Enterprise Products Partners, L.P.

NYSE:  EPD

 

 

Enterprise Products Partners is the second largest publicly traded, midstream energy partnership in the United States.  Following its September 30, 2004 merger with GulfTerra Energy Partners, it has an enterprise value of approximately $14 billion.  The partnership is a leading integrated North American provider of processing and transportation services to domestic and foreign producers of natural gas liquids (NGLs) and other liquid hydrocarbons, and to domestic and foreign consumers of NGLs and liquid hydrocarbon products. Enterprise's asset platform on the Gulf Coast, combined with its Mid-America and Seminole pipeline systems, creates the only integrated North American natural gas and NGL network complete with export services in North America. The system links producers of natural gas and NGLs from the largest supply basins in the United States and Canada with the largest consumers of NGLs and international markets. 

 

The company manages a fully integrated and diversified portfolio of midstream energy assets and is engaged in both natural gas and NGL processing through direct and indirect ownership and operation of NGL fractionators.  Enterprise Products Partners also operates and/or manages NGL processing facilities, storage facilities, pipelines, rail transportation facilities, a methyl tertiary butyl ether ("MTBE") facility, a propylene production complex, and other transportation facilities in which it has a direct and indirect ownership.  The products that Enterprise Products Partners processes generally are used as feedstocks in petrochemical  manufacturing, in the production of motor gasoline, and as fuel for residential and commercial heating.  The merger with GulfTerra added interests in three large capacity offshore oil pipeline systems and six offshore Gulf of Mexico hub platforms.

 

Enterprise Products Partner’s operations include:

 

1.                  NGL, Petrochemical, and Natural Gas Pipelines

 

            Enterprise Products Partners owns or has interests in approximately 31,000 miles of NGL, petrochemical and natural gas transportation and distribution pipeline systems. NGL and petrochemical pipelines total 13,000 miles and include the 7,226 Mid-American pipeline, a system with three separate pipelines branching into 13 states; the 1,301 Dixie Pipeline system, which carries NGLs and petrochemicals from Mt. Belvieu through the Southeast; the 1,281 mile Seminole Pipeline, running from New Mexico through Texas to the Gulf Coast, and several smaller pipelines. Total net throughput of Enterprise’s NGL and petrochemical pipelines in 2003 was 1,264 MBPD.  

 

            This segment also includes the partnership’s storage and import/export terminaling businesses. NGL and petrochemical storage facilities are integral parts of Enterprise’s pipeline operations. Following the merger Enterprise has ownership interests in 164 million barrels of NGL storage capacity.   The storage facilities are located in Texas, Louisiana, Mississippi, Iowa, Nebraska, and Oklahoma and have a practical capacity of 139.5 MMBbls.   Enterprise leases and operates an import facility and owns an export facility in the Houston Ship Channel.  The import facility enables NGL tankers to be offloaded at their maximum unloading rate of 10,000 barrels per hour, while the export facility can load vessels with refrigerated propane and butane at rates up to 5,000 barrels per hour. It also owns and operates the OTC Propylene Export Facility an above-ground polymer grade propylene storage and export facility located in Seabrook, Texas, which can load vessels of polymer grade propylene at rates up to 5,000 barrels per hour.  Total volume at these facilities in 2003 was 64 MBPD at the Houston import facility, 15 MBPD at the Houston export facility, and 3 MBPD at the OTC facility, for a total of 82 MBPD. 

 

            The GulfTerra merger added three additional NGL storage facilities:  Hattiesburg Propane Storage, a 3.3 MMBbl propane storage business and leaching operation in Mississippi; Beaux Bridge NGL Storage, a 3.2 MMBbl NGL multi-product storage facility in Louisiana; and Texas Leased NGL Storage, three NGL storage facilities with aggregate capacity of 18.1 MMBbls.   Also added were GulfTerra’s Petal and Hattiesburg, Mississippi salt dome natural gas storage facilities, which have a combined current working gas storage capacity of 13.5 billion cubic feet and delivery capacity of in excess of 1.2 Bcf/d into five interstate pipeline systems. These acquisitions brought Enterprise’s natural gas storage capacity to 23 billion cubic feet.

 

            Enterprise’s natural gas pipeline systems total 17,000 miles, including 15,500 miles of pipeline acquired in the merger with GulfTerra.  The systems include:

 

Ø      The Texas Intrastate System, an 8,222-mile pipeline with a capacity of 4,975-MMcf/d and average throughput of 3,331 during 2003.

Ø      The San Juan gathering system – a 5,300-mile gathering system; includes the 1,042 Acadian Gas System as well as several smaller pipelines.

Ø      The Permian Basin system – a 1,064-mile system, with a net capacity of 470 MMcf/d and average throughput in 2003 of 320 MMcf/d.

Ø      Viosca Knoll – a 162-mile system with a net capacity of1, 160 MMcf/d connecting the Main Pass, Mississippi Canyon and Viosca Knoll areas of the Gulf of Mexico with major interstate pipelines.

Ø      The High Island Offshore System (HIOS) – a 204-mile system with a net capacity of 1,800 MMcf/d which transports natural gas from the Galveston, Garden Banks, West Cameron, High Island, and East Breaks areas of the Gulf of Mexico to downstream pipelines.  Average throughput in 2003 was 708 MMcf/d.

Ø      East Breaks – an 85-mile gathering system with a net capacity of 400 MMcf/d and average throughput in 2003 of 186 MMcf/d, connecting HIOS to the Hoover-Diana project.

Ø      Falcon – a 14-mile system with a net capacity of 400 MMcf/d and average throughput of 177 MMcf/d in 2003.

Ø      Typhoon – a 35-mile system with a net capacity of 400 MMcf/d which connects the Typhoon field to the ANR pipeline.  Average throughput in 2003 was 50 MMcf/d.

Ø      GulfTerra Alabama Intrastate – a 450-mile system with a net capacity 200MMcf/d serving the coal bed methane region of Alabama.  Average throughput in 2003 was 151 MMcf/d.

 

2.                  Fractionation

 

            Enterprise’s fractionation operations include NGL fractionation, isomerization, and propylene fractionation.  Following the merger with GulfTerra, the partnership owns interests in 19 fractionation plants with a net capacity of approximately 650 thousand barrels per day. NGL fractionation operations include six NGL fractionators with a combined gross processing capacity of 556 MBPD and a net processing capacity of 314 BPD, located at Mont Belvieu, Texas and Norco, BRF, Promix, Tebone, Toca-Western, and Venice, Louisiana.  The partnership’s isomerization business includes three butamer reactor units and eight associated deisobutanizers located in Mont Belvieu, Texas, which comprise the largest commercial isomerization complex in the United States.  These facilities have an average combined production capacity of 116 MBPD of isobutane and produced 77 MBPD in 2003.  The majority of the propylene fractionation assets are located in Texas, with one facility in Louisiana. 

 

The GulfTerra merger brought to Enterprise more than 1,000 miles of intrastate NGL gathering and transportation pipelines and four fractionation plants with a combined capacity of 120 MBbls/d of NGLs located in Texas.   The NGL pipeline system includes 379 miles of pipeline used to gather and transport unfractionated NGLs to the Shoup Plant, located in Corpus Christi, which is the largest of the four fractionators.  The pipeline system also includes over 660 miles of pipelines that deliver fractionated products such as ethane, propane, butane and natural gasoline to refineries and petrochemical plants from Corpus Christi to Houston and within the Texas City-Houston area, as well as to common carrier NGL pipelines.

 

3.                  Natural Gas Processing

 

            The processing segment includes the Enterprise’s natural gas processing business and related NGL marketing activities.    Enterprise has interests in 24 natural gas processing plants with a net capacity of 6.0 billion cubic feet per day.   The processing facilities are primarily straddle plants situated on mainline natural gas pipelines that bring unprocessed natural gas production from the Gulf of Mexico onshore. These facilities allow Enterprise to extract NGLs from a raw natural gas stream which enable the natural gas to meet pipeline quality specifications.  Processing is done under three types of contracts with producers:  margin-band/keepwhole contracts, in which Enterprise takes ownership of mixed NGLs extracted from a producer’s natural gas stream and in return, pays the producer for the energy value of the mixed NGLs extracted from the natural gas stream and that of the fuel consumed by in the extraction process; percent-of-liquids contracts, in which Enterprise takes ownership of a percentage of mixed NGLs extracted from a producer’s natural gas stream and the producer retains title to the remaining percentage of mixed NGLs extracted and is responsible for the cost of PTR with respect to 100% of the mixed NGLs extracted; and fee based contracts, in which the partnership earns a fee based on the volume of natural gas processed.  In addition, Enterprise acquired in the merger with GulfTerra interests in five processing and treating plants in New Mexico, Texas and Colorado with a combined maximum capacity of over 1.5 Bcf/d of natural gas and 50 MBbls/d of NGLs.

 

            Enterprise’s NGL marketing activities utilize a fleet of approximately 670 railcars, the majority of which are under short and long-term leases.  The railcars are used to deliver feedstocks to the company’s facilities and to transport NGL products throughout the United States.  The partnership has rail loading/unloading facilities at Mont Belvieu, Texas; Breaux Bridge, Louisiana; Sorrento, Louisiana and Petal, Mississippi

 

4.                  Octane enhancement

 

The octane enhancement segment consist of the partnership’s 66.7% equity interest in Belvieu Environmental Fuels, which owns and operates a facility that produces motor gasoline additives to enhance octane.  The facility has primarily produced MBTE and is now being modified to produce iso-octane, a motor gasoline octane enhancement additive derived from isobutane.

 

5.                  Offshore Oil Pipeline Systems

 

As a result of the merger with GulfTerra, Enterprise owns interests in three offshore oil pipeline systems, which extend over 340 miles and have a combined capacity of approximately 635 MBbls/d of oil with the addition of pumps and the use of friction reducers. In addition to being strategically located in the vicinity of some prolific oil-producing regions in the Gulf of Mexico, GulfTerra’s oil pipeline systems are parallel to and interconnect with key segments of some of its natural gas pipeline systems and offshore platforms, which contain separation and handling facilities.

 

Enterprise also has interests in seven multi-purpose offshore hub platforms in the Gulf of Mexico, including the Falcon Nest platform which went on line in March 2003 and the Marco Polo tension leg platform (TLP) that was installed in January 2004. These platforms were specifically designed to be used as deepwater hubs and production handling and pipeline maintenance facilities. Through these facilities, the partnership is able to provide a variety of midstream services to increase deliverability for, and attract new volumes into, its offshore pipeline systems.

 

6.                  Other operations

 

Other operations include fee-based marketing services and unallocated costs of engineering services, construction equipment rentals, and computer network services that support the partnership’s operations and business activities. This segment is primarily comprised of fee-based marketing activities.  Enterprise Products Partners performs NGL marketing services for a small number of clients, for which it charges a commission.  The customers served are primarily located in California, Illinois, and Washington State. During 2003, the partnership’s fee-based marketing services handled approximately 35 MBPD of various NGL products with the period of highest activity occurring during the summer months.

 

Business Strategy

 

Enterprise’s business strategy is to:

 

1.                  Capitalize on expected increases in natural gas and NGL production resulting from development activities in the Rocky Mountain, Permian Basin and Mid-Continent regions and in the deepwater and continental shelf and onshore and coastal areas of the Gulf of Mexico;

2.                  Develop and invest in joint venture projects with strategic partners that will provide the raw materials for the project or purchase the project's end products;

3.                  Share capital costs and risks associated with our operations through the formation of strategic alliances, joint ventures and similar arrangements with other businesses;

4.                  Expand its asset base through accretive acquisitions of complementary midstream energy assets, particularly those of fee-based businesses such as pipelines; and

5.                  Maintain a sound capital structure, which is important in managing liquidity and capital resource requirements and providing Enterprise with the financial flexibility to fund future growth opportunities.

 

Enterprise Products Partners trades on the New York Stock Exchange under the symbol EPD.  For more information, visit the company’s web site at http://www.epplp.com/ or contact Randy Burkhalter at 713-880-6500, [email protected].

 

 

Enterprise Products Partners (pre-merger)

Financial Information from 2003 10-K

(in thousands, except per unit amounts)

 

 

2003

2002

 

 

 

Market Value

$1,100,000

$3,969,000

Current Assets

$687,183

$637,568

Net Property, Plant & Equipment

2,963,505

 2,810,839

Total Assets

$4,802,814

$4,230,272

Current Liabilities

$1,096,805

$721,356

Long-Term Debt

$1,899,548

$2,231,463

Partners’ Equity

$1,705,953 

1,200,904

Revenues

$5,346,431

$3,584,783

Operating Income

$248,104

 $194,307

Net Income

$104,546

$95,500

Net Income /Unit (undiluted)

$0.42

$.55

Distribution / Unit

$1.47

$1.36

High unit price

$24.98

$25.79

Low unit price

$17.85

$15.00

 
*As of June 30, 2003 and June 28, 2002

 

 

GulfTerra Energy Partners (pre-merger)
Financial Information from 2003 10-K

(in thousands, except per unit amounts)

 

 

2003

2002

 

 

 

Market value*

$2,450,000

$1,869,000

Current assets

$209,023

$279,995

Net property, plant & equipment

$2,894,492

$2,724,938

Total assets

$3,321,580

$3,130,896

Current liabilities

$209,367

$254,091

Long-term debt

$1,129,807

$857,786

Partners’ capital

$1,252,586

$949,852

Revenues

$871,489

$457,390

Operating income

$314,463

$160,810

Net income

$163,139

$97,688

Net income/unit

$1.32

$0.92

Distribution/unit       

$2.76

$2.70

High unit price

$42.93

$38.54

Low unit price

$27.82

$20.50

*As of March 10, 2004 and June 30, 2003

 

 

 

Click here to download this document in Word.

 

All company fact sheets on the Coalition web site are for informational purposes only and do not constitute a recommendation by the Coalition regarding the purchase or sale of any particular security.