Enterprise Products Partners L.p. · NYSE:EPD
Enterprise Products Partners L.p — Annual Wachovia Investor Tour 2007
66 slides from Enterprise Products Partners L.p's conference presentation, May 31, 2007
Slide 1: Annual Wachovia Investor Tour
Enterprise Products Partners L.P. Annual Wachovia Investor Tour May 31, 2007
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 partner, as well as assumptions made by and information currently available to them. When used in this presentation, words such as “anticip
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation utilizes the Non-GAAP financial measures of Gross Operating Margin, EBITDA, Distributable Cash Flow and Consolidated EBITDA. In general, we define Gross Operating Margin as operating income before (i) depreciation, amortization and accretion expen
Slide 4: Meeting Agenda
Meeting Agenda 1. Randy Fowler – Welcome / Introduction 2. James H. Lytal – Natural Gas Pipelines / Storage / Offshore 3. A.J. “Jim” Teague – NGLs / Rockies Projects / LPG / Natural Gas Marketing 4. Gil H. Radtke – Petrochemical / Octane Enhancement 5. Randy Fowler – Financial Overview / Closing Rem
Slide 5: Natural Gas Pipelines / Storage and Offshore
Natural Gas Pipelines / Storage and Offshore James H. Lytal
Slide 6: Gas Pipelines, Storage & Offshore
Gas Pipelines, Storage & Offshore Natural Gas Gathering & Transportation Provide “best in class” wellhead services Position for high growth / low risk developments Feed the value chain; maximize basis differentials Natural Gas Storage Economically expand existing facilities Link to existing infrastr
Slide 7: San Juan Basin Gathering and Processing
San Juan Basin Gathering and Processing Record 405 well connects in 2006 Renegotiated long-term agreements on 250 MMcf/d Chaco plant volume up 23% to 615 MMcf/d Majority of gathering contracts are priced on percentage of gas price; provides a hedge to EPD gas fuel requirements
Slide 8: Texas Intrastate Pipeline System
Texas Intrastate Pipeline System Over 8,000 miles of pipeline transporting 5 Bcf/d (gross) Connected to major cities and industrial complexes New long-term agreement with CenterPoint in Houston area Long-term extension of City of San Antonio contract Connected to all the major hubs Waha Hub Connecte
Slide 9: Significant Long-Term Gas Supply
Significant Long-Term Gas Supply Multiple basins Low F&D costs Largest processor in South Texas / Gulf Coast North Texas 36” provides bridge to eastern markets
Slide 10: Sherman Extension Project Barnett Shale Update
Sherman Extension Project Barnett Shale Update New 1.1 Bcf/d, 178 mile pipeline extends EPD’s Texas Intrastate System through growing Barnett Shale region Will connect with Boardwalk’s Gulf Crossing project Long-term contracts with Devon Energy (largest Barnett Shale producer with volumes projected
Slide 11: Gas Storage Capacities Current and Projected
Gas Storage Capacities Current and Projected (in Bcf)
Slide 12: Independence Project
Independence Project 1 Bcf/d capacity Hub platform 134-mile, 24” gas pipeline, 1 Bcf/d capacity 10 initial fields connecting 17 wells 210 miles of subsea flowlines Hub water depth of approximately 8,000 feet
Slide 13: Independence Project: Hub Platform Installed
Independence Project: Hub Platform Installed Largest Gulf of Mexico gas processing facility at 1 Bcf/d of capacity Project expected to increase Gulf of Mexico gas production by 12% Should provide above average returns At full capacity, should earn approx. $214 million per year in gross operating mar
Slide 14: Independence Project: Positioned for Future Opportunities
Independence Project: Positioned for Future Opportunities Producers tested numerous wells with over 50 MMcf/d Capacity anticipated to be filled early in 2008 Additional locations to be drilled when capacity is available Independence Hub is strategically located for future growth Lease Sale 181 compr
Slide 15: NGL Services and Marketing and Natural Gas Services and Marketing
NGL Services and Marketing and Natural Gas Services and Marketing A.J. “Jim” Teague
Slide 16: Strong NGL Industry Fundamentals
Strong NGL Industry Fundamentals 2006 was a strong year for NGLs characterized by record spreads in 2Q 2006 and 3Q 2006 Key factors are the economy and GDP growth, plant operating rates and gas-to-crude price ratio Ethane extraction increases as ethylene production increases History has shown that i
Slide 17: NGL System Defining Characteristics
NGL System Defining Characteristics Unparalleled supply system Green River Permian Western Canada Piceance Mid-Continent International Uintah South Texas Four Corners Gulf of Mexico Premier market connectivity Refinery Concentration National Footprint Petrochemical Access International Reach Heating
Slide 18: NGL System Defining Characteristics: Mont Belvieu Hub
NGL System Defining Characteristics Mont Belvieu Hub Anchors NGL system Largest NGL fractionation complex Largest storage network Largest distribution system International reach Swing strength of footprint Storage in multiple locations Wheeling through supply source diversity Arbitrage through syste
Slide 19: 2007 NGL System
2007 NGL System Connectivity to 95% of U.S. ethylene plants Connectivity to 90% of all refineries east of the Rockies
Slide 20: U.S. Waterborne LPG Import Growth
U.S. Waterborne LPG Import Growth
Slide 21: 2006 U.S. LPG Imports by Terminal
2006 U.S. LPG Imports by Terminal
Slide 22: 2006 / 2007 Rockies Capital Projects
2006 / 2007 Rockies Capital Projects Constructing the 750 MMcf/d Pioneer gas processing facility in southwest Wyoming with completion in October 2007 Acquired interest in Jonah Gas Gathering System and currently expanding capacity to 2.3 Bcf/d with completion by late 2007
Slide 23: 2006 / 2007 Rockies Capital Projects
2006 / 2007 Rockies Capital Projects Acquired Piceance Creek Gathering System from EnCana with 1.6 Bcf/d of capacity and extends through the heart of the Piceance Basin to the Meeker gas processing facility Constructing a 750 MMcf/d gas processing facility in Meeker, Colorado with Phase I completion
Slide 24: 2006 / 2007 Rockies Capital Projects: MAPL Expansion
2006 / 2007 Rockies Capital Projects MAPL Expansion Strategically positioned to benefit from growth in Rockies natural gas and NGL production Tied to all significant current and future processing plants in Rockies Signed long-term dedication agreements with all but one shipper Competitive rate struc
Slide 25: 2006 / 2007 Mid-Continent Capital Projects
2006 / 2007 Mid-Continent Capital Projects Constructing new NGL fractionator in Hobbs, New Mexico with 75 MBPD capacity for Rocky Mountains growth and operational in September 2007 Constructing new 70-mile batch-service pipeline from Hobbs to Odessa to exclusively supply Huntsman / Flint Hills ethyl
Slide 26: 2006 / 2007 Texas Capital Projects
2006 / 2007 Texas Capital Projects Acquired South Texas 16” Pipeline from ExxonMobil extending from Corpus Christi to South Houston Houston 8” NGL pipeline converted to ethane service January 1, 2006 with capacity of 31 MBPD
Slide 27: NGL Marketing Support of Asset Growth
NGL Marketing Support of Asset Growth
Slide 28: Natural Gas System Strong Supply System
Natural Gas System Strong Supply System
Slide 29: Rocky Mountain Market Connectivity
Rocky Mountain Market Connectivity Jonah / Pinedale / Pioneer Interstate Interconnects (2.5 Bcf/d) CIG Rockies Express NWPL Kern River Piceance / Meeker Interstate Interconnects (1.5 Bcf/d) Questar Rockies Express WIC TransColorado CIG San Juan / Chaco Interstate Interconnects (1.1 Bcf/d) Transweste
Slide 30: Louisiana / Mississippi / Gulf of Mexico Market Connectivity
Louisiana / Mississippi / Gulf of Mexico Market Connectivity Pipeline Interconnects 14 interconnects with 8 interstate pipelines 8 interconnects with 4 intrastate pipelines Storage at Petal and Napoleonville Sherman / Gulf Crossing Project
Slide 31: Texas Pipeline System Market Connectivity
Texas Pipeline System Market Connectivity Texas Pipeline System 51 interconnects with 14 interstate pipelines 53 interconnects with 8 intrastate pipelines Storage at Wilson and Mont Belvieu Sherman / Gulf Crossing Project Industrial users on Houston Ship Channel, Corpus Christi Ship Channel, Beaumon
Slide 32: Natural Gas System
Natural Gas System Swing strength of footprint Storage in key locations Wheeling through supply source diversity Arbitrage through system reach Wealth of information Enterprise serves every kind of application and the largest producing basins
Slide 33: Petrochemical Services
Petrochemical Services Gil H. Radtke
Slide 34: 2007 Petrochemical Outlook
2007 Petrochemical Outlook Petrochemicals (billion pounds and growth) Ethylene US Global – 06 Demand 55 3.1% 242 5.1% – 07 Forecast 55 0.5% 251 3.8% Propylene – 06 Demand 36 2.5% 159 5.5% – 07 Forecast 37 2.3% 168 5.8% Big concentration of new ethylene crackers in Middle East. Far East and Europe ex
Slide 35: Petrochemical Services Overview
Petrochemical Services Overview Petrochemical group consists of 5 businesses Butane isomerization (116 MBPD capacity) Propylene fractionation (currently 4.4 billion pounds or 65 MBPD, net capacity) Mont Belvieu hydrocarbon storage (104 MMbbls of usable capacity) Propylene and HP isobutane pipelines
Slide 36: 2007 Mont Belvieu Capital Projects
2007 Mont Belvieu Capital Projects Pipelines Expanding propylene feedstock capability from Texas City Propylene feedstock from Port Arthur area DEP South Texas NGL pipeline Storage Services Upgrading product handling facilities for increased volumes, new connections and new products Natural gas stor
Slide 37: Butane Isomerization Service
Butane Isomerization Service Isomerization is the process of converting normal butane to high purity isobutane EPD has a combined capacity of 116 MBPD 57 MBPD (49%) is committed under long-term third-party processing contracts with escalation provisions on the fees and 20 MBPD is used as feedstock f
Slide 38: Isomerization Business Outlook
Isomerization Business Outlook Stable demand from long-term contracts base loads isomerization business EPD has available capacity to service future growth in isobutane demand and seasonal demand for gasoline without investing new capital Expect increase in demand for isobutane as premium gasoline c
Slide 39: Propylene Fractionation
Propylene Fractionation Propylene splitters take refinery-grade propylene (RGP) and fractionate it into polymer-grade propylene (PGP) or chemical-grade propylene (CGP) and propane RGP is typically 60–75% propylene with the balance primarily propane RGP is referred to in barrels per day (BPD) of feed
Slide 40: Propylene Assets
Propylene Assets We own and operate 3 polymer-grade propylene fractionation (“splitter”) facilities with approximately 4.8 billion pounds per year (72 MBPD) of polymer-grade propylene production capacity (our share is 3.9 billion pounds) Basell owns approximately 45% of Splitter 1 and leases this ca
Slide 41: Propylene Outlook
Propylene Outlook Propylene primarily sourced from refineries (to splitters) and as a co-product from steam crackers 2007 world demand expected to be 168 billion pounds 2007 North American demand expected to be 37 billion pounds World propylene demand expected to grow at roughly 5–6% per year and U.
Slide 42: Propylene Expansion
Propylene Expansion Includes the necessary improvements to pipelines, storage and measurement facilities Capacity: 1.0 billion pounds Expandable to 1.5 billion pounds Completion in 3Q 2007 Utilization ramping up to 60% in 2008, 80% in 2009 and 100% in 2010 forward Processing and sales margins of 3.1
Slide 43: Octane Enhancement
Octane Enhancement EPD owns a facility at Mont Belvieu that produces octane additives for motor gasoline Produced and sold isooctane in 2006 under contract at NYMEX RBOB plus pricing Allowed us to hedge our sales through 4Q 2006 We expect to execute the same hedge program in 2007 Also produce isobut
Slide 44: Isooctane
Isooctane Only the second plant of its kind in the world; in place in advance of the phase out of MTBE Isooctane capacity: 12 MBPD Feedstock comes from our isomerization business Requires 2 gallons of high-purity isobutane to produce 1 gallon of isooctane Engineering work underway for the restart of
Slide 45: Ethanol Drives Demand for Isooctane
Ethanol Drives Demand for Isooctane 2005 Energy Bill effectively removed MTBE from U.S. gasoline market Significant octane loss with 6.0 lbs. vapor pressure Corresponding Renewable Fuels Standard (RFS) mandated ethanol usage Blends to higher vapor pressure of 15.0 lbs. Forces removal of higher vapor
Slide 46: 2007 Gasoline and Ethanol Outlook
2007 Gasoline and Ethanol Outlook Gasoline (MMBPD and growth) 06 Demand 9.2 1.2% 07 Forecast 9.3 1.4% Ethanol (Billion Gallons) As more ethanol plants come on stream in 2007 and more ethanol is blended into gasoline, demand for alkylate and isooctane will increase. This benefits both the isooctane a
Slide 47: Financial Overview
Financial Overview Randy Fowler
Slide 48: Financial Objectives
Financial Objectives Maintain a strong balance sheet and credit metrics that support investment grade credit ratings Key financial objective since IPO Increase cash flows from fee-based businesses Prudently invest to expand the partnership through organic growth, acquisitions and joint ventures with
Slide 49: History of Financial Discipline
History of Financial Discipline Financial discipline while executing EPD’s growth strategy Financed 59% of $14.2 billion in capital investment since 1999 with equity (includes total estimate of capital investment for 2007) Retired $1.2 billion acquisition term loan used to finance the acquisition of
Slide 50: EPD Completed Largest Equity Offerings Since 2001
EPD Completed 4 of 5 Largest Equity Offerings Since 2001 MLP Follow-on Offerings ($ in millions) Amount Offered (1) (1) Includes overallotment options, where exercised.
Slide 51: 59% of Growth Investment Funded with Equity
History of Financial Discipline 59% of Growth Investment Funded with Equity Growth capital investment includes the capital expenditures, cash used for business combinations, investments in and advances to unconsolidated affiliates, and acquisition of intangible asset amounts as reflected on our Stat
Slide 52: Managing Distributable Cash Flow
History of Financial Discipline Managing Distributable Cash Flow 14% DCF Reinvested in Partnership Since 1999 12% DCF Reinvested in Partnership Since GTM Merger
Slide 53: Realizing Benefits of Eliminating GP's 50% IDRs
Realizing Benefits of Eliminating GP’s 50% IDRs “Landmark” action taken by EPD’s GP in December 2002 to eliminate GP’s 50% IDR for no consideration is beginning to provide significant benefits to debt and equity investors 1Q 2007 annualized savings of $95.8 million Cumulative savings of $132.6 milli
Slide 54: Strong Financial Position
Strong Financial Position Actual Hybrids Pro Forma $Millions 34-Mar-07 May-07 31-Mar-07 Total Debt Excluding Hybrid Securities $ 4,898.7 $ 4,898.7 Hybrid Securities 550.0 700.0 1,250.0 Total Debt $ 5,448.7 $ 6,148.7 Minority Interests 433.6 433.6 Partners’ Equity 6,304.5. 6,303.5 Total Capitalizatio
Slide 55: Closing Remarks
Closing Remarks © Allrights reserved. Enterprise Products Partners LP
Slide 56: Premier Midstream Network in Key Regions
Premier Midstream Network in Key Regions Assets in areas with 90% of production and 85% of reserves in the lower 48 states (1)
Slide 57: Diversified Businesses
Diversified Businesses Gross Operating Margin LTM March 31, 2007 NGL Pipelines & Services (56%) 13,295 miles of NGL pipelines 162 MMBbls of NGL & petrochemical storage capacity 25 natural gas processing plants (Including Pioneer & Meeker) 7 NGL fractionation facilities Onshore Natural Gas Pipelines
Slide 58: Diversified Businesses Provide Consistent Results
Diversified Businesses Provide Consistent Results Consistent Gross Operating Margin & Consolidated EBITDA. In Periods of Volatile Natural Gas, Crude Oil and NGL Prices (1) Gross operating margin for 2Q05 was negatively impacted by an $11MM charge for costs of refinancing project finance debt for Cam
Slide 59: EPD Delivered Record 2006 Results
EPD Delivered Record 2006 Results Gross Operating Margin 2006 vs. 2005 NGL Pipelines and Services up 30% due in part to record pipeline volumes, improved processing and fractionation margins Onshore Natural Gas Pipelines and Services down 6% despite volume and margin increases at Texas intrastate wh
Slide 60: Major Organic Growth Projects Expected Start Dates
Major Organic Growth Projects Expected Start Dates
Slide 61: 2007 Outlook
2007 Outlook Another year of strong operating fundamentals $2.5 billion of new projects begin operations $44 million of annualized demand charges net to EPD at Independence Hub platform began mid-March 2007 First production to Independence and majority of other projects expected to commence in 2H 20
Slide 62: Non-GAAP Reconciliations
Non-GAAP Reconciliations © Allrights reserved. Enterprise Products Partners LP
Slide 63: Non-GAAP Reconciliations: Gross Operating Margin
Non-GAAP Reconciliations Enterprise Products Partners LP. Gross Operating Margin (Dollars in 0005, Unaudited) ‘Gress operating margin by segment NGL Pipelines & Servioes Onshore Natural Gas Pipelines & Services Oitshore Pipelines & Servioes Petrochemical Services Total segment gross operating margin
Slide 64: Non-GAAP Reconciliations: Consolidated EBITDA
Non-GAAP Reconciliations Enterprise Products Partrers LP. Censeldated EBITOK Dallarsin 000s, Uraucted) saa“ Di GAAP és and GAAP ‘etcash fows proved by operating aches Netincom C1) ‘Aajustwertsb netincome b deve Consoilated EBITDA (edd orcubtact az incoatedby sign of number: "Addileduct equtyin (ncor
Slide 65: Non-GAAP Reconciliations: Distributable Cash Flow
Non-GAAP Reconciliations Enterprise Products Partners LP. Distributable Cash Flow (Dollars in 000s, Unaudited) Year Ended December 34, 2006 2005 GAAP" wt GAAP” income” and GAAP "Net cash flaws provided by operating activties” Net income B 6011ss $419,508 Adjustments to Net income to derive Distituta
Slide 66: Non-GAAP Reconciliations: EBITDA
Non-GAAP Reconciliations Enterprise Products Partners L.P. EBITDA (Dollars in 000s, Unaudited) Year Ended December 31, 2006 2005 f Non-GAAP "EBITDA" to Gaal GAAP "W, i fy : Net income § 801155 = § «© 419.508 Additions to net income to derive EBITDA, Interest expense (including related amortization)
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