Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three and nine months
ended September 30, 2014. In August 2014, Enterprise completed a
two-for-one split of its common units. All earnings per unit and
other unit-related information contained in this press release are
presented on a post-split basis.
Third Quarter 2014
Highlights
Three months ended Nine months ended
September 30, September 30, 2014 2013
2014 2013 ($ in millions, except per
unit amounts) Gross operating margin
(1) $ 1,335 $ 1,154 $ 3,928 $ 3,527 Net income (2) (3) $ 699 $ 593
$ 2,152 $ 1,901 Fully diluted earnings per unit (2) (3) $ 0.37 $
0.32 $ 1.13 $ 1.03 Adjusted EBITDA (1) $ 1,301 $ 1,139 $ 3,902 $
3,493 Distributable cash flow (1) $ 975 $ 908 $ 3,016 $ 2,729
(1)
Gross operating margin, adjusted earnings
before interest, taxes, depreciation and amortization (“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.
(2)
For the three months ended September 30,
2014 and 2013, net income and fully diluted earnings per unit
included net gains of $3 million, or less than $0.01 per unit, and
$10 million, or less than $0.01 per unit, respectively,
attributable to asset sales. For the nine months ended September
30, 2014 and 2013, net income and fully diluted earnings per unit
included net gains of $99 million, or $0.05 per unit, and $68
million, or $0.04 per unit, respectively, attributable to asset
sales and insurance recoveries.
(3)
Net income and fully diluted earnings per
unit included non-cash asset impairment charges for the three
months ended September 30, 2014 and 2013 of $6 million, or less
than $0.01 per unit, and $15 million, or less than $0.01 per unit,
respectively. Non-cash asset impairment charges for the nine months
ended September 30, 2014 and 2013 were $18 million, or less than
$0.01 per unit, and $53 million, or $0.03 per unit, respectively,
with both amounts on a fully diluted basis.
- Enterprise increased its cash
distribution with respect to the third quarter of 2014 by 5.8
percent to $0.365 per unit, or $1.46 per unit on an annualized
basis, compared to the distribution paid with respect to the third
quarter of 2013. This is the 41st consecutive quarterly increase
and the 50th increase since the partnership’s initial public
offering in 1998. This distribution will be paid on November 7,
2014 to unitholders of record as of the close of business on
October 31, 2014;
- Enterprise reported distributable cash
flow of $975 million for the third quarter of 2014, which provided
1.4 times coverage of the $0.365 per unit cash distribution.
Enterprise retained $284 million of distributable cash flow for the
third quarter of 2014;
- Enterprise’s natural gas liquid
(“NGL”), crude oil, refined products and petrochemical pipeline
volumes for the third quarter of 2014 increased 2 percent to a
record 5.2 million barrels per day (“BPD”) compared to the third
quarter of 2013. Total natural gas pipeline volumes decreased 3
percent to 13.2 trillion British thermal units per day (“TBtud”)
for the third quarter of 2014 compared to the third quarter of
2013. NGL fractionation volumes for the third quarter of 2014
increased 12 percent to 823 thousand barrels per day (“MBPD”).
Fee-based natural gas processing volumes for the third quarter of
2014 increased 6 percent to a record 5.0 billion cubic feet per day
(“Bcfd”), while equity NGL production for the third quarter of 2014
decreased 14 percent to 103 MBPD;
- Enterprise made capital investments of
approximately $772 million during the third quarter of 2014,
including $107 million of sustaining capital expenditures; and
- Affiliates of privately-held Enterprise
Products Company (“EPCO”), which collectively own our general
partner and approximately 35 percent of our outstanding limited
partner interests, expect to purchase an additional $25 million of
common units from Enterprise in November 2014 through the
distribution reinvestment plan. This purchase would bring total
purchases by these affiliates in 2014 to $100 million.
Review of Third Quarter 2014
Results
Net income for the third quarter of 2014 increased 18 percent to
$699 million compared to $593 million for the third quarter of
2013. On a fully diluted basis, net income attributable to limited
partners for the third quarter of 2014 increased 16 percent to
$0.37 per unit compared to $0.32 per unit for the third quarter of
2013.
On October 10, 2014, Enterprise announced an increase in the
partnership’s quarterly cash distribution with respect to the third
quarter of 2014 to $0.365 per unit, representing a 5.8 percent
increase over the $0.345 per unit that was paid with respect to the
third quarter of 2013. Enterprise generated distributable cash flow
of $975 million for the third quarter of 2014 compared to $908
million for the third quarter of 2013. Distributable cash flow for
the third quarters of 2014 and 2013 included proceeds from the
sales of assets of $8 million and $57 million, respectively.
Enterprise’s distributable cash flow for the third quarter of
2014 provided 1.4 times coverage of the cash distribution that will
be paid on November 7, 2014 to unitholders of record on October 31,
2014. The partnership retained $284 million of distributable cash
flow for the third quarter of 2014, which is available to reinvest
in growth capital projects, reduce debt and decrease the need to
issue additional equity. For the first nine months of 2014,
Enterprise has retained $1.0 billion of distributable cash
flow.
“Enterprise reported another solid quarter for the third quarter
of 2014,” said Michael A. Creel, chief executive officer of
Enterprise’s general partner. “Our performance continues to be
driven by record or near record volumes transported on our liquid
pipelines, fee-based natural gas processing volumes and NGL
fractionation volumes. We benefited from cash flow growth from new
assets placed in service over the past twelve months as well as the
diversification of our businesses. Four of our five business
segments reported increases in gross operating margin leading to a
16 percent increase in total gross operating margin and generating
a 14 percent increase in distributable cash flow, excluding
proceeds from asset sales, in the third quarter of 2014 compared to
the third quarter of last year.”
“We completed construction and began commercial operations for
assets totaling $4.9 billion of capital investment over the last
twelve months. During the third quarter of 2014, we completed
construction of approximately $500 million of assets, net to our
ownership interest, including the SEKCO crude oil pipeline in the
Gulf of Mexico, the extension of the Seaway crude oil pipeline from
ECHO to Port Arthur, Texas and connections with the Cochin and
Southern Lights pipelines to facilitate deliveries of natural
gasoline to the Canadian market. The loop of the Seaway Crude
Pipeline, which was completed in July 2014, is expected to begin
receiving crude oil and generating cash flow late in the fourth
quarter of 2014,” continued Creel.
“Enterprise announced two new projects during the third quarter
of 2014: the ninth NGL fractionator at our complex in Mont Belvieu,
Texas and a natural gas processing plant and related facilities in
the Delaware Basin. Including these new projects, Enterprise has
approximately $6.3 billion of assets under construction that are
expected to begin operations in 2015 and 2016. These investments
provide visibility to new sources of distributable cash flow for
the partnership over the next few years,” stated Creel.
Review of Third Quarter 2014 Segment
Performance
NGL Pipelines & Services – Gross operating margin for
the NGL Pipelines & Services segment increased 11 percent to
$712 million for the third quarter of 2014 compared to $640 million
for the same quarter of 2013.
Enterprise’s natural gas processing and related NGL marketing
business generated gross operating margin of $291 million for the
third quarter of 2014 compared to $293 million for the third
quarter of 2013. Gross operating margin from the partnership’s
natural gas processing plants increased by $45 million primarily
due to higher fee-based processing volumes and higher processing
margins at certain plants. Enterprise’s natural gas processing
plants reported record fee-based processing volumes of 5.0 Bcfd in
the third quarter of 2014 compared to 4.7 Bcfd in the third quarter
of 2013. Enterprise’s equity NGL production decreased to 103 MBPD
for the third quarter of 2014 compared to 120 MBPD for the third
quarter of 2013 due to lower recoveries of ethane and more volumes
being processed under fee-based arrangements. Gross operating
margin from Enterprise’s NGL marketing activities decreased $48
million primarily due to lower margins and volumes as the result of
expansion related downtime associated with the partnership’s
liquefied petroleum gas (“LPG”) export facility. In the third
quarter of 2014, more volume in the LPG export business was
associated with long-term, fee-based contracts as opposed to higher
margin spot business in the third quarter of 2013.
Gross operating margin from the partnership’s NGL pipelines and
storage business increased $47 million, or 20 percent, to $278
million for the third quarter of 2014 from $231 million for the
third quarter of 2013. NGL pipeline volumes were 2.9 million BPD
for the third quarters of both 2014 and 2013. The partnership’s
ATEX ethane pipeline, which began commercial service in January
2014, generated gross operating margin of $35 million for the third
quarter of 2014. ATEX transported approximately 66 MBPD of ethane
during the third quarter of 2014.
The Mid-America and Seminole NGL pipeline systems reported a $10
million increase in gross operating margin to $106 million in the
third quarter of 2014 compared to the same quarter of 2013
primarily due to higher revenues from deficiency fees and an
increase in tariffs, which was partially offset by higher operating
expenses. Volumes on the Mid-America and Seminole pipelines
decreased to 908 MBPD in the third quarter of 2014 compared to 968
MBPD in the third quarter of last year due in part to lower
recoveries of ethane by natural gas processing plants.
The Texas Express pipeline and gathering system and the Front
Range NGL pipeline reported aggregate gross operating margin of $9
million and total volumes of 79 MBPD in the third quarter of 2014.
These pipelines began service after the third quarter of 2013.
Enterprise’s LPG export terminal and the related Channel pipeline
reported an $8 million decrease in gross operating margin for the
third quarter of 2014 compared to the third quarter of last year
primarily due to a 44 MBPD decrease in volume associated with
downtime for maintenance and activities preparing for the 2015
expansion of the LPG export terminal. The LPG export terminal
resumed operations on July 7, 2014 after a 12-day outage.
Enterprise’s NGL fractionation business reported gross operating
margin of $143 million for the third quarter of 2014, a $27
million, or 23 percent, increase compared to $116 million reported
for the third quarter of last year. Total fractionation volumes for
the third quarter of 2014 increased 12 percent to 823 MBPD compared
to the same quarter in 2013.
Gross operating margin for the partnership’s fractionators at
Mont Belvieu increased $37 million to $119 million for the third
quarter of 2014 compared to the third quarter of 2013. This
increase in gross operating margin was primarily attributable to a
114 MBPD increase in volume as Fractionators VII and VIII began
commercial operations during the second half of 2013. The Norco and
Hobbs fractionators reported an aggregate $10 million decrease in
gross operating margin for the third quarter of 2014 compared to
the third quarter of 2013 primarily due to a 35 MBPD decrease in
fractionation volumes.
Onshore Natural Gas Pipelines & Services –
Enterprise’s Onshore Natural Gas Pipelines & Services segment
reported gross operating margin of $195 million for the third
quarter of 2014 compared to $213 million for the third quarter of
2013. This $18 million decrease in gross operating margin was
primarily due to the settlement of a multi-year contract dispute
with a producer on our San Juan system that occurred during the
third quarter of 2014. Total onshore natural gas pipeline volumes
were 12.5 TBtud in the third quarter of 2014 compared to 13.0 TBtud
in the third quarter of 2013.
The Texas Intrastate system reported gross operating margin of
$95 million for the third quarter of 2014 compared to $97 million
for the third quarter of last year with the decrease primarily due
to higher operating expenses. The Acadian Gas System, including the
Haynesville Extension, reported gross operating margin of $45
million for the third quarter of 2014 compared to $46 million for
the same quarter of 2013.
Onshore Crude Oil Pipelines & Services – Gross
operating margin from the partnership’s Onshore Crude Oil Pipelines
& Services segment increased by 31 percent, or $45 million, to
$191 million for the third quarter of 2014 from $146 million for
the third quarter of 2013. Total onshore crude oil pipeline volumes
were 1.3 million BPD for the third quarters of both 2014 and
2013.
Gross operating margin attributable to Enterprise’s ownership in
the Seaway Crude Pipeline increased $14 million in the third
quarter of 2014 compared to the same quarter in 2013 primarily due
to higher average fees. Enterprise’s West Texas and South Texas
crude oil pipeline systems, Eagle Ford joint venture pipeline and
ECHO terminal reported an aggregate $25 million increase in gross
operating margin in the third quarter of 2014 compared to the third
quarter of 2013 on a 74 MBPD increase in volume.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment increased 63 percent, or $73 million, to $190
million for the third quarter of 2014 compared to $117 million for
the third quarter of 2013.
The partnership’s propylene business reported gross operating
margin of $65 million for the third quarter of 2014 compared to $28
million for the third quarter of 2013 primarily due to higher sales
margins and lower operating expenses. Gross operating margin for
the third quarter of 2013 included $16 million in maintenance
expenses for one of the fractionators that did not recur in the
third quarter of the current year. Propylene fractionation volumes
were 73 MBPD for the third quarter of 2014 compared to 74 MBPD for
the third quarter of 2013.
Gross operating margin for Enterprise’s octane enhancement and
high-purity isobutylene business was $48 million in the third
quarter of 2014 compared to $41 million for the same quarter in
2013. Total plant production volumes were 20 MBPD for the third
quarter of 2014 compared to 19 MBPD for the same quarter of
2013.
Enterprise’s refined products pipelines and related services
business reported gross operating margin of $48 million for the
third quarter of 2014 compared to $3 million for the third quarter
of 2013 primarily due to lower maintenance expenses associated with
pipeline integrity and related projects. Total pipeline volumes for
this business were 630 MBPD for the third quarter of 2014 compared
to 568 MBPD for the third quarter of 2013.
Enterprise’s butane isomerization business reported gross
operating margin of $12 million in the third quarter of 2014
compared to $27 million in the third quarter of 2013. This decrease
in gross operating margin was primarily due to higher maintenance
expenses in the third quarter of 2014. Butane isomerization volumes
were 95 MBPD for the third quarter of 2014 compared to 100 MBPD for
the third quarter of 2013.
Enterprise’s marine transportation and other services business
reported $17 million of gross operating margin for the third
quarter of 2014 compared to $18 million for the same quarter of
2013.
Offshore Pipelines & Services – Gross operating
margin for the Offshore Pipelines & Services segment was $47
million for the third quarter of 2014 compared to $38 million for
the same quarter of 2013.
Gross operating margin from Enterprise’s offshore crude oil
pipeline business was $33 million for the third quarter of 2014
compared to $24 million for the third quarter of 2013. The SEKCO
Oil Pipeline, which began operations in July 2014, reported $7
million of gross operating margin. Total offshore crude oil
pipeline volumes increased 7 percent to 335 MBPD in the third
quarter of 2014 compared to 314 MBPD for the third quarter of
2013.
The Independence Hub platform and Independence Trail pipeline
reported aggregate gross operating margin of $8 million for the
third quarter of 2014 compared to $11 million for the third quarter
of 2013 attributable to lower volumes. Natural gas volumes on the
Independence Trail pipeline were 198 billion British thermal units
per day (“BBtud”) for the third quarter of 2014 compared to 262
BBtud in the third quarter of 2013. Total offshore natural gas
pipeline volumes (including those for Independence Trail) were 683
BBtud for the third quarter of 2014 compared to 665 BBtud in the
third quarter of 2013.
Capitalization
Total debt principal outstanding at September 30, 2014 was
approximately $19.7 billion, including $1.5 billion of junior
subordinated notes to which the nationally recognized debt rating
agencies ascribe partial equity content. At September 30, 2014,
Enterprise had consolidated liquidity of approximately $4.8
billion, which was comprised of $1.1 billion of unrestricted cash
on hand and approximately $3.7 billion of available borrowing
capacity under our $3.5 billion multi-year revolving credit
facility and a new $1.5 billion 364-day credit facility.
On October 1, 2014, Enterprise acquired the general partner and
related incentive distribution rights, approximately 15.9 million
common units and 38.9 million subordinated units in Oiltanking
Partners, L.P. (“Oiltanking”) (NYSE: OILT). Enterprise paid total
consideration of approximately $4.6 billion comprised of $2.4
billion of cash, which included $228 million to assume notes
receivable issued by Oiltanking and its subsidiaries, and 54.8
million Enterprise common units valued at $2.2 billion. Enterprise
funded the cash consideration for this transaction using borrowings
under its new 364-day credit facility, borrowings under its
commercial paper program and cash on hand.
On October 2, 2014, Enterprise priced $2.75 billion of senior
notes. These notes were issued on October 14, 2014. The partnership
used the net proceeds to repay amounts then outstanding under its
364-day credit facility, commercial paper program and $650 million
of senior notes that matured on October 15, 2014.
Total capital spending in the third quarter of 2014 was $772
million, which includes $107 million of sustaining capital
expenditures.
Conference Call to Discuss Third
Quarter 2014 Earnings
Enterprise will host a conference call today to discuss third
quarter 2014 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; 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. 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)
For the Three
Months For the Nine Months Ended September 30,
Ended September 30, 2014
2013 2014 2013
Revenues
$ 12,330.2 $ 12,093.3 $ 37,760.9 $
34,625.7
Costs and
expenses:
Operating costs and expenses 11,414.8 11,273.5 34,934.4 32,061.1
General and administrative costs 50.0
43.9 150.9
138.9 Total costs and expenses 11,464.8
11,317.4 35,085.3
32,200.0
Equity in income of
unconsolidated affiliates
72.3 44.0
179.1 126.1
Operating
income
937.7 819.9 2,854.7 2,551.8
Other income
(expense):
Interest expense (229.8 ) (208.3 ) (679.6 ) (604.4 ) Other, net
(1.0 ) 0.6
(0.2 ) 0.2 Total other expense
(230.8 ) (207.7 ) (679.8
) (604.2 )
Income before income
taxes
706.9 612.2 2,174.9 1,947.6 Provision for income taxes (7.7
) (19.4 ) (22.5 )
(46.2 )
Net
income
699.2 592.8 2,152.4 1,901.4
Net income
attributable to noncontrolling interests
(8.1 ) (0.8 )
(24.8 ) (3.4 )
Net income
attributable to limited partners
$ 691.1 $ 592.0 $ 2,127.6
$ 1,898.0
Per unit data (fully
diluted): (1)
Earnings per unit $ 0.37 $ 0.32
$ 1.13 $ 1.03 Average limited
partner units outstanding (in millions) 1,883.4
1,846.0 1,880.0
1,835.2
Supplemental
financial data:
Non-GAAP distributable cash flow (2) $ 974.8 $
907.6 $ 3,015.6 $ 2,729.3
Non-GAAP Adjusted EBITDA (3) $ 1,300.7
$ 1,138.7 $ 3,902.3 $
3,492.6 Non-GAAP gross operating margin by segment: (4) NGL
Pipelines & Services $ 711.5 $ 639.6 $ 2,172.4 $ 1,777.0
Onshore Natural Gas Pipelines & Services 195.4 213.4 618.8
601.9 Onshore Crude Oil Pipelines & Services 190.8 146.0 534.5
579.6 Offshore Pipelines & Services 47.1 37.9 120.0 118.1
Petrochemical & Refined Products Services 190.3
117.1 482.4
450.7 Total gross operating margin $
1,335.1 $ 1,154.0 $
3,928.1 $ 3,527.3 Net cash flows
provided by operating activities $ 832.5 $
835.3 $ 2,704.4 $ 2,366.2
Total debt principal outstanding at end of period $ 19,672.7
$ 17,532.7 $ 19,672.7
$ 17,532.7 Capital spending:
Capital expenditures, net (5) $ 687.0 $ 960.9 $ 1,859.5 $ 2,393.3
Investments in unconsolidated affiliates 84.5 220.5 583.3 768.4
Other investing activities --
1.0 6.0 1.0
Total capital spending $ 771.5 $
1,182.4 $ 2,448.8 $
3,162.7
(1) On July 15,
2014, the partnership announced that its general partner had
approved a two-for-one unit split. The additional common units were
distributed on August 21, 2014. All per unit amounts and number of
units outstanding presented on this Exhibit A are on a post-split
basis. (2) See Exhibit D for reconciliation to GAAP net cash flows
provided by operating activities. (3) See Exhibit E for
reconciliation to GAAP net cash flows provided by operating
activities. (4) See Exhibit F for reconciliation to GAAP operating
income. (5) 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
For the Three
Months For the Nine Months Ended September 30,
Ended September 30, 2014
2013 2014 2013
Selected operating
data: (1)
NGL Pipelines & Services, net: NGL
transportation volumes (MBPD) 2,866 2,867 2,862 2,717 NGL
fractionation volumes (MBPD) 823 736 820 707 Equity NGL production
(MBPD) (2) 103 120 125 120 Fee-based natural gas processing
(MMcf/d) (3) 4,958 4,660 4,872 4,589 Onshore Natural Gas Pipelines
& Services, net: Natural gas transportation volumes (BBtus/d)
12,486 12,969 12,541 13,115 Onshore Crude Oil Pipelines &
Services, net: Crude oil transportation volumes (MBPD) 1,266 1,252
1,274 1,139 Offshore Pipelines & Services, net: Natural gas
transportation volumes (BBtus/d) 683 665 621 706 Crude oil
transportation volumes (MBPD) 335 314 329 306 Platform natural gas
processing (MMcf/d) 152 185 150 217 Platform crude oil processing
(MBPD) 16 16 14 15 Petrochemical & Refined Products Services,
net: Butane isomerization and deisobutanizer volumes (MBPD) 181 179
174 160 Propylene fractionation volumes (MBPD) 73 74 72 71 Octane
additive and related plant production volumes (MBPD) 20 19 15 18
Transportation volumes, primarily refined
products and petrochemicals (MBPD)
778 711 746 693 Total, net:
NGL, crude oil, refined products and
petrochemical transportation volumes (MBPD)
5,245 5,144 5,211 4,855 Natural gas transportation volumes
(BBtus/d) 13,169 13,634 13,162 13,821 Equivalent transportation
volumes (MBPD) (4) 8,711 8,732 8,675 8,492
(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)
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
2014 by quarter: 1st Quarter $4.95
$0.34 $1.30 $1.39 $1.42 $2.12 $0.73 $0.61 $98.68 $104.43 2nd
Quarter $4.68 $0.29 $1.06 $1.25 $1.30 $2.21 $0.70 $0.57 $102.99
$105.55 3rd Quarter $4.07 $0.24 $1.04
$1.25 $1.28 $2.11
$0.71 $0.58 $97.21
$100.94
YTD 2014 Averages $4.57 $0.29
$1.13 $1.30 $1.33
$2.15 $0.71 $0.59 $99.63
$103.64
(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.
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 $0.99 per
gallon during the third quarter of 2014 versus $1.01 per gallon for
the third quarter of 2013.
The market price of natural gas (as measured at the Henry Hub in
Louisiana) averaged $4.07 per MMBtu during the third quarter of
2014 versus $3.58 per MMBtu during the third quarter of 2013 – a 14
percent increase. The increase in prices is generally due to higher
natural gas demand for power generation.
The market price of WTI crude oil (as measured on the NYMEX)
averaged $97.21 per barrel during the third quarter of 2014
compared to $105.82 per barrel during the third quarter of 2013. 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 third quarter
of 2014 compared to $109.89 per barrel during the third quarter of
2013.
A decrease in our consolidated marketing revenues due to lower
energy commodity sales prices may not result in a decrease in gross
operating margin or cash available for distribution, since our
consolidated cost of sales amounts would also be lower due to
comparable decreases in the purchase prices of the underlying
energy commodities. The same correlation would be true in the case
of higher energy commodity sales prices and purchase costs.
Enterprise Products Partners
L.P. Exhibit D Distributable Cash Flow -
UNAUDITED ($ in
millions)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2014 2013 2014
2013 Net income attributable to limited
partners (GAAP) $ 691.1 $ 592.0 $ 2,127.6
$ 1,898.0 Adjustments to GAAP net income attributable to
limited partners to derive non-GAAP distributable cash flow: Add
depreciation, amortization and accretion expenses 341.4 302.5 992.4
902.3 Add distributions received from unconsolidated affiliates
103.6 68.3 260.7 187.6 Subtract equity in income of unconsolidated
affiliates (72.3 ) (44.0 ) (179.1 ) (126.1 ) Subtract sustaining
capital expenditures (106.8 ) (81.8 ) (262.0 ) (213.9 )
Subtract net gains attributable to asset
sales and insurance recoveries
(2.6 ) (10.2 ) (99.0 ) (68.4 ) Add cash proceeds from asset sales
and insurance recoveries 8.3 57.1 121.5 256.3
Subtract losses from the monetization of
interest rate derivative instruments
-- -- -- (168.8 ) Add deferred income tax expense or subtract
benefit, as applicable 2.0 17.3 2.6 32.1 Add impairment charges 5.7
15.2 18.2 53.3
Add or subtract other miscellaneous
adjustments to derive non-GAAP distributable cash flow, as
applicable
4.4 (8.8 )
32.7 (23.1 )
Distributable cash flow
(non-GAAP) 974.8 907.6 3,015.6 2,729.3 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 106.8 81.8 262.0 213.9
Subtract cash proceeds from asset sales
and insurance recoveries reflected in distributable cash flow
(8.3 ) (57.1 ) (121.5 ) (256.3 )
Add losses from the monetization of
interest rate derivative instruments
-- -- -- 168.8 Add or subtract the net effect of changes in
operating accounts, as applicable (237.2 ) (104.7 ) (435.8 ) (513.9
) Add or subtract miscellaneous non-cash and other amounts to
reconcile non-GAAP distributable cash flow with GAAP net cash flows
provided by operating activities, as applicable (3.6 )
7.7 (15.9 )
24.4
Net cash flows provided by operating
activities (GAAP) $ 832.5 $ 835.3
$ 2,704.4 $ 2,366.2
(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.
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.
Enterprise Products Partners
L.P.
Exhibit E
Adjusted EBITDA - UNAUDITED
($ in millions)
For the Twelve
For the Three Months
For the Nine Months
Months Ended
Ended September 30,
Ended September 30,
September 30,
2014
2013
2014
2013
2014
Net income (GAAP) $ 699.2 $ 592.8 $ 2,152.4
$ 1,901.4 $ 2,858.1 Adjustments to GAAP net income to
derive non-GAAP Adjusted EBITDA: Subtract equity in income of
unconsolidated affiliates (72.3 ) (44.0 ) (179.1 ) (126.1 ) (220.3
) Add distributions received from unconsolidated affiliates 103.6
68.3 260.7 187.6 324.7 Add interest expense, including related
amortization 229.8 208.3 679.6 604.4 877.7 Add provision for income
taxes 7.7 19.4 22.5 46.2 33.8 Add depreciation, amortization and
accretion in costs and expenses 332.7
293.9 966.2
879.1 1,272.5
Adjusted
EBITDA (non-GAAP) 1,300.7 1,138.7 3,902.3 3,492.6 5,146.5
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
(229.8 ) (208.3 ) (679.6 ) (604.4 ) (877.7 )
Subtract provision for income taxes
reflected in Adjusted EBITDA
(7.7 ) (19.4 ) (22.5 ) (46.2 ) (33.8 )
Subtract net gains attributable to asset
sales and insurance recoveries
(2.6 ) (10.2 ) (99.0 ) (68.4 ) (113.9 ) Add deferred income tax
expense or subtract benefit, as applicable 2.0 17.3 2.6 32.1 8.4
Add impairment charges 5.7 15.2 18.2 53.3 57.5 Add or subtract the
net effect of changes in operating accounts, as applicable (237.2 )
(104.7 ) (435.8 ) (513.9 ) (19.5 ) Add miscellaneous non-cash and
other amounts to reconcile non-GAAP Adjusted EBITDA with GAAP net
cash flows provided by operating activities 1.4
6.7 18.2
21.1 36.2
Net cash flows provided by operating activities (GAAP) $
832.5 $ 835.3 $ 2,704.4
$ 2,366.2 $ 4,203.7
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.
Exhibit F
Gross Operating Margin – UNAUDITED
($ in millions)
For the Three Months
For the Nine Months Ended September 30,
Ended September 30, 2014 2013
2014 2013 Total gross
operating margin (non-GAAP) $ 1,335.1 $ 1,154.0 $
3,928.1 $ 3,527.3 Adjustments to reconcile non-GAAP
gross operating margin to
GAAP operating income:
Subtract depreciation, amortization and
accretion expense amounts not reflected in gross operating
margin
(322.7 ) (285.2 ) (936.5 ) (851.7 )
Subtract impairment charges not reflected
in gross operating margin
(5.7 ) (15.2 ) (18.2 ) (53.3 )
Add net gains attributable to asset sales
and insurance recoveries not reflected in gross operating
margin
2.6 10.2 99.0 68.4
Subtract non-refundable deferred revenues
attributable to shipper make-up rights on new pipeline projects
included in gross operating margin
(21.6 ) -- (66.8 ) --
Subtract general and administrative costs
not reflected in gross operating margin
(50.0 ) (43.9 )
(150.9 ) (138.9 )
Operating income
(GAAP) $ 937.7 $ 819.9
$ 2,854.7 $ 2,551.8
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. In addition, 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.
Enterprise Products Partners L.P.Randy Burkhalter,
713-381-6812Vice President, Investor RelationsorRick Rainey,
713-381-3635Vice President, Media Relations
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