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Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP

Enterprise Products Partners LP · Aug 16, 2017 · 60 slides

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Slides

  1. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 1
    ENTERPRISE PRODUCTS PARTNERS L.P. CITI 1X1 MLP / MIDSTREAM INFRASTRUCTURE CONFERENCE August 1617, 2017 ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  2. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 2
    KEY INVESTMENT CONSIDERATIONS One of the largest integrated midstream energy companies Integrated system enables EPD to reduce impact of cyclical commodity swings Large supply aggregator and access to domestic and international…
  3. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 3
    EPDS UNIQUE ADVANTAGE Significant & Supportive Insider Ownership Supportive and unlevered GP with significant ownership EPCO and affiliates own 32% of LP EPCO & Affiliates units (no structural subordination 100% all…
  4. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 4
    SUCCESSFUL EXECUTION THROUGHOUT CYCLES Increased Cash Distributions for 52 Consecutive Quarters MLP Equities: Higher Correlation to Crude for Last 30 Months EPD Has Delivered Consistent Results Throughout Cycles 400% 1,600 160 Total…
  5. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 5
    EPD: NATURAL GAS, NGLS, CRUDE OIL, PETROCHEMICALS AND REFINED PRODUCTS Asset Overview Connectivity Pipelines: 50,000 miles of natural gas, NGL, crude oil, petrochemicals and Fully integrated midstream energy company refined…
  6. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 6
    DIVERSIFIED SOURCES OF CASH FLOW BACKED BY FEEBASED BUSINESS MODEL 5.5 Billion Total Gross Operating Margin Natural Gas Gathering & Processing Diminishing for 12 months ended June 30, 2017 Contribution to Total Gross Operating…
  7. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 7
    SUPPLY / DEMAND FUNDAMENTALS ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  8. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 8
    CURRENT MACRO ENERGY OUTLOOK SupplySide In 3rd year of lower commodity prices Crude oil price OPEC agreement versus U.S. shale producers Will U.S. production grow faster than global demand E&P still generally living within cash…
  9. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 9
    GLOBAL CRUDE BALANCES ARE IMPROVING Demand / Supply Balance as of 2Q17 MMBbls OECD Total Products Inventory Inventory Change (MMBPD) Supply / Demand (MMBPD) Inventory Change & Misc. Oil demand growth remains robust,…
  10. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 10
    IS 55 50/BBL THE NEW 85/BBL COULD 45 BECOME THE NEW 85 U.S. Oil and Condensate MBPD EPD Forecasts: 2014 vs. 2017 14,000 12,000 10,000 8,000 6,000 4,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024…
  11. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 11
    ALL MAJOR U.S. CRUDE OIL BASINS HAVE SOLID RETURNS IN CORE ACREAGE 100% 350 Basin size in current production (MBPD) 1,400 80% 600 875 Rate of Return 60% 300 1,050 40% 20% 0% DJ Niobrara HZ Midland Basin HZ…
  12. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 12
    RECOVERY IN RIG COUNTS 600 Permian Eagle Ford 560 250 204 500 200 400 369 150 300 232 101 100 82 200 154 50 32 100 0 0 50 Haynesville 2,500 Total U.S. 42 41 40 2,000 1,874 30 27 1,500 20 1,000 862 940 15 10 500…
  13. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 13
    HOW QUICKLY WILL DRILLED UNCOMPLETED WELLS (DUCs) TURN INTO PRODUCTION Permian Eagle Ford 2,500 1,600 1,520 2,244 1,406 1,400 2,000 1,203 1,648 1,200 1,071 1,000 936 of Wells of Wells 1,500 1,117 1,278 800 1,000 600…
  14. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 14
    U.S. OIL & CONDENSATE SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (MBPD) AK & CA 1,000 750 1,018 941 500 899 250 0 Current 2020 2022 2,200 ROCKIES 2,000 1,970 2,021 1,800 1,774 200 APPALACHIAN 1,600 150 Current 2020 2022…
  15. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 15
    PERMIAN BASIN BALANCES CRUDE OIL TAKEAWAY Permian Crude Oil Balances (using Capacities at 100% Load Factor) 6 5 4 MMBPD 3 2 1 0 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Jan16 Jul16 Jan17 Jul17 Jan18…
  16. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 16
    TO MATCH REFINERS PREFERRED FEED SLATE: EXPECT LIGHT OIL EXPORTED & HEAVY / MEDIUM IMPORTED We expect EPD assets to handle exports, imports, batching and blending of various crude oil grades and qualities MMBPD 22 20 18 US Prod…
  17. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 17
    MACRO REFINED PRODUCTS FUNDAMENTALS 10,000 25 3.5 PADD3 Refining: Crude Input and Crack Spread U.S. Net Refined Products Exports 9,500 3.0 20 9,000 2.5 8,500 MMBPD 15 2.0 MBPD 8,000 7,500 10 1.5 7,000 1.0 5…
  18. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 18
    ALL MAJOR U.S. NATURAL GAS BASINS HAVE SOLID RETURNS IN CORE ACREAGE 100% Rich Lean 80% Rate of Return 60% 40% 20% 0% Rich Scoop Rich Marcellus Pinedale Rich Utica Lean Haynesville Lean Utica Fayetteville Stack…
  19. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 19
    U.S. NATURAL GAS SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (BCF/D) 4 AK & CA 2 1 1 1 0 16 ROCKIES Current 2020 2022 12 13 13 13 8 4 0 APPALACHIAN Current 2020 2022 30 32 35 20 23 10 MIDCONTINENT 0 12 Current 2020…
  20. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 20
    NATURAL GAS: U.S. GULF COASTCENTRIC DEMAND & FORECASTED FLOW PATTERNS Canada +3 Bcf/d 2016 to 2022 Change in NG Flow Bakken +0.5 1 Bcf/d Canada +1.5 RC & E.G. +1.0 Rockies Demand Production Marcellus & Utica Other…
  21. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 21
    U.S. NGL SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (MBPD) 120 AK & CA 80 105 98 95 40 0 1000 ROCKIES Current 2020 2022 926 967 815 500 0 1,500 APPALACHIAN Current 2020 2022 1,264 1,000 1,108 500 766 Total Supply…
  22. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 22
    U.S. LPG DEMAND IS EXPECTED TO REMAIN FLAT AS PRODUCTION GROWS MMBPD 3.5 LPG Supply 3.0 Industry Export Capacity at 85% Operating Rate 2.5 2.0 1.5 1.0 0.5 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021…
  23. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 23
    U.S. IS THE LARGEST EXPORTER OF LPG LPG Exports by Destination through June 2017 EPD LPG Exports by Destination Region through June 2017: 462.5 MBPD % of Cargos Loaded EPD% of Destination Market North America 13% 33% South America 20%…
  24. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 24
    CHINA AND INDIA LPG DEMAND MOSTLY FOR RESIDENTIAL; PRICE INSENSITIVE China & India LPG Demand 2.5 1,500 Population Million People 1,000 U.S. LPG Demand 2.0 500 0 USA India China 1.5 MMBPD 1.0 0.5 0.0 2010 2011 2012…
  25. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 25
    U.S. GULF COAST ETHANE BALANCES All Regions West of Appalachia Appalachia MBPD Supply Potential MBPD Supply Potential 800 2,400 (1) 120 600 278 1,800 120 (1) +50 234 (1) 120 400 Utopia Export 259 1,200 233 200 410 460 1,898…
  26. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 26
    LOW GAS TO CRUDE SPREAD CONTINUING TO DRIVE U.S. NGL ADVANTAGE 70 70 Global Ethylene Cash Costs Indicative U.S. Ethylene Cracker 60 Profit Margin by Feedstock 55 Margin Cents per Pound U.S. Cents per Pound 50 40 40…
  27. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 27
    THE CHEMICALS INDUSTRY IS MAKING LARGE INVESTMENTS BASED ON U.S. SHALES American Chemistry Council (ACC) analysis shows 164 billion in capital spending could lead to 105 billion per year in new chemical output Much of new…
  28. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 28
    CRACKING ETHANE HAS A HIDDEN COST (OPPORTUNITY): FEW HEAVIER OLEFINS Production* Ethylene Propylene Butylene Butadiene Other Ethane 78% 0% 1% 2% 19% Propane 42% 17% 1% 3% 37% Feedstock Butane 40% 17% 7% 3% 33% Naphtha 31%…
  29. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 29
    U.S. PROPYLENE INVENTORIES 6.0 5.5 5.0 4.5 Million Barrels 4.0 3.5 3.0 2.5 2.0 5Yr Range 2017 2016 5Yr Average Sources: Bloomberg, ProphetX and EIA ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. 30
  30. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 30
    HOUSTON AREA VS. CORPUS CHRISTI AREA MARKET COMPARISON EAGLE FORD Houston Area* Total Ship Docks 150 Storage Capacity (MMbbl s ) 300 Refining Capacity (MMBPD) 4.40 Houston 1.60 Beaumont 1.70 Texas City 0.80 Freeport…
  31. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 31
    HOUSTON SHIP CHANNEL HAS PLENTY OF CAPACITY Average Utilization is 57% of Peak Movements Houston Vessel Arrivals 20142017 Vessels Month Houston Deepdraft Vessel Movements 2016 arrivals per year 8,300 2016 average movements…
  32. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 32
    COMMERCIAL UPDATES ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  33. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 33
    EPD VISIBILITY TO GROWTH 9.0B of Major Capital Projects with More to Come MidlandtoSealy pipeline NatGas Crude oil infrastructure 1% Mont Belvieu Frac IX 5.0 Orla I & II gas processing plants Ethylene infrastructure 4.5 NGL 4.0…
  34. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 34
    EXPANDING NGL FOOTPRINT IN PERMIAN Orla Gas Plant I & II: Capacity of 600 MMcf/d inlet gas and 80 MBPD of NGL production Bringing gas processing capacity to 1 Bcf/d and 150 MBPD of NGL production Delaware Basin Building fully…
  35. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 35
    ENTERPRISE WESTERN G&P ASSETS Focus on Increasing Supply Franchise assets in the Rockies feeding Wyoming EPD's downstream NGL system of Pioneer Plant Green River pipelines, fractionation, storage and Basin export terminals…
  36. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 36
    EPD CONTRACTED LPG EXPORT LOADINGS 16,000 1,150 Cargos Contracted from 20172020 14,000 12,000 10,000 Mbbls/Month 8,000 6,000 LPG Export Capacity: 14.0 MMbbls/Month 4,000 2,000 0 2010 2011 2012 2013 2014 2015 2016…
  37. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 37
    ETHANE EXPORT FACILITY Largest of Its Kind HOUSTON SHIP CHANNEL MORGANS POINT Dock 8 Dock 7 Train 2 Train 1 200 Average Annual Contracted Volumes 150 MBPD 100 Combined operating loading rate of 200 MBPD 50…
  38. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 38
    MIDLAND TO SEALY CRUDE OIL P/L SEGMENT From Permian Supply Hub to Multiple Markets Contracted Volumes in Annual Averages O K L A H O M A 350 416mile, 24 pipeline from Midland Cushing 300 250 to Sealy segment connects to Sealy…
  39. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 39
    MIDLAND CRUDE OIL CONNECTIVITY Growing to 4 MMBbls with Access to Multiple Markets Cushing Colorado Wichita Falls City BASIN (14%) PAA CACTUS MIDLAND AREA Mesa Plains / Centurion Sunoco PET Basin EPD WTX GATHERING…
  40. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 40
    CRUDE OIL DISTRIBUTION SYSTEM Connectivity to 4 MMBbls Refining Capacity Capability to Load 4 MMBPD of Crude Oil / Refined Products Moore Road Cushing 36/24/24 EHSC 45 draft Galena Park 24 30/30/24 Sealy XOM Baytown 24…
  41. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 41
    PDH & iBDH Extending the Value Chain w/PetChem H2 Ethane Removing (and Selling) Feed to Petchems Fuel (Nat Gas) Hydrogen Adds Value Gas Export Liquids PDH Propylene Propane (fabrics, plastics, Feed to Petchems paints,…
  42. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 42
    PDH FACILITY Produce up to 1.65 billion lbs/year (25 MBPD) of PGP Consume 35 MBPD of propane 100% of capacity subscribed under feebased contracts with investment grade companies averaging 15 years Transitioned to new…
  43. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 43
    ISOBUTYLENE VALUE CHAIN Continuing Strategy: Convert low cost NGLs into value added olefins EPD Assets Crude MTBE YGrade Nbutane Isobutane Isobutylene isoButane Crude Gas Plants Fractionation Isomerization DeHydro Isobutylene…
  44. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 44
    iBDH Converting Low Cost NGLs into Value Added Olefins Capacity Announced January 30 425 kta = 937 million pounds of isobutylene annually Doubles Enterprise capacity Will consume 30 MBPD butane Schedule Engineering is in full…
  45. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 45
    POTENTIAL NEW NATURAL GAS PIPELINE Addressing a Potential Permian Constraint Waha Hub Agua Dulce Hub ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. 46
  46. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 46
    INCREASING ETHYLENE & PROPYLENE INFRASTRUCTURE Ethylene Infrastructure Mont Belvieu ethylene cavern conversion will have capacity of 600 million lbs; expected inservice 2018 Eight (8) ethylene pipelines within 0.5 mile of 2…
  47. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 47
    FINANCIAL UPDATE ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  48. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 48
    SOLID OPERATING PERFORMANCE 6.0 Onshore Liquids Pipeline Volumes(1) 160 Equity NGL Production 5.5 & Feebased Processing 5.5 5.4 140 Equity NGL Production Feebased Processing 5.2 5.0 5.0 Million BPD 5.0 120 4.9…
  49. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 49
    MARINE TERMINAL / DOCK ACTIVITY (1,2) Crude Oil & Condensate Petrochemical & (1) 435 750 691 Refined Products 400 389 131 481 355 600 557 103 495 482 300 97 366 270 MBPD MBPD 450 328 286 304 341 97 200 258 300 210…
  50. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 50
    STRONG FINANCIAL RESULTS Total Gross Operating Margin (Total GOM) Distributable Cash Flow (DCF)(1) 6.0 6.0 5.6 5.2 5.3 5.2 4.8 5.0 5.0 4.1 4.1 4.0 3.8 4.0 Billions Billions 3.9 4.0 4.1 2.8 3.0 3.7 3.0 2.0 2.0 2.2 1.0…
  51. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 51
    DEMONSTRATED FINANCIAL DISCIPLINE WHILE EXECUTING GROWTH STRATEGY Total Growth Capex & Debt Leverage 8.0 7.8 4.6 4.7x 7.0 6.2 4.5x 6.0 2.5 Debt / Adjusted EBITDA 4.4x 4.3x(3) 4.3x 5.0 in Billions 4.2x 4.2 4.2x 3.9…
  52. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 52
    WHY HYBRIDS WHY NOW Indicative WACC Comparison (1,2) On August 7, EPD priced 1.7 billion of 8.5% Hybrids vs Traditional Debt & Equity at Various Distribution Growth Rates for 10 Years hybrid debt 8.0% Most attractive hybrids…
  53. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 53
    STRENGTHENING DEBT PORTFOLIO Extending Maturities Without Increasing Costs 21.3 Billion Notes Issued 87.3% Fixed Rate Debt 18.0 8.0% 2009August 2017 17.5 17.7 17.6 17.3 17.3 17.0 7.0% 8.9% Average Maturity Years…
  54. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 54
    MLPs PROVIDE COMPELLING VALUE COMPARED TO OTHER INCOME SECURITIES Median Current Yield 8.0% 7.26% 7.0% 6.0% EPD 6.18% EPD 5.7% 5.0% 4.76% 4.20% 4.0% 3.41% 3.0% 2.0% 1.0% 0.0% Midstream MLP Midstream C-Corp REIT…
  55. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 55
    EPD VISIBILITY TO GROWTH 9.0B of Major Capital Projects with More to Come 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 2018 2019+ NGL Pipeline & Services South Eddy (Permian) gas plant 200 MMcf/d & related pipelines Done Ethane export…
  56. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 56
    NONGAAP RECONCILIATIONS ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  57. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 57
    TOTAL GROSS OPERATING MARGIN We evaluate segment performance based on our financial measure of gross operating margin. Gross operating margin is an important performance measure of the core profitability of our operations and forms the…
  58. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 58
    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 ratings agencies to…
  59. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 59
    DISTRIBUTABLE CASH FLOW Distributable cash flow is an important nonGAAP 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…
  60. Citi One on One MLP and Midstream Infrastructure Conference – Enterprise Products Partners LP – slide 60
    CONTACT INFORMATION Randy Burkhalter Vice President, Investor Relations (713) 3816812 rburkhaltereprod.com Jackie Richert Director, Investor Relations (713) 3813920 jmricherteprod.com ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS…

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