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Enterprise release 2Q16 results

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World Pipelines,

Enterprise Products Partners L.P. (Enterprise) has announced its financial results for the three and six months ended 30 June 2016.

Enterprise increased its cash distribution with respect to the second quarter of 2016 (2Q16) by 5.3% to US$0.40 per unit compared to the distribution paid with respect to 2Q15. The distribution will be paid 5 August 2016 to unitholders of record as of the close of business on 29 July 2016.

Enterprise reported distributable cash flow of US$1 billion for 2Q16, which provided 1.2 times coverage of the US$0.40 per unit cash distribution and resulted in US$200 million of retained distributable cash flow. For the first six months of 2016, distributable cash flow of US$2.1 billion provided 1.3 times coverage of the aggregate US$0.795 per unit cash distribution, and Enterprise retained US$428 million of distributable cash flow, which is available to reinvest in growth capital projects and reduce the need to issue additional equity.

Capital investments were US$884 million in 2Q16, and US$1.9 billion for the first six months of 2016. Included in these investments were sustaining capital expenditures of US$58 million in 2Q16 and US$118 million in the first six months of 2016.

“Enterprise reported record onshore liquid pipeline volumes and marine terminal volumes in 2Q16, which led to a 5.3% increase in distributable cash flow to US$1 billion and provided 1.2 times coverage of the distribution to partners declared for the second quarter,” said Jim Teague, Chief Executive Officer of Enterprise’s general partner. “Volume growth was primarily driven by the expansion of our LPG marine terminal, the ramp up of contracted volumes on our Aegis and ATEX ethane pipelines, the acquisition of EFS Midstream, as well as higher volumes on the Mid-America, Seminole and TE Products pipeline systems. The increase in gross operating margin from our fee-based businesses largely offset lower earnings from our commodity-sensitive businesses, the impact of lower crude oil pipeline volumes and the divestiture of our offshore Gulf of Mexico business in July 2015.”

“Enterprise successfully completed construction and began commercial service for US$600 million of growth capital projects in the second quarter. These included the South Eddy natural gas processing plant in the Delaware Basin and completion of over 2 million bbls of additional crude oil storage capacity at our Houston terminal and Beaumont Marine West terminals. We are on schedule to complete and begin commercial service on another US$1.4 billion of growth projects during the remainder of 2016, including our ethane export facility on the Houston Ship Channel and the Waha natural gas processing plant in the Delaware Basin. In addition, we have US$5.2 billion of growth capital projects scheduled to be completed in 2017 and 2018. These capital projects provide our investors visibility to continued growth in distributable cash flow,” continued Teague.

Petrochemical and refined products services

Gross operating margin for the petrochemical and refined products services segment was US$176 million for 2Q16 compared to US$181 million for 2Q15. Total segment pipeline transportation volumes increased 12% to 874 million bpd for 2Q16 from 777 million bpd for the same quarter of 2015.

Enterprise’s refined products pipelines and related services business reported a 68% increase in gross operating margin for 2Q16 to US$74 million from US$44 million for 2Q15. Included in these amounts is gross operating margin from refined products marketing activities, which increased by US$15 million, primarily due to higher sales margins and volumes. Gross operating margin from the TE Products Pipeline and related terminals increased US$9 million as a result of higher volumes, and refined products terminalling services at the facility in Beaumont, Texas contributed US$5 million to the increase in gross operating margin, primarily due to higher demand for storage and marine vessel loading services.

The partnership’s propylene business reported a 55% increase in gross operating margin to US$53 million for 2Q16 from US$34 million for 2Q15, primarily as a result of higher propylene volumes and lower maintenance expenses. Propylene fractionation volumes were 80 million bpd for this quarter compared to 68 million bpd for 2Q15.

Gross operating margin for Enterprise’s octane enhancement and high purity isobutylene business was US$21 million in 2Q16 versus US$68 million in 2Q15. The US$47 million quarter to quarter decrease was primarily due to lower sales margins and volumes. Total plant production volumes were 22 million bpd this quarter compared to 24 million bpd for 2Q15.


Total debt principal outstanding at 30 June 2016 was US$23 billion, including US$1.5 billion of junior subordinated notes to which the nationally recognised debt rating agencies ascribe partial equity content. At 30 June 2016, Enterprise had consolidated liquidity of US$4.7 billion, which was comprised of unrestricted cash on hand and available borrowing capacity under our revolving credit facilities. The company used US$1 billion of liquidity on 11 July 2016 to fund the second and final installment payment for the EFS Midstream acquisition.

Total capital spending in 2Q16 was US$884 million, which includes US$58 million of sustaining capital expenditures. For the first six months of 2016, Enterprise’s capital spending was US$1.9 billion including US$118 million of sustaining capital expenditures. For 2016, Enterprise is currently expecting to invest approximately US$2.8 billion for growth projects and approximately US$275 million for sustaining capital expenditures.

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 US$0.50/gal. during 2Q16 versus US$0.52/gal. for the 2Q15.

Fluctuations in 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.

A change in Enterprise's consolidated marketing revenues due to lower energy commodity sales prices may not result in a similar change in gross operating margin or cash available for distribution, since the consolidated cost of sales amounts would also change due to comparable decreases in the purchase prices of the underlying energy commodities.

Adapted from press release by Francesca Brindle

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