What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-10 · 456 added, 352 removed, 1320 unchanged (38% of the section changed)

3 unchanged sentences

(Dollars in millions)

September 30,

Current assets:

2 unchanged sentences

Accounts receivable – trade, net of allowance for doubtful accounts

of $ 13.9 at June 30, 2020 and $ 12.4 at December 31, 2019

of $ 13.8 at September 30, 2020 and $ 12.4 at December 31, 2019

Accounts receivable – related parties

5 unchanged sentences

Intangible assets, net of accumulated amortization of $ 1,796.8 at

June 30, 2020 and $ 1,687.5 at December 31, 2019 (see Note 6)

September 30, 2020 and $ 1,687.5 at December 31, 2019 (see Note 6)

Goodwill (see Note 6)

12 unchanged sentences

Other long-term liabilities

Commitments and contingencies (see Note 16)

Commitments and contingent liabilities (see Note 16)

Redeemable preferred limited partner interests:

Series A cumulative convertible preferred units (“preferred units”)

( 50,000 units outstanding at September 30, 2020)

Partners’ equity:

Limited partners:

Common units ( 2,240,703,785 units issued and 2,185,896,433 units outstanding at

June 30, 2020, 2,189,226,130 units issued and outstanding at December 31, 2019)

Treasury units, at cost ( 54,807,352 units at June 30, 2020) (see Note 8)

Common limited partner interests ( 2,182,880,979 units issued and outstanding at September 30, 2020, 2,189,226,130 units issued and outstanding at December 31, 2019)

Treasury units, at cost

Accumulated other comprehensive income (loss)

Total partners’ equity

Noncontrolling interests

Total liabilities and equity

Noncontrolling interests in consolidated subsidiaries

Total liabilities, preferred units, and equity

See Notes to Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Third parties

15 unchanged sentences

Interest expense

Change in fair market value of Liquidity Option

Change in fair market value of Liquidity Option (see Note 8)

Interest income

3 unchanged sentences

Net income attributable to noncontrolling interests

Net income attributable to limited partners

Net income attributable to preferred units (see Note 8)

Net income attributable to common unitholders

* Amount is negligible

Earnings per unit:

(see Note 12)

Basic and diluted earnings per unit

Basic earnings per common unit

Diluted earnings per common unit

See Notes to Unaudited Condensed Consolidated Financial Statements.

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Other comprehensive income (loss):

3 unchanged sentences

Changes in fair value of cash flow hedges

Reclassificatio n of gains to ne t income

Reclassificatio n of losses ( gains) to ne t income

Interest rate hedging derivative instruments:

5 unchanged sentences

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to limited partners

Comprehensive income attributable to preferred units (see Note 8)

Comprehensive income attributable to common unitholders

* Amount is negligible

See Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(Dollars in millions)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Operating activities:

24 unchanged sentences

Monetization of interest rate derivative instruments

Cash distributions paid to limited partners (see Note 8)

Cash distributions paid to common unitholders (see Note 8)

Cash payments made in connection with distribution equivalent rights

3 unchanged sentences

Repurchase of common units under 2019 Buyback Program (see Note 8)

Net cash proceeds from the issuance of preferred units (see Note 8)

Other financing activities

6 unchanged sentences

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

(Dollars in millions)

3 unchanged sentences

Noncontrolling

For the Three Months Ended June 30, 2020:

Balance, March 31, 2020

Cash distributions paid to limited partners

For the Three Months Ended September 30, 2020:

Balance, June 30, 2020

Cash distributions paid to common unitholders

Cash payments made in connection with

3 unchanged sentences

Amortization of fair value of equity-based awards

Repurchase and cancellation of common units under

2019 Buyback Program (see Note 8)

Common units exchanged for preferred units, with common

units received being immediately cancelled (see Note 8)

Cash flow hedges

Balance, June 30, 2020

Balance, September 30, 2020

Partners’ Equity

2 unchanged sentences

Noncontrolling

For the Six Months Ended June 30, 2020:

For the Nine Months Ended September 30, 2020:

Balance, December 31, 2019

Cash distributions paid to limited partners

Cash distributions paid to common unitholders

Cash payments made in connection with

5 unchanged sentences

2019 Buyback Program (see Note 8)

Common units issued in connection with settlement

of Liquidity Option (see Note 8)

Common units issued to Skyline North Americas, Inc.

connection with settlement of Liquidity Option (see Note 8)

Treasury units acquired in connection with settlement

of Liquidity Option, at cost (see Note 8)

Common units exchanged for preferred units, with common

units received being immediately cancelled (see Note 8)

Cash flow hedges

Balance, June 30, 2020

Balance, September 30, 2020

See Notes to Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(Dollars in millions)

3 unchanged sentences

Noncontrolling

For the Three Months Ended June 30, 2019:

Balance, March 31, 2019

Cash distributions paid to limited partners

For the Three Months Ended September 30, 2019:

Balance, June 30, 2019

Cash distributions paid to common unitholders

Cash payments made in connection with distribution equivalent rights

1 unchanged sentence

Cash contributions from noncontrolling interests

Net cash proceeds from the issuance of common units

Repurchase and cancellation of common units under

2019 Buyback Program (see Note 8)

Amortization of fair value of equity-based awards

Cash flow hedges

Balance, June 30, 2019

Balance, September 30, 2019

Partners’ Equity

2 unchanged sentences

Noncontrolling

For the Six Months Ended June 30, 2019:

For the Nine Months Ended September 30, 2019:

Balance, December 31, 2018

Cash distributions paid to limited partners

Cash distributions paid to common unitholders

Cash payments made in connection with distribution equivalent rights

7 unchanged sentences

Cash flow hedges

Balance, June 30, 2019

Balance, September 30, 2019

See Notes to Unaudited Condensed Consolidated Financial Statements.

32 unchanged sentences

Fowler, who is also the Executive Vice President and Chief Financial Officer of EPCO.

EPCO, together with its privately held affiliates, owned approximately 32.1 % of EPD’s limited partner common units at June 30, 2020.

EPCO, together with its privately held affiliates, owned approximately 32.2 % of EPD’s common units outstanding and 30 % of its preferred units outstanding at September 30, 2020.

See Note 8 for information regarding our issuance of preferred units on September 30, 2020.

Partnership Organization and Basis of Presentation

We are a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.” We were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products.

We conduct substantially all of our business through EPO and are owned 100 % by EPD’s limited partners from an economic perspective.

Enterprise GP manages our partnership and owns a non-economic general partner interest in us.

The Partnership is a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.” The Partnership’s preferred units are not publicly traded.

We were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products.

The Partnership is owned by its limited partners (preferred and common unitholders) from an economic perspective.

Enterprise GP, which owns a non-economic general partner interest in the Partnership, manages our operations.

The Partnership conducts substantially all of its business through EPO.

We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees.

2 unchanged sentences

See Note 15 for information regarding related party matters.

Our results of operations for the six months ended June 30, 2020 are not necessarily indicative of results expected for the full year of 2020.

Our results of operations for the nine months ended September 30, 2020 are not necessarily indicative of results expected for the full year of 2020.

In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation.

8 unchanged sentences

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets that sum to the total of the amounts shown in the Unaudited Condensed Statements of Consolidated Cash Flows.

September 30,

Cash and cash equivalents

27 unchanged sentences

Our inventory amounts by product type were as follows at the dates indicated:

September 30,

Petrochemicals and refined products

Inventories of NGLs, refined products and crude oil increased since December 31, 2019 primarily due to the use of working capital in connection with our marketing activities.

Due to fluctuating commodity prices, we recognize lower of cost or net realizable value adjustments when the carrying value of our available-for-sale inventories exceeds their net realizable value.

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Cost of sales (1)

7 unchanged sentences

The historical costs of our property, plant and equipment and related accumulated depreciation balances were as follows at the dates indicated:

September 30,

Plants, pipelines and facilities (1)

28 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Depreciation expense (1)

4 unchanged sentences

When capitalized interest is recorded, it reduces interest expense from what it would be otherwise.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Asset impairment charges and related matters

We recognized non-cash asset impairment charges of $ 77.0 million and $ 90.4 million during the three and nine months ended September 30, 2020, respectively, primarily due to the complete write-off of assets that would no longer be used or constructed.

These charges include the $ 42.0 million of expense we recognized in September 2020 in connection with our cancellation of the Midland-to-ECHO 4 pipeline construction project.

We recognized impairment charges of $ 39.4 million and $ 51.2 million during the three and nine months ended September 30, 2019, respectively, primarily due to the complete write-off of assets that would no longer be used.

These impairment charges are a component of “Operating costs and expenses” on our Unaudited Condensed Statements of Consolidated Operations.

We recognized $ 0.1 million of impairment charges in the three and nine months ended September 30, 2019 that are a component of general and administrative costs.

We are closely monitoring the recoverability of our long-lived assets in light of the adverse economic effects of the coronavirus disease 2019 (“COVID-19”) pandemic.

If the adverse economic impacts of the pandemic persist for longer periods than currently expected, these developments could result in the recognition of additional non-cash impairment charges in the future.

In connection with our cancellation of the Midland-to-ECHO 4 pipeline project, we reclassified $ 311.7 million of pipe and related items that were purchased for the project from construction in progress to long-term spare parts, where they will be held for future use.

Long-term spare parts is a component of “Other assets” as presented on our Unaudited Condensed Consolidated Balance Sheet.

Asset Retirement Obligations

Property, plant and equipment at June 30, 2020 and December 31, 2019 includes $ 70.3 million and $ 69.6 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.

Property, plant and equipment at September 30, 2020 and December 31, 2019 includes $ 70.2 million and $ 69.6 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.

The following table presents information regarding our asset retirement obligations, or AROs, since December 31, 2019:

4 unchanged sentences

Accretion expense

ARO liability balance, June 30, 2020

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ARO liability balance, September 30, 2020

Investments in Unconsolidated Affiliates

1 unchanged sentence

We account for these investments using the equity method.

September 30,

NGL Pipelines & Services

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

NGL Pipelines & Services

7 unchanged sentences

The following table summarizes our intangible assets by business segment at the dates indicated:

June 30, 2020

September 30, 2020

December 31, 2019

18 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

NGL Pipelines & Services

5 unchanged sentences

There has been no change in our goodwill amounts since those reported in our 2019 Form 10-K.

We are closely monitoring the recoverability of our long-lived assets, which include goodwill, in light of the COVID-19 pandemic (see Note 4).

ENTERPRISE PRODUCTS PARTNERS L.P.

2 unchanged sentences

The following table presents our consolidated debt obligations (arranged by company and maturity date) at the dates indicated:

September 30,

EPO senior debt obligations:

2 unchanged sentences

Senior Notes Y, 5.20 % fixed-rate, due September 2020

September 2019 364-Day Revolving Credit Agreement, variable-rate, due September 2020

Senior Notes TT, 2.80 % fixed-rate, due February 2021

Senior Notes RR, 2.85 % fixed-rate, due April 2021

April 2020 364-Day Revolving Credit Agreement, variable-rate, due April 2021

September 2020 364-Day Revolving Credit Agreement, variable-rate, due September 2021

Senior Notes VV, 3.50 % fixed-rate, due February 2022

26 unchanged sentences

Senior Notes BBB, 3.70 % fixed-rate, due January 2051

Senior Notes DDD, 3.20 % fixed-rate, due February 2052

Senior Notes NN, 4.95 % fixed-rate, due October 2054

23 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the range of interest rates and weighted-average interest rates paid on our consolidated variable-rate debt during the six months ended June 30, 2020:

The following table presents the range of interest rates and weighted-average interest rates paid on our consolidated variable-rate debt during the nine months ended September 30, 2020:

Range of Interest

9 unchanged sentences

The applicable spreads are determined based on EPO's debt ratings.

The following table presents the scheduled contractual maturities of principal amounts of our consolidated debt obligations at June 30, 2020 for the next five years and in total thereafter:

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at September 30, 2020 for the next five years and in total thereafter:

Scheduled Maturities of Debt

Principal amount of senior and junior debt obligations

Expected Renewal of September 2019 364-Day Revolving Credit Agreement

EPO’s September 2019 364-Day Revolving Credit Agreement is scheduled to mature in September 2020.

As a result, EPO expects to renew this credit agreement during the third quarter of 2020.

At June 30, 2020, there were no principal amounts outstanding under the September 2019 364-Day Revolving Credit Agreement.

September 2020 364-Day Revolving Credit Agreement

In September 2020, EPO entered into a new 364-Day Revolving Credit Agreement that replaced its September 2019 364-Day Revolving Credit Agreement.

The new 364-Day Revolving Credit Agreement matures in September 2021.

There was no principal amount outstanding under the September 2019 364-Day Revolving Credit Agreement when it expired and was replaced by the September 2020 364-Day Revolving Credit Agreement.

Under the terms of the September 2020 364-Day Revolving Credit Agreement, EPO may borrow up to $ 1.5 billion (which may be increased by up to $ 200 million to $ 1.7 billion at EPO’s election, provided certain conditions are met) at a variable interest rate for a term of up to 364 days, subject to the terms and conditions set forth therein.

To the extent that principal amounts are outstanding at the maturity date, EPO may elect to have the entire principal balance then outstanding continued as non-revolving term loans for a period of one additional year, payable in September 2022.

Borrowings under the September 2020 364-Day Revolving Credit Agreement may be used for working capital, capital expenditures, acquisitions and general company purposes.

The September 2020 364-Day Revolving Credit Agreement contains customary representations, warranties, covenants (affirmative and negative) and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of any amounts borrowed under this credit agreement.

The September 2020 364-Day Revolving Credit Agreement also restricts EPO’s ability to pay cash distributions to its parent, Enterprise Products Partners L.P., if an event of default (as defined in the credit agreement) has occurred and is continuing at the time such distribution is scheduled to be paid or would result therefrom.

EPO’s obligations under the September 2020 364-Day Revolving Credit Agreement are not secured by any collateral;

however, they are guaranteed by Enterprise Products Partners L.P.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 2020 Senior Notes Offering

In August 2020, EPO issued $ 1.0 billion in principal amount of 3.20 % senior notes due February 2052 (“Senior Notes DDD”) and $ 250.0 million in principal amount of 2.80 % reopened Senior Notes AAA (as defined below).

The reopened Senior Notes AAA and the Senior Notes DDD were issued at 107.211 % and 99.233 % of their principal amounts, respectively.

We received aggregate net proceeds of $ 1.25 billion from the sale of the notes after deducting underwriting discounts and other estimated offering expenses payable by us.

Net proceeds from the issuance of these senior notes will be used for general company purposes, including for growth capital investments, and to repay all or part of $ 750.0 million in principal amount of Senior Notes TT, which mature in February 2021.

The reopened Senior Notes AAA represent a re-opening of an outstanding series of EPO’s senior notes.

EPO originally issued $ 1.0 billion principal amount of Senior Notes AAA on January 15, 2020.

The reopened Senior Notes AAA form a single series with the original notes of that series, trade under the same CUSIP number, and have the same terms as to status, redemption or otherwise as the original notes of that series.

EPO’s fixed-rate senior notes are unsecured obligations of EPO that rank equal with its existing and future unsecured and unsubordinated indebtedness.

They are senior to any existing and future subordinated indebtedness of EPO.

EPO’s senior notes are subject to make-whole redemption rights and were issued under indentures containing certain covenants, which generally restrict its ability (with certain exceptions) to incur debt secured by liens and engage in sale and leaseback transactions.

April 2020 364-Day Revolving Credit Agreement

In April 2020, EPO entered into an additional 364-day revolving credit agreement (the “April 2020 364-Day Revolving Credit Agreement ”).

The new agreement provides EPO with an incremental $ 1.0 billion of borrowing capacity, thereby increasing its overall borrowing capacity under its revolving credit agreements to $ 6.0 billion.

Under the terms of the April 2020 364-Day Revolving Credit Agreement, EPO may borrow up to $ 1.0 billion at a variable interest rate for a term of 364 days, subject to the terms and conditions set forth therein.

EPO may use proceeds from borrowings under the April 2020 364-Day Revolving Credit Agreement for working capital, capital expenditures, acquisitions and other company purposes.

Senior Notes Offering in January 2020

The new agreement provided EPO with an incremental $ 1.0 billion of borrowing capacity at a variable interest rate for a term of 364 days, subject to the terms and conditions set forth therein.

Following execution of the September 2020 364-Day Revolving Credit Agreement, EPO terminated the April 2020 364-Day Revolving Credit Agreement on September 11, 2020.

January 2020 Senior Notes Offering

In January 2020, EPO issued $ 3.0 billion aggregate principal amount of senior notes comprised of (i) $ 1.0 billion principal amount of senior notes due January 2030 (“Senior Notes AAA”), (ii) $ 1.0 billion principal amount of senior notes due January 2051 (“Senior Notes BBB”) and (iii) $ 1.0 billion principal amount of senior notes due January 2060 (“Senior Notes CCC”).

Net proceeds from this offering were used by EPO for the repayment of $ 500 million principal amount of its Senior Notes Q that matured in January 2020, temporary repayment of amounts outstanding under its commercial paper program and for general company purposes.

In addition, net proceeds from this offering will be used by EPO for the repayment of $ 1.0 billion principal amount of its Senior Notes Y upon their maturity in September 2020.

In addition, net proceeds from this offering were used by EPO for the repayment of $ 1.0 billion principal amount of its Senior Notes Y that matured in September 2020.

Senior Notes AAA were issued at 99.921 % of their principal amount and have a fixed-rate interest rate of 2.80 % per year.

2 unchanged sentences

EPD guaranteed these senior notes through an unconditional guarantee on an unsecured and unsubordinated basis.

See Note 19 for a subsequent event involving the reopening of Senior Notes AAA and the issuance of $ 1.25 billion aggregate principal amount of new senior notes in August 2020.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lender Financial Covenants

We were in compliance with the financial covenants of our consolidated debt agreements at June 30, 2020.

We were in compliance with the financial covenants of our consolidated debt agreements at September 30, 2020.

Letters of Credit

At June 30, 2020, EPO had $ 150.7 million of letters of credit outstanding primarily related to our commodity hedging activities.

At September 30, 2020, EPO had $ 200.7 million of letters of credit outstanding primarily related to our commodity hedging activities.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Parent-Subsidiary Guarantor Relationships

1 unchanged sentence

If EPO were to default on any of its guaranteed debt, EPD would be responsible for full and unconditional repayment of that obligation.

Equity and Distributions

Partners’ Equity

The following table summarizes changes in the number of our limited partner common units outstanding and treasury units since December 31, 2019:

Units outstanding at December 31, 2019

Capital Accounts

Common Limited Partner Interests

The following table summarizes changes in the number of our common units outstanding since December 31, 2019:

Common units outstanding at December 31, 2019

2,189,226,130

Common units issued in connection with settlement of Liquidity Option

Treasury units acquired in connection with settlement of Liquidity Option

Common units issued to Skyline North Americas, Inc.

in connection with

settlement of Liquidity Option in March 2020

Treasury units acquired in connection with settlement of Liquidity Option in March 2020

Common unit repurchases under 2019 Buyback Program

Common units issued in connection with the vesting of phantom unit awards, net

Units outstanding at March 31, 2020

Common units outstanding at March 31, 2020

2,185,800,243

Common units issued in connection with the vesting of phantom unit awards, net

Units outstanding at June 30, 2020

Common units outstanding at June 30, 2020

2,185,896,433

We have a universal shelf registration statement (the “2019 Shelf”) on file with the SEC which allows EPD and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively.

EPO issued $ 3.0 billion of senior notes in January 2020 using the 2019 Shelf (see Note 7).

Common units exchanged for preferred units in September 2020,

with the common units received being immediately cancelled

Common unit repurchases under 2019 Buyback Program

Common units issued in connection with the vesting of phantom unit awards, net

Units outstanding at September 30, 2020

2,182,880,979

Registration Statements

We have a universal shelf registration statement (the “2019 Shelf”) on file with the SEC which allows the Partnership and EPO to issue an unlimited amount of equity and debt securities, respectively.

EPO issued $ 4.25 billion of senior notes during 2020 using the 2019 Shelf (see Note 7).

In addition, EPD has a registration statement on file with the SEC covering the issuance of up to $ 2.54 billion of its common units in amounts, at prices and on terms to be determined by market conditions and other factors at the time of such offerings in connection with its at-the-market (“ATM”) program.

During the six months ended June 30, 2020 and 2019 , EPD did not issue any common units under its ATM program.

After taking into account the aggregate sales price of common units sold under the ATM program through June 30, 2020, EPD has the capacity to issue additional common units under its ATM program up to an aggregate sales price of $ 2.54 billion.

During the nine months ended September 30, 2020 and 2019 , EPD did not issue any common units under its ATM program.

After taking into account the aggregate sales price of common units sold under the ATM program through September 30, 2020, EPD has the capacity to issue additional common units under its ATM program up to an aggregate sales price of $ 2.54 billion.

The existing ATM registration statement expires in November 2020, at which time we expect to file a replacement ATM registration statement with the SEC in order to maintain our financial flexibility.

We may issue additional equity and debt securities to assist us in meeting our future liquidity requirements, including those related to capital investments.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Settlement of Liquidity Option in March 2020

On February 25, 2020, the Partnership received notice from Marquard & Bahls AG (“M&B”) of its election to exercise its rights (the “Liquidity Option”) under the Liquidity Option Agreement among EPD, OTA Holdings, Inc., a Delaware corporation previously named Oiltanking Holding Americas, Inc.

March 2020 Issuance of Common Units to Skyline North Americas, Inc.

and related acquisition of Treasury Units

In February 2020, the Partnership received notice from Marquard & Bahls AG (“M&B”) of M&B’s election to exercise its rights (the “Liquidity Option”) under the Liquidity Option Agreement among the Partnership, OTA Holdings, Inc., a Delaware corporation previously named Oiltanking Holding Americas, Inc.

(“OTA”), and M&B dated October 1, 2014 (the “Liquidity Option Agreement”).

On March 5, 2020, we settled our obligations under the Liquidity Option Agreement by issuing 54,807,352 new EPD common units to Skyline North Americas, Inc.

On March 5, 2020, the Partnership settled its obligations under the Liquidity Option Agreement by issuing 54,807,352 new common units to Skyline North Americas, Inc.

(“Skyline,” an affiliate of M&B) in exchange for the capital stock of OTA.

Upon settlement of the Liquidity Option, we indirectly acquired the 54,807,352 EPD common units owned by OTA (which were issued to OTA in October 2014) and assumed all future income tax obligations of OTA, including its deferred tax liability.

At March 5, 2020, OTA’s assets and liabilities consisted primarily of the EPD common units it owned and the related deferred tax liability, respectively.

At March 5, 2020, our accrual for the Liquidity Option liability was $ 511.9 million.

The Liquidity Option liability, at any measurement date, represents the present value of estimated federal and state income taxes that we believe a market participant would incur due to ownership of OTA, including its deferred income tax liabilities.

As a result of the settlement, OTA became a consolidated subsidiary of ours and we indirectly acquired the 54,807,352 Partnership common units owned by OTA (which were issued by the Partnership to OTA in October 2014) and assumed all future income tax obligations of OTA, including its deferred tax liability.

At March 5, 2020, OTA’s assets and liabilities consisted primarily of the Partnership common units it owned and the related deferred tax liability, respectively.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At March 5, 2020, the Partnership’s accrual for the Liquidity Option liability was $ 511.9 million.

The Liquidity Option liability, at any measurement date, represented the fair value of estimated federal and state income taxes that we believe a market participant would assume due to ownership of OTA, including its deferred income tax liabilities.

OTA’s deferred tax liability at March 5, 2020 was $ 439.7 million.

The market value of the new EPD common units issued to Skyline was $ 1.3 billion based on a closing price of $ 23.67 per unit on March 5, 2020.

The 54,807,352 new EPD common units issued to Skyline upon settlement of the Liquidity Option constitute “restricted securities” in the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) and may not be resold except pursuant to an effective registration statement or an available exemption under the Securities Act.

In connection with the settlement of the Liquidity Option, Enterprise entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Skyline.

Pursuant to the Registration Rights Agreement, Skyline has the right to request that we prepare and file a registration statement to permit and otherwise facilitate the public resale of all or a portion of such EPD common units that Skyline and its affiliates then own.

Our obligation to Skyline to effect such transactions is limited to five registration statements and underwritten offerings.

In May 2020, we filed a registration statement on behalf of Skyline for the resale of up to 54,807,352 EPD common units.

This registration statement is effective and, in June 2020, we filed a prospectus supplement to this registration statement that allows Skyline to sell up to $ 500 million of the EPD common units it owns in connection with an “at-the-market” program that it administers.

We will not receive any proceeds from such offerings.

As a result of the Liquidity Option settlement, the partners’ equity balance for common units (as presented on our Unaudited Condensed Consolidated Balance Sheet) increased by the $ 1.3 billion market value of the new EPD common units issued to Skyline.

Since OTA does not meet the definition of a business as described in ASC 805, Business Combinations , t he acquisition of OTA was accounted for as the purchase of treasury units and assumption of the related deferred tax liability.

In consolidation, we present the 54,807,352 EPD common units owned by OTA as treasury units, with their historical cost based on the $ 1.3 billion market value of the 54,807,352 new EPD common units issued to Skyline.

The market value of the common units issued by the Partnership to Skyline was $ 1.30 billion based on a closing price of $ 23.67 per unit on March 5, 2020.

The common units issued to Skyline upon settlement of the Liquidity Option constitute “restricted securities” in the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) and may not be resold except pursuant to an effective registration statement or an available exemption under the Securities Act.

In connection with the settlement of the Liquidity Option, the Partnership entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Skyline.

Pursuant to the Registration Rights Agreement, Skyline has the right to request that the Partnership prepare and file a registration statement to permit and otherwise facilitate the public resale of all or a portion of the Partnership’s common units owned by Skyline and its affiliates.

The Partnership’s obligation to Skyline to effect such transactions is limited to five registration statements and underwritten offerings.

In May 2020, the Partnership filed a registration statement on behalf of Skyline for the resale of up to 54,807,352 common units.

This registration statement is effective and, in June 2020, the Partnership filed a prospectus supplement to this registration statement that allows Skyline to sell up to $ 500 million of the Partnership’s common units it owns in connection with an “at-the-market” program that it administers.

We do not receive any proceeds from such offerings.

As a result of the Liquidity Option settlement, the partners’ equity balance for common units (as presented on our Unaudited Condensed Consolidated Balance Sheet) increased by $ 1.30 billion, representing the market value of the Partnership’s common units issued to Skyline.

Since OTA does not meet the definition of a business as described in Accounting Standards Codification (“ASC”) 805, Business Combinations , t he OTA transaction was accounted for as the reacquisition of limited partner units and the assumption of OTA’s related deferred tax liability by the Partnership.

In consolidation, we present the limited partner units owned by OTA as treasury units, with their historical cost equal to the $ 1.30 billion market value of the Partnership common units issued to Skyline.

On September 30, 2020, OTA exchanged the common units it holds for preferred units issued by the Partnership.

For information regarding the preferred units and exchange transaction, see “Redeemable Preferred Limited Partner Interests” within this Note 8.

Upon settlement of the Liquidity Option, the Liquidity Option liability was effectively replaced by the deferred tax liability of OTA as calculated in accordance with ASC 740, Income Taxes .

See Note 11 for additional information regarding OTA’s deferred tax liability.

Prior to March 5, 2020, changes in the estimated fair value of the Liquidity Option liability were recognized in earnings as a component of other income (expense) on our Unaudited Condensed Statements of Consolidated Operations.

We recognized $ 2.3 million of expense for the period January 1, 2020 to March 5, 2020 attributable to changes in the estimated fair value of the Liquidity Option.

We recognized $ 38.7 million and $ 123.1 million of such expense for the three and nine months ended September 30, 2019, respectively.

Common Unit Repurchases Under 2019 Buyback Program

In January 2019, we announced that the Board of Enterprise GP had approved a $ 2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides EPD with an additional method to return capital to investors.

The 2019 Buyback Program authorizes EPD to repurchase its common units from time to time, including through open market purchases and negotiated transactions.

The timing and pace of buy backs under the program will be determined by a number of factors including (i) our financial performance and flexibility, (ii) organic growth and acquisition opportunities with higher potential returns on investment, (iii) EPD’s unit price and implied cash flow yield and (iv) maintaining targeted financial leverage with a debt-to-normalized adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of approximately 3.5 times.

In January 2019, we announced that the Board had approved a $ 2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides the Partnership with an additional method to return capital to investors.

The 2019 Buyback Program authorizes the Partnership to repurchase its common units from time to time, including through open market purchases and negotiated transactions.

The timing and pace of buy backs under the program will be determined by a number of factors including (i) our financial performance and flexibility, (ii) organic growth and acquisition opportunities with higher potential returns on investment, (iii) the Partnership’s unit market price and implied cash flow yield and (iv) maintaining targeted financial leverage with a debt-to-normalized adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of approximately 3.5 times.

No time limit has been set for completion of the program, and it may be suspended or discontinued at any time.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In January 2020, management announced its intention to use approximately 2.0% of net cash flow provided by operating activities, or cash flow from operations (“CFFO”), in 2020 to repurchase EPD common units under the 2019 Buyback Program.

EPD repurchased 6,357,739 common units under the 2019 Buyback Program through open market purchases during the six months ended June 30, 2020 .

The total purchase price of these repurchases (including commissions and fees) was $ 140.1 million.

During the six months ended June 30, 2019 , EPD repurchased 2,909,128 common units under the 2019 Buyback Program for a total purchase price of $ 81.1 million.

The units repurchased during the six months ended June 30, 2020 and 2019 were immediately cancelled upon acquisition.

At June 30, 2020, the remaining available capacity under the 2019 Buyback Program was $ 1.78 billion.

The Partnership repurchased an aggregate 8,342,246 common units under the 2019 Buyback Program through open market and private purchases during the nine months ended September 30, 2020 .

The total purchase price of these repurchases was $ 173.8 million including commissions and fees .

During the nine months ended September 30, 2019 , the Partnership repurchased 2,909,128 common units under the 2019 Buyback Program for a total purchase price of $ 81.1 million including commissions and fees.

Units repurchased under the 2019 Buyback Program are immediately cancelled upon acquisition.

At September 30, 2020, the remaining available capacity under the 2019 Buyback Program was $ 1.75 billion.

Common Units Issued in Connection With the Vesting of Phantom Unit Awards

During the six months ended June 30, 2020 , after taking into account tax withholding requirements, EPD issued a net 3,008,404 new common units to employees in connection with the vesting of phantom unit awards.

During the nine months ended September 30, 2020 , after taking into account tax withholding requirements, the Partnership issued a net 3,098,045 new common units to employees in connection with the vesting of phantom unit awards.

See Note 13 for information regarding our phantom unit awards.

Common Units Delivered Under DRIP and EUPP

EPD has registration statements on file with the SEC in connection with its distribution reinvestment plan (“DRIP”) and employee unit purchase plan (“EUPP”).

In July 2019, EPD announced that, beginning with the quarterly distribution payment paid in August 2019, it would use common units purchased on the open market, rather than issuing new common units, to satisfy its delivery obligations under the DRIP and EUPP.

The Partnership has registration statements on file with the SEC in connection with its distribution reinvestment plan (“DRIP”) and employee unit purchase plan (“EUPP”).

In July 2019, the Partnership announced that, beginning with the quarterly distribution payment paid in August 2019, it would use common units purchased on the open market, rather than issuing new common units, to satisfy its delivery obligations under the DRIP and EUPP.

This election is subject to change in future quarters depending on the Partnership’s need for equity capital.

During the six months ended June 30, 2020, a total of 3,379,971 common units were purchased on the open market and delivered to participants in connection with the DRIP and EUPP.

During the nine months ended September 30, 2020, a total of 5,148,468 common units were purchased on the open market and delivered to participants in connection with the DRIP and EUPP.

Apart from $ 1.8 million attributable to the plan discount available to all participants in the EUPP, the funds used to effect these purchases were sourced from the DRIP and EUPP participants.

No other Partnership funds were used to satisfy these obligations.

We plan to use open market purchases to satisfy DRIP and EUPP reinvestments in connection with the distribution expected to be paid on August 12, 2020.

We plan to use open market purchases to satisfy DRIP and EUPP reinvestments in connection with the distribution expected to be paid on November 12, 2020.

Redeemable Preferred Limited Partner Interests

On September 30, 2020, the Partnership issued and sold an aggregate of 50,000 Series A Cumulative Convertible Preferred Units in a private placement transaction.

The stated value of each preferred unit is $ 1,000 per unit.

The total offering price for the preferred units was $ 50.0 million, of which $ 32.5 million was received in cash with the remaining $ 17.5 million funded through the exchange of 1,120,588 of the Partnership’s common units owned by the purchasers.

Cash proceeds from the preferred unit offering include $ 15.0 million received from a privately held affiliate of EPCO for the purchase of 15,000 preferred units.

Concurrently, the Partnership exchanged all of the 54,807,352 Partnership common units owned directly by OTA for 855,915 of the Partnership’s new preferred units having an equivalent value.

The preferred units held by OTA, like the common units OTA held prior to the exchange, are accounted for as treasury units by the Partnership in consolidation.

The historical cost of the treasury units did not change as a result of the exchange and remains at the $ 1.3 0 billion recognized in March 2020 in connection with settlement of the Liquidity Option.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The preferred units represent a new class of limited partner interests authorized under the Partnership’s Seventh Amended and Restated Agreement of Limited Partnership dated September 30, 2020 (the “Amended Partnership Agreement”).

As described in the Amended Partnership Agreement, key terms of the preferred units include the following:

With respect to distribution and liquidation rights, the preferred units rank senior to the Partnership’s common units.

Preferred units held by persons other than the Partnership, its subsidiaries and its affiliates generally will vote on an as-converted basis with the Partnership’s common units and have certain class voting rights with respect to certain protective matters.

Holders of the preferred units are entitled to receive cumulative quarterly distributions at a rate of 7.25 % per annum.

The Partnership is prohibited from paying distributions on its common units unless full cumulative distributions on the preferred units are paid or set aside for payment.

The Partnership may satisfy its obligation to pay distributions to the preferred unitholders through the issuance, in whole or in part, of additional preferred units (referred to as paid-in kind or “PIK” distributions), with the remainder in cash, subject to certain rights of a holder to elect all cash and other conditions as described in the Amended Partnership Agreement.

The exchange by OTA of its common units for PIK-eligible preferred units enables the Partnership to more effectively manage its consolidated cash balances.

Subject to certain limitations, each preferred unitholder may elect to convert its preferred units on or after September 30, 2025 into a number of the Partnership’s common units equal to (a) the number of preferred units to be converted multiplied by (b) the quotient of (i) $ 1,000 plus any accrued and unpaid distributions per preferred unit, divided by (ii) 92.5 % of the volume-weighted average price of the Partnership’s common units at the time of conversion (as defined in the underlying agreements).

In addition, each preferred unitholder may convert its preferred units into common units if EPO’s senior notes cease to have an investment grade rating or a Change of Control (as defined in the Amended Partnership Agreement) occurs, in each case based on the conversion ratio specified in the Amended Partnership Agreement.

The Partnership may elect to redeem the preferred units for cash, in whole or in part, based on a redemption price outlined in the following schedule, plus any accrued and unpaid distributions at the redemption date:

$ 1,100 per preferred unit from September 30, 2020 through September 29, 2022;

$ 1,070 per preferred unit from September 30, 2022 through September 29, 2024;

$ 1,030 per preferred unit from September 30, 2024 through September 29, 2025;

$ 1,010 per preferred unit from September 30, 2025 through September 29, 2026;

$ 1,000 per preferred unit on or after September 30, 2026;

if a Change of Control event occurs prior to September 30, 2026, the redemption price is $ 1,010 per preferred unit.

In connection with a redemption at the Partnership’s election, the Partnership may convert up to 50 % of the preferred units being redeemed into common units (and to pay cash with respect to the remainder), with each such preferred unit being converted on the applicable redemption date into a number of common units equal to (i) the then-applicable preferred unit redemption price divided by (ii) 92.5 % of the volume-weighted average price of the Partnership’s common units at the time of conversion (as defined in the underlying agreements).

The Partnership has agreed to prepare and file a registration statement that would permit or otherwise facilitate the public resale of any common units resulting from the conversion of the preferred units to common units.

Our Unaudited Condensed Consolidated Balance Sheet at September 30, 2020 presents the capital accounts of the third-party and related party purchasers of the preferred units as mezzanine equity since the terms of the preferred units allow for cash redemption by the holders in a Change of Control event, without regard to the likelihood of such an event.

The preferred units held by OTA are presented as treasury units in consolidation since their ultimate disposition remains under the control of the Partnership.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss)

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Total other comprehensive income (loss) for period

Accumulated Other Comprehensive Income (Loss), June 30, 2020

Accumulated Other Comprehensive Income (Loss), September 30, 2020

Cash Flow Hedges

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Total other comprehensive income (loss) for period

Accumulated Other Comprehensive Income (Loss), June 30, 2019

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss), September 30, 2019

The following table presents reclassifications of (income) loss out of accumulated other comprehensive income into net income during the periods indicated:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Losses (gains) on cash flow hedges:

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Cash Distributions

On July 7, 2020, we announced that the Board declared a quarterly cash distribution to be paid to our limited partners with respect to the second quarter of 2020 of $ 0.4450 per common unit, or $ 1.78 per unit on an annualized basis.

The quarterly distribution associated with the second quarter of 2020 is payable on August 12, 2020, to unitholders of record as of the close of business on July 31, 2020.

This distribution represents a 1.1 % increase over the distribution declared with respect to the second quarter of 2019.

In light of current economic conditions, management will evaluate future cash distributions in 2020 on a quarterly basis.

The payment of any quarterly cash distribution is subject to Board approval and management’s evaluation of our financial condition, results of operations and cash flows in connection with such payments.

On October 7, 2020, we announced that the Board declared a quarterly cash distribution of $ 0.4450 per common unit, or $ 1.78 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the third quarter of 2020.

The quarterly distribution is payable on November 12, 2020 to unitholders of record as of the close of business on October 30, 2020.

In light of current economic conditions, management will evaluate any future increases in cash distributions on a quarterly basis.

The payment of any quarterly cash distribution is subject to management’s evaluation of our financial condition, results of operations and cash flows in connection with such payments and Board approval.

ENTERPRISE PRODUCTS PARTNERS L.P.

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

NGL Pipelines & Services:

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Unbilled Revenue and Deferred Revenue

The following table provides information regarding our contract assets and contract liabilities at June 30, 2020:

The following table provides information regarding our contract assets and contract liabilities at September 30, 2020:

Contract Asset

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents significant changes in our unbilled revenue and deferred revenue balances during the six months ended June 30, 2020:

The following table presents significant changes in our unbilled revenue and deferred revenue balances for the nine months ended September 30, 2020:

Balance at December 31, 2019

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Other changes

Balance at June 30, 2020

Balance at September 30, 2020

Unbilled revenues are transferred to accounts receivable once we have an unconditional right to consideration from the customer.

Deferred revenues are recognized as revenue upon satisfaction of our performance obligation to the customer.

Unbilled revenue represents revenue that has been recognized upon satisfaction of a performance obligation, but cannot be contractually invoiced (or billed) to the customer at the balance sheet date until a future period.

Deferred revenue is recorded when payment is received from a customer prior to our satisfaction of the associated performance obligation.

The increase in unbilled revenue since December 31, 2019 is primarily due to the recognition of deficiency fee revenues on our EFS Midstream System that are not billable to the customer until the end of 2020.

Remaining Performance Obligations

The following table presents estimated fixed future consideration from revenue contracts that contain minimum volume commitments, deficiency and similar fees and the term of the contracts exceeds one year.

These amounts represent the revenues we expect to recognize in future periods from these contracts as of June 30, 2020.

These amounts represent the revenues we expect to recognize in future periods from these contracts as of September 30, 2020.

Consideration

Six Months Ended December 31, 2020

Three Months Ended December 31, 2020

One Year Ended December 31, 2021

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Operating income

14 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Gross operating margin by segment:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the non-cash mark-to-market gains (losses) included in gross operating margin for the periods indicated:

The following table summarizes the non-cash mark-to-market gains (losses) for the periods indicated:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Mark-to-market gains (losses) in gross operating margin:

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Total mark-to-market impact on gross operating margin

Mark-to-market loss in interest expense

For information regarding our hedging activities, see Note 14.

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Revenues from third parties:

Three months ended June 30, 2020

Three months ended June 30, 2019

Six months ended June 30, 2020

Six months ended June 30, 2019

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Revenues from related parties:

Three months ended June 30, 2020

Three months ended June 30, 2019

Six months ended June 30, 2020

Six months ended June 30, 2019

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Intersegment and intrasegment revenues:

Three months ended June 30, 2020

Three months ended June 30, 2019

Six months ended June 30, 2020

Six months ended June 30, 2019

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Total revenues:

Three months ended June 30, 2020

Three months ended June 30, 2019

Six months ended June 30, 2020

Six months ended June 30, 2019

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Equity in income (loss) of unconsolidated affiliates:

Three months ended June 30, 2020

Three months ended June 30, 2019

Six months ended June 30, 2020

Six months ended June 30, 2019

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates.

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Property, plant and equipment, net:

At June 30, 2020

At September 30, 2020

At December 31, 2019

Investments in unconsolidated affiliates:

At June 30, 2020

At September 30, 2020

At December 31, 2019

Intangible assets, net:

At June 30, 2020

At September 30, 2020

At December 31, 2019

At June 30, 2020

At September 30, 2020

At December 31, 2019

Segment assets:

At June 30, 2020

At September 30, 2020

At December 31, 2019

2 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Consolidated revenues:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the components of our consolidated benefit from (provision for) income taxes for the periods indicated (dollars in millions):

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Deferred tax benefit (expense) attributable to OTA

Texas Margin Tax

Benefit from (provision for) income taxes

Income taxes are accounted for under the asset-and-liability method.

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Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

We did not rely on any uncertain tax positions in recording our income tax-related amounts during the six months ended June 30, 2020 and 2019.

We did not rely on any uncertain tax positions in recording our income tax-related amounts during the nine months ended September 30, 2020 and 2019.

OTA Deferred Tax Liability

On March 5, 2020, we settled the Liquidity Option (see Note 8) and assumed OTA’s deferred tax liability, which reflects the outside basis difference of OTA in the 54,807,352 EPD common units it received in October 2014.

On March 5, 2020, the Partnership settled its obligations under the Liquidity Option Agreement (see Note 8) and indirectly assumed OTA’s deferred tax liability, which reflects OTA’s outside basis difference in the limited partner interests it received from the Partnership in October 2014.

Upon settlement of the Liquidity Option, the Liquidity Option liability was effectively replaced by the deferred tax liability of OTA calculated in accordance with ASC 740, Income Taxes .

At March 5, 2020, the Liquidity Option liability amount was $ 511.9 million.

Since the book value of the Liquidity Option liability exceeded OTA’s estimated deferred tax liability of $ 439.7 million on that date, we recognized a non-cash benefit in earnings of $ 72.2 million, which is reflected in the “Benefit from (provision for) income tax” line on our Unaudited Condensed Statement of Consolidated Operations for the six months ended June 30, 2020 .

The deferred tax liability of OTA is subject to fluctuation due to changes in the market value of the EPD common units it owns relative to its underlying tax basis in the units.

For example, if the market price of EPD common units increases between reporting dates, we expect to recognize deferred income tax expense in connection with an anticipated increase in OTA’s deferred tax liability.

Conversely, if the market price of EPD common units decreases between reporting dates, we expect to recognize a deferred income tax benefit in connection with an anticipated decrease in OTA’s deferred tax liability.

The following table presents changes in OTA’s deferred tax liability since the settlement date of March 5, 2020 to June 30, 2020:

Deferred tax liability at March 5, 2020

Impact of change in fair value of units on deferred tax liability:

Change in fair value of 54,807,352 EPD common units held by OTA (1)

Multiplied by estimated blended federal and state tax rate

Other, including interim allocations of taxable income

Deferred tax liability at June 30, 2020

The market price of EPD common units declined from $ 23.67 per unit at March 5, 2020 (settlement date of the Liquidity Option) to $ 18.17 per unit on June 30, 2020.

As presented in the preceding table, OTA recognized a net deferred income tax benefit of $ 64.5 million through June 30, 2020 primarily due to a decrease in the market value of its investment in EPD common units since March 5, 2020.

With respect to the second quarter of 2020, OTA recognized deferred income tax expense of $ 50.5 million primarily due to an increase in the market value of its investment in EPD common units since March 31, 2020.

The market price of EPD common units increased from $ 14.30 per unit at March 31, 2020 to $ 18.17 per unit on June 30, 2020.

In total, earnings for the six months ended June 30, 2020 reflect a net $ 136.7 million of deferred income tax benefit attributable to OTA.

Subsequent to March 5, 2020 and through September 30, 2020, OTA recognized an additional net, non-cash deferred income tax benefit of $ 85.8 million due to a decrease in the outside basis difference of its investment in the Partnership, which in turn was driven by a decline in the market price of Partnership common units since March 5, 2020.

In total, earnings for the three and nine months ended September 30, 2020 reflect $ 21.3 million and $ 158.0 million, respectively, of net deferred income tax benefit attributable to OTA.

On September 30, 2020, OTA exchanged the Partnership common units it owned for non-publicly traded preferred units having a stated value of $ 1,000 per unit (see Note 8).

As a result and beginning September 30, 2020, OTA’s deferred tax liability no longer fluctuates due to market price changes in the Partnership’s common units.

Our subsidiary OTA is a corporation for U.S.

federal income tax purposes, and the exchange of common units for preferred units did not constitute a taxable transaction for OTA.

ENTERPRISE PRODUCTS PARTNERS L.P.

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Tabular Disclosures Regarding Income Taxes

Our federal, state and foreign income tax provision (benefit) is summarized below:

Our federal, state and foreign income tax benefit (provision) is summarized below:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Current portion of income tax provision (benefit):

Ended September 30,

For the Nine Months

Ended September 30,

Current portion of income tax benefit (provision):

Total current portion

Deferred portion of income tax provision (benefit):

Deferred portion of income tax benefit (provision):

Total deferred portion

Total provision for (benefit from) income taxes

A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S.

Total benefit from (provision for) income taxes

A reconciliation of the benefit from (provision for) income taxes with amounts determined by applying the statutory U.S.

federal income tax rate to income before income taxes is as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Pre-Tax Net Book Income (“NBI”)

Texas Margin Tax (1)

State income tax provision (benefit), net of federal benefit (2)

Federal income tax provision (benefit) computed by applying

State income tax benefit (provision), net of federal benefit (2)

Federal income tax benefit (provision) computed by applying

the federal statutory rate to NBI of corporate entities

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Liquidity Option (2)

Provision for (benefit from) income taxes

Other differences

Benefit from (provision for) income taxes

Effective income tax rate

5 unchanged sentences

The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated:

September 30,

Deferred tax liabilities:

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

BASIC EARNINGS PER UNIT

Net income attributable to limited partners

Ended September 30,

For the Nine Months

Ended September 30,

BASIC EARNINGS PER COMMON UNIT

Net income attributable to common unitholders

Earnings allocated to phantom unit awards (1)

Net income available to common unitholders

Net income allocated to common unitholders

Basic weighted-average number of common units outstanding

Basic earnings per unit

DILUTED EARNINGS PER UNIT

Net income attributable to limited partners

Basic earnings per common unit

DILUTED EARNINGS PER COMMON UNIT

Net income attributable to common unitholders

Diluted weighted-average number of units outstanding:

Distribution-bearing common units

Phantom units (2)

Diluted earnings per unit

Preferred units (2)

Diluted earnings per common unit

* Amount is negligible

Phantom units are considered participating securities for purposes of computing basic earnings per unit.

See Note 13 for information regarding our phantom units.

See Note 13 for information regarding the phantom units.

We use the “if-converted method” to determine the potential dilutive effect of the vesting of phantom units and the conversion of preferred units outstanding.

See Note 8 for information regarding the preferred units issued on September 30, 2020.

Since the preferred units were issued on the last day of the third quarter of 2020, their weighted-average dilutive impact on earnings per unit for the three and nine months ended September 30, 2020 was negligible.

ENTERPRISE PRODUCTS PARTNERS L.P.

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Equity-classified awards:

1 unchanged sentence

Profits interest awards

Liability-classified awards

The fair value of equity-classified awards is amortized to earnings over the requisite service or vesting period.

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Phantom unit awards at December 31, 2019

Phantom unit awards at June 30, 2020

Phantom unit awards at September 30, 2020

Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued.

6 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Cash payments made in connection with DERs

Total intrinsic value of phantom unit awards that vested during period

For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $ 237.1 million at June 30, 2020, of which our share of such cost is currently estimated to be $ 202.0 million.

For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $ 196.6 million at September 30, 2020, of which our share of such cost is currently estimated to be $ 165.5 million.

Due to the graded vesting provisions of these awards, we expect to recognize our share of the unrecognized compensation cost for these awards over a weighted-average period of 2.1 years.

2 unchanged sentences

Profits Interest Awards

EPCO currently serves as the general partner for each of four limited partnerships (referred to as “Employee Partnerships”) that serve as long-term incentive arrangements for key employees of EPCO by providing such employees a profits interest in one or more of the Employee Partnerships.

The profits interest in a fifth Employee Partnership (EPD PubCo Unit I L.P.) fully vested in February 2020 and the partnership was liquidated.

At June 30, 2020 , our share of the total unrecognized compensation cost related to the four remaining Employee Partnerships was $ 18.9 million, which we expect to recognize over a weighted-average period of 3.1 years.

EPCO currently serves as the general partner for each of four limited partnerships (referred to as the “Employee Partnerships”) that serve as long-term incentive arrangements for key employees of EPCO by providing such employees a profits interest in one or more of the Employee Partnerships.

On September 30, 2020, the partners of two such Employee Partnerships, namely EPD PubCo Unit II L.P.

(“PubCo II”) and EPD PrivCo Unit I L.P.

(“PrivCo I”), amended their respective limited partnership agreements to provide for the vesting of their Class B limited partner interests on the earlier of (i) February 22, 2023, (ii) the first date on or after September 30, 2020 on which the closing market price of the Partnership’s common units is equal to or greater than $ 25.41 per unit, (iii) a change of control event, or (iv) dissolution of the applicable Employee Partnership.

As a result of these modifications, PubCo II and PrivCo I will recognize incremental compensation cost of $ 1.2 million and $ 0.5 million, respectively, through February 22, 2023.

The profits interest in EPD PubCo Unit I L.P.

vested in February 2020 and was liquidated.

At September 30, 2020 , our share of the total unrecognized compensation cost related to the four remaining Employee Partnerships was $ 18.0 million, which we expect to recognize over a weighted-average period of 3.1 years.

Derivative Instruments, Hedging Activities and Fair Value Measurements

6 unchanged sentences

Forward-Starting Swaps

The following table summarizes our portfolio of 30-year forward-starting swaps at June 30, 2020, all of which are associated with the expected future issuance of senior notes.

The following table summarizes our portfolio of 30-year forward-starting swaps at September 30, 2020, all of which are associated with the expected future issuance of senior notes.

Hedged Transaction

21 unchanged sentences

These swaps were entered into during the first quarter of 2020.

In total, the notional amount of forward-starting swaps outstanding at June 30, 2020 was $ 1.08 billion.

In total, the notional amount of forward-starting swaps outstanding at September 30, 2020 was $ 1.08 billion.

The weighted-average fixed interest rate of these derivative instruments is 1.83 %.

6 unchanged sentences

In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps and basis swaps.

At June 30, 2020, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging the fair value of commodity products held in inventory and (iii) hedging natural gas processing margins.

The following table summarizes our portfolio of commodity derivative instruments outstanding at June 30, 2020 (volume measures as noted):

At September 30, 2020, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging the fair value of commodity products held in inventory and (iii) hedging natural gas processing margins.

The following table summarizes our portfolio of commodity derivative instruments outstanding at September 30, 2020 (volume measures as noted):

Derivative Purpose

12 unchanged sentences

Natural gas marketing:

Forecasted purchase of natural gas (Bcf)

Cash flow hedge

Natural gas storage inventory management activities (Bcf)

22 unchanged sentences

Cash flow hedge

Commercial energy:

Forecasted purchases of power related to asset operations (terawatt hours (“TWh”))

Cash flow hedge

Derivatives not designated as hedging instruments:

7 unchanged sentences

Mark-to-market

Commercial energy risk management activities (TWh) (4)

Mark-to-market

Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes.

The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is December 2022, March 2021 and December 2022, respectively.

Current volumes include approximately 0.7 Bcf of physical derivatives instruments that are predominantly priced as index plus a premium or minus a discount.

Reflects the use of derivative instruments to manage risks associated with our transportation, processing, storage assets and end use power requirements.

The carrying amount of our inventories subject to fair value hedges was $ 233.8 million and $ 31.7 million at June 30, 2020 and December 31, 2019, respectively.

Forecasted NGL sales volumes under natural gas processing exclude 0.3 MMBbls of additional hedges executed under contracts that have been designated as normal sales agreements.

Reflects the use of derivative instruments to manage risks associated with our transportation, processing and storage assets.

The carrying amount of our inventories subject to fair value hedges was $ 72.4 million and $ 31.7 million at September 30, 2020 and December 31, 2019, respectively.

ENTERPRISE PRODUCTS PARTNERS L.P.

5 unchanged sentences

Liability Derivatives

June 30, 2020

September 30, 2020

December 31, 2019

June 30, 2020

September 30, 2020

December 31, 2019

35 unchanged sentences

(v) = (iii) + (iv)

As of June 30, 2020:

As of September 30, 2020:

Interest rate derivatives

Commodity derivatives

11 unchanged sentences

(v) = (iii) + (iv)

As of June 30, 2020:

As of September 30, 2020:

Interest rate derivatives

15 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Interest rate derivatives

Interest expense

Ended September 30,

For the Nine Months

Ended September 30,

Commodity derivatives

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Interest rate derivatives

Interest expense

Ended September 30,

For the Nine Months

Ended September 30,

Commodity derivatives

The gain (loss) corresponding to the hedge ineffectiveness on the fair value hedges was negligible for all periods presented.

The remaining gain (loss) for each period presented is primarily attributable to prompt-to-forward month price differentials that were excluded from the assessment of hedge effectiveness.

The following tables present the effect of our derivative instruments designated as cash flow hedges on our Unaudited Condensed Statements of Consolidated Operations and Unaudited Condensed Statements of Consolidated Comprehensive Income for the periods indicated:

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Interest rate derivatives

7 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Interest rate derivatives

13 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Interest rate derivatives

3 unchanged sentences

Operating costs and expenses

The $ 99.5 million gain recognized for the six months ended June 30, 2020 (as noted in the preceding table) from derivatives not designated as hedging instruments consists of $ 35.8 million of realized gains and $ 63.7 million of net unrealized mark-to-market gains attributable to commodity derivatives.

The $ 114.3 million gain recognized for the nine months ended September 30, 2020 (as noted in the preceding table) from derivatives not designated as hedging instruments consists of $ 59.6 million of realized gains and $ 54.7 million of net unrealized mark-to-market gains attributable to commodity derivatives.

Fair Value Measurements

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 2020

At September 30, 2020

Fair Value Measurements Using

3 unchanged sentences

Financial assets:

Interest rate derivatives

Commodity derivatives:

25 unchanged sentences

Total commodity derivatives

In the aggregate, the fair value of our commodity hedging portfolios at June 30, 2020 was a net derivative liability of $ 197.4 million prior to the impact of CME Rule 814.

Financial assets and liabilities recorded on the balance sheet at June 30, 2020 using significant unobservable inputs (Level 3) are not material to the Unaudited Condensed Consolidated Financial Statements.

In the aggregate, the fair value of our commodity hedging portfolios at September 30, 2020 was a net derivative liability of $ 356.8 million prior to the impact of CME Rule 814.

Financial assets and liabilities recorded on the balance sheet at September 30, 2020 using significant unobservable inputs (Level 3) are not material to the Unaudited Condensed Consolidated Financial Statements.

Refer to Note 8 for discussion of the settlement of the Liquidity Option in March 2020 and Note 11 for the income tax impact related to this transaction.

2 unchanged sentences

Nonrecurring Fair Value Measurements

Non-cash asset impairment charges for the six months ended June 30, 2020 were $ 13.4 million compared to $ 11.8 million for the six months ended June 30, 2019.

Charges for 2020 primarily relate to assets retired during the quarter whose operations have ceased.

Impairment charges are a component of “Operating costs and expenses” on our Unaudited Condensed Statements of Consolidated Operations.

We did not have any significant nonrecurring fair value measurements at September 30, 2020 or 2019.

See Note 4 for information regarding other non-cash asset impairment charges.

Other Fair Value Information

The carrying amounts of cash and cash equivalents (including restricted cash balances), accounts receivable, commercial paper notes and accounts payable approximate their fair values based on their short-term nature.

The estimated total fair value of our fixed-rate debt obligations was $ 33.03 billion and $ 30.37 billion at June 30, 2020 and December 31, 2019, respectively.

The aggregate carrying value of these debt obligations was $ 29.65 billion and $ 27.15 billion at June 30, 2020 and December 31, 2019, respectively.

The estimated total fair value of our fixed-rate debt obligations was $ 32.80 billion and $ 30.37 billion at September 30, 2020 and December 31, 2019, respectively.

The aggregate carrying value of these debt obligations was $ 29.90 billion and $ 27.15 billion at September 30, 2020 and December 31, 2019, respectively.

These values are primarily based on quoted market prices for such debt or debt of similar terms and maturities (Level 2) and our credit standing.

5 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Revenues – related parties:

4 unchanged sentences

The following table summarizes our related party accounts receivable and accounts payable balances at the dates indicated:

September 30,

Accounts receivable - related parties:

EPCO and its privately held affiliates

Unconsolidated affiliates

8 unchanged sentences

We have an extensive and ongoing relationship with EPCO and its privately held affiliates (including Enterprise GP, our general partner), which are not a part of our consolidated group of companies.

At June 30, 2020, EPCO and its privately held affiliates (including Dan Duncan LLC and certain Duncan family trusts) beneficially owned the following limited partner interests in us:

At September 30, 2020, EPCO and its privately held affiliates (including Dan Duncan LLC and certain Duncan family trusts) beneficially owned the following limited partner interests in us:

Total Number of Limited Partner Interests Held

Percentage of

Of the total number of units held by EPCO and its privately held affiliates, 88,222,618 have been pledged as security under the credit facilities of EPCO and its privately held affiliates at June 30, 2020.

Limited Partner

701,981,017 common units

15,000 preferred units

Of the total number of units held by EPCO and its privately held affiliates, 97,322,618 have been pledged as security under the credit facilities of EPCO and its privately held affiliates at September 30, 2020.

These credit facilities contain customary and other events of default, including defaults by us and other affiliates of EPCO.

An event of default, followed by a foreclosure on the pledged collateral, could ultimately result in a change in ownership of these units and affect the market price of EPD’s common units.

We and Enterprise GP are both separate legal entities apart from each other and apart from EPCO and its other affiliates, with assets and liabilities that are also separate from those of EPCO and its other affiliates.

The Partnership and Enterprise GP are both separate legal entities apart from each other and apart from EPCO and its other affiliates, with assets and liabilities that are also separate from those of EPCO and its other affiliates.

EPCO and its privately held affiliates depend on the cash distributions they receive from us and other investments to fund their other activities and to meet their debt obligations.

During the six months ended June 30, 2020 and 2019, we paid EPCO and its privately held affiliates cash distributions totaling $ 605.5 million and $ 593.7 million, respectively.

From time-to-time, EPCO and its privately held affiliates elect to purchase additional common units under EPD’s DRIP and ATM program.

See Note 8 for additional information regarding the DRIP.

During the nine months ended September 30, 2020 and 2019, we paid EPCO and its privately held affiliates cash distributions totaling $ 908.2 million and $ 893.1 million, respectively.

We have no employees.

2 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Operating costs and expenses

1 unchanged sentence

Total costs and expenses

We lease office space from privately held affiliates of EPCO.

The rental rates in these lease agreements approximate market rates.

For the three months ended June 30, 2020 and 2019, we recognized $ 2.9 million and $ 3.5 million, respectively, of related party operating lease expense in connection with these office space leases.

For the six months ended June 30, 2020 and 2019, we recognized $ 6.3 million and $ 7.3 million, respectively, of related party operating lease expense in connection with these office space leases.

Commitments and Contingencies

We lease office space from privately held affiliates of EPCO at rental rates that approximate market rates.

In January 2020, we amended an office space lease with an affiliate of EPCO that extended the term through June 2037.

For the three months ended September 30, 2020 and 2019, we recognized $ 3.3 million and $ 3.8 million, respectively, of related party operating lease expense in connection with these office space leases.

For the nine months ended September 30, 2020 and 2019, we recognized $ 9.6 million and $ 11.1 million, respectively, of related party operating lease expense in connection with these office space leases.

Commitments and Contingent Liabilities

As part of our normal business activities, we may be named as defendants in legal proceedings, including those arising from regulatory and environmental matters.

3 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our accruals for litigation contingencies were $ 0.2 million at June 30, 2020 and December 31, 2019, and recorded in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities.”

Our accruals for litigation contingencies were $ 6.9 million and $ 0.2 million at September 30, 2020 and December 31, 2019, respectively, and recorded in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities.”

Energy Transfer Matter

11 unchanged sentences

We have long-term and short-term payment obligations under debt agreements.

In total, the principal amount of our consolidated debt obligations were $ 29.90 billion and $ 27.88 billion at June 30, 2020 and December 31, 2019, respectively.

In total, the principal amount of our consolidated debt obligations were $ 30.15 billion and $ 27.88 billion at September 30, 2020 and December 31, 2019, respectively.

See Note 7 for additional information regarding our scheduled future maturities of debt principal.

Lease Accounting Matters

The following table presents information regarding operating leases where we are the lessee at June 30, 2020:

The following table presents information regarding operating leases where we are the lessee at September 30, 2020:

Asset Category

3 unchanged sentences

Right-of-use (“ROU”) asset amounts are a component of “Other assets” on our Unaudited Condensed Consolidated Balance Sheet.

At June 30, 2020 , lease liabilities of $ 30.1 million and $ 328.9 million were included within “Other current liabilities” and “Other liabilities,” respectively.

At September 30, 2020 , lease liabilities of $ 28.6 million and $ 325.6 million were included within “Other current liabilities” and “Other liabilities,” respectively.

The discount rate for each category of assets represents the weighted average of either (i) the implicit rate applicable to the underlying leases (where determinable) or (ii) our incremental borrowing rate adjusted for collateralization (if the implicit rate is not determinable).

In general, the discount rates are based on either (i) information available at the lease commencement date or (ii) January 1, 2019 for leases existing at the adoption date for ASC 842.

In general, the discount rates are based on either (i) information available at the lease commencement date or (ii) January 1, 2019 for leases existing at the adoption date for ASC 842, Leases .

In total, our ROU asset and lease liability carrying values increased $ 130.9 million and $ 142.2 million, respectively, since December 31, 2019 primarily due to the modification of an office space lease with an affiliate of EPCO.

ENTERPRISE PRODUCTS PARTNERS L.P.

2 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Long-term operating leases:

9 unchanged sentences

Short-term operating lease expense is expensed as incurred.

Cash paid for operating lease liabilities recorded on our balance sheet was $ 7.9 million and $ 12.9 million for the three months ended June 30, 2020 and 2019, respectively.

For the six months ended June 30, 2020 and 2019 cash paid for operating lease liabilities was $ 18.3 million and $ 26.4 million, respectively.

Cash paid for operating lease liabilities recorded on our balance sheet was $ 9.8 million and $ 13.0 million for the three months ended September 30, 2020 and 2019, respectively.

For the nine months ended September 30, 2020 and 2019 cash paid for operating lease liabilities was $ 28.1 million and $ 39.4 million, respectively.

We do not have any significant operating or direct financing leases where we are the lessor.

Our operating lease income for the three months ended June 30, 2020 and 2019 was $ 2.6 million and $ 2.4 million, respectively.

For the six months ended June 30, 2020 and 2019 operating lease income was $ 6.1 million and $ 7.2 million, respectively.

Our operating lease income for the three months ended September 30, 2020 and 2019 was $ 2.3 million and $ 3.5 million, respectively.

For the nine months ended September 30, 2020 and 2019 operating lease income was $ 8.4 million and $ 10.7 million, respectively.

We do not have any sales-type leases.

Our operating lease commitments at June 30, 2020 did not differ materially from those reported in our 2019 Form 10-K.

Including the impact of the modification of the related party office space lease, our total operating lease commitments increased from $ 271.2 million at December 31, 2019 to approximately $ 469.2 million at September 30, 2020.

Purchase Obligations

1 unchanged sentence

These commitments represent enforceable and legally binding agreements as of the reporting date.

Our product purchase commitments at June 30, 2020 declined by an estimated $ 8.63 billion when compared to those reported in our 2019 Form 10-K primarily due to lower NGL and crude oil prices in the six months ended June 30, 2020.

At June 30, 2020, our estimated long-term product purchase obligations totaled $ 11.94 billion after reflecting the decline in commodity prices, agreements added during the six months ended June 30, 2020 and those commitments that expired during the year.

Our product purchase commitments at September 30, 2020 declined by an estimated $ 6.3 billion when compared to those reported in our 2019 Form 10-K primarily due to lower NGL and crude oil prices in the nine months ended September 30, 2020.

At September 30, 2020, our estimated long-term product purchase obligations totaled $ 14.27 billion after reflecting the decline in commodity prices, agreements added during the nine months ended September 30, 2020 and those commitments that expired during the year.

At December 31, 2019, our estimated long-term product purchase obligations totaled $ 20.57 billion.

5 unchanged sentences

The following table presents the net effect of changes in our operating accounts for the periods indicated:

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Decrease (increase) in:

10 unchanged sentences

Net effect of changes in operating accounts

We incurred liabilities for construction in progress that had not been paid at June 30, 2020 and December 31, 2019 of $ 306.6 million and $ 432.0 million, respectively.

Cash payments for interest, net of $ 96.9 and $ 102.9 capitalized during the

nine months ended September 30, 2020 and 2019, respectively

Cash payments for federal and state income taxes

We incurred liabilities for construction in progress that had not been paid at September 30, 2020 and December 31, 2019 of $ 272.1 million and $ 432.0 million, respectively.

Such amounts are not included under the caption “Capital expenditures” on the Unaudited Condensed Statements of Consolidated Cash Flows.

11 unchanged sentences

Unaudited Condensed Consolidating Balance Sheet

June 30, 2020

September 30, 2020

EPO and Subsidiaries

22 unchanged sentences

Other long-term liabilities

Commitments and contingencies

Commitments and contingent liabilities

Redeemable preferred limited partner interests

Partners’ and other owners’ equity

Noncontrolling interests

Total liabilities and equity

Noncontrolling interests in consolidated subsidiairies

Total liabilities, preferred units, and equity

ENTERPRISE PRODUCTS PARTNERS L.P.

27 unchanged sentences

Other long-term liabilities

Commitments and contingencies

Commitments and contingent liabilities

Partners’ and other owners’ equity

Noncontrolling interests

Noncontrolling interests in consolidated subsidiairies

Total liabilities and equity

3 unchanged sentences

Unaudited Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

EPO and Subsidiaries

11 unchanged sentences

Net income attributable to noncontrolling interests

Net income attributable to preferred units

Net income attributable to entity

1 unchanged sentence

Unaudited Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2019

For the Three Months Ended September 30, 2019

EPO and Subsidiaries

16 unchanged sentences

Unaudited Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

11 unchanged sentences

Net income attributable to noncontrolling interests

Net income attributable to preferred units

Net income attributable to entity

1 unchanged sentence

Unaudited Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

EPO and Subsidiaries

16 unchanged sentences

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

EPO and Subsidiaries

1 unchanged sentence

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to preferred units

Comprehensive income attributable to entity

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2019

For the Three Months Ended September 30, 2019

EPO and Subsidiaries

3 unchanged sentences

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

1 unchanged sentence

Comp rehensive income attrib utable to noncontrolling interests

Comprehensive income attributable to preferred units

Comprehensive income attributable to entity

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

EPO and Subsidiaries

6 unchanged sentences

Unaudited Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

19 unchanged sentences

Repurchase of common units under 2019 Buyback Program

Net cash proceeds from the issuance of preferred unit

Cash contributions from owners

11 unchanged sentences

Unaudited Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

EPO and Subsidiaries

29 unchanged sentences

restricted cash, at end of period

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

Issuance of $ 1.25 Billion of Senior Notes in August 2020

In August 2020, EPO issued $ 1.0 billion in principal amount of 3.20 % senior notes due February 2052 (“Senior Notes DDD”) and $ 250.0 million in principal amount of 2.80 % reopened senior notes due January 2030 (“Senior Notes AAA”).

The reopened Senior Notes AAA and the Senior Notes DDD were issued at 107.211 % and 99.233 % of their principal amounts, respectively.

We received aggregate net proceeds of $ 1.25 billion from the sale of the notes after deducting underwriting discounts and other estimated offering expenses payable by us.

The reopened Senior Notes AAA represent a re-opening of an outstanding series of EPO’s senior notes.

EPO originally issued $ 1.0 billion principal amount of Senior Notes AAA on January 15, 2020.

The reopened Senior Notes AAA will form a single series with the original notes of that series, will trade under the same CUSIP number, and will have the same terms as to status, redemption or otherwise as the original notes of that series.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements