Enterprise Products Partners L.p. · NYSE:EPD
Enterprise Products Partners L.p — Investor Presentation (January 2006)
53 slides from Enterprise Products Partners L.p's investor presentation, Jan 17, 2006
Slide 1: Enterprise Products Partners L.P. Investor Presentation January 2006
Enterprise Products Partners L.P. Investor Presentation January 2006
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements and information that are based on Enterprise’s beliefs and those of its general p“anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “could,” “believe,” “may,” and similar expressions and statements
Slide 3: 2005 Accomplishments / Takeaways
2005 Accomplishments / Takeaways Successfully integrated EPD and GTM Merger cost savings realized Business and geographic diversification have reduced volatility of cash flows Natural hedge to natural gas prices is real Diversity largely offset effects of hurricanes and volatile energy prices Despit
Slide 4: 2005 Accomplishments / Takeaways
2005 Accomplishments / Takeaways Leading business positions have resulted in organic business opportunities that are greater than expected Rocky Mountains Gulf of Mexico Major construction activities that began in 2005 with emphasis on Gulf of Mexico continues in 2006 with major emphasis in Rocky Mo
Slide 5: Hurricane Update
Hurricane Update Financial Effect Net effect on 2005 gross operating margin a decrease of approximately $55MM Property damage loss estimated at $70–75MM before insurance recoveries
Slide 6: EPD Growth Strategy
EPD Growth Strategy EPD’s midstream asset network is well positioned to access supply-side growth opportunities, increase fee-based services and generate higher returns on existing assets Large geographic infrastructure footprint Fully integrated value chain offers multiple services Strategically lo
Slide 7: EPD Growth Strategy (continued)
EPD Growth Strategy (continued) Strong pricing fundamentals are driving record upstream activity in key EPD basins Rockies, San Juan, Midcontinent / Permian and Barnett Shale see strong activity in 2005/6 Deepwater GOM completes 10 new field discoveries in 2005 with increased semisubmersible rig cou
Slide 8: Premier Network of Midstream Energy Assets
Premier Network of Midstream Energy Assets
Slide 9: Access to Supply Growth Drives Major Capital Projects in 2006–2007
Access to Supply Growth Drives Major Capital Projects in 2006–2007
Slide 10: U.S. Drilling by Region
U.S. Drilling by Region Rig Activity Near EPD Assets Rig Activity in the Rockies Rig Activity in Texas Offshare GOM Contracted Rigs © Allrights reserved. Enterprise Products Partners LP. ‘Sous: paler Hagiee adooS pened 1)
Slide 11: Rockies / San Juan Production
Rockies / San Juan Production
Slide 12: Western U.S. Growth Strategy
Western U.S. Growth Strategy
Slide 13: Western U.S. Growth Strategy: Rocky Mountain Expansion Projects
Western U.S. Growth Strategy Rocky Mountain Expansion Projects EPD well-positioned to benefit from growth in Rockies natural gas supplies through MAPL natural gas liquids pipeline system MAPL averaged 200 MBPD Rockies / San Juan Y-grade in 2005 (90% of capacity) MAPL Phase I expansion (50 MBPD) unde
Slide 14: MAPL Rocky Mountain System Expected Volume Growth
MAPL Rocky Mountain System Expected Volume Growth
Slide 15: MAPL Expansion Phase I Project to Increase Capacity into Hobbs
MAPL Expansion Phase I Project to Increase Capacity into Hobbs to 275 MBPD Capacity Added 30 MBPD capacity increase on the West Leg 20 MBPD capacity increase on the East Leg 20 MBPD capacity increase on Mainline south of Rock Springs 50 MBPD capacity increase across New Mexico Timing BLM reviewing E
Slide 16: Piceance Basin Growth
Piceance Basin Growth The Piceance Basin has grown by over 20% annually for the past four years Currently 400 MMcf/d existing production processed for under dew point control only New 650 MMcf/d cryo plant with conditioning to full recovery capability 35 MBPD Phase I volume Construction started 11/0
Slide 17: Jonah and Pinedale Fields Growth
Jonah and Pinedale Fields Growth Currently 275 MMcf/d existing production processed for dew point control only Increased capacity of conditioning plant to 600 MMcf/d by July 2006 New 650 MMcf/d cryo plant with conditioning to full recovery capability 35 MBPD Phase I volume Construction will start 2Q
Slide 18: San Juan Basin Optimization
San Juan Basin Optimization San Juan gathering system optimization project (130 MMcf/d) completed in 2005 to increase capacity consistent with producer drilling plans Record 330 well connects in 2005 with 375 planned for 2006 Expect higher gathering / processing volumes and increased NGL’s into MAPL
Slide 19: San Juan Basin Well Ties
San Juan Basin Well Ties = Completed oI comin 25] bist San tan Otization emo Optimization a0 IF Su hide Price tose 1090 on 20270022004 008E ©2000 memWelTies 9 SJ IndexPrice © Allrights reserved. Enterprise Products Partners LP. 19
Slide 20: Western U.S. Growth Strategy: Fractionation Expansion
Western U.S. Growth Strategy Fractionation Expansion Mont Belvieu fractionation stayed consistently above 205 MBPD capacity in 2005 requiring offloads to 3rd parties MTBV West Texas II expansion (15 MBPD) to be operational in April 2006 Hobbs Fractionator (75 MBPD) supported by increased Rockies / S
Slide 21: Hobbs Fractionator
Hobbs Fractionator 75 MBPD fractionator located on the interconnect between MAPL and Seminole Fractionator operational in mid-2007 Long-term frac / sales contracts with local customers Enhanced supply for local, Conway and Western U.S. markets Ferrell (Hutchinson) storage acquisition and Skellytown
Slide 22: Deepwater Gulf of Mexico Growth Strategy
Deepwater Gulf of Mexico Growth Strategy
Slide 23: Enterprise Gulf of Mexico Assets
Enterprise Gulf of Mexico Assets Active in the Gulf of Mexico since 1993 Integrated pipeline and platform network covers major corridors with active developments New projects supported by substantial reserve commitments Hurricane delays push ramp-up to 2006–07
Slide 24: Gulf of Mexico Drilling Activity
Gulf of mexico Drilling Activity
Slide 25: Deepwater Trend 2005 Update
Deepwater Trend 2005 Update “The deepwater discoveries to date represent a strong continuing success story in the Gulf of Mexico” – Chris Oynes MMS Regional Director, December 14, 2005 2005 Announced Deepwater Discoveries, Gulf of Mexico Prospect Operator Area Water Depth Asset Play Clipper Pioneer
Slide 26: Gulf of Mexico Semisubmersible Rig Fleet Supply and Demand
Gulf of Mexico Semisubmersible Rig Fleet Supply and Demand
Slide 27: Marco Polo TLP
Marco Polo TLP Four wells flowing, first K2 well and eight new wells online in 2006 14 wells planned Initial reserves – 146 MMBOE Current reserves – 281 MMBOE Dedications – Marco Polo, K2, K2N, Genghis Kahn Discoveries – Frampton, Mighty Joe Young, Daniel Boone Prospects – HAM, Marichal, Yorick, Mum
Slide 28: Anadarko secures necessary drilling rigs to execute its deepwater strategy
“Anadarko secures necessary drilling rigs to execute its deepwater strategy over next six years.” – Anadarko 9/2005 Anadarko executed $200MM contract for the construction of a new deepwater drilling rig $460MM contract to secure deepwater drillship for three years Anadarko is finalizing $1.2B in con
Slide 29: Cameron Highway Oil Pipeline System (CHOPS)
Cameron Highway Oil Pipeline System (CHOPS) Owner – EPD 50% / Valero 50% Operator – EPD Holstein, Mad Dog online Currently flowing approximately 70 MBPD 10 wells flowing, 48 planned Initial reserves – 1.9 BBO Current reserves – 2.3 BBO 1.0 BBO proved by NSAI-P90 Dedications – Constitution, Ticondero
Slide 30: CHOPS Production Forecast
CHOPS Production Forecast Ee == B aya Ticonderoga - = February2006 br08—Mar8May08 AMOS “Sep-06 © NovOB Jan? MarO? May? UO? Sep-07 Novo? ‘eShell Hoenn BP Hoenn eked Dog 2 thecal ‘Toonderoga (560%) ‘= Gonstiston Mantis © Potenal FN, Genghis Kahn Noble of eon, © Allrights reserved. Enterprise Products
Slide 31: Constitution Pipeline Extension
Constitution Pipeline Extension Owner / Operator – EPD Extends Anaconda, CHOPS and Poseidon Start-up in 1Q06; pipeline construction complete and linefill underway Eight wells planned Initial reserves – 185 MMBOE Current reserves – 207 MMBOE Prospects – Covington, Kona, Cannon Ball, Ness, Caesar
Slide 32: South Green Canyon Summary
South Green Canyon Summary Resource rich area 870–1,060 MBPD of capacity upstream of Cameron Highway and Poseidon Anchor tenants active and firmly committed to the area Expansion of franchise area to the south into Walker Ridge
Slide 33: Independence Hub
Independence Hub Owner – Independence Hub LLC 80% Enterprise 20% Cal Dive Managed by Enterprise Operator – Anadarko Capacity – 1 Bcf/d (expanded) Producers – Anadarko, Kerr-McGee, Dominion, Spinnaker, Devon Start of operation – 1Q07 17 of 20 planned wells drilled Initial reserves – 1.6 Tcf Current r
Slide 34: Independence Hub anchor fields, discoveries and prospects
Independence Hub 7 anchor fields 3 new discoveries 3 active prospects 138 blocks dedicated Expansion to 1 Bcf/d capacity proposed and funded by producers
Slide 35: Construction Update
Construction Update Hull fabrication – 57% complete Topside fabrication – 70% complete Load-out and transport of hull – April 2006 Topside lift onto hull – June 2006 Onshore integration – Jun/Aug 2006 Installation & commissioning – Aug/Oct 2006 Pipeline commissioning – Oct/Dec 2006 Subsea completion
Slide 36: Financial Overview
Financial Overview © Allrights reserved. Enterprise Products Partners LP
Slide 37: Summary of Major Growth Capital Projects
Summary of Major Growth Capital Projects1 Diversified Portfolio of Capital Projects Capital Spending by Year
Slide 38: Capital Investment in Major Growth Projects
Capital Investment in Major Growth Projects
Slide 39: Cumulative Capital Investment in Major Projects Under Construction
Cumulative Capital Investment in Major Projects Under Construction1 Includes select major capital projects under construction and until such project is in operations and is generating a 7% cash return
Slide 40: Gross Operating Margin Potential
Gross Operating Margin Potential
Slide 41: Cost of Capital Evaluation for Publicly Traded Partnerships
Cost of Capital Evaluation for Publicly Traded Partnerships
Slide 42: Situation Assessment: Cash is King in the Partnership Sector
Situation Assessment “Cash is King” in the Partnership Sector Cash flow generated by a new investment must support the long-term cost of capital to fund the acquisition plus provide accretion for existing LP units outstanding prior to the investment in the project or acquisition In evaluating accret
Slide 43: High-Multiple Investments & 50% Splits Can Result in Long-Term Cost of Capital Exceeding ROI
High-Multiple Investments & 50% Splits Can Result in Long-Term Cost of Capital Exceeding ROI
Slide 44: Increase in Investment Multiples Require Increase in % Funded with Equity
Increase in Investment Multiples Require Increase in % Funded with Equity = Less Accretion
Slide 45: Generic Acquisition Case Study Investment Assumptions
Generic Acquisition Case Study Investment Assumptions
Slide 46: Generic Partnership Case Study Incremental Cash Accretion Economics
Generic Partnership Case Study Incremental Cash Accretion Economics
Slide 47: EPD Acquisition Case Study Investment Assumptions
EPD Acquisition Case Study Investment Assumptions
Slide 48: EPD Acquisition Case Study Incremental Cash Accretion Economics
EPD Acquisition Case Study Incremental Cash Accretion Economics
Slide 49: EPD Organic Growth Case Study Investment Assumptions
EPD Organic Growth Case Study Investment Assumptions
Slide 50: EPD Organic Growth Case Study Incremental Cash Accretion Economics
EPD Organic Growth Case Study Incremental Cash Accretion Economics
Slide 51: EPD's Investments in Organic Growth Projects & 25% GP Splits Provide For a Lower Cost of Capital
EPD’s Investments in Organic Growth Projects & 25% GP Splits Provide For a Lower Cost of Capital
Slide 52: EPD Comparison to Generic MLP
EPD Comparison to Generic MLP
Slide 53: Financial Objectives
Financial Objectives EPD is in a major construction phase that began in 2005 that is expected to provide significant growth in gross operating margin beginning in 4Q2006 Higher cash flow on organic capital investment coupled with lower GP splits capped at 25% should provide for attractive total retu
Enterprise Products Partners — Investor Presentation (January 2006) on 6ix