     
181.4
     
(68.3
)
   
113.1
 
Contract-based intangibles
   
44.9
     
(24.9
)
   
20.0
     
44.9
     
(24.6
)
   
20.3
 
Segment total
   
226.3
     
(94.6
)
   
131.7
     
226.3
     
(92.9
)
   
133.4
 
Total intangible assets
 
$
4,896.2
   
$
(1,636.4
)
 
$
3,259.8
   
$
5,135.8
   
$
(1,826.7
)
 
$
3,309.1
 


12


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following table presents the amortization expense of our intangible assets by business segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
NGL Pipelines & Services
 
$
6.0
   
$
6.5
 
Crude Oil Pipelines & Services
   
17.8
     
20.9
 
Natural Gas Pipelines & Services
   
10.6
     
10.2
 
Petrochemical & Refined Products Services
   
1.7
     
2.0
 
Total
 
$
36.1
   
$
39.6
 

The following table presents our forecast of amortization expense associated with existing intangible assets for the periods indicated:

Remainder
of 2021
   
2022
   
2023
   
2024
   
2025
 
$
107.9
   
$
159.5
   
$
167.4
   
$
163.6
   
$
162.2
 

Impairment of Intangible Asset

In March 2021, we recognized an impairment charge of $6.8 million for the write down of contract-based intangible assets associated with the sale of a portion of our San Juan Gathering System (see Note 4).  The contract-based intangible assets were classified within our Natural Gas Pipelines & Services business segment.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in the transaction.  There has been no change in our goodwill amounts since those reported in our 2020 Form 10-K.  We are closely monitoring the recoverability of our long-lived assets, which include goodwill, in light of the COVID-19 pandemic.
  

13


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 7.  Debt Obligations

The following table presents our consolidated debt obligations (arranged by company and maturity date) at the dates indicated:

   
March 31,
2021
   
December 31,
2020
 
EPO senior debt obligations:
           
Commercial Paper Notes, variable-rates
 
$
115.0
   
$
 
Senior Notes TT, 2.80% fixed-rate, due February 2021
   
     
750.0
 
Senior Notes RR, 2.85% fixed-rate, due April 2021
   
     
575.0
 
September 2020 364-Day Revolving Credit Agreement, variable-rate, due September 2021
   
     
 
Senior Notes VV, 3.50% fixed-rate, due February 2022
   
750.0
     
750.0
 
Senior Notes CC, 4.05% fixed-rate, due February 2022
   
650.0
     
650.0
 
Senior Notes HH, 3.35% fixed-rate, due March 2023
   
1,250.0
     
1,250.0
 
Senior Notes JJ, 3.90% fixed-rate, due February 2024
   
850.0
     
850.0
 
Multi-Year Revolving Credit Agreement, variable-rate, due September 2024
   
     
 
Senior Notes MM, 3.75% fixed-rate, due February 2025
   
1,150.0
     
1,150.0
 
Senior Notes PP, 3.70% fixed-rate, due February 2026
   
875.0
     
875.0
 
Senior Notes SS, 3.95% fixed-rate, due February 2027
   
575.0
     
575.0
 
Senior Notes WW, 4.15% fixed-rate, due October 2028
   
1,000.0
     
1,000.0
 
Senior Notes YY, 3.125% fixed-rate, due July 2029
   
1,250.0
     
1,250.0
 
Senior Notes AAA, 2.80% fixed-rate, due January 2030
   
1,250.0
     
1,250.0
 
Senior Notes D, 6.875% fixed-rate, due March 2033
   
500.0
     
500.0
 
Senior Notes H, 6.65% fixed-rate, due October 2034
   
350.0
     
350.0
 
Senior Notes J, 5.75% fixed-rate, due March 2035
   
250.0
     
250.0
 
Senior Notes W, 7.55% fixed-rate, due April 2038
   
399.6
     
399.6
 
Senior Notes R, 6.125% fixed-rate, due October 2039
   
600.0
     
600.0
 
Senior Notes Z, 6.45% fixed-rate, due September 2040
   
600.0
     
600.0
 
Senior Notes BB, 5.95% fixed-rate, due February 2041
   
750.0
     
750.0
 
Senior Notes DD, 5.70% fixed-rate, due February 2042
   
600.0
     
600.0
 
Senior Notes EE, 4.85% fixed-rate, due August 2042
   
750.0
     
750.0
 
Senior Notes GG, 4.45% fixed-rate, due February 2043
   
1,100.0
     
1,100.0
 
Senior Notes II, 4.85% fixed-rate, due March 2044
   
1,400.0
     
1,400.0
 
Senior Notes KK, 5.10% fixed-rate, due February 2045
   
1,150.0
     
1,150.0
 
Senior Notes QQ, 4.90% fixed-rate, due May 2046
   
975.0
     
975.0
 
Senior Notes UU, 4.25% fixed-rate, due February 2048
   
1,250.0
     
1,250.0
 
Senior Notes XX, 4.80% fixed-rate, due February 2049
   
1,250.0
     
1,250.0
 
Senior Notes ZZ, 4.20% fixed-rate, due January 2050
   
1,250.0
     
1,250.0
 
Senior Notes BBB, 3.70% fixed-rate, due January 2051
   
1,000.0
     
1,000.0
 
Senior Notes DDD, 3.20% fixed-rate, due February 2052
   
1,000.0
     
1,000.0
 
Senior Notes NN, 4.95% fixed-rate, due October 2054
   
400.0
     
400.0
 
Senior Notes CCC, 3.95% fixed rate, due January 2060
   
1,000.0
     
1,000.0
 
TEPPCO senior debt obligations:
               
TEPPCO Senior Notes, 7.55% fixed-rate, due April 2038
   
0.4
     
0.4
 
Total principal amount of senior debt obligations
   
26,290.0
     
27,500.0
 
EPO Junior Subordinated Notes C, variable-rate, due June 2067 (1)
   
232.2
     
232.2
 
EPO Junior Subordinated Notes D, fixed/variable-rate, due August 2077 (2)
   
700.0
     
700.0
 
EPO Junior Subordinated Notes E, fixed/variable-rate, due August 2077 (3)
   
1,000.0
     
1,000.0
 
EPO Junior Subordinated Notes F, fixed/variable-rate, due February 2078 (4)
   
700.0
     
700.0
 
TEPPCO Junior Subordinated Notes, variable-rate, due June 2067 (1)
   
14.2
     
14.2
 
Total principal amount of senior and junior debt obligations
   
28,936.4
     
30,146.4
 
Other, non-principal amounts
   
(277.1
)
   
(280.7
)
Less current maturities of debt
   
(1,513.4
)
   
(1,325.0
)
Total long-term debt
 
$
27,145.9
   
$
28,540.7
 

(1)
Variable rate is reset quarterly and based on 3-month London Interbank Offered Rate ("LIBOR"), plus 2.778%.
(2)
Fixed rate of 4.875% through August 15, 2022; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 2.986%.
(3)
Fixed rate of 5.250% through August 15, 2027; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 3.033%.
(4)
Fixed rate of 5.375% through February 14, 2028; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 2.57%.

References to “TEPPCO” mean TEPPCO Partners, L.P. prior to its merger with one of our wholly owned subsidiaries in October 2009.
14


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Variable Interest Rates

The following table presents the range of interest rates and weighted-average interest rates paid on our consolidated variable-rate debt during the three months ended March 31, 2021:

Range of Interest
Rates Paid
Weighted-Average
Interest Rate Paid
Commercial Paper Notes
0.15% to 0.25%
0.22%
EPO Junior Subordinated Notes C and TEPPCO Junior Subordinated Notes
2.97% to 3.00%
2.99%

Amounts borrowed under EPO’s 364-Day and Multi-Year Revolving Credit Agreements bear interest, at its election, equal to: (i) LIBOR, plus an additional variable spread; or (ii) an alternate base rate, which is the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.5%, or (c) the LIBO Market Index Rate in effect on such day plus 1% and a variable spread. The applicable spreads are determined based on EPO's debt ratings.

In July 2017, the Financial Conduct Authority in the U.K. announced a desire to phase out LIBOR as a benchmark by the end of June 2023. Financial industry working groups are developing replacement rates and methodologies to transition existing agreements that depend on LIBOR as a reference rate.  We currently do not expect the transition from LIBOR to have a material financial impact on us.

Scheduled Maturities of Debt

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2021 for the next five years, and in total thereafter:

 
       
Scheduled Maturities of Debt
 
 
 
Total
   
Remainder
of 2021
   
2022
   
2023
   
2024
   
2025
   
Thereafter
 
Commercial Paper Notes
 
$
115.0
   
$
115.0
   
$
   
$
   
$
   
$
   
$
 
Senior Notes
   
26,175.0
     
     
1,400.0
     
1,250.0
     
850.0
     
1,150.0
     
21,525.0
 
Junior Subordinated Notes
   
2,646.4
     
     
     
     
     
     
2,646.4
 
Total
 
$
28,936.4
   
$
115.0
   
$
1,400.0
   
$
1,250.0
   
$
850.0
   
$
1,150.0
   
$
24,171.4
 

In February 2021, EPO repaid all of the $750.0 million in principal amount of its Senior Notes TT using remaining cash on hand attributable to its August 2020 senior notes offering and proceeds from the issuance of short-term notes under its commercial paper program.

In March 2021, EPO redeemed all of the $575.0 million outstanding principal amount of its Senior Notes RR one month prior to their scheduled maturity in April 2021.  These notes were redeemed at par (i.e., at a redemption price equal to the outstanding principal amount of such notes to be redeemed, plus accrued and unpaid interest thereon) using proceeds from the issuance of short-term notes under its commercial paper program.

Letters of Credit

At March 31, 2021, EPO had $200.7 million of letters of credit outstanding primarily related to our commodity hedging activities.

Lender Financial Covenants

We were in compliance with the financial covenants of our consolidated debt agreements at March 31, 2021.

Parent-Subsidiary Guarantor Relationships

The Partnership acts as guarantor of the consolidated debt obligations of EPO, with the exception of the remaining debt obligations of TEPPCO.  If EPO were to default on any of its guaranteed debt, the Partnership would be responsible for full and unconditional repayment of that obligation.

15


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 8.  Capital Accounts

Common Limited Partner Interests

The following table summarizes changes in the number of our common units outstanding since December 31, 2020:

Common units outstanding at December 31, 2020
   
2,182,308,958
 
Common unit repurchases under 2019 Buyback Program
   
(709,816
)
Common units issued in connection with the vesting of phantom unit awards, net
   
3,553,313
 
Other
   
26,148
 
Common units outstanding at March 31, 2021
   
2,185,178,603
 

Registration Statements
We have a universal shelf registration statement (the “2019 Shelf”) on file with the SEC which allows the Partnership and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively.

In addition, the Partnership has a registration statement on file with the SEC covering the issuance of up to $2.54 billion of its common units in amounts, at prices and on terms based on market conditions and other factors at the time of such offerings (referred to as the Partnership’s at-the-market (“ATM”) program).  The Partnership did not issue any common units under its ATM program during the three months ended March 31, 2021.  The Partnership’s capacity to issue additional common units under the ATM program remains at $2.54 billion as of March 31, 2021.

We may issue additional equity and debt securities to assist us in meeting our future liquidity requirements, including those related to capital investments.

Common Unit Repurchases Under 2019 Buyback Program
In January 2019, we announced that the Board of Enterprise GP had approved a $2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides the Partnership with an additional method to return capital to investors. The 2019 Buyback Program authorizes the Partnership to repurchase its common units from time to time, including through open market purchases and negotiated transactions.  No time limit has been set for completion of the program, and it may be suspended or discontinued at any time.

During the three months ended March 31, 2021, the Partnership settled open market repurchase transactions initiated in December 2020 involving an aggregate 709,816 common units.  The total cost of these repurchases was $13.9 million including commissions and fees. During the three months ended March 31, 2020, the Partnership repurchased 6,357,739 common units under the 2019 Buyback Program for a total purchase price of $140.1 million including commissions and fees.  Units repurchased under the 2019 Buyback Program are immediately cancelled upon acquisition.  At March 31, 2021, the remaining available capacity under the 2019 Buyback Program was $1.72 billion.

Common Units Issued in Connection With the Vesting of Phantom Unit Awards
After taking into account tax withholding requirements, the Partnership issued 3,553,313 new common units to employees in connection with the vesting of phantom unit awards during the three months ended March 31, 2021.  See Note 12 for information regarding our phantom unit awards.

Common Units Delivered Under DRIP and EUPP
The Partnership has registration statements on file with the SEC in connection with its distribution reinvestment plan (“DRIP”) and employee unit purchase plan (“EUPP”). In July 2019, the Partnership announced that, beginning with the quarterly distribution payment paid in August 2019, it would use common units purchased on the open market, rather than issuing new common units, to satisfy its delivery obligations under the DRIP and EUPP.  This election is subject to change in future quarters depending on the Partnership’s need for equity capital.  During the three months ended March 31, 2021, agents of the Partnership purchased 1,553,688 common units on the open market and delivered them to participants in the DRIP and EUPP.  Apart from $0.5 million attributable to the plan discount available to all participants in the EUPP, the funds used to effect these purchases were sourced from the DRIP and EUPP participants.  No other Partnership funds were used to satisfy these obligations.  We plan to use open market purchases to satisfy DRIP and EUPP reinvestments in connection with the distribution expected to be paid on May 12, 2021.
16


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Preferred Units

The following table summarizes changes in the number of our Series A Cumulative Convertible Preferred Units (“preferred units”) outstanding since December 31, 2020:

Preferred units outstanding at December 31, 2020
   
50,138
 
Paid in-kind distribution to related party
   
274
 
Preferred units outstanding at March 31, 2021
   
50,412
 

We present the capital accounts attributable to our preferred unitholders as mezzanine equity on our consolidated balance sheets since the terms of the preferred units allow for cash redemption by such unitholders in the event of a Change of Control (as defined in our partnership agreement), without regard to the likelihood of such an event.

In February 2021, the Partnership made a quarterly distribution to its third party and related party preferred unitholders valued at $0.9 million, consisting of paid-in-kind distributions of 274 new preferred units and $0.6 million of cash.

In March 2021, a privately held affiliate of EPCO sold its entire ownership interest in the Partnership’s preferred units to third parties.

Accumulated Other Comprehensive Income (Loss)

The following tables present the components of accumulated other comprehensive income (loss) as reported on our Unaudited Condensed Consolidated Balance Sheets at the dates indicated:

 
 
Cash Flow Hedges
             
 
 
Commodity
Derivative
Instruments
   
Interest Rate
Derivative
Instruments
   
Other
   
Total
 
Accumulated Other Comprehensive Income (Loss), December 31, 2020
 
$
(93.2
)
 
$
(74.3
)
 
$
2.3
   
$
(165.2
)
Other comprehensive income (loss) for period, before reclassifications
   
(461.2
)
   
182.9
     
(0.2
)
   
(278.5
)
Reclassification of losses (gains) to net income during period
   
616.1
     
8.6
     
     
624.7
 
Total other comprehensive income (loss) for period
   
154.9
     
191.5
     
(0.2
)
   
346.2
 
Accumulated Other Comprehensive Income, March 31, 2021
 
$
61.7
   
$
117.2
   
$
2.1
   
$
181.0
 

   
Cash Flow Hedges
             
 
 
Commodity
Derivative
Instruments
   
Interest Rate
Derivative
Instruments
   
Other
   
Total
 
Accumulated Other Comprehensive Income, December 31, 2019
 
$
55.1
   
$
13.9
   
$
2.4
   
$
71.4
 
Other comprehensive income (loss) for period, before reclassifications
   
475.1
     
(278.1
)
   
(0.1
)
   
196.9
 
Reclassification of losses (gains) to net income during period
   
(155.6
)
   
9.6
     
     
(146.0
)
Total other comprehensive income (loss) for period
   
319.5
     
(268.5
)
   
(0.1
)
   
50.9
 
Accumulated Other Comprehensive Income (Loss), March 31, 2020
 
$
374.6
   
$
(254.6
)
 
$
2.3
   
$
122.3
 

The following table presents reclassifications of (income) loss out of accumulated other comprehensive income (loss) into net income during the periods indicated:

 
 
For the Three Months
Ended March 31,
 
Location
2021
 
2020
Losses (gains) on cash flow hedges:
           
Interest rate derivatives
Interest expense
$
8.6
 
$
9.6
Commodity derivatives
Revenue
 
597.4
 
 
(154.4)
Commodity derivatives
Operating costs and expenses
 
18.7
 
 
(1.2)
Total
 
$
624.7
 
$
(146.0)

For information regarding our interest rate and commodity derivative instruments, see Note 13.
17


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Cash Distributions

On April 8, 2021, we announced that the Board declared a quarterly cash distribution of $0.45 per common unit, or $1.80 per common unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the first quarter of 2021.  The quarterly distribution is payable on May 12, 2021 to unitholders of record as of the close of business on April 30, 2021.  The total amount to be paid is $991.5 million, which includes $8.1 million for distribution equivalent rights (“DERs”) on phantom unit awards.

The payment of quarterly cash distributions is subject to management’s evaluation of our financial condition, results of operations and cash flows in connection with such payments and Board approval.  In light of current economic conditions, management will evaluate any future increases in cash distributions on a quarterly basis. 


Note 9.  Revenues

We classify our revenues into sales of products and midstream services.  Product sales relate primarily to our various marketing activities whereas midstream services represent our other integrated businesses (i.e., gathering, processing, transportation, fractionation, storage and terminaling).  The following table presents our revenues by business segment, and further by revenue type, for the periods indicated:

   
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
NGL Pipelines & Services:
           
Sales of NGLs and related products
 
$
3,005.6
   
$
2,419.2
 
Segment midstream services:
               
Natural gas processing and fractionation
   
183.4
     
188.5
 
Transportation
   
274.6
     
265.0
 
Storage and terminals
   
119.9
     
95.4
 
Total segment midstream services
   
577.9
     
548.9
 
Total NGL Pipelines & Services
   
3,583.5
     
2,968.1
 
Crude Oil Pipelines & Services:
               
Sales of crude oil
   
1,838.9
     
1,696.9
 
Segment midstream services:
               
Transportation
   
208.8
     
218.4
 
Storage and terminals
   
117.8
     
123.6
 
Total segment midstream services
   
326.6
     
342.0
 
Total Crude Oil Pipelines & Services
   
2,165.5
     
2,038.9
 
Natural Gas Pipelines & Services:
               
Sales of natural gas
   
1,335.3
     
399.2
 
Segment midstream services:
               
Transportation
   
251.5
     
271.4
 
Total segment midstream services
   
251.5
     
271.4
 
Total Natural Gas Pipelines & Services
   
1,586.8
     
670.6
 
Petrochemical & Refined Products Services:
               
Sales of petrochemicals and refined products
   
1,598.9
     
1,597.5
 
Segment midstream services:
               
Fractionation and isomerization
   
53.5
     
35.8
 
Transportation, including marine logistics
   
116.7
     
134.9
 
Storage and terminals
   
50.4
     
36.7
 
Total segment midstream services
   
220.6
     
207.4
 
Total Petrochemical & Refined Products Services
   
1,819.5
     
1,804.9
 
Total consolidated revenues
 
$
9,155.3
   
$
7,482.5
 

Substantially all of our revenues are derived from contracts with customers as defined within ASC 606, Revenue from Contracts with Customers.
18


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Unbilled Revenue and Deferred Revenue

The following table provides information regarding our contract assets and contract liabilities at March 31, 2021:

Contract Asset
Location
 
Balance
 
Unbilled revenue (current amount)
Prepaid and other current assets
 
$
66.5
 
Total
   
$
66.5
 

Contract Liability
Location
 
Balance
 
Deferred revenue (current amount)
Other current liabilities
 
$
148.7
 
Deferred revenue (noncurrent)
Other long-term liabilities
   
216.7
 
Total
   
$
365.4
 

The following table presents significant changes in our unbilled revenue and deferred revenue balances for the three months ended March 31, 2021:

   
Unbilled
Revenue
   
Deferred
Revenue
 
Balance at December 31, 2020
 
$
18.8
   
$
343.5
 
Amount included in opening balance transferred to other accounts during period (1)
   
(4.5
)
   
(105.0
)
Amount recorded during period (2)
   
56.0
     
248.5
 
Amounts recorded during period transferred to other accounts (1)
   
(3.8
)
   
(120.0
)
Other changes
   
     
(1.6
)
Balance at March 31, 2021
 
$
66.5
   
$
365.4
 

(1)
Unbilled revenues are transferred to accounts receivable once we have an unconditional right to consideration from the customer.  Deferred revenues are recognized as revenue upon satisfaction of our performance obligation to the customer.
(2)
Unbilled revenue represents revenue that has been recognized upon satisfaction of a performance obligation, but cannot be contractually invoiced (or billed) to the customer at the balance sheet date until a future period.  Deferred revenue is recorded when payment is received from a customer prior to our satisfaction of the associated performance obligation.

Remaining Performance Obligations

The following table presents estimated fixed future consideration from revenue contracts that contain minimum volume commitments, deficiency and similar fees and the term of the contracts exceeds one year.  These amounts represent the revenues we expect to recognize in future periods from these contracts as of March 31, 2021.

Period
 
Fixed
Consideration
 
Nine Months Ended December 31, 2021
 
$
2,959.8
 
One Year Ended December 31, 2022
   
3,528.0
 
One Year Ended December 31, 2023
   
3,123.2
 
One Year Ended December 31, 2024
   
2,948.0
 
One Year Ended December 31, 2025
   
2,634.0
 
Thereafter  
   
12,928.8
 
Total
 
$
28,121.8
 



19


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 10.  Business Segments and Related Information

Our operations are reported under four business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) Petrochemical & Refined Products Services.  Our business segments are generally organized and managed according to the types of services rendered (or technologies employed) and products produced and/or sold.  

Financial information regarding these segments is evaluated regularly by our co-chief operating decision makers in deciding how to allocate resources and in assessing our operating and financial performance.  The co-principal executive officers of our general partner have been identified as our chief operating decision makers.  While these two officers evaluate results in a number of different ways, the business segment structure is the primary basis for which the allocation of resources and financial results are assessed.

The following information summarizes the assets and operations of each business segment:

Our NGL Pipelines & Services business segment includes our natural gas processing and related NGL marketing activities, NGL pipelines, NGL fractionation facilities, NGL and related product storage facilities, and NGL marine terminals.

Our Crude Oil Pipelines & Services business segment includes our crude oil pipelines, crude oil storage and marine terminals, and related crude oil marketing activities.  

Our Natural Gas Pipelines & Services business segment includes our natural gas pipeline systems that provide for the gathering, treating and transportation of natural gas.  This segment also includes our natural gas marketing activities.

Our Petrochemical & Refined Products Services business segment includes our (i) propylene production facilities, which include propylene fractionation units and a PDH facility, and related pipelines and marketing activities, (ii) butane isomerization complex and related deisobutanizer operations, (iii) octane enhancement, iBDH and HPIB production facilities, (iv) refined products pipelines, terminals and related marketing activities, (v) ethylene export terminal and related operations; and (vi) marine transportation business.

Segment Gross Operating Margin

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.  Gross operating margin is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.  Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests. Our calculation of gross operating margin may or may not be comparable to similarly titled measures used by other companies.

20


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following table presents our measurement of total segment gross operating margin for the periods presented.  The GAAP financial measure most directly comparable to total segment gross operating margin is operating income.

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Operating income
 
$
1,694.5
   
$
1,507.5
 
Adjustments to reconcile operating income to total segment gross operating margin
   (addition or subtraction indicated by sign):
               
Depreciation, amortization and accretion expense in operating costs and expenses (1)
   
496.1
     
482.8
 
Asset impairment charges in operating costs and expenses
   
65.5
     
1.6
 
Net losses attributable to asset sales and related matters in operating costs
   and expenses
   
10.9
     
0.1
 
General and administrative costs
   
56.3
     
55.5
 
     Non-refundable payments received from shippers attributable to make-up rights (2)
   
19.3
     
16.8
 
     Subsequent recognition of revenues attributable to make-up rights (3)
   
(39.3
)
   
(7.1
)
Total segment gross operating margin
 
$
2,303.3
   
$
2,057.2
 

(1)
Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin.
(2)
Since make-up rights entail a future performance obligation by the pipeline to the shipper, these receipts are recorded as deferred revenue for GAAP purposes; however, these receipts are included in gross operating margin in the period of receipt since they are nonrefundable to the shipper.
(3)
As deferred revenues attributable to make-up rights are subsequently recognized as revenue under GAAP, gross operating margin must be adjusted to remove such amounts to prevent duplication since the associated non-refundable payments were previously included in gross operating margin.

Gross operating margin by segment is calculated by subtracting segment operating costs and expenses from segment revenues, with both segment totals reflecting the adjustments noted in the preceding table, as applicable, and before the elimination of intercompany transactions.  The following table presents gross operating margin by segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Gross operating margin by segment:
           
NGL Pipelines & Services
 
$
1,086.4
   
$
1,042.0
 
Crude Oil Pipelines & Services
   
400.2
     
452.9
 
Natural Gas Pipelines & Services
   
535.2
     
283.8
 
Petrochemical & Refined Products Services
   
281.5
     
278.5
 
Total segment gross operating margin
 
$
2,303.3
   
$
2,057.2
 

21


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Summarized Segment Financial Information

Information by business segment, together with reconciliations to amounts presented on, or included in, our Unaudited Condensed Statements of Consolidated Operations, is presented in the following table:

 
 
Reportable Business Segments
             
 
 
NGL
Pipelines
& Services
   
Crude Oil
Pipelines
& Services
   
Natural Gas
Pipelines
& Services
   
Petrochemical
& Refined
Products
Services
   
Adjustments
and
Eliminations
   
Consolidated
Total
 
Revenues from third parties:
                                   
Three months ended March 31, 2021
 
$
3,580.7
   
$
2,157.0
   
$
1,583.9
   
$
1,819.5
   
$
   
$
9,141.1
 
Three months ended March 31, 2020
   
2,966.3
     
2,027.7
     
667.6
     
1,804.9
     
     
7,466.5
 
Revenues from related parties:
                                               
Three months ended March 31, 2021
   
2.8
     
8.5
     
2.9
     
     
     
14.2
 
Three months ended March 31, 2020
   
1.8
     
11.2
     
3.0
     
     
     
16.0
 
Intersegment and intrasegment revenues:
                                               
Three months ended March 31, 2021
   
13,088.6
     
7,420.1
     
145.8
     
6,234.2
     
(26,888.7
)
   
 
Three months ended March 31, 2020
   
5,780.7
     
7,840.3
     
115.1
     
808.1
     
(14,544.2
)
   
 
Total revenues:
                                               
Three months ended March 31, 2021
   
16,672.1
     
9,585.6
     
1,732.6
     
8,053.7
     
(26,888.7
)
   
9,155.3
 
Three months ended March 31, 2020
   
8,748.8
     
9,879.2
     
785.7
     
2,613.0
     
(14,544.2
)
   
7,482.5
 
Equity in income (loss) of unconsolidated affiliates:
                                               
Three months ended March 31, 2021
   
28.1
     
118.9
     
1.4
     
0.5
     
     
148.9
 
Three months ended March 31, 2020
   
32.7
     
107.3
     
1.6
     
(0.8
)
   
     
140.8
 

Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates.  Our consolidated revenues reflect the elimination of intercompany transactions.  Substantially all of our consolidated revenues are earned in the U.S. and derived from a wide customer base.

Information by business segment, together with reconciliations to our Unaudited Condensed Consolidated Balance Sheet totals, is presented in the following table:

 
 
Reportable Business Segments
             
 
 
NGL
Pipelines
& Services
   
Crude Oil
Pipelines
& Services
   
Natural Gas
Pipelines
& Services
   
Petrochemical
& Refined
Products
Services
   
Adjustments
and
Eliminations
   
Consolidated
Total
 
Property, plant and equipment, net:
(see Note 4)
                                   
At March 31, 2021
 
$
17,121.5
   
$
7,015.1
   
$
8,355.8
   
$
7,554.7
   
$
2,055.3
   
$
42,102.4
 
At December 31, 2020
   
17,128.3
     
6,982.6
     
8,465.8
     
7,528.4
     
1,807.7
     
41,912.8
 
Investments in unconsolidated affiliates:
(see Note 5)
                                               
At March 31, 2021
   
664.6
     
1,749.5
     
32.5
     
3.2
     
     
2,449.8
 
At December 31, 2020
   
671.6
     
1,723.7
     
31.4
     
2.5
     
     
2,429.2
 
Intangible assets, net: (see Note 6)
                                               
At March 31, 2021
   
328.1
     
1,918.8
     
881.2
     
131.7
     
     
3,259.8
 
At December 31, 2020
   
334.1
     
1,936.6
     
905.0
     
133.4
     
     
3,309.1
 
Goodwill: (see Note 6)
                                               
At March 31, 2021
   
2,651.7
     
1,841.0
     
     
956.2
     
     
5,448.9
 
At December 31, 2020
   
2,651.7
     
1,841.0
     
     
956.2
     
     
5,448.9
 
Segment assets:
                                               
At March 31, 2021
   
20,765.9
     
12,524.4
     
9,269.5
     
8,645.8
     
2,055.3
     
53,260.9
 
At December 31, 2020
   
20,785.7
     
12,483.9
     
9,402.2
     
8,620.5
     
1,807.7
     
53,100.0
 

22


ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Revenue and Expense Information

The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:

 
 
For the Three Months
Ended March 31,