Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three and nine months
ended September 30, 2022.
Enterprise reported net income attributable to common
unitholders of $1.4 billion, or $0.62 per unit on a fully diluted
basis, for the third quarter of 2022, compared to $1.2 billion, or
$0.52 per unit on a fully diluted basis, for the third quarter of
2021. Net income for the third quarters of 2022 and 2021 was
reduced by non-cash, asset impairment charges of $29 million, or
$0.01 per fully diluted unit.
Distributable Cash Flow (“DCF”), excluding proceeds from asset
sales, increased 16 percent to $1.9 billion for the third quarter
of 2022 compared to $1.6 billion for the third quarter of 2021.
Distributions declared with respect to the third quarter of 2022
increased 5.6 percent to $0.475 per unit, or $1.90 per unit
annualized, compared to distributions declared for the third
quarter of 2021. DCF provided 1.8 times coverage of the
distribution declared with respect to the third quarter of 2022.
Enterprise retained $826 million of DCF for the third quarter of
2022, and $3.3 billion for the twelve months ended September 30,
2022.
Adjusted cash flow provided by operating activities (“Adjusted
CFFO”) was $2.0 billion for the third quarter of 2022 compared to
$1.7 billion for the third quarter of 2021. Enterprise’s payout
ratio of distributions to common unitholders and partnership unit
buybacks for the twelve months ended September 30, 2022, was 56
percent of Adjusted CFFO. For the twelve months ended September 30,
2022, Adjusted Free Cash Flow (“Adjusted FCF”) was $3.0 billion.
Excluding $3.2 billion used for the acquisition of Navitas
Midstream Partners, LLC (“Navitas Midstream”) in February 2022, the
partnership’s payout ratio of Adjusted FCF for this period was 70
percent.
Third Quarter Highlights
Three Months Ended
September 30,
($ in millions, except per unit
amounts)
2022
2021
Operating income
$
1,712
$
1,513
Net income (1)
$
1,392
$
1,182
Fully diluted earnings per common unit
(1)
$
0.62
$
0.52
Total gross operating margin (2)
$
2,321
$
2,089
Adjusted EBITDA (2)
$
2,258
$
2,015
Adjusted CFFO (2)
$
1,950
$
1,722
Adjusted FCF (2)
$
1,476
$
1,191
DCF (2)
$
1,868
$
1,613
(1)
Net income and fully diluted earnings per
common unit for the third quarters of 2022 and 2021 include
non-cash, asset impairment charges of $29 million, or $0.01 per
unit.
(2)
Total gross operating margin, adjusted
earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”), Adjusted CFFO, Adjusted 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 common unitholders for the third quarters of 2022
and 2021 included $48 million and $47 million, respectively, of
non-cash, mark-to-market (“MTM”) net gains on financial instruments
used in our hedging activities.
- Capital investments were $474 million in the third quarter of
2022, which included $397 million of organic growth capital
expenditures and $77 million for sustaining capital expenditures.
For the first nine months of 2022, capital investments were $4.4
billion, which included $3.2 billion for the acquisition of Navitas
Midstream, $973 million of growth capital expenditures and $234
million for sustaining capital expenditures.
- During the third quarter of 2022, Enterprise repurchased
approximately 3.9 million of its common units on the open market
for approximately $95 million. For the nine months ended September
30, 2022, the partnership repurchased approximately 5.3 million
common units for approximately $130 million. Including these
purchases, the partnership has utilized 31 percent of its
authorized $2.0 billion unit buyback program.
Third Quarter Volume
Highlights
Three Months Ended
September 30,
2022
2021
NGL, crude oil, refined products &
petrochemical
pipeline volumes (million BPD)
6.7
6.3
Marine terminal volumes (million BPD)
1.7
1.5
Natural gas pipeline volumes (TBtus/d)
17.5
14.6
NGL fractionation volumes (million
BPD)
1.4
1.3
Propylene plant production volumes
(MBPD)
101
96
Fee-based natural gas processing volumes
(Bcf/d)
5.2
4.0
Equity NGL-equivalent production volumes
(MBPD)
182
150
As used in this press release, “NGL” means
natural gas liquids, “BPD” means barrels per day, “MBPD” means
thousand barrels per day, “MMcf/d” means million cubic feet per
day, “Bcf/d” means billion cubic feet per day, “BBtus/d” means
billion British thermal units per day and “TBtus/d” means trillion
British thermal units per day.
“Enterprise reported strong financial results for the third
quarter of 2022,” said A.J. “Jim” Teague, co-chief executive
officer of Enterprise’s general partner. “Our third quarter
performance was very similar to our record second quarter of 2022.
Enterprise reported a $232 million increase in gross operating
margin for the third quarter of 2022 compared to the third quarter
of last year. These results were primarily driven by contributions
from the partnership’s Midland Basin natural gas gathering and
processing business (acquired in February 2022) and higher gross
operating margin from our natural gas processing, octane
enhancement and natural gas pipeline businesses. These businesses
more than offset a $149 million decrease in gross operating margin
from our propylene business, primarily due to lower average
propylene sales margins, and a $59 million decrease in gross
operating margin from our EFS Midstream System due to the
expiration of minimum volume commitments in July 2022.”
“During the third quarter, our pipelines transported a record
11.3 million barrels per day equivalent of NGLs, crude oil, natural
gas, refined products and petrochemicals. Enterprise’s natural gas
pipelines transported a record 17.5 trillion Btus per day for the
third quarter of 2022. The partnership also set quarterly
volumetric records for NGL fractionation, ethane export, butane
isomerization and fee-based natural gas processing volumes,” stated
Teague.
“Enterprise generated $1.9 billion of DCF for the third quarter
of 2022 that provided 1.8 times coverage of the cash distribution
for the quarter. We retained approximately $826 million of excess
DCF to reinvest in the partnership, reduce debt and buy back common
units. We have $5.5 billion of organic growth projects under
construction. These major projects remain on-time and on-budget,”
said Teague.
Review of Third Quarter 2022
Results
Enterprise reported an 11 percent increase in total gross
operating margin to $2.3 billion for the third quarter of 2022
compared to $2.1 billion for the third quarter of 2021. Below is a
detailed review of each business segment’s quarterly
performance.
NGL Pipelines & Services – Gross operating margin
from the NGL Pipelines & Services segment was $1.3 billion for
the third quarter of 2022, a 27 percent increase from $1.0 billion
reported for the third quarter of 2021.
Enterprise’s natural gas processing and related NGL marketing
business reported gross operating margin of $485 million for the
third quarter of 2022, an 84 percent increase over gross operating
margin of $264 million for the third quarter of 2021. Gross
operating margin for the third quarters of 2022 and 2021 included
non-cash, MTM gains of $18 million and $38 million,
respectively.
The partnership’s Midland Basin natural gas processing
facilities, acquired in February 2022, contributed $128 million of
gross operating margin in the third quarter of 2022 on 972 MMcf/d
of fee-based natural gas processing volumes and 57 MBPD of equity
NGL-equivalent production volumes.
The partnership’s Delaware Basin natural gas processing plants
reported $93 million of gross operating margin this quarter
compared to $57 million for the third quarter of 2021. The $36
million net increase was primarily due to higher average processing
margins, including the impact of hedging activities, and higher
fee-based natural gas processing volumes of 180 MMcf/d, partially
offset by lower equity NGL-equivalent production volumes of 26
MBPD.
Gross operating margin from Enterprise’s South Texas natural gas
processing facilities increased $12 million this quarter compared
to the same quarter last year, primarily due to higher average
processing margins, including the impact of hedging activities.
Fee-based natural gas processing volumes at these facilities
increased 64 MMcf/d for the third quarter of 2022 compared to the
same quarter last year.
In general, higher NGL prices contributed to an increase in
average processing margins for Enterprise’s natural gas processing
business. The weighted-average indicative NGL price for the third
quarter of 2022 increased 13 percent to $0.95 per gallon from $0.84
per gallon for the third quarter of 2021. Total fee-based natural
gas processing volumes were a record 5.2 Bcf/d in the third quarter
of 2022 compared to 4.0 Bcf/d in the third quarter of 2021. Equity
NGL-equivalent production volumes were 182 MBPD for the third
quarter of 2022 compared to 150 MBPD for the same quarter last
year.
Gross operating margin from NGL marketing activities increased a
net $46 million for the third quarter of 2022 compared to the third
quarter of 2021, primarily due to higher average sales margins and
sales volumes, partially offset by lower non-cash, MTM
earnings.
Gross operating margin from the partnership’s NGL pipelines and
storage business for the third quarter of 2022 increased to $611
million compared to $570 million for the third quarter of 2021. NGL
pipeline transportation volumes increased to 3.7 million BPD in the
third quarter of 2022 from 3.5 million BPD in the third quarter of
2021, and NGL marine terminal volumes increased to 747 MBPD in the
third quarter of 2022 from 664 MBPD in the third quarter of
2021.
Gross operating margin from the partnership’s Eastern ethane
pipelines, which include our ATEX and Aegis pipelines, increased a
combined $39 million for the third quarter of this year compared to
the third quarter of 2021, primarily due to higher transportation
volumes of 30 MBPD on the ATEX Pipeline as well as higher
deficiency fees.
A number of Enterprise’s NGL pipelines, including the
Mid-America (“MAPL”) and Seminole NGL Pipeline Systems, Shin Oak
NGL Pipeline and Chaparral NGL pipeline, serve the Permian Basin
and Rocky Mountain regions. On a combined basis, these pipelines
reported a net $25 million decrease in gross operating margin for
the third quarter of 2022 compared to the third quarter of 2021,
primarily due to lower deficiency fees, including the impacts of
certain contracts associated with the Rocky Mountain pipeline
segment of the MAPL system that terminated during the third quarter
of 2021, and higher utility and other operating costs, partially
offset by higher transportation volumes of 34 MBPD, net to our
interest.
The Enterprise Hydrocarbons Terminal (“EHT”) had a $18 million
decrease in gross operating margin for the third quarter of this
year compared to the third quarter of 2021, primarily due to lower
average loading fees. LPG export volumes at EHT increased 49 MBPD
this quarter compared to the third quarter of last year. The
partnership’s Morgan’s Point Ethane Export Terminal reported a $16
million increase in gross operating margin, primarily attributable
to higher average loading fees and a 34 MBPD increase in export
volumes.
Gross operating margin from the partnership’s NGL storage
complex in Chambers County, Texas increased $11 million for the
third quarter of 2022 compared to the third quarter of last year,
primarily due to higher storage revenues.
Enterprise’s NGL fractionation business reported gross operating
margin of $200 million for the third quarter of 2022 compared to
$189 million for the third quarter of 2021. Total NGL fractionation
volumes were a record 1.4 million BPD in the third quarter of 2022
compared to 1.3 million BPD for the third quarter of 2021.
The partnership’s gasoline hydrotreater, which commenced
operations in October 2021 contributed $9 million of gross
operating margin this quarter.
Enterprise’s Norco NGL fractionator in Louisiana reported an $8
million increase in gross operating margin for the third quarter of
2022 compared to the third quarter of 2021, primarily due to higher
fractionation volumes of 23 MBPD. The Norco NGL fractionator was
down for 29 days during the third quarter of 2021 due to damages
sustained from Hurricane Ida.
Gross operating margin from Enterprise’s Chambers County NGL
fractionation complex decreased a net $11 million in the third
quarter of 2022 compared to the third quarter of 2021 primarily due
to higher utility and other operating costs, partially offset by a
66 MBPD, net to our interest, increase in fractionation volumes and
higher average fractionation fees.
Crude Oil Pipelines & Services – Gross operating
margin from the Crude Oil Pipelines & Services segment was $415
million for the third quarter of 2022 compared to $423 million for
the third quarter of 2021. Gross operating margin for the third
quarters of 2022 and 2021 included non-cash, MTM gains related to
hedging activities of $31 million and $11 million, respectively.
Total crude oil pipeline transportation volumes were 2.2 million
BPD for the third quarter of 2022 compared to 2.0 million BPD for
the third quarter of 2021. Total crude oil marine terminal volumes
increased 40 percent to 824 MBPD this quarter from 588 MBPD for the
third quarter of last year.
Gross operating margin from Enterprise’s EFS Midstream System
decreased $59 million this quarter compared to the third quarter of
2021, primarily due to lower deficiency fees as a result of the
expiration of minimum volume commitments associated with certain
long-term gathering agreements entered into at the time Enterprise
acquired the system in July 2015. The EFS Midstream System will
continue to transport volumes produced from dedicated acreage
through the remaining term of these agreements.
Enterprise’s share of gross operating margin associated with the
Seaway Pipeline decreased $19 million for the third quarter of this
year compared to the same quarter in 2021, primarily due to lower
average transportation fees. Transportation volumes on our Seaway
Pipeline increased 96 MBPD, net to our interest.
Gross operating margin from Enterprise’s Midland-to-ECHO
Pipeline System decreased a net $5 million for the third quarter of
2022 compared to the third quarter of 2021, primarily due to lower
average sales margins, partially offset by higher transportation
volumes of 89 MBPD, net to our interest, and higher average
transportation fees.
Gross operating margin from other crude oil marketing activities
increased $46 million, primarily due to higher average sales
margins and higher non-cash MTM earnings.
Gross operating margin from the partnership’s West Texas
Pipeline System increased $21 million, primarily due to higher
ancillary service and other revenues. Transportation volumes
increased 5 MBPD on this pipeline system.
Gross operating margin from Enterprise’s South Texas Crude Oil
Pipeline System increased a net $12 million, primarily due to
higher ancillary service and other revenues, partially offset by
lower average transportation fees. Transportation volumes increased
7 MBPD on this pipeline system.
Natural Gas Pipelines & Services – Gross operating
margin from the Natural Gas Pipelines & Services segment
increased 25 percent to $278 million for the third quarter of 2022
from $223 million for the third quarter of 2021. Total natural gas
transportation volumes increased 20 percent to a record 17.5
TBtus/d this quarter compared to 14.6 TBtus/d for the same quarter
of 2021.
Gross operating margin from the partnership’s Texas Intrastate
System increased $40 million this quarter compared to the third
quarter of 2021, primarily due to higher average transportation
fees, higher ancillary and other revenues and higher capacity
reservation revenues. Transportation volumes for the Texas
Intrastate System increased 421 BBtus/d to 5.6 TBtus/d this
quarter.
On a combined basis, gross operating margin from the
partnership’s Jonah Gathering System, Piceance Basin Gathering
System, and San Juan Gathering System in the Rocky Mountains
increased $17 million for the third quarter of 2022 compared to the
third quarter of 2021, primarily due to higher average gathering
fees. Gathering volumes on these systems decreased a combined 139
BBtus/d this quarter compared to the same quarter of 2021.
Enterprise’s Midland Basin Gathering System, acquired in
February 2022, generated $15 million of gross operating margin this
quarter on gathering volumes of 1.3 TBtus/d.
Gross operating margin from Enterprise’s natural gas marketing
business decreased $22 million, primarily due to lower average
sales margins.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment was $353 million for the third quarter of 2022
compared to $411 million for the third quarter of 2021. Total
segment pipeline transportation volumes were 758 MBPD for the third
quarter of 2022 compared to 782 MBPD for the third quarter of 2021.
Total refined products and petrochemicals marine terminal volumes
were 166 MBPD this quarter compared to 264 MBPD for the same
quarter of 2021.
Gross operating margin from propylene production and related
activities decreased $149 million for the third quarter of 2022
compared to the third quarter of 2021. Gross operating margin from
the partnership’s Chambers County propylene production facilities
decreased a net $141 million for the third quarter of 2022 compared
to the third quarter of 2021 primarily due to lower average
propylene sales margins, lower average processing fees and higher
utility and other operating costs, partially offset by higher
propylene sales volumes. Total propylene and associated by-product
production volumes at these facilities increased 6 MBPD this
quarter compared to the same quarter of 2021.
The octane enhancement and related operations business reported
a net $59 million increase in gross operating margin this quarter
compared to the third quarter of 2021, primarily due to higher
sales margins, partially offset by higher utility and other
operating costs.
The partnership’s ethylene exports and related activities
generated a $10 million increase in gross operating margin for the
third quarter of 2022, primarily due to higher average loading
fees, a 24 MBPD increase in transportation volumes and higher
storage and other revenues.
Enterprise’s refined products pipelines and related activities
reported a net $8 million increase in gross operating margin for
the third quarter of 2022 compared to the third quarter of 2021,
primarily due to higher average sales margins from refined products
marketing, partially offset by lower transportation volumes of 69
MBPD and related fees from the refined products pipelines.
Gross operating margin for the marine transportation and other
services business increased $12 million for the third quarter of
2022 compared to the same period in 2021, primarily due to higher
average fees and fleet utilization rates.
Capitalization
Total debt principal outstanding at September 30, 2022 was $29.5
billion, including $2.3 billion of junior subordinated notes to
which the nationally recognized debt rating agencies ascribe
partial equity content. At September 30, 2022, Enterprise had
consolidated liquidity of approximately $3.3 billion, comprised of
available borrowing capacity under its revolving credit facilities
and unrestricted cash on hand.
At September 30, 2022, approximately 93 percent of Enterprise’s
debt had fixed interest rates. The debt portfolio had a
weighted-average maturity of approximately 20 years with a
weighted-average interest rate of 4.4 percent for debt outstanding
at September 30, 2022.
Capital Investments
Total capital investments in the third quarter of 2022 were $474
million, which included $77 million of sustaining capital
expenditures. For the first nine months of 2022, Enterprise’s
capital investments totaled $4.4 billion, which included $3.2
billion for the acquisition of Navitas Midstream, $973 million for
organic growth capital projects and $234 million of sustaining
capital expenditures.
Our current expectation for growth capital investments
associated with sanctioned projects for 2022 and 2023 is
approximately $1.6 billion and $2.0 billion, respectively. We
currently expect sustaining capital expenditures to be
approximately $350 million for 2022.
Conference Call to Discuss Third
Quarter 2022 Earnings
Today, Enterprise will host a conference call to discuss third
quarter 2022 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,
Adjusted CFFO, FCF, Adjusted 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. Services
include: natural gas gathering, treating, processing,
transportation and storage; NGL transportation, fractionation,
storage and marine terminals; crude oil gathering, transportation,
storage and marine terminals; petrochemical and refined products
transportation, storage, and marine terminals and related services;
and a marine transportation business that operates on key United
States inland and intracoastal waterway systems. The partnership’s
assets include more than 50,000 miles of pipelines; over 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, direct
and indirect effects of the COVID-19 pandemic, insufficient cash
from operations, adverse market conditions, governmental
regulations and other factors discussed in Enterprise’s filings
with the U.S. Securities and Exchange Commission. If any of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary
materially from those expected. The partnership disclaims any
intention or obligation to update publicly or reverse such
statements, whether as a result of new information, future events
or otherwise.
Enterprise Products Partners L.P.
Exhibit A
Condensed Statements of Consolidated
Operations – UNAUDITED
($ in millions, except per unit
amounts)
For the Three Months Ended
September 30,
For the Nine Months
EndedSeptember 30,
For the Twelve
Months Ended
September 30,
2022
2021
2022
2021
2022
Revenues
$
15,468
$
10,832
$
44,536
$
29,437
$
55,906
Costs and
expenses:
Operating costs and expenses
13,812
9,409
39,550
25,029
49,599
General and administrative costs
55
47
179
155
233
Total costs and expenses
13,867
9,456
39,729
25,184
49,832
Equity in income of
unconsolidated affiliates
111
137
335
447
471
Operating
income
1,712
1,513
5,142
4,700
6,545
Other income
(expense):
Interest expense
(309
)
(316
)
(937
)
(955
)
(1,265
)
Other, net
7
1
12
3
14
Total other expense, net
(302
)
(315
)
(925
)
(952
)
(1,251
)
Income before income
taxes
1,410
1,198
4,217
3,748
5,294
Provision for income taxes
(18
)
(16
)
(54
)
(57
)
(67
)
Net
income
1,392
1,182
4,163
3,691
5,227
Net income
attributable to noncontrolling interests
(31
)
(28
)
(93
)
(82
)
(128
)
Net income
attributable to preferred units
(1
)
(1
)
(3
)
(3
)
(4
)
Net income
attributable to common unitholders
$
1,360
$
1,153
$
4,067
$
3,606
$
5,095
Per common unit data
(fully diluted):
Earnings per common unit
$
0.62
$
0.52
$
1.85
$
1.64
$
2.32
Average common units outstanding (in
millions)
2,199
2,204
2,200
2,204
2,200
Supplemental
financial data:
Net cash flow provided by operating
activities
$
1,050
$
2,370
$
5,314
$
6,387
$
7,440
Cash flows used in investing
activities
$
441
$
492
$
4,309
$
1,721
$
4,723
Cash flows used in financing
activities
$
751
$
131
$
3,715
$
3,466
$
4,820
Total debt principal outstanding at end of
period
$
29,476
$
29,821
$
29,476
$
29,821
$
29,476
Non-GAAP Distributable Cash Flow (1)
$
1,868
$
1,613
$
5,723
$
4,949
$
7,382
Non-GAAP Adjusted EBITDA (2)
$
2,258
$
2,015
$
6,933
$
6,269
$
9,045
Non-GAAP Adjusted Cash flow from
operations (3)
$
1,950
$
1,722
$
5,996
$
5,340
$
7,803
Non-GAAP Free Cash Flow (4)
$
576
$
1,839
$
894
$
4,574
$
2,616
Non-GAAP Adjusted Free Cash Flow (4)
$
1,476
$
1,191
$
1,576
$
3,527
$
2,979
Gross operating margin by segment:
NGL Pipelines & Services
$
1,296
$
1,023
$
3,848
$
3,207
$
4,957
Crude Oil Pipelines & Services
415
423
1,237
1,242
1,675
Natural Gas Pipelines & Services
278
223
727
960
922
Petrochemical & Refined Products
Services
353
411
1,178
1,019
1,516
Total segment gross operating margin
(5)
2,342
2,080
6,990
6,428
9,070
Net adjustment for shipper make-up rights
(6)
(21
)
9
(49
)
46
(42
)
Non-GAAP total gross operating margin
(7)
$
2,321
$
2,089
$
6,941
$
6,474
$
9,028
(1)
See Exhibit F for reconciliation to GAAP
net cash flow provided by operating activities.
(2)
See Exhibit G for reconciliation to GAAP
net cash flow provided by operating activities.
(3)
See Exhibit E for reconciliation to GAAP
net cash flow provided by operating activities.
(4)
See Exhibit D for reconciliation to GAAP
net cash flow provided by operating activities.
(5)
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”).
(6)
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.
(7)
See Exhibit H for reconciliation to GAAP
total operating income.
Enterprise Products Partners L.P.
Exhibit B
Selected Operating Data –
UNAUDITED
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
For the Twelve
Months Ended
September 30,
2022
2021
2022
2021
2022
Selected operating
data: (1)
NGL Pipelines & Services, net:
NGL pipeline transportation volumes
(MBPD)
3,702
3,481
3,650
3,389
3,608
NGL marine terminal volumes (MBPD)
747
664
713
661
697
NGL fractionation volumes (MBPD)
1,371
1,254
1,341
1,229
1,338
Equity NGL-equivalent production volumes
(MBPD) (2)
182
150
188
169
194
Fee-based natural gas processing volumes
(MMcf/d) (3,4)
5,202
3,990
5,091
4,064
5,056
Crude Oil Pipelines & Services,
net:
Crude oil pipeline transportation volumes
(MBPD)
2,216
2,047
2,204
2,009
2,234
Crude oil marine terminal volumes
(MBPD)
824
588
799
642
761
Natural Gas Pipelines & Services,
net:
Natural gas pipeline transportation
volumes (BBtus/d) (5)
17,514
14,556
16,935
14,144
16,653
Petrochemical & Refined Products
Services, net:
Propylene production volumes (MBPD)
101
96
105
98
105
Butane isomerization volumes (MBPD)
122
108
109
85
103
Standalone DIB processing volumes
(MBPD)
165
153
159
155
157
Octane enhancement and related plant sales
volumes (MBPD) (6)
40
39
39
33
37
Pipeline transportation volumes, primarily
refined products
and petrochemicals (MBPD)
758
782
750
889
742
Refined products and petrochemicals marine
terminal volumes (MBPD) (7)
166
264
200
243
200
Total, net:
NGL, crude oil, petrochemical and refined
products
pipeline transportation volumes (MBPD)
6,676
6,310
6,604
6,287
6,584
Natural gas pipeline transportation
volumes (BBtus/d)
17,514
14,556
16,935
14,144
16,653
Equivalent pipeline transportation volumes
(MBPD) (8)
11,285
10,141
11,061
10,009
10,966
NGL, crude oil, refined products and
petrochemical
marine terminal volumes (MBPD)
1,737
1,516
1,712
1,546
1,658
(1)
Operating rates are reported on a net
basis, which take into account our ownership interests in certain
joint ventures and include volumes for newly constructed assets
from the related in-service dates and for recently purchased assets
from the related acquisition dates.
(2)
Primarily represents the NGL and
condensate volumes we earn and take title to in connection with our
processing activities. The total equity NGL-equivalent production
volumes also include residue natural gas volumes from our natural
gas processing business.
(3)
Volumes reported correspond to the revenue
streams earned by our gas plants. “MMcf/d” means million cubic feet
per day.
(4)
Fee-based natural gas processing volumes
are measured at either the wellhead or plant inlet in MMcf/d.
(5)
“BBtus/d” means billion British thermal
units per day.
(6)
Reflects aggregate sales volumes for our
octane enhancement and isobutane dehydrogenation (“iBDH”)
facilities located at our Chambers County complex and our
high-purity isobutylene production facility located adjacent to the
Houston Ship Channel.
(7)
In addition to exports of refined
products, these amounts include loading volumes at our ethylene
export terminal.
(8)
Represents total NGL, crude oil, refined
products and petrochemical transportation volumes plus equivalent
energy volumes where 3.8 million British thermal units (“MMBtus”)
of natural gas transportation volumes are equivalent to one barrel
of NGLs transported.
Enterprise Products Partners L.P.
Exhibit C
Selected Commodity Price Information –
UNAUDITED
Polymer
Refinery
Natural
Normal
Natural
Grade
Grade
Gas,
Ethane,
Propane,
Butane,
Isobutane,
Gasoline,
Propylene,
Propylene,
$/MMBtu (1)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/gallon (2)
$/pound (3)
$/pound (3)
2021 by quarter:
First Quarter
$2.71
$0.24
$0.89
$0.94
$0.93
$1.33
$0.73
$0.44
Second Quarter
$2.83
$0.26
$0.87
$0.97
$0.98
$1.46
$0.67
$0.27
Third Quarter
$4.02
$0.35
$1.16
$1.34
$1.34
$1.62
$0.82
$0.36
Fourth Quarter
$5.84
$0.39
$1.24
$1.46
$1.46
$1.82
$0.66
$0.33
2021 Averages
$3.85
$0.31
$1.04
$1.18
$1.18
$1.56
$0.72
$0.35
2022 by quarter:
First Quarter
$4.96
$0.40
$1.30
$1.59
$1.60
$2.21
$0.63
$0.39
Second Quarter
$7.17
$0.59
$1.24
$1.50
$1.68
$2.17
$0.61
$0.40
Third Quarter
$8.20
$0.55
$1.08
$1.19
$1.44
$1.72
$0.47
$0.28
2022 Averages
$6.78
$0.51
$1.21
$1.43
$1.57
$2.03
$0.57
$0.36
(1)
Natural gas prices are based on Henry-Hub
Inside FERC commercial index prices as reported by Platts, which is
a division of S&P Global, 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 by IHS Markit (“IHS”).
(3)
Polymer grade propylene prices represent
average contract pricing for such product as reported by IHS.
Refinery grade propylene prices represent weighted-average spot
prices for such product as reported by IHS.
WTI
Midland
Houston
LLS
Crude Oil,
Crude Oil,
Crude Oil
Crude Oil,
$/barrel (1)
$/barrel (2)
$/barrel (2)
$/barrel (3)
2021 by quarter:
First Quarter
$57.84
$59.00
$59.51
$59.99
Second Quarter
$66.07
$66.41
$66.90
$67.95
Third Quarter
$70.56
$70.74
$71.17
$71.51
Fourth Quarter
$77.19
$77.82
$78.27
$78.41
2021 Averages
$67.92
$68.49
$68.96
$69.47
2022 by quarter:
First Quarter
$94.29
$96.43
$96.77
$96.77
Second Quarter
$108.41
$109.66
$109.96
$110.17
Third Quarter
$91.56
$93.41
$93.77
$94.17
2022 Averages
$98.09
$99.83
$100.17
$100.37
(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 $0.95 per
gallon during the third quarter of 2022 versus $0.84 per gallon
during the third quarter of 2021. Fluctuations in our consolidated
revenues and cost of sales amounts are explained in large part by
changes in energy commodity prices. An increase in our consolidated
marketing revenues due to higher energy commodity sales prices may
not result in an increase in gross operating margin or cash
available for distribution, since our consolidated cost of sales
amounts would also be expected to increase due to comparable
increases in the purchase prices of the underlying energy
commodities. The same type of relationship would be true in the
case of lower energy commodity sales prices and purchase costs.
Enterprise Products Partners L.P.
Exhibit D
Free Cash Flow and Adjusted Free Cash
Flow – UNAUDITED
($ in millions)
For the Three Months
Ended September 30,
For the Nine Months
Ended September
30,
2022
2021
2022
2021
Free
Cash Flow (“FCF”) and Adjusted FCF
Net cash flow provided by operating
activities (GAAP)
$
1,050
$
2,370
$
5,314
$
6,387
Adjustments to reconcile net cash flow
provided by operating activities to FCF and
Adjusted FCF (addition or subtraction
indicated by sign):
Cash used in investing activities
(441
)
(492
)
(4,309
)
(1,721
)
Cash contributions from noncontrolling
interests
–
5
4
23
Cash distributions paid to noncontrolling
interests
(33
)
(44
)
(115
)
(115
)
FCF (non-GAAP)
$
576
$
1,839
$
894
$
4,574
Net effect of changes in operating
accounts, as applicable
900
(648
)
682
(1,047
)
Adjusted FCF (non-GAAP)
$
1,476
$
1,191
$
1,576
$
3,527
For the Twelve Months
Ended September 30,
2022
2021
Net cash flow provided by operating
activities (GAAP)
$
7,440
$
7,986
Adjustments to reconcile net cash flow
provided by operating activities to FCF and
Adjusted FCF (addition or subtraction
indicated by sign):
Cash used in investing activities
(4,723
)
(2,277
)
Cash contributions from noncontrolling
interests
53
33
Cash distributions paid to noncontrolling
interests
(154
)
(148
)
FCF (non-GAAP)
$
2,616
$
5,594
Net effect of changes in operating
accounts, as applicable
363
(971
)
Adjusted FCF (non-GAAP)
$
2,979
$
4,623
FCF is a non-GAAP measure of how much cash a
business generates after accounting for capital expenditures such
as plants or pipelines. Additionally, Adjusted FCF is a non-GAAP
measure of how much cash a business generates, excluding the net
effect of changes in operating accounts, after accounting for
capital expenditures. 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. We believe that Adjusted FCF
is also important to traditional investors for the same reasons as
FCF, without regard for fluctuations caused by timing of when
amounts earned or incurred were collected, received or paid from
period to period. Since we partner with other companies to fund
certain capital projects of our consolidated subsidiaries, our
determination of FCF and Adjusted FCF appropriately reflect the
amount of cash contributed from and distributed to noncontrolling
interests.
Enterprise Products Partners L.P.
Exhibit E
Adjusted Cash flow from operations –
UNAUDITED
($ in millions)
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
For the Twelve Months
Ended September 30,
2022
2021
2022
2021
2022
2021
Adjusted
Cash flow from operations (“Adjusted CFFO”)
Net cash flow provided by operating
activities (GAAP)
$
1,050
$
2,370
$
5,314
$
6,387
$
7,440
$
7,986
Adjustments to reconcile net cash flow
provided by operating activities to
Adjusted Cash flow from operations
(addition or subtraction indicated by sign):
Net effect of changes in operating
accounts, as applicable
900
(648
)
682
(1,047
)
363
(971
)
Adjusted CFFO (non-GAAP)
$
1,950
$
1,722
$
5,996
$
5,340
$
7,803
$
7,015
Adjusted CFFO is a non-GAAP measure that
represents net cash flow provided by operating activities before
the net effect of changes in operating accounts, as summarized from
the Company’s Unaudited Condensed Consolidated Statements of Cash
Flows. We believe that it is important to consider this non-GAAP
measure as it can often be a better way to measure the amount of
cash generated from our operations that can be used to fund our
capital investments or return value to our investors through cash
distributions and buybacks, without regard for fluctuations caused
by timing of when amounts earned or incurred were collected,
received or paid from period to period.
Enterprise Products Partners L.P.
Exhibit F
Distributable Cash Flow –
UNAUDITED
($ in millions)
For the Twelve
Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2022
2021
2022
2021
2022
Distributable Cash Flow (“DCF”)
Net income attributable to common
unitholders (GAAP)
$
1,360
$
1,153
$
4,067
$
3,606
$
5,095
Adjustments to net income attributable to
common
unitholders to derive DCF (addition or
subtraction indicated by sign):
Depreciation, amortization and accretion
expenses
558
535
1,675
1,594
2,221
Cash distributions received from
unconsolidated affiliates
132
148
411
447
554
Equity in income of unconsolidated
affiliates
(111
)
(137
)
(335
)
(447
)
(471
)
Asset impairment charges
29
29
48
113
168
Change in fair market value of derivative
instruments
(48
)
(47
)
46
(86
)
105
Deferred income tax expense
8
9
24
33
31
Sustaining capital expenditures (1)
(77
)
(70
)
(234
)
(331
)
(333
)
Other, net (2)
11
(15
)
1
(113
)
(14
)
Operational DCF
1,862
1,605
5,703
4,816
7,356
Proceeds from asset sales
6
8
20
58
26
Monetization of interest rate derivative
instruments accounted
for as cash flow hedges
–
–
–
75
–
DCF (non-GAAP)
$
1,868
$
1,613
$
5,723
$
4,949
$
7,382
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
(900
)
648
(682
)
1,047
(363
)
Sustaining capital expenditures
77
70
234
331
333
Other, net
5
39
39
60
88
Net cash flow provided by operating
activities (GAAP)
$
1,050
$
2,370
$
5,314
$
6,387
$
7,440
(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.
(2)
The first nine months of 2021 include $100
million of accounts receivable that we do not expect to collect in
the normal billing cycle.
DCF is an important non-GAAP liquidity
measure for our common unitholders since it serves as an indicator
of our success in providing a cash return on investment.
Specifically, this liquidity measure indicates to investors whether
or not we are generating cash flows at a level that can sustain or
support an increase in our quarterly cash distributions. DCF is
also a quantitative standard used by the investment community with
respect to publicly traded partnerships because the value of a
partnership unit is, in part, measured by its yield, which is based
on the amount of cash distributions a partnership can pay to a
common unitholder.
Enterprise Products Partners L.P.
Exhibit G
Adjusted EBITDA - UNAUDITED
($ in millions)
For the Twelve
Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2022
2021
2022
2021
2022
Net income (GAAP)
$
1,392
$
1,182
$
4,163
$
3,691
$
5,227
Adjustments to net income to derive
Adjusted EBITDA
(addition or subtraction indicated by
sign):
Depreciation, amortization and accretion
in costs and expenses (1)
536
511
1,606
1,531
2,130
Interest expense, including related
amortization
309
316
937
955
1,265
Cash distributions received from
unconsolidated affiliates
132
148
411
447
554
Equity in income of unconsolidated
affiliates
(111
)
(137
)
(335
)
(447
)
(471
)
Asset impairment charges
29
29
48
113
168
Provision for income taxes
18
16
54
57
67
Change in fair market value of commodity
derivative instruments
(48
)
(47
)
46
(86
)
105
Other, net
1
(3
)
3
8
–
Adjusted EBITDA (non-GAAP)
2,258
2,015
6,933
6,269
9,045
Adjustments to reconcile Adjusted EBITDA
to net cash flow provided by
operating activities (addition or
subtraction indicated by sign):
Interest expense, including related
amortization
(309
)
(316
)
(937
)
(955
)
(1,265
)
Deferred income tax expense
8
9
24
33
31
Provision for income taxes
(18
)
(16
)
(54
)
(57
)
(67
)
Net effect of changes in operating
accounts, as applicable
(900
)
648
(682
)
1,047
(363
)
Other, net
11
30
30
50
59
Net cash flow provided by operating
activities (GAAP)
$
1,050
$
2,370
$
5,314
$
6,387
$
7,440
(1)
Excludes amortization of major maintenance
costs for reaction-based plants, which are a component of Adjusted
EBITDA.
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 H
Gross Operating Margin –
UNAUDITED
($ in millions)
For the Twelve
Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2022
2021
2022
2021
2022
Total gross operating margin
(non-GAAP)
$
2,321
$
2,089
$
6,941
$
6,474
$
9,028
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 (1)
(524
)
(503
)
(1,569
)
(1,498
)
(2,082
)
Asset impairment charges in operating
costs and expenses
(29
)
(29
)
(48
)
(113
)
(168
)
Net gains (losses) attributable to asset
sales and related matters in operating costs and expenses
(1
)
3
(3
)
(8
)
–
General and administrative costs
(55
)
(47
)
(179
)
(155
)
(233
)
Total operating income (GAAP)
$
1,712
$
1,513
$
5,142
$
4,700
$
6,545
(1)
Excludes amortization of major maintenance
costs for reaction-based plants, which are a component of 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.
The term “total gross operating margin”
represents GAAP operating income exclusive of (i) depreciation,
amortization and accretion expenses (excluding amortization of
major maintenance costs for reaction-based plants), (ii) impairment
charges, (iii) gains and losses attributable to asset sales and
related matters, 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 (6)
to Exhibit A of this press release.
Enterprise Products Partners L.P.
Exhibit I
Other Information – UNAUDITED
($ in millions)
For the Twelve
Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2022
2021
2022
2021
2022
Capital investments:
Capital expenditures
$
472
$
505
$
1,203
$
1,806
$
1,620
Cash used for business combinations, net
of cash received
–
–
3,204
–
3,204
Investments in unconsolidated
affiliates
1
–
1
1
2
Other investing activities
1
(1
)
3
13
10
Total capital investments
$
474
$
504
$
4,411
$
1,820
$
4,836
The following table summarizes the non-cash mark-to-market gains
(losses) for the periods indicated:
For the Twelve
Months Ended
September 30,
For the Three Months
Ended September 30,
For the Nine Months
Ended September 3,
2022
2021
2022
2021
2022
Mark-to-market gains (losses) in gross
operating margin:
NGL Pipelines & Services
$
18
$
38
$
(12
)
$
90
$
(62
)
Crude Oil Pipelines & Services
31
11
(38
)
–
(41
)
Natural Gas Pipelines & Services
(1
)
1
(2
)
–
(4
)
Petrochemical & Refined Products
Services
–
(3
)
6
(4
)
2
Total mark-to-market impact on gross
operating margin
$
48
$
47
$
(46
)
$
86
$
(105
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221101005379/en/
Randy Burkhalter, Vice President, Investor
Relations, (713) 381-6812
Rick Rainey, Vice President, Media Relations,
(713) 381-3635
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