Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three months and year
ended December 31, 2013. For the year ended 2013, Enterprise
reported record results for each of the following: net income of
$2.6 billion; earnings per unit of $2.82 on a fully diluted basis;
and gross operating margin of $4.8 billion. Distributable cash flow
for 2013 was $3.8 billion.
“Enterprise had another record year in 2013,” stated Michael A.
Creel, chief executive officer of Enterprise’s general partner. “We
benefited from record volumes in our fee-based businesses
attributable to production growth and from strong domestic and
international demand for NGLs, particularly from the U.S.
petrochemical industry. In 2013, our integrated pipeline system
transported a record 5 million barrels per day of NGLs, crude oil,
refined products and petrochemicals; our NGL fractionators averaged
a record 726,000 barrels per day and our natural gas processing
plants had record fee-based volumes of 4.6 billion cubic feet per
day.”
“We generated $3.8 billion of distributable cash flow and
increased our cash distributions with respect to 2013 by 6.5
percent to $2.74 per unit. Enterprise has increased its cash
distribution rate for each of the last 38 consecutive quarters, the
longest period for any of the publicly traded energy partnerships,
and in excess of 5 percent for each of the last nine years. In
2013, we retained approximately $1.3 billion of distributable cash
flow to reinvest in our growth projects and reduce our need to
issue additional equity. Distributable cash flow provided 1.5 times
coverage of the distributions paid with respect to 2013. We begin
2014 with approximately $4.1 billion of liquidity in unrestricted
cash and availability under our bank credit facilities,” said
Creel.
“During 2013, we successfully completed and began operations for
major growth projects totaling $2.3 billion of investment. Most of
these projects were completed on or under budget and on time or
ahead of schedule. During the fourth quarter of 2013, we completed
$800 million of large projects including our eighth NGL
fractionator and the Texas Express Pipeline. In January 2014, we
began commercial operations on our ATEX pipeline, which can be
expanded to transport up to 265,000 barrels per day of ethane from
the Marcellus and Utica shale regions to petrochemical markets on
the U.S. Gulf Coast,” continued Creel.
“Including ATEX, we have approximately $7.8 billion of
announced, major capital projects under construction that are
scheduled to begin commercial operations from 2014 to 2016.
Approximately $5.0 billion of these projects are expected to begin
operations and start generating cash flow in 2014. The revenues
associated with these projects are predominately fee-based and the
larger projects have the additional assurance of demand revenues or
minimum volume commitments,” stated Creel.
“In 2014, we expect continuing volume and gross operating margin
growth from our NGL pipelines and fractionators; crude oil
pipelines and storage facilities; and LPG and refined product
export terminals as these projects begin operations and volumes
increase. We do not expect material improvement in our natural gas
processing business in 2014 compared to 2013 due to the
continuation of low prices and reduced recoveries for ethane as a
result of U.S. ethane supplies that exceed demand; however, we
believe ethane demand will continue to grow for the remainder of
this decade as the U.S. petrochemical industry modifies existing
facilities and completes construction of new plants as well as the
development of international demand,” said Creel.
“Over the past few years, we have taken steps to improve the
distributable cash flow per unit generated by our growth capital
investments that will be a long-term benefit to our limited
partners. We simplified our partnership structure and lowered our
cost of capital by eliminating our general partner’s incentive
distribution rights. We are focused on growth at a reasonable
price, not growth at any price. We evaluate growth investment
opportunities based on the project’s ability to enhance the value
of our existing integrated system of assets, the project’s relative
business risk as well as the difference between the project’s
expected return on capital and its cost of capital. We believe
successful execution on opportunities generated by our midstream
system and this disciplined approach to investment will result in
distribution growth and an attractive total return for our limited
partners. We want to thank our debt and equity investors for their
continued support again in 2013,” concluded Creel.
Fourth Quarter 2013
Highlights
- Enterprise reported record gross
operating margin of $1.3 billion for the fourth quarter of 2013.
The partnership reported adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”) of $1.2 billion,
net income of $706 million and earnings per unit of $0.75 on a
fully diluted basis. The fourth quarter of 2013 included non-cash
charges totaling $44 million, or a loss of $0.05 per unit on a
fully diluted basis, for impairments of certain assets. This
compares to gross operating margin of $1.2 billion, Adjusted EBITDA
of $1.1 billion, net income of $617 million and earnings per unit
of $0.68 on a fully diluted basis for the fourth quarter of
2012.
Three months endedDecember 31,
Year ended
December 31,
2013
2012 2013 2012 ($ in millions, except
per unit amounts) Gross operating
margin (1)
$
1,291
$ 1,162 $ 4,818 $ 4,387 Net income
$
706
$ 617 $ 2,607 $ 2,428 Fully diluted earnings per unit
$
0.75
$ 0.68 $ 2.82 $ 2.71 Adjusted EBITDA (1)
$
1,244
$ 1,132 $ 4,737 $ 4,330 Distributable cash flow (1)
$
1,021
$ 886 $ 3,750 $ 4,133
(1) Gross operating margin, Adjusted EBITDA
and distributable cash flow are non-generally accepted accounting
principle (“non-GAAP”) financial measures that are defined and
reconciled later in this press release.
- Enterprise increased its cash
distribution with respect to the fourth quarter of 2013 to $0.70
per unit, or $2.80 per unit on an annualized basis, which
represents a 6.1 percent increase from the distribution rate paid
with respect to the fourth quarter of 2012. This is the 38th
consecutive quarterly increase and the 47th increase since the
partnership’s initial public offering in 1998. The distribution
with respect to the fourth quarter of 2013 will be paid on February
7, 2014 to unitholders of record as of the close of business on
January 31, 2014;
- Enterprise reported distributable cash
flow of $1.0 billion for the fourth quarter of 2013, which provided
1.6 times coverage of the $0.70 per unit cash distribution that
will be paid to common unitholders. Enterprise retained
approximately $382 million of distributable cash flow for the
fourth quarter of 2013. Distributable cash flow for the fourth
quarter of 2013 included $24 million of proceeds from sales of
assets and insurance recoveries;
- Enterprise’s NGL, crude oil, refined
products and petrochemical pipeline volumes for the fourth quarter
of 2013 increased 16 percent to a record 5.2 million barrels per
day (“BPD”) compared to the fourth quarter of 2012. Total natural
gas pipeline volumes were 13.0 trillion British thermal units per
day (“TBtud”) for the fourth quarter of 2013 compared to 14.2 TBtud
for the fourth quarter of 2012. NGL fractionation volumes for the
fourth quarter of 2013 increased 11 percent to a record 781
thousand barrels per day (“MBPD”). Equity NGL production for the
fourth quarter of 2013 increased to 145 MBPD, while fee-based
natural gas processing volumes for the fourth quarters of 2013 and
2012 were 4.7 billion cubic feet per day (“Bcfd”);
- Enterprise made capital investments of
approximately $1.3 billion during the fourth quarter of 2013,
including $78 million of sustaining capital expenditures; and
- Affiliates of privately-held Enterprise
Products Company (“EPCO”), which collectively own our general
partner and approximately 36 percent of our outstanding limited
partner interests, purchased $25 million of common units from
Enterprise Products Partners L.P. in November 2013 through the
partnership’s distribution reinvestment plan. During 2013,
affiliates of EPCO purchased a total of $100 million of our common
units through the distribution reinvestment plan. These affiliates
have expressed their willingness to consider investing up to $100
million during 2014 to purchase additional common units. The first
such purchase is expected to be $25 million through the
partnership’s distribution reinvestment plan for the distribution
to be paid on February 7, 2014.
Review of Fourth Quarter 2013
Results
Net income for the fourth quarter of 2013 was $706 million
versus $617 million for the fourth quarter of 2012. Net income
attributable to limited partners for the fourth quarter of 2013 was
$0.75 per unit on a fully diluted basis compared to $0.68 per unit
on a fully diluted basis for the fourth quarter of 2012. Net income
for the fourth quarter of 2013 included non-cash charges
aggregating $44 million, or a loss of $0.05 per unit on a fully
diluted basis, for impairments of certain assets.
On January 13, 2013, the Board of Directors of Enterprise’s
general partner approved an increase in the partnership’s quarterly
cash distribution rate with respect to the fourth quarter of 2013
to $0.70 per unit, representing a 6.1 percent increase over the
$0.66 per unit rate that was paid with respect to the fourth
quarter of 2012. Enterprise generated distributable cash flow of
$1.0 billion for the fourth quarter of 2013 compared to $886
million for the fourth quarter of 2012. Distributable cash flow for
the fourth quarter of 2013 included $24 million of proceeds from
the sales of assets and insurance recoveries, while distributable
cash flow for the fourth quarter of 2012 included $31 million of
such proceeds.
Enterprise’s distributable cash flow for the fourth quarter of
2013 provided 1.6 times coverage of the cash distributions that
will be paid on February 7, 2014 to unitholders of record on
January 31, 2014. The partnership retained approximately $382
million of cash flow for the fourth quarter of 2013, which is
available to reinvest in growth capital projects, reduce debt, and
decrease our need to issue additional equity.
“The fourth quarter of 2013 demonstrated the benefits of our
fee-based midstream energy businesses,” said Creel. “Enterprise
reported record gross operating margin of $1.3 billion for the
fourth quarter of 2013 driven by record NGL, crude oil, refined
products and petrochemical pipeline volumes of 5.2 million barrels
per day, record NGL fractionation volumes of 781,000 barrels per
day and near record fee-based natural gas processing volumes of 4.7
billion cubic feet per day. Gross operating margin earned for the
fourth quarter of 2013 exceeded the fourth quarter of 2012 by $129
million, or 11 percent. Likewise, our distributable cash flow,
excluding proceeds from the sale of assets and insurance
recoveries, was also a record $997 million in the fourth quarter of
2013, a $142 million, or 17 percent, increase compared to the
fourth quarter of 2012.”
Review of Segment Performance for the
Fourth Quarter of 2013
NGL Pipelines & Services – Gross operating margin for
the NGL Pipelines & Services segment was a record $737 million
for the fourth quarter of 2013 compared to $632 million for the
same quarter of 2012.
Enterprise’s natural gas processing and related NGL marketing
business generated gross operating margin of $339 million for the
fourth quarter of 2013 compared to $330 million for the fourth
quarter of 2012. A $20 million increase in gross operating margin
from the NGL marketing business more than offset an $11 million
decrease in the natural gas processing business primarily due to
lower processing margins. Enterprise’s natural gas processing
plants reported fee-based processing volumes of 4.7 Bcfd in the
fourth quarters of both 2013 and 2012. Enterprise’s equity NGL
production was 145 MBPD for the fourth quarter of 2013 compared to
96 MBPD for the fourth quarter of 2012. Fee-based natural gas
processing volumes and equity NGL production from the partnership’s
processing plants in South Texas increased by 0.2 Bcfd and 26 MBPD,
respectively, in the fourth quarter of 2013 compared to the fourth
quarter of 2012.
Gross operating margin from the partnership’s NGL pipelines and
storage business increased $29 million, or 14 percent, to $249
million for the fourth quarter of 2013 from $220 million for the
fourth quarter of 2012. NGL pipeline volumes increased by 368 MBPD,
or 14 percent, in the fourth quarter of 2013 to 2.9 million BPD
compared to the fourth quarter of 2012. The partnership’s South
Texas NGL pipeline systems reported a $7 million increase in gross
operating margin on a 122 MBPD increase in volume due to Eagle Ford
shale production growth. Enterprise’s liquefied petroleum gas
(“LPG”) marine import/export terminal on the Houston Ship Channel
and its related pipeline reported a $16 million increase in gross
operating margin due to the expansion of the facility in March
2013.
Enterprise’s NGL fractionation business reported record gross
operating margin of $150 million for the fourth quarter of 2013
compared to $82 million reported for the same quarter of 2012. The
partnership’s fractionators at Mont Belvieu generated $56 million
of this increase in gross operating margin primarily attributable
to a 113 MBPD increase in volume as Fractionators VII and VIII
began commercial operations during the fourth quarter of 2013 and
Fractionator VI, which began operations in October 2012, was in
operation for a full quarter in 2013. Fractionation volumes for the
fourth quarter of 2013 increased 11 percent to a record 781 MBPD
compared to the same quarter in 2012.
Onshore Natural Gas Pipelines & Services –
Enterprise’s Onshore Natural Gas Pipelines & Services segment
reported gross operating margin of $187 million for the fourth
quarter of 2013 compared to $210 million for the fourth quarter of
2012. Total onshore natural gas pipeline volumes were 12.4 TBtud in
the fourth quarter of 2013 compared to 13.4 TBtud in the fourth
quarter of 2012.
Gross operating margin from natural gas marketing activities
decreased $11 million for the fourth quarter of 2013 compared to
the same quarter of 2012 primarily due to lower natural gas sales
margins. Aggregate gross operating margin for the Haynesville,
Jonah, Piceance Basin and San Juan gathering systems declined by $9
million and aggregate volume on these systems declined by 0.8 TBtud
in the fourth quarter of 2013 compared to the fourth quarter of
2012 due to the effects of reduced drilling activities and
production declines in the regions served by these systems. In
general, producers have reduced their drilling programs in areas
that typically have reserves of dry natural gas or natural gas with
a lower content of NGLs.
Onshore Crude Oil Pipelines & Services – Gross
operating margin from the partnership’s Onshore Crude Oil Pipelines
& Services segment increased 21 percent to $163 million for the
fourth quarter of 2013 from $135 million for the fourth quarter of
2012. This increase in gross operating margin for the fourth
quarter of 2013 was attributable to increased pipeline volumes,
including the partnership’s South Texas and West Texas pipeline
systems and our Seaway and Eagle Ford joint venture pipelines as
well as improved results from our crude oil storage facilities.
This increase from our pipelines and storage facilities was
partially offset by a $52 million decrease in gross operating
margin from our crude oil marketing and related trucking activities
due to lower margins as a result of lower regional price
differences for crude oil. Total onshore crude oil pipeline volumes
increased 42 percent to a record 1.3 million BPD for the fourth
quarter of 2013 from 897 MBPD for the fourth quarter of 2012.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment increased 23 percent to $175 million for the
fourth quarter of 2013 compared to $143 million for the fourth
quarter of 2012.
Gross operating margin for Enterprise’s octane enhancement and
high-purity isobutylene business was $33 million for the fourth
quarter of 2013 compared to $13 million for the fourth quarter of
2012. This increase was primarily due to an increase in operating
days during the fourth quarter of 2013 compared to the fourth
quarter of 2012 due to downtime during the fourth quarter of 2012
for the plant’s annual turnaround. Total plant production volumes
were 24 MBPD in the fourth quarter of 2013 compared to 15 MBPD for
the fourth quarter of 2012.
The partnership’s propylene business reported gross operating
margin of $46 million for the fourth quarter of 2013 compared to
$34 million for the fourth quarter of 2012 due to higher volumes
and sales margins. Propylene fractionation volumes were 82 MBPD for
the fourth quarter of 2013 compared to 69 MBPD in the fourth
quarter of 2012. Related propylene pipeline volumes were 119 MBPD
for the fourth quarter of 2013 compared to 116 MBPD for the fourth
quarter of 2012.
Enterprise’s refined products pipelines and related services
business reported gross operating margin of $56 million for the
fourth quarter of 2013 compared to $53 million for the fourth
quarter of 2012. This increase was primarily due to improved
results from our refined products marketing and terminal
businesses. Total pipeline volumes for this business were 590 MBPD
for the fourth quarter of 2013 compared to 589 MBPD for the fourth
quarter of 2012.
Enterprise’s butane isomerization business reported gross
operating margin of $21 million in the fourth quarter of 2013
compared to $24 million in the fourth quarter of 2012 primarily due
to increased maintenance expenses associated with two isomerization
plants during the fourth quarter of 2013. Butane isomerization
volumes were 93 MBPD for the fourth quarters of both 2013 and
2012.
Enterprise’s marine transportation and other services business
reported $19 million of gross operating margin for both the fourth
quarters of 2013 and 2012.
Offshore Pipelines & Services – Gross operating
margin for the Offshore Pipelines & Services segment was $28
million for the fourth quarter of 2013 compared to $42 million for
the same quarter of 2012.
Gross operating margin from Enterprise’s offshore crude oil
pipeline business was $22 million for the fourth quarter of 2013
compared to $26 million for the fourth quarter of 2012. Total
offshore crude oil pipeline volumes were 309 MBPD in the fourth
quarter of 2013 compared to 336 MBPD for the fourth quarter of
2012.
The Independence Hub platform and Independence Trail pipeline
reported aggregate gross operating margin of $9 million for the
fourth quarter of 2013 compared to $14 million for the fourth
quarter of 2012 attributable to lower volumes. Natural gas volumes
on the Independence Trail pipeline were 212 BBtud for the fourth
quarter of 2013 compared to 313 BBtud in the fourth quarter of
2012. Total offshore natural gas pipeline volumes (including those
for Independence Trail) were 594 BBtud for the fourth quarter of
2013 compared to 786 BBtud in the fourth quarter of 2012.
Capitalization
Total debt principal outstanding at December 31, 2013 was
approximately $17.4 billion, including $1.5 billion of junior
subordinated notes to which the nationally recognized debt rating
agencies ascribe partial equity content. At December 31, 2013,
Enterprise had consolidated liquidity (defined as unrestricted cash
on hand and available borrowing capacity under our revolving credit
facilities) of approximately $4.1 billion.
Total capital spending in the fourth quarter of 2013 was $1.3
billion, which includes $78 million of sustaining capital
expenditures. Total capital spending for 2013 was $4.5 billion,
which includes $292 million of sustaining capital expenditures. We
currently expect total capital spending during 2014 to be in the
range of $3.9 billion to $4.4 billion, which includes approximately
$350 million for sustaining capital expenditures.
Tax Year 2013 K-1
Availability
Enterprise expects to complete the mailing of the partnership’s
Schedule K-1s for tax year 2013 to unitholders by February 24,
2014. The K-1s are scheduled to be available online by Noon CT on
February 17, 2014 at the following website,
http://www.taxpackagesupport.com/enterprise.
Conference Call to Discuss Fourth
Quarter 2013 Earnings
Today, Enterprise will host a conference call to discuss fourth
quarter 2013 earnings. The call will be broadcast live over the
Internet beginning at 9:00 a.m. CT and may be accessed by visiting
the company’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 gross operating margin,
distributable cash flow 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 flows provided by operating activities or any other
measure of financial performance calculated and presented in
accordance with GAAP. Our non-GAAP financial measures may not be
comparable to similarly-titled measures of other companies because
they may not calculate such measures in the same manner as we
do.
Company Information and Use of
Forward-Looking Statements
Enterprise Products Partners L.P. is one of the largest publicly
traded partnerships and a leading North American provider of
midstream energy services to producers and consumers of natural
gas, NGLs, crude oil, refined products and petrochemicals. Our
midstream energy operations include: natural gas gathering,
treating, processing, transportation and storage; NGL
transportation, fractionation, storage and import and export
terminals (including LPG); crude oil gathering, transportation,
storage and terminals; offshore production platforms; petrochemical
and refined products transportation and services; and a marine
transportation business that operates primarily on the U.S. inland
and Intracoastal Waterway systems and in the Gulf of Mexico. The
partnership’s assets include approximately 51,000 miles of onshore
and offshore pipelines; 200 million barrels of storage capacity for
NGLs, crude oil, refined products and petrochemicals; and 14
billion cubic feet of natural gas storage capacity. Additional
information regarding Enterprise can be found on its website,
www.enterpriseproducts.com.
This press release includes forward-looking statements. Except
for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve certain risks and uncertainties, such as the partnership’s
expectations regarding future results, capital expenditures,
project completions, liquidity and financial market conditions.
These risks and uncertainties include, among other things,
insufficient cash from operations, adverse market conditions,
governmental regulations and other factors discussed in
Enterprise’s filings with the U.S. Securities and Exchange
Commission. If any of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those expected. The partnership
disclaims any intention or obligation to update publicly or reverse
such statements, whether as a result of new information, future
events or otherwise.
Enterprise Products Partners
L.P.
Exhibit A
Condensed Statements of Consolidated Operations – UNAUDITED
($ in millions, except per unit amounts)
Three Months Ended
December 31,
Year Ended
December 31,
2013 2012 2013 2012
Revenues
$ 13,101.3 $ 11,072.1 $ 47,727.0 $ 42,583.1
Costs and
expenses:
Operating costs and expenses 12,177.6 10,231.4 44,238.7 39,367.9
General and administrative costs 49.4 40.1
188.3 170.3 Total costs and
expenses 12,227.0 10,271.5
44,427.0 39,538.2
Equity in income of
unconsolidated affiliates
41.2 22.1 167.3
64.3
Operating
income
915.5 822.7 3,467.3 3,109.2
Other income
(expense):
Interest expense (198.1 ) (199.0 ) (802.5 ) (771.8 ) Other, net
(0.4 ) -- (0.2 ) 73.4
Total other expense (198.5 ) (199.0 ) (802.7 )
(698.4 )
Income before income
taxes
717.0 623.7 2,664.6 2,410.8 Benefit from (provision for) income
taxes (11.3 ) (6.3 ) (57.5 ) 17.2
Net
income
705.7 617.4 2,607.1 2,428.0
Net income
attributable to noncontrolling interests
(6.8 ) (1.9 ) (10.2 ) (8.1 )
Net income
attributable to limited partners
$ 698.9 $ 615.5 $ 2,596.9 $ 2,419.9
Per unit data (fully
diluted):
Earnings per unit $ 0.75 $ 0.68 $ 2.82 $ 2.71
Average limited partner units outstanding (in millions)
932.5 902.7 921.3
893.2
Supplemental
financial data:
Net cash flows provided by operating activities $ 1,499.3 $
1,275.1 $ 3,865.5 $ 2,890.9 Cash used in
investing activities $ 1,320.0 $ 1,123.8 $ 4,257.5
$ 3,018.8 Cash provided by (used in) financing
activities $ (132.0 ) $ (149.7 ) $ 432.8 $ 124.2
Depreciation, amortization and accretion $ 315.3 $ 287.0
$ 1,217.6 $ 1,104.9 Distributions received
from unconsolidated affiliates $ 64.0 $ 49.2 $ 251.6
$ 116.7 Total debt principal outstanding at end of
period $ 17,357.7 $ 16,179.3 $ 17,357.7 $
16,179.3 Non-GAAP gross operating margin by segment:
(1) NGL Pipelines & Services $ 737.4 $ 632.0 $ 2,514.4 $
2,468.5 Onshore Natural Gas Pipelines & Services 187.1 210.0
789.0 775.5 Onshore Crude Oil Pipelines & Services 163.1 135.0
742.7 387.7 Offshore Pipelines & Services 28.0 42.0 146.1 173.0
Petrochemical & Refined Products Services 175.2 142.7 625.9
579.9 Other Investments -- -- --
2.4 Total gross operating margin $ 1,290.8
$ 1,161.7 $ 4,818.1 $ 4,387.0
Non-GAAP distributable cash flow (2) $ 1,021.1 $ 885.9
$ 3,750.4 $ 4,133.3 Non-GAAP Adjusted
EBITDA (3) $ 1,244.2 $ 1,132.1 $ 4,736.8 $
4,329.9 Capital spending: Capital expenditures, net
(4) $ 988.9 $ 900.6 $ 3,382.2 $ 3,598.5 Investments in
unconsolidated affiliates, net 325.7 257.7 1,094.1 608.6 Other,
primarily the acquisition of intangible assets --
11.0 1.0 43.1 Total
capital spending $ 1,314.6 $ 1,169.3 $ 4,477.3
$ 4,250.2
(1) See Exhibit D for reconciliation to GAAP operating income. (2)
See Exhibit E for reconciliation to net cash flows provided by
operating activities. (3) See Exhibit F for reconciliation to net
cash flows provided by operating activities.
(4) Capital expenditures for property,
plant and equipment are presented net of contributions in aid of
construction cost.
Enterprise Products Partners
L.P.
Exhibit B
Selected Operating Data – UNAUDITED
Three Months Ended
December 31,
Year Ended
December 31,
2013 2012 2013 2012
Selected operating
data: (1)
NGL Pipelines & Services, net: NGL transportation volumes
(MBPD) 2,914 2,546 2,787 2,472 NGL fractionation volumes (MBPD) 781
707 726 659 Equity NGL production (MBPD) (2) 145 96 126 101
Fee-based natural gas processing (MMcf/d) (3) 4,679 4,696 4,612
4,382 Onshore Natural Gas Pipelines & Services, net: Natural
gas transportation volumes (BBtus/d) 12,403 13,378 12,936 13,634
Onshore Crude Oil Pipelines & Services, net: Crude oil
transportation volumes (MBPD) 1,270 897 1,175 828 Offshore
Pipelines & Services, net: Natural gas transportation volumes
(BBtus/d) 594 786 678 853 Crude oil transportation volumes (MBPD)
309 336 307 300 Platform natural gas processing (MMcf/d) 155 247
202 291 Platform crude oil processing (MBPD) 17 15 16 17
Petrochemical & Refined Products Services, net: Butane
isomerization volumes (MBPD) 93 93 94 95 Propylene fractionation
volumes (MBPD) 82 69 74 72 Octane additive and related plant
production volumes (MBPD) 24 15 20 16 Transportation volumes,
primarily refined products
and petrochemicals (MBPD)
727 726 702 689 Total, net: NGL, crude oil, refined products and
petrochemical
transportation volumes (MBPD)
5,220 4,505 4,971 4,289 Natural gas transportation volumes
(BBtus/d) 12,997 14,164 13,614 14,487 Equivalent transportation
volumes (MBPD) (4) 8,640 8,232 8,554 8,101
(1) Operating rates are reported on a net
basis, which takes into account our ownership interests in certain
joint ventures, and include volumes for newly constructed assets
from the related in-service dates and for recently purchased assets
from the related acquisition dates.
(2) Represents the NGL volumes we earn and take title to in
connection with our processing activities. (3) Volumes reported
correspond to the revenue streams earned by our gas plants.
(4) Represents total NGL, crude oil,
refined products and petrochemical transportation volumes plus
equivalent energy volumes where 3.8 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
Polymer Refinery Natural Normal
Natural Grade Grade WTI LLS
Gas, Ethane, Propane, Butane,
Isobutane, Gasoline, Propylene,
Propylene, Crude Oil, Crude Oil,
$/MMBtu $/gallon
$/gallon $/gallon
$/gallon $/gallon
$/pound
$/pound $/barrel
$/barrel (1) (2) (2) (2) (2) (2) (3) (3) (4) (4)
2012 by quarter: 1st Quarter $ 2.72 $ 0.56 $ 1.26 $ 1.93 $
2.04 $ 2.39 $ 0.69 $ 0.60 $ 102.93 $ 119.59 2nd Quarter $ 2.21 $
0.40 $ 0.98 $ 1.62 $ 1.75 $ 2.05 $ 0.66 $ 0.51 $ 93.49 $ 108.47 3rd
Quarter $ 2.80 $ 0.34 $ 0.89 $ 1.44 $ 1.62 $ 2.01 $ 0.51 $ 0.37 $
92.22 $ 109.40 4th Quarter $ 3.41 $ 0.28
$ 0.88 $ 1.64
$ 1.82 $ 2.15
$ 0.56 $ 0.48 $
88.18 $ 109.43
YTD 2012 Averages $ 2.79
$ 0.40 $ 1.00
$ 1.65 $ 1.81
$ 2.15 $ 0.60 $
0.49 $ 94.20 $ 111.72
2013 by quarter: 1st Quarter $ 3.34 $ 0.26 $ 0.86 $ 1.58 $
1.65 $ 2.23 $ 0.75 $ 0.65 $ 94.37 $ 113.93 2nd Quarter $ 4.10 $
0.27 $ 0.91 $ 1.24 $ 1.27 $ 2.04 $ 0.63 $ 0.53 $ 94.22 $ 104.63 3rd
Quarter $ 3.58 $ 0.25 $ 1.03 $ 1.33 $ 1.35 $ 2.15 $ 0.68 $ 0.58 $
105.82 $ 109.89 4th Quarter $ 3.60 $ 0.26
$ 1.20 $ 1.43
$ 1.45 $ 2.10
$ 0.68 $ 0.56 $
97.46 $ 100.94
YTD 2013 Averages $ 3.65
$ 0.26 $ 1.00
$ 1.39 $ 1.43
$ 2.13 $ 0.69 $
0.58 $ 97.97 $ 107.34
(1) Natural gas prices are based on Henry-Hub Inside FERC
commercial index prices as reported by Platts, which is a division
of McGraw Hill Financial, Inc.
(2) NGL prices for ethane, propane, normal
butane, isobutane and natural gasoline are based on Mont Belvieu
Non-TET commercial index prices as reported by
Oil Price Information Service.
(3) Polymer-grade propylene prices
represent average contract pricing for such product as reported by
Chemical Market Associates, Inc. (“CMAI”). Refinery
grade propylene prices represent
weighted-average spot prices for such product as reported by
CMAI
(4) Crude oil prices are based on
commercial index prices for West Texas Intermediate (“WTI”) as
measured on the New York Mercantile Exchange
(“NYMEX”) and for Louisiana Light Sweet
(“LLS”) as reported by Platts.
For additional information regarding commodity prices, see
“Appendix to Financial Tables” at the end of this press
release.
Enterprise Products Partners
L.P.
Exhibit D Gross Operating Margin – UNAUDITED
($ in millions)
Three Months Ended Year Ended December 31,
December 31, 2013
2012
2013 2012 Total
gross operating margin (non-GAAP) $ 1,290.8 $ 1,161.7 $ 4,818.1
$ 4,387.0 Adjustments to reconcile non-GAAP gross operating margin
to GAAP operating income: Subtract depreciation, amortization and
accretion expenses amounts not reflected in gross operating margin
(297.2 ) (276.6 ) (1,148.9 ) (1,061.7 ) Subtract impairment charges
not reflected in gross operating margin (39.3 ) (5.8 ) (92.6 )
(63.4 ) Add gains or subtract losses attributable to asset sales
and insurance recoveries not reflected in gross operating margin
15.0 (16.5 ) 83.4 17.6 Subtract non-refundable deferred revenues
included in gross operating margin attributable to shipper make-up
rights on new pipeline projects (4.4 ) -- (4.4 ) -- Subtract
general and administrative costs not reflected in gross operating
margin (49.4 ) (40.1 )
(188.3 )
(170.3 )
Operating income (GAAP) $
915.5 $ 822.7
$ 3,467.3
$ 3,109.2
For information regarding our non-GAAP financial measure of
gross operating margin, see “Appendix to Financial Tables” at the
end of this press release.
Enterprise Products Partners
L.P. Exhibit E Distributable Cash Flow –
UNAUDITED
($ in millions)
Three Months Ended Year Ended
December 31, December
31, 2013 2012
2013
2012 Net income attributable to limited partners $
698.9 $ 615.5 $ 2,596.9 $ 2,419.9
Adjustments to GAAP net income
attributable to limited partners to derive non-
GAAP distributable cash flow:
Add depreciation, amortization and accretion expenses 315.3 287.0
1,217.6 1,104.9 Add distributions received from unconsolidated
affiliates 64.0 49.2 251.6 116.7 Subtract equity in income of
unconsolidated affiliates (41.2 ) (22.1 ) (167.3 ) (64.3 ) Subtract
sustaining capital expenditures (1) (77.8 ) (83.5 ) (291.7 ) (366.2
) Add losses or subtract gains attributable to asset sales and
insurance recoveries
(14.9 ) 16.5 (83.3 ) (86.4 ) Add cash proceeds from asset sales and
insurance recoveries 24.3 31.4 280.6 1,198.8 Subtract losses from
the monetization of interest rate derivative instruments -- --
(168.8 ) (147.8 ) Add deferred income tax expense or subtract
benefit, as applicable 5.8 1.7 37.9 (66.2 ) Add impairment charges
39.3 5.8 92.6 63.4 Add or subtract other miscellaneous adjustments
to derive non-GAAP distributable cash flow, as applicable
7.4 (15.6 )
(15.7 )
(39.5 )
Distributable cash flow (non-GAAP) 1,021.1
885.9 3,750.4 4,133.3
Adjustments to non-GAAP distributable cash
flow to derive GAAP net cash flows
provided by operating activities:
Add sustaining capital expenditures reflected in distributable cash
flow 77.8 83.5 291.7 366.2 Subtract cash proceeds from asset sales
and insurance recoveries reflected in distributable cash flow (24.3
) (31.4 ) (280.6 ) (1,198.8 ) Add losses from the monetization of
interest rate derivative instruments -- -- 168.8 147.8 Add or
subtract the net effect of changes in operating accounts, as
applicable 416.3 327.7 (97.6 ) (582.5 ) Add miscellaneous non-cash
and other amounts to reconcile non-GAAP distributable cash flow
with GAAP net cash flows provided by operating activities
8.4 9.4
32.8
24.9
Net cash flows provided by operating
activities (GAAP) $ 1,499.3
$ 1,275.1 $ 3,865.5
$ 2,890.9
(1) Sustaining capital expenditures are
capital expenditures (as defined by GAAP) resulting from
improvements to and major renewals of existing assets. Such
expenditures serve to maintain existing operations but do not
generate additional revenues.
For information regarding our non-GAAP financial measure of
distributable cash flow, see “Appendix to Financial Tables” at the
end of this press release.
Enterprise Products Partners
L.P.
Exhibit F
Adjusted EBITDA - UNAUDITED
($ in
millions)
Three Months Ended
Year Ended December 31,
December 31, 2013
2012 2013
2012 Net income $ 705.7 $ 617.4 $
2,607.1 $ 2,428.0 Adjustments to GAAP net income to derive non-GAAP
Adjusted EBITDA: Subtract equity in income of unconsolidated
affiliates (41.2 ) (22.1 ) (167.3 ) (64.3 ) Add distributions
received from unconsolidated affiliates 64.0 49.2 251.6 116.7 Add
interest expense, including related amortization 198.1 199.0 802.5
771.8 Add provision for or subtract benefit from income taxes, as
applicable 11.3 6.3 57.5 (17.2 ) Add depreciation, amortization and
accretion in costs and expenses 306.3
282.3
1,185.4 1,094.9
Adjusted EBITDA (non-GAAP) 1,244.2 1,132.1 4,736.8
4,329.9
Adjustments to non-GAAP Adjusted EBITDA to
derive GAAP net cash flows
provided by operating activities:
Subtract interest expense, including related amortization,
reflected in Adjusted EBITDA (198.1 ) (199.0 ) (802.5 ) (771.8 )
Add benefit from or subtract provision for income taxes reflected
in Adjusted EBITDA (11.3 ) (6.3 ) (57.5 ) 17.2 Add losses and
subtract gains attributable to asset sales and insurance recoveries
(14.9 ) 16.5 (83.3 ) (86.4 ) Add deferred income tax expense or
subtract benefit, as applicable 5.8 1.7 37.9 (66.2 ) Add impairment
charges 39.3 5.8 92.6 63.4 Add or subtract the net effect of
changes in operating accounts, as applicable 416.3 327.7 (97.6 )
(582.5 ) Add or subtract miscellaneous non-cash and other amounts
to reconcile non-GAAP Adjusted EBITDA with GAAP net cash flows
provided by operating activities 18.0
(3.4 ) 39.1
(12.7 )
Net cash flows
provided by operating activities (GAAP) $ 1,499.3
$ 1,275.1 $
3,865.5 $ 2,890.9
For information regarding our non-GAAP financial measure of
Adjusted EBITDA, see “Appendix to Financial Tables” at the end of
this press release.
APPENDIX TO FINANCIAL TABLES
Supplemental Information Regarding Commodity Prices
(Exhibit C)
Period-to-period fluctuations in our consolidated revenues and
cost of sales amounts are explained in large part by changes in
energy commodity prices. Energy commodity prices fluctuate for a
variety of reasons, including supply and demand imbalances and
geopolitical tensions.
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 $1.08 per
gallon during the fourth quarter of 2013 versus $1.05 per gallon
for the fourth quarter of 2012. While average market prices at Mont
Belvieu for ethane, normal butane, isobutane and natural gasoline
decreased quarter-to-quarter, the average market price of propane
at Mont Belvieu increased 36 percent primarily due to international
demand for U.S. propane exports.
The market price of natural gas (as measured at the Henry Hub in
Louisiana) averaged $3.60 per MMBtu during the fourth quarter of
2013 versus $3.41 per MMBtu during the fourth quarter of 2012 – a 6
percent increase. The increase in prices is generally due to higher
natural gas demand for power generation and as a heating fuel.
The market price of WTI crude oil (as measured on the NYMEX)
averaged $97.46 per barrel during the fourth quarter of 2013
compared to $88.18 per barrel during the fourth quarter of 2012. As
a result of our recent crude oil pipeline infrastructure
improvements, we have greater access to U.S. Gulf Coast refiners.
Typically, these refining customers purchase crude oil based on LLS
prices, which averaged $100.94 per barrel during the fourth quarter
of 2013 compared to $109.43 per barrel during the fourth quarter of
2012.
A decrease in our consolidated marketing revenues due to lower
energy commodity sales prices may not result in a decrease in gross
operating margin or cash available for distribution, since our
consolidated cost of sales amounts would also be lower due to
comparable decreases in the purchase prices of the underlying
energy commodities. The same correlation would be true in the case
of higher energy commodity sales prices and purchase costs.
Non-GAAP Financial Measures (Exhibits D, E and F)
Gross operating margin. We evaluate
segment performance based on the non-GAAP financial measure of
gross operating margin. Gross operating margin (either in total or
by individual segment) is an important performance measure of the
core profitability of our operations. This measure forms the basis
of our internal financial reporting and is used by our executive
management in deciding how to allocate capital resources among
business segments. We believe that investors benefit from having
access to the same financial measures that our management uses in
evaluating segment results. The GAAP financial measure most
directly comparable to total segment gross operating margin is
operating income.
In total, gross operating margin represents operating income
exclusive of (1) depreciation, amortization and accretion expenses;
(2) impairment charges, (3) gains and losses attributable to asset
sales and insurance recoveries and (4) general and administrative
costs. As discussed below, gross operating margin includes equity
in income of unconsolidated affiliates and non-refundable deferred
transportation revenues relating to the make-up rights of committed
shippers associated with certain pipelines. Gross operating margin
by segment is calculated by subtracting segment operating costs and
expenses (net of the adjustments noted above) from segment
revenues, with both segment totals before the elimination of
intercompany transactions. In accordance with GAAP, intercompany
accounts and transactions are eliminated in consolidation. 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 percent basis before any allocation of
earnings to noncontrolling interests.
We include equity in income of unconsolidated affiliates in our
measurement of segment gross operating margin and operating income.
Equity investments with industry partners are a significant
component of our business strategy. They are a means by which we
conduct our operations to align our interests with those of
customers and/or suppliers. This method of operation enables us to
achieve favorable economies of scale relative to the level of
investment and business risk assumed. Many of these businesses
perform supporting or complementary roles to our other midstream
business operations.
Management includes deferred transportation revenues relating to
the make-up rights of committed shippers when reviewing the
financial results of certain major new pipeline projects such as
the Texas Express Pipeline and Seaway Pipeline. Certain shippers on
these systems did not meet their minimum volume commitment
beginning in the fourth quarter of 2013, thus revenues associated
with each shipper’s make-up rights were deferred in accordance with
GAAP. From an internal (and segment) reporting standpoint,
management considers the transportation fees paid by committed
shippers on major new pipeline projects, including any
non-refundable revenues that may be deferred under GAAP related to
make-up rights, to be important in assessing their financial
performance. From a GAAP perspective, the revenue streams
associated with these make-up rights are deferred until the earlier
of (i) the deficiency volumes are shipped, (ii) the contractual
make-up period expires or (iii) the pipeline is released from its
performance obligation. Since management includes such deferred
revenues in non-GAAP gross operating margin, these amounts are
deducted in determining GAAP-based operating income. Our
consolidated revenues do not reflect any deferred revenues until
the conditions for recognizing such revenues are met in accordance
with GAAP.
Management expects that several of our new pipeline projects,
including the ATEX, Texas Express Pipeline and Front Range
Pipeline, will experience periods where shippers are unable to meet
their contractual minimum volume commitments during 2014. We
anticipate that committed shipper transportation volumes on the
ATEX may be negatively impacted by producer drilling programs,
including the timing of new production well start-ups in the
Marcellus and Utica Shale developments. With respect to the Texas
Express Pipeline and Front Range Pipeline, we expect that ethane
rejection in the supply basins served by these pipelines will
adversely impact shipper transportation volumes.
Distributable cash flow. Our
management compares the distributable cash flow we generate to the
cash distributions we expect to pay our partners. Using this
metric, management computes our distribution coverage ratio.
Distributable cash flow is an important non-GAAP financial measure
for our limited partners since it serves as an indicator of our
success in providing a cash return on investment. Specifically,
this financial 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. Distributable cash
flow is also a quantitative standard used by the investment
community with respect to publicly traded partnerships because the
value of a partnership unit is, in part, measured by its yield,
which is based on the amount of cash distributions a partnership
can pay to a unitholder. The GAAP measure most directly comparable
to distributable cash flow is net cash flows provided by operating
activities.
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 flows provided by operating activities.
Enterprise Products Partners L.P.Randy Burkhalter, (713)
381-6812Vice President, Investor RelationsorRick Rainey, (713)
381-3635Vice President, Media Relations
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