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RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP

Enterprise Products Partners LP · Nov 15, 2017 · 57 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 1
    ENTERPRISE PRODUCTS PARTNERS L.P. RBC CAPITAL MARKETS MLP CONFERENCE November 1516, 2017 Bryan Bulawa Chief Financial Officer ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  2. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 4
    SUCCESSFUL EXECUTION THROUGHOUT CYCLES Increased Cash Distributions for 53 Consecutive Quarters MLP Equities: Correlation to Crude EPD Has Delivered Consistent Results Throughout Cycles in the Downturn, Lacking in the Upturn 1,600 160…
  5. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 6
    ENTERPRISE EXPORT CAPACITY Linking U.S. Supplies to Global Demand (5 MMBPD) Beaumont West Beaumont East Enterprise HSC Mont Belvieu PERMIAN AND EAGLE FORD Sealy Morgans Point ECHO Texas City Dock Activity: YTD Sept 2017…
  7. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 7
    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 September 30, 2017 Contribution to Total Gross Operating…
  8. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 8
    SUPPLY / DEMAND FUNDAMENTALS ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  9. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 9
    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…
  10. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 10
    GLOBAL CRUDE BALANCES ARE IMPROVING REFINED PRODUCTS ARE TIGHTENING FAST MMBbls OECD Total Oil / Products Inventory MMBbls OECD Total Products Inventory Inventory Change & Misc. IEA estimates that global demand grew by 2.3…
  11. RBC Capital Markets 2017 MLP 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% Theoretical Investment Threshold 20%…
  12. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 12
    RECOVERY IN RIG COUNTS 600 556 Permian 250 Eagle Ford 213 500 200 400 380 150 300 229 218 100 75 200 65 100 134 50 35 0 0 50 Haynesville 2,500 Total U.S. 44 40 2,000 1,854 38 30 25 1,500 21 20 1,000 898 775 569 10 12 13…
  13. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 13
    HOW QUICKLY WILL DRILLED UNCOMPLETED WELLS (DUCs) TURN INTO PRODUCTION 3,000 Permian 1,800 Eagle Ford 1,600 1,482 2,500 2,416 1,444 1,400 1,268 2,000 1,200 1,128 of Wells of Wells 943 1,000 1,500 1,219 1,113 800 1,000…
  14. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 14
    U.S. OIL & CONDENSATE SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (MBPD) AK & CA 1,000 750 999 941 500 899 250 0 Current 2020 2022 2,200 ROCKIES 2,000 1,970 2,021 1,800 1,755 200 APPALACHIAN 1,600 150 Current 2020 2022 100…
  15. RBC Capital Markets 2017 MLP 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 Production MMBPD 3 2 Existing 1 Refining 0 Jan13 Jan14 Jan15 Jan16 Jan17…
  16. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 16
    TO MATCH REFINERS PREFERRED FEED SLATE: Expect Light Oil Exports & Heavy / Medium Imports By 2022 Global crude oil demand (excluding the U.S.) is expected to reach 7073 MMBPD vs. 65 MMBPD today The U.S. is expected to export 4 MMBPD,…
  17. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 17
    ALL MAJOR U.S. NATURAL GAS BASINS HAVE SOLID RETURNS IN CORE ACREAGE 100% Rich Lean Basin size in current production (Bcf/d) 80% 2.0 12.0 Rate of Return 60% 5.8 4.1 1.9 40% 2.0 Theoretical 2.8 Investment 1.6…
  18. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 18
    U.S. NATURAL GAS SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (BCF/D) 2 AK & CA 1 1 1 1 0 Current 2020 2022 ROCKIES 15 10 12 12.5 12.5 5 0 APPALACHIAN Current 2020 2022 30 32 35 20 24 10 MIDCONTINENT 0 12 Current 2020…
  19. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 19
    U.S. NGL SUPPLY POTENTIAL ASSUMING SUFFICIENT MARKETS (MBPD) 120 AK & CA 80 98 95 40 69 0 Current 2020 2022 1000 ROCKIES 926 967 500 738 0 1,500 APPALACHIAN Current 2020 2022 1,264 1,000 1,108 500 783 Total Supply…
  20. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 20
    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…
  21. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 21
    U.S. IS THE LARGEST EXPORTER OF LPG LPG Exports by Destination through September 2017 EPD LPG Exports by Destination Region through September 2017: 421.9 MBPD % of Cargos Loaded EPD% of Destination Market North America 13% 39% South…
  22. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 22
    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…
  23. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 23
    U.S. GULF COAST ETHANE BALANCES Appalachia MBPD Supply Potential All Regions West of Appalachia 800 MBPD Supply Potential 2,400 120 (1) 600 261 120 (1) +50 223 1,800 400 120(1) Utopia Export 229 +50 200 410 460 +205 1,200…
  24. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 24
    ETHANE MARKET LOOKS BALANCED Ethane SupplyDemand on U.S. Gulf Coast MBPD 2,500 120 MBPD Enhanced 2,250 Recovery Ethane Total 2,000 Formosa 1,750 Axiall / Lotte Sasol 1,500 Shintech Indorama 1,250 XOM Chemical CPC 1,000…
  25. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 25
    NOT ALL ETHANE IS CREATED EQUAL Not all ethane can be recovered Equipment limitations, especially with older plants and very rich gas Economic limitations in remote regions MBPD 400 350 Bakken 300 Recovered Ethane 250…
  26. RBC Capital Markets 2017 MLP 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 25…
  27. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP 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 Average 2017 2016 5Yr Average Sources: Bloomberg, ProphetX and EIA ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. 30
  30. RBC Capital Markets 2017 MLP 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. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 31
    COMMERCIAL UPDATES ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  32. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 32
    EPD VISIBILITY TO GROWTH 9.1B of Major Capital Projects with More to Come PDH facility 5.0 NatGas MidlandtoSealy pipeline 1% Crude oil infrastructure 4.5 4.2 Mont Belvieu Frac IX Orla I & II gas processing plants 4.0 NGL…
  33. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 33
    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…
  34. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 34
    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…
  35. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 35
    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…
  36. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 36
    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…
  37. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 37
    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…
  38. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 38
    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…
  39. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 39
    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,…
  40. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 40
    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…
  41. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 41
    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…
  42. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 42
    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…
  43. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 43
    INCREASING ETHYLENE & PROPYLENE INFRASTRUCTURE Ethylene Infrastructure Mont Belvieu ethylene cavern conversion will have capacity of 600 million lbs; expected inservice 1Q 2019 Eight (8) ethylene pipelines within 0.5 mile of…
  44. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 44
    FINANCIAL UPDATE ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  45. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 45
    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…
  46. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 46
    MARINE TERMINAL / DOCK ACTIVITY (1,2) Crude Oil & Condensate Petrochemical & (1) 750 691 Refined Products 410 400 389 481 355 113 600 557 103 495 472 300 97 366 270 MBPD MBPD 450 328 286 297 312 97 200 258 300 210…
  47. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 47
    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 4.2 4.1 4.1 4.0 3.8 4.0 Billions Billions 3.9 4.0 4.1 3.0 3.7 3.0 3.2 2.0 2.0 1.0…
  48. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 48
    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…
  49. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 49
    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…
  50. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 50
    STRENGTHENING DEBT PORTFOLIO Extending Maturities Without Increasing Costs 21.3 Billion Notes Issued 86.2% Fixed Rate Debt 20.0 8.0% 2009August 2017 19.0 18.0 7.0% 8.9% 17.3 17.7 17.6 Average Maturity Years 17.0…
  51. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 51
    MLPs PROVIDE COMPELLING VALUE COMPARED TO OTHER INCOME SECURITIES Median Current Yield 9.0% 7.92% 8.0% 7.0% EPD 6.73% 6.0% EPD 5.7% 5.40% 5.0% 4.14% 4.0% 3.35% 3.0% 2.0% 1.0% 0.0% Midstream MLP Midstream C-Corp…
  52. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 52
    EPD VISIBILITY TO GROWTH 9.1B 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…
  53. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 53
    NONGAAP RECONCILIATIONS ALL RIGHTS RESERVED. ENTERPRISE PRODUCTS PARTNERS L.P. enterpriseproducts.com
  54. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 54
    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…
  55. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 55
    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…
  56. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 56
    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…
  57. RBC Capital Markets 2017 MLP Conference – Enterprise Products Partners LP – slide 57
    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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