Enterprise Products Partners L.p. · NYSE:EPD
Enterprise Products Partners L.p — Investor Presentation (February 2023)
48 slides from Enterprise Products Partners L.p's investor presentation, February 2023
Slide 1: Investor Deck
Investor Deck February 2023 NYSE: EPD
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on the beliefs of the company, as well as assumptions made by, and information currently available to our management team (including information published by third parties). When used in this presentation, words s
Slide 3: A Fully Integrated Midstream Energy Company
Enterprise Products Partners L.P. A Fully Integrated Midstream Energy Company Our Platform NGLs, Crude Oil, Natural Gas, Petrochemicals, and Refined Products >50,000 29 Natural Gas Miles Processing of Pipeline Plants 260 25 MMBbls of Fractionators Liquids Storage 2 20 PDH (1) Deepwater Docks 2 iBDH
Slide 4: Why EPD?
Why EPD? Built for the Long Run Diversified ≈$56B Market 24 years of Capitalization BBB+ / Baa1 consecutive credit rating ≈$87B Enterprise Value distribution ≈$126MM increases 2.9x Leverage(1) Average Daily Trading Value (last 20 days) 2022 reported Geographic, Product and Market Diversification Blo
Slide 5: Value Chain Model
Value Chain Model EPD Earns Fees Delivering Raw Materials Essential to Everyday Life product & volume Nat. Gas Ethane Propane Butanes C5+ Crude Oil electric generation heating bottled fuels diluent direct uses heating cooking gasoline blending gasoline blending refinery feedstock petchem feedstock c
Slide 6: EPD Sustainability Highlights
EPD Sustainability Highlights A Leader in Sustainability Recognized as one of Recognized as one of Upgraded from a Recognized by America’s Most Trustworthy America’s Most Responsible BBB to an “A” ESG Institutional Investor Companies from Newsweek Companies from Newsweek Rating from (1) MSCI magazin
Slide 7: Energy Fundamentals
Energy Fundamentals [2 Enterprise Products Partners L.P.
Slide 8: U.S. Oil & Gas and Global Energy Security
U.S. Oil & Gas and Global Energy Security Global Population Growth Requires “All of the Above” Energy Sources Energy Security has replaced Energy Transition as highest priority Energy “transition” is really energy “addition” U.S. oil & gas industry will be the first mover in significant CCUS(1) proj
Slide 9: Global Energy Needs Won't Disappear Overnight
Global Energy Needs Won’t Disappear Overnight Traditional Energy Demand Global Population Last 30 Timeline 600 Years to 2050 12 2100, 10.9B 500 10 2050, 9.7B Gas growing by Stacked Demand in Exa Joules 400 8 2021, 7.9B 1.8 billion people by 2050 ? Billions 300 6 2000, 6.1B Oil 200 4 100 2 Coal 1900,
Slide 10: Has the World Ever Done Energy Transition?
Has the World Ever Done Energy “Transition”? Global Population Growth Drives Energy “Addition” Historical Energy Demand by Source vs. Population Growth 180,000 9 Solar Wind 160,000 8 140,000 7 Energy demand has dramatically increased over time, 120,000 6 with a rapidly increasing global population a
Slide 11: IEA on Oil Demand
IEA on Oil Demand Oil demand only declines in the IEA’s Net Zero Emissions scenario, which would be essentially impossible to implement IEA Oil Demand by Scenario 110 105 103 MMBPD Stated Policies Scenario 2021–30: +8 MMBPD 100 96 MMBPD 95 2021–30: +1 MMBPD Announced Pledges Scenario 90 MMBPD 85 80
Slide 12: EPD Supply Forecasts
EPD Supply Forecasts Expecting Growth Across Commodities U.S. Crude Supply Scenarios 16.4 MMBPD 17 (+5.3) We expect significant growth in 16 15 14.2 MMBPD commodity supply forecasts, even in each 14 (+3.1) MMBPD “Base Case”, as post-COVID demand 13 12 recovers along with growing developing 11 energy
Slide 13: A Transition Following the Shale Revolution
A Transition Following the Shale Revolution U.S. Migrated From a Net Importer to Net Exporter of Crude and Refined Products 8,000 Incremental exports 6,000 3.5 to 6.0 MMBPD 4,000 2,000 MBPD 0 (2,000) (4,000) (6,000) (8,000) (10,000) (12,000) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 14: U.S. Waterborne Exports
U.S. Waterborne Exports Continuing to Remain Strong U.S. Waterborne Crude Oil Exports 4,000 2022 Average Winter Storms 2020 Average 3,500 2021 Average 3,000 2,500 MBPD 2,000 1,500 1,000 500 0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul
Slide 15: EPD Facility Exports
EPD Facility Exports Volumes Remain Resilient EPD Crude exports averaged 681 MBPD in 2022 (≈22% of U.S. waterborne exports) EPD NGL exports averaged 723 MBPD in 2022 (≈35% of U.S. waterborne exports) 2,000 1,800 Winter Storms 1,600 1,400 1,200 MBPD 1,000 800 600 400 200 0- May-19 Aug-19 Dec-19 Dec-2
Slide 16: U.S. Responsible for Global LPG Export Growth
U.S. Responsible for Global LPG Export Growth Growth Driven by Residential Market; >70% of Global LPG Demand LPG Waterborne Exports LPG Waterborne Export Growth by Country (≈3.4 MMBPD 2022 Globally) 3,500 3,000 EPD ≈16% 2,500 2,000 MBPD 1,500 1,000 500 0 EPD Other U.S. Qatar 2010 2011 2012 2013 2014
Slide 17: U.S. LNG Potential is Huge
U.S. LNG Potential is Huge FERC Needs to Fast-Track Projects; U.S. & E.U. Need to Finance • More than 90% of “Operational” capacity is on the USGC • All “Under Construction” and “Potential Additional” capacity is also on the USGC 40 U.S. LNG Export Capacity 35 30 Potential Additional (10.3 Bcf/d) 25
Slide 18: Comparing U.S. BTU Values to Markets Overseas
Comparing U.S. BTU Values to Markets Overseas U.S. NGLs Expected to Maintain a Material Price Advantage $20 Gas Oil - Asia Gas Oil - Europe NG - Europe $18 $16 $14 Propane - Asia Propane - Europe LNG - Asia $/MMBtu $12 U.S. BTU’s hold a $10 material advantage $8 over E.U. and Propane – U.S. Asian al
Slide 19: Primary Petrochemical Demand
Primary Petrochemical Demand Poised for Growth 2020 Case Study: World GDP declined by ≈3.5%, oil demand fell by ≈9% and ethylene and propylene demand rose ≈2.5% Global Ethylene & Propylene Demand Trends Relative to Oil 200,000 Forecast 120,000 180,000 Ethylene Demand 115,000 160,000 110,000 140,000
Slide 20: The Pillars of Modern Civilization
The 4 Pillars of Modern Civilization(1) Depend on Crude Oil, Natural Gas & NGLs Modern Civilization Plastics & Ammonia Steel Cement Petrochemicals Natural gas is Natural gas Natural gas NGLs and primary raw fueled blast fueled kilns naphtha are material; 80% furnace to heat primary raw of ammonia sy
Slide 21: Everyday Products Made From Oil
Everyday Products Made From Oil >96% of Manufactured Goods are Touched by Petrochemicals Industry Renewable Electronics Asphalt Energy Materials Medicines Plastics Cosmetics Cleaning Products Devices such as A building block of Oil is needed to create 99% of Oil is needed to Deodorants and Products
Slide 22: Commodity Inflation
Commodity Inflation Green Metals, Food & Energy • Russia invasion has exacerbated mineral, food and energy inflation already impacted by underinvestment, lack of strategic sourcing of green metals, and post COVID supply chain issues 1 Year CAGR 3 Year CAGR Lithium 89.3% Lithium 105.6% Nickel 32.5% C
Slide 23: Critical Minerals Extraction and Processing
Critical Minerals Extraction and Processing Concentrated in Politically and Socially Sensitive Regions • Mineral demand to facilitate “clean” energy tech would need to increase by 4–6x by 2040 to meet (1) Sustainable Development and Scenario (“SDS”) and net-zero climate goals • Production of many en
Slide 24: The Grass Isn't Always Greener
The Grass Isn't Always Greener How Environmentally Sustainable is Your Energy? Rare Earth Mineral Mine Petroleum Pipeline MP Materials’ rare earth open-pit mine in Mountain Pass, CA © All Rights Reserved. Enterprise Products Partners L.P. enterpriseproducts.com 24
Slide 25: Financial Update
Financial Update [2 Enterprise Products Partners L.P.
Slide 26: Growth Capital Updates
Growth Capital Updates ≈$5.8B of Major Projects Under Construction Forecast Capital Project Summary In-Service Estimated Annual Organic Capital Midland Basin Poseidon Plant (Plant 6) 3Q 2023 Project Spending $2.5 Midland Basin Leonidas Plant (Plant 7) 1Q 2024 Mentone II 4Q 2023 Natural Gas Liquids $
Slide 27: 2022 Business Segment Highlights
2022 Business Segment Highlights Continuing to Produce Results 2022 Gross Operating Margin 2022 Highlights 10 operational records included record: Petrochemicals 1. NGL pipeline transportation volumes 16% 2. Ethane marine terminal volumes 3. Total NGL marine terminal volumes Natural Gas 11% 4. Fee-b
Slide 28: Financial Stability
Financial Stability A Track Record of Financial Discipline Adjusted EBITDA(1) Organic Growth Capital Expenditures $9.3B $4.2B $8.4B $3.9B $8.1B $8.1B $7.2B $2.9B $3.0B 10.6% $5.6B Responding CAGR to customer & $1.8B market signals $1.6B 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Adj
Slide 29: Strengthening Debt Portfolio
(1)(2) Strengthening Debt Portfolio Extending Maturities Without Increasing Costs $34.9 Billion Notes Issued 97.9% Fixed Rate Debt 2010–January 2023 (as of January 31, 2023) 21.0 6.5% 20.7 20.0 20.4 20.3 11% 6.0% Average Maturity – Years 19.0 7% 19.2 19.1 5.8% 5.8% 18.8 Cost of Debt 5.5% 18.0 5.5% 5
Slide 30: Setting the Standard for Balance Sheet Strength
Setting the Standard for Balance Sheet Strength BBB+ / Baa1 Manageable Debt Maturity Schedule(1) One of the highest credit ratings in the $1,800 midstream space $1,625 $1,600 $1,400 ≈$4.1B of liquidity $1,250 $1,150 Ample amount of liquidity, allowing for $1,200 flexibility and opportunity $1,000 $M
Slide 31: Long-Term, Distribution-Focused Unitholders
Long-Term, Distribution-Focused Unitholders Over 50% of Units Held for 5+ Years EPD Common Unit Ownership by Type 2.2 Billion Common Units Outstanding EPCO & Individuals Affiliates & Trusts 43% Excluding EPCO & Affiliates, 63% of remaining units are 32% (1) held by Individuals & Trusts Length of Com
Slide 32: Enterprise's History of Returning Capital
Enterprise’s History of Returning Capital Attractive, Long-Term Returns EPD’s Historical Return on Invested Capital ("ROIC")(1) (2) (3) 16% 14% 13% 13% 13% 13% 13% 13% 12% 13% 12% 12% 12% 11% 12% 11% 11% 11% 11% 11% 10% 10% 8% 6% 4% 2% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 33: History of Cash Flow per Unit Durability
History of Cash Flow per Unit Durability A Track Record of Resilience Financial Crisis Oil Price Collapse COVID-19 Pandemic $3.68 $3.60 $3.47 $3.24 $3.17 $3.20 $3.00 $3.03 $2.92 $2.94 Operational DCF and Adjusted CFFO per Unit (1) $2.78 $2.80 $2.65 $2.40 $2.20 $2.12 $2.14 $2.14 $2.06 $2.00 $2.05 $2.
Slide 34: Returning Capital to Unitholders
Returning Capital to Unitholders Distribution Stability and Growth Remains a Core Focus 24 consecutive years of distribution growth and $47.4 Billion returned to unitholders via LP distributions & unit buybacks $ in MMs Self-Funded $9,000 Moderated Distribution Capex Growth; Self-Fund Equity $8,000
Slide 35: Returning Capital to Equity Investors
Returning Capital to Equity Investors 2022 Results $4.4B Returned $4.5B Reinvested to $6.2B to Equity Holders Increase EPD Equity Value $12.0 $8.1 ($4.9) 71% $10.0 Adjusted FCF $3.2 ($4.1) Payout Ratio(1) $8.0 $ Billions ($0.2) $6.0 ($0.3) ($1.3) $4.0 ($3.2) $3.0 $2.0 ($0.1) $0.2 $0.0 Cash at 2022 A
Slide 36: Financial Objectives
Financial Objectives Invest in midstream energy infrastructure with attractive, long-term returns on investment ALL Support and grow cash distributions to partners OF Buybacks THE Support strong balance sheet and financial flexibility ABOVE © All Rights Reserved. Enterprise Products Partners L.P. en
Slide 37: Appendix
Appendix Financials & Non-GAAP Reconciliations
Slide 38: Indicative Attribution of Segment GOM
Indicative Attribution of Segment GOM As of Year-End 2022 2020 2021 2022 100% 5% 12% 10% 10% 9% 5% 13% 16% 16% 13% 16% 16% 90% 20% 17% 2% 3% 26% 2% 5% 15% 10% 4% 80% 10% 10% 7% 11% 70% 13% 60% 50% 100% 88% 90% 88% 87% 40% 82% 80% 82% 77% 74% 76% 74% 73% 72% 30% 61% 20% 10% 0% NGL Crude Natural Petch
Slide 39: History of Returning Capital to Partners
History of Returning Capital to Partners Adjusted CFFO (1) • Distributions include: GP & LP distributions paid and distribution equivalent rights • Excess cash flow from operations goes towards funding distributions, repayments of debt and growth capital projects We continue to reduce debt principal
Slide 40: Total Return Since 1998 of XLE, SPX and EPD
1000% 1500% 2000% 2500% 3000% 3500% 0% 500% -500% 12/31/1998 6/30/1999 12/31/1999 6/30/2000 12/31/2000 6/30/2001 12/31/2001 6/30/2002 12/31/2002 6/30/2003 12/31/2003 6/30/2004 12/31/2004 Past results may not be indicative of future performance. 6/30/2005 12/31/2005 6/30/2006 12/31/2006 © All Rights
Slide 41: Indicative Attribution of GOM
Indicative Attribution of GOM Slide 38 attributes gross operating margin (“GOM”) among fee-based, commodity-based and differential-based business activities. Most activities fit easily into one category; however, the classification of certain activities involves an element of subjectivity. The class
Slide 42: Definitions
Definitions Operational DCF per Unit represents Distributable Cash Flow (“DCF”) excluding proceeds from asset sales and property damage insurance claims and net receipts / payments from the monetization of interest rate derivative instruments for a period divided by the average number of fully dilut
Slide 43: Distributable Cash Flow
Distributable Cash Flow We measure available cash by reference to DCF, which is a non-GAAP cash flow measure. DCF is an important 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 measure i
Slide 44: Gross Operating Margin
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 basis of our internal financial reporting. We believe that investors b
Slide 45: Free Cash Flow (FCF) and Adjusted FCF
Free Cash Flow (“FCF”) and Adjusted FCF FCF is a non-GAAP cash flow metric that is widely used by a variety of investors and other participants in the financial community, reflects how much cash flow a business generates during a period after accounting for all capital investments, including expendi
Slide 46: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted for cash distributions received from unconsolidated affiliates, equity in income of unconsolidated affiliates, non-cash impairment charges, changes in the fair market value of commod
Slide 47: Adjusted CFFO
Adjusted CFFO Adjusted CFFO is a non-GAAP measure that represents net cash flow provided by operating activities ("CFFO") before the net effect of changes in operating accounts. We believe that it is important to consider this non-GAAP measure as it can often be a better way to measure the amount of
Slide 48: Investor Relations Contact Information
Investor Relations Contact Information Randy Burkhalter – Vice President, Investor Relations • (713) 381-6812 • rburkhalter@eprod.com Libby Strait – Senior Manager, Investor Relations • (713) 381-4754 • ecstrait@eprod.com Michael Cisarik – Lead Analyst, Finance & Investor Relations • (713) 381-6460
Enterprise Products Partners — Investor Presentation (February 2023) on 6ix