What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 391 added, 908 removed, 868 unchanged (60% of the section changed)

3 unchanged sentences

(Dollars in millions)

September 30,

Current assets:

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Restricted cash

Accounts receivable – trade, net of allowance for doubtful accounts

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

Accounts receivable – trade, net of allowance for credit losses

of $ 47.3 at March 31, 2021 and $ 46.5 at December 31, 2020

Accounts receivable – related parties

Derivative assets

Inventories (see Note 3)

Derivative assets (see Note 13)

Prepaid and other current assets

Total current assets

Property, plant and equipment, net

Investments in unconsolidated affiliates

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

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

Property, plant and equipment, net (see Note 4)

Investments in unconsolidated affiliates (see Note 5)

Intangible assets, net (see Note 6)

Goodwill (see Note 6)

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Accrued interest

Derivative liabilities

Derivative liabilities (see Note 13)

Other current liabilities

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

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

( 50,412 units outstanding at March 31, 2021 and 50,138 units outstanding

at December 31, 2020)

Partners’ equity:

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)

Common limited partner interests ( 2,185,178,603 units issued and outstanding at March 31, 2021, 2,182,308,958 units issued and outstanding at December 31, 2020)

Treasury units, at cost

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Third parties

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Operating costs and expenses:

Third parties

Third party and other costs

Related parties

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General and administrative costs:

Third parties

Third party and other costs

Related parties

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Interest expense

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

Change in fair market value of Liquidity Option

Interest income

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Net income attributable to noncontrolling interests

Net income attributable to preferred units (see Note 8)

Net income attributable to preferred units

Net income attributable to common unitholders

* Amount is negligible

Earnings per unit:

(see Note 11)

Basic earnings per common unit

Diluted earnings per common unit

Basic and diluted earnings per common unit

See Notes to Unaudited Condensed Consolidated Financial Statements.

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Other comprehensive income (loss):

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Changes in fair value of cash flow hedges

Reclassificatio n of losses ( gains) to ne t income

Reclassificati on of losses (gains) to ne t income

Interest rate hedging derivative instruments:

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Total cash flow hedges

Total other comprehens ive income (loss)

Total other comprehens ive income

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to preferred units (see Note 8)

Comprehensive income attributable to preferred units

Comprehensive income attributable to common unitholders

* Amount is negligible

See Notes to Unaudited Condensed Consolidated Financial Statements.

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(Dollars in millions)

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

Operating activities:

Reconciliation of net income to net cash flows provided by operating activities:

Depreciation, amortization and accretion

Asset impairment and related charges

Depreciation and accretion

Amortization of intangible assets

Amortization of major maintenance costs for reaction-based plants

Other amortization expense

Impairment of assets other than goodwill (see Note 4)

Equity in income of unconsolidated affiliates

Distributions received from unconsolidated affiliates attributable to earnings

Net gains attributable to asset sales

Net losses attributable to asset sales and related matters

Deferred income tax expense (benefit)

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Cash contributions from noncontrolling interests

Net cash proceeds from the issuance of common units

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

Cas h used in financing ac tivities

Cas h provided by (used in) financing ac tivities

Net change in cash and cash equivalents, including restricted cash

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UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

(Dollars in millions)

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Noncontrolling

For the Three Months Ended September 30, 2020:

Balance, June 30, 2020

Cash distributions paid to common unitholders

Cash payments made in connection with

distribution equivalent rights

Cash distributions paid to noncontrolling interests

Cash contributions from noncontrolling interests

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, September 30, 2020

Partners’ Equity

Comprehensive

Income (Loss)

Noncontrolling

For the Nine Months Ended September 30, 2020:

Balance, December 31, 2020

Cash distributions paid to common unitholders

Cash payments made in connection with

distribution equivalent rights

Cash payments made in connection with distribution equivalent rights

Cash distributions paid to noncontrolling interests

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2019 Buyback Program (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, September 30, 2020

See Notes to Unaudited Condensed Consolidated Financial Statements.

For information regarding Unit History and

Accumulated Other Comprehensive Income (Loss), see Note 8.

ENTERPRISE PRODUCTS PARTNERS L.P.

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(Dollars in millions)

Partners’ Equity

Comprehensive

Income (Loss)

Noncontrolling

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

Cash distributions paid to noncontrolling interests

Cash contributions from noncontrolling interests

Amortization of fair value of equity-based awards

Cash flow hedges

Balance, September 30, 2019

Balance, March 31, 2021

Partners’ Equity

2 unchanged sentences

Noncontrolling

For the Nine Months Ended September 30, 2019:

Balance, December 31, 2019

3 unchanged sentences

Cash contributions from noncontrolling interests

Net cash proceeds from the issuance of common units

Common units issued in connection with employee compensation

Amortization of fair value of equity-based awards

Repurchase and cancellation of common units under

2019 Buyback Program (see Note 8)

Amortization of fair value of equity-based awards

Common units issued to Skyline North Americas, Inc.

in connection with

settlement of Liquidity Option (see Note 8)

Treasury units acquired in connection with settlement of Liquidity Option,

at cost (see Note 8)

Cash flow hedges

Balance, September 30, 2019

Balance, March 31, 2020

See Notes to Unaudited Condensed Consolidated Financial Statements.

For information regarding Unit History and

For information regarding Unit History,

Accumulated Other Comprehensive Income (Loss), see Note 8.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

With the exception of per unit amounts, or as noted within the context of each disclosure,

the dollar amounts presented in the tabular data within these disclosures are

stated in millions of dollars.

KEY REFERENCES USED IN THESE

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references to “we,” “us,” “our” or “Enterprise” are intended to mean the business and operations of Enterprise Products Partners L.P.

Unless the context requires otherwise, references to “we,” “us” or “our” within these Notes to Unaudited Condensed Consolidated Financial Statements are intended to mean the business and operations of Enterprise Products Partners L.P.

and its consolidated subsidiaries.

References to “EPD” or the “Partnership” mean Enterprise Products Partners L.P.

References to the “Partnership” mean Enterprise Products Partners L.P.

on a standalone basis.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of EPD, and its consolidated subsidiaries, through which EPD conducts its business.

Enterprise is managed by its general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of the Partnership, and its consolidated subsidiaries, through which the Partnership conducts its business.

We are managed by our general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are:

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Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP;

and (iii) Dr.

Cunningham, who is also an advisory director of Enterprise GP.

Duncan Williams and Mr.

Bachmann also currently serve as managers of Dan Duncan LLC along with W.

Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP.

Duncan Williams and Messrs.

Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.

References to “EPCO” mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.

A majority of the outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are:

The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are:

Duncan Williams, who serves as Chairman of EPCO;

Cunningham, who serves as Vice Chairman of EPCO;

and (iii) Mr.

Bachmann, who serves as the President and Chief Executive Officer of EPCO;

Duncan Williams and Mr.

Bachmann also currently serve as directors of EPCO along with Mr.

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

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

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.

and (iii) Mr.

Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO.

Duncan Williams and Messrs.

Bachmann and Fowler also currently serve as directors of EPCO.

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

EPCO, together with its privately held affiliates, owned approximately 32.2 % of the Partnership’s common units outstanding at March 31, 2021.

With the exception of per unit amounts, or as noted within the context of each disclosure,

the dollar amounts presented in the tabular data within these disclosures are

stated in millions of dollars.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Partnership Organization and Operations

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.” Our preferred units are not publicly traded.

We are owned by our limited partners (preferred and common unitholders) from an economic perspective.

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

We conduct substantially all of our business operations through EPO and its consolidated subsidiaries.

Our fully integrated, midstream energy asset network (or “value chain”) links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States (“U.S.”), Canada and the Gulf of Mexico with domestic consumers and international markets.

Our midstream energy operations include:

natural gas gathering, treating, processing, transportation and storage;

NGL transportation, fractionation, storage, and marine terminals (including those used to export liquefied petroleum gases, or “LPG,” and ethane);

crude oil gathering, transportation, storage, and marine terminals;

propylene production facilities (including propane dehydrogenation (“PDH”) facilities), butane isomerization, octane enhancement, isobutane dehydrogenation (“iBDH”) and high purity isobutylene (“HPIB”) production facilities;

petrochemical and refined products transportation, storage, and marine terminals (including those used to export ethylene and polymer grade propylene (“PGP”);

a marine transportation business that operates on key U.S.

inland and intracoastal waterway systems.

Like many publicly traded partnerships, we have no employees.

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See Note 14 for information regarding related party matters.

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.

Our results of operations for the three months ended March 31, 2021 are not necessarily indicative of results expected for the full year of 2021.

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

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Securities and Exchange Commission (“SEC”).

These Unaudited Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) filed with the SEC on March 1, 2021.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These Unaudited Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the SEC on February 28, 2020.

Summary of Significant Accounting Policies

Apart from those matters noted below, there have been no changes in our significant accounting policies since those reported under Note 2 of the 2019 Form 10-K.

Apart from those matters described in this footnote, there have been no updates to our significant accounting policies since those reported under Note 2 of the 2020 Form 10-K.

Allowance for Credit Losses

We estimate our allowance for credit losses (formerly, the allowance for doubtful accounts) at each reporting date using a current expected credit loss model, which requires the measurement of expected credit losses for financial assets (e.g., accounts receivable) based on historical experience with customers, current economic conditions, and reasonable and supportable forecasts.

We may also increase the allowance for credit losses in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties.

The following table presents our allowance for credit losses activity since December 31, 2020:

Allowance for credit losses, December 31, 2020

Charged to costs and expenses

Charged to other accounts

Allowance for credit losses, March 31, 2021

Cash, Cash Equivalents and Restricted Cash

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

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See Note 13 for information regarding our derivative instruments and hedging activities.

Recent Accounting Developments

Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The new guidance, referred to as the current expected credit loss model, requires the measurement of expected credit losses for financial assets (e.g., accounts receivable) held at the reporting date based on historical experience, current economic conditions, and reasonable and supportable forecasts.

These result in the more timely recognition of losses.

The adoption of this new guidance on January 1, 2020 did not have a material impact on our consolidated financial statements.

Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which amended the disclosure requirements related to fair value measurements in an effort to enhance the overall usefulness of the disclosures and reduce costs by eliminating certain disclosures that were not considered to be decision-useful for users of the financial statements.

The ASU will now require incremental disclosures regarding changes in unrealized gains and losses, significant unobservable inputs used to develop Level 3 fair value measurements and measurement uncertainty.

Additionally, the ASU eliminated certain policy and process disclosures and reporting requirements.

The adoption of this new guidance on January 1, 2020 did not have a material impact on our consolidated financial statements.

See Note 14 for information regarding our fair value measurements.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

This ASU simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

We adopted this guidance on January 1, 2020 for future goodwill impairment testing.

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.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Cost of sales (1)

Lower of cost or net realizable value adjustments

recognized in cost of sales

Lower of cost or net realizable value adjustments recognized in cost of sales

Cost of sales is a component of “Operating costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.

Fluctuations in these amounts are primarily due to changes in energy commodity prices and sales volumes associated with our marketing activities.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant and Equipment

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

September 30,

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

Plants, pipelines and facilities (1)

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Less accumulated depreciation

Subtotal property, plant and equipment, net

Capitalized major maintenance costs for reaction-based

plants, net of accumulated amortization (7)

Property, plant and equipment, net

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and water wells, 5 - 35 years.

The following table summarizes our depreciation expense and capitalized interest amounts for the periods indicated:

For reaction-based plants, we use the deferral method when accounting for major maintenance activities.

Under the deferral method, major maintenance costs are capitalized and amortized over the period until the next major overhaul project.

On a weighted-average basis, the expected amortization period for these costs is 2.8 years.

Property, plant and equipment at March 31, 2021 and December 31, 2020 includes $ 69.0 million and $ 69.7 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, 2020:

ARO liability balance, December 31, 2020

Liabilities incurred

Liabilities settled

Revisions in estimated cash flows

Accretion expense

ARO liability balance, March 31, 2021

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Of the $ 150.1 million total ARO liability recorded at March 31, 2021 , $ 11.3 million was reflected as a current liability and $ 138.8 million as a long-term liability.

The following table summarizes our depreciation and accretion expense and capitalized interest amounts for the periods indicated:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Depreciation expense (1)

Accretion expense (1)

Capitalized interest (2)

Depreciation expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.

Depreciation and accretion expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.

We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase.

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

Asset impairment charges

In March 2021, we entered into agreements to sell a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System, to a third party for $ 40.0 million in cash.

The transaction closed and was effective on April 1, 2021.

In total, we recognized an impairment charge of $ 43.4 million, which reflects the write down of $ 36.6 million of property, plant and equipment and $ 6.8 million of intangible assets (see Note 6).

The impairment charge attributable to this transaction primarily reflects the reclassification of the underlying assets and liabilities (at their estimated fair values) to their respective held-for-sale accounts at March 31, 2021.

The remainder of our impairment charges for the three month periods ended March 31, 2021 and 2020 are attributable to the complete write-off of assets that are no longer expected to be used or constructed.

Asset impairment charges related to operations are a component of “Third party and other costs” within the “Operating costs and expenses” section of our Unaudited Condensed Statements of Consolidated Operations.

We are closely monitoring the recoverability of our long-lived assets, investments in unconsolidated affiliates and goodwill 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 non-cash impairment charges in the future.

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 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:

ARO liability balance, December 31, 2019

Liabilities incurred

Liabilities settled

Revisions in estimated cash flows

Accretion expense

ARO liability balance, September 30, 2020

Investments in Unconsolidated Affiliates

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We account for these investments using the equity method.

September 30,

NGL Pipelines & Services

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Petrochemical & Refined Products Services

The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods indicated:

The following table presents our equity in inc ome (loss) of u nconsolidated affiliates by business segment for the periods indicated:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

NGL Pipelines & Services

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Petrochemical & Refined Products Services

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets and Goodwill

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

September 30, 2020

March 31, 2021

December 31, 2020

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Total intangible assets

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the amortization expense of our intangible assets by business segment for the periods indicated:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

NGL Pipelines & Services

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The following table presents our forecast of amortization expense associated with existing intangible assets for the periods indicated:

Impairment of Intangible Asset

In March 2021, we recognized an impairment charge of $ 6.8 million for the write down of contract-based intangible assets associated with the sale of a portion of our San Juan Gathering System (see Note 4).

The contract-based intangible assets were classified within our Natural Gas Pipelines & Services business segment.

Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in the transaction.

There has been no change in our goodwill amounts since those reported in our 2020 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).

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

ENTERPRISE PRODUCTS PARTNERS L.P.

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

September 30,

EPO senior debt obligations:

Commercial Paper Notes, variable-rates

Senior Notes Q, 5.25 % fixed-rate, due January 2020

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

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

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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 nine months ended September 30, 2020:

Variable Interest Rates

The following table presents the range of interest rates and weighted-average interest rates paid on our consolidated variable-rate debt during the three months ended March 31, 2021:

Range of Interest

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

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:

In July 2017, the Financial Conduct Authority in the U.K.

announced a desire to phase out LIBOR as a benchmark by the end of June 2023.

Financial industry working groups are developing replacement rates and methodologies to transition existing agreements that depend on LIBOR as a reference rate.

We currently do not expect the transition from LIBOR to have a material financial impact on us.

Scheduled Maturities of Debt

Principal amount of senior and junior debt obligations

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 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 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.

Senior Notes BBB were issued at 99.413 % of their principal amount and have a fixed-rate interest rate of 3.70 % per year.

Senior Notes CCC were issued at 99.360 % of their principal amount and have a fixed-rate interest rate of 3.95 % per year.

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

Lender Financial Covenants

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

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2021 for the next five years, and in total thereafter:

Scheduled Maturities of Debt

Commercial Paper Notes

Junior Subordinated Notes

In February 2021, EPO repaid all of the $ 750.0 million in principal amount of its Senior Notes TT using remaining cash on hand attributable to its August 2020 senior notes offering and proceeds from the issuance of short-term notes under its commercial paper program.

In March 2021, EPO redeemed all of the $ 575.0 million outstanding principal amount of its Senior Notes RR one month prior to their scheduled maturity in April 2021.

These notes were redeemed at par (i.e., at a redemption price equal to the outstanding principal amount of such notes to be redeemed, plus accrued and unpaid interest thereon) using proceeds from the issuance of short-term notes under its commercial paper program.

Letters of Credit

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

At March 31, 2021, EPO had $ 200.7 million of letters of credit outstanding primarily related to our commodity hedging activities.

Lender Financial Covenants

We were in compliance with the financial covenants of our consolidated debt agreements at March 31, 2021.

Parent-Subsidiary Guarantor Relationships

The Partnership acts as guarantor of the consolidated debt obligations of EPO, with the exception of the remaining debt obligations of TEPPCO.

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

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Parent-Subsidiary Guarantor Relationships

EPD acts as guarantor of the consolidated debt obligations of EPO, with the exception of the remaining debt obligations of TEPPCO.

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

Capital Accounts

3 unchanged sentences

2,182,308,958

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

2 unchanged sentences

2,185,178,603

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

Common units outstanding at June 30, 2020

2,185,896,433

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

In addition, the Partnership 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 based on market conditions and other factors at the time of such offerings (referred to as the Partnership’s at-the-market (“ATM”) program).

The Partnership did not issue any common units under its ATM program during the three months ended March 31, 2021.

The Partnership’s capacity to issue additional common units under the ATM program remains at $ 2.54 billion as of March 31, 2021.

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

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, 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.

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 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 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.

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 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.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

During the three months ended March 31, 2021 , the Partnership settled open market repurchase transactions initiated in December 2020 involving an aggregate 709,816 common units .

The total cost of these repurchases was $ 13.9 million including commissions and fees .

During the three months ended March 31, 2020 , the Partnership repurchased 6,357,739 common units under the 2019 Buyback Program for a total purchase price of $ 140.1 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.

At March 31, 2021, the remaining available capacity under the 2019 Buyback Program was $ 1.72 billion.

Common Units Issued 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.

After taking into account tax withholding requirements, the Partnership issued 3,553,313 new common units to employees in connection with the vesting of phantom unit awards during the three months ended March 31, 2021.

See Note 12 for information regarding our phantom unit awards.

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

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.

During the three months ended March 31, 2021, agents of the Partnership purchased 1,553,688 common units on the open market and delivered them to participants in the DRIP and EUPP.

Apart from $ 0.5 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 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.

We plan to use open market purchases to satisfy DRIP and EUPP reinvestments in connection with the distribution expected to be paid on May 12, 2021.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Preferred Units

The following table summarizes changes in the number of our Series A Cumulative Convertible Preferred Units (“preferred units”) outstanding since December 31, 2020:

Preferred units outstanding at December 31, 2020

Paid in-kind distribution to related party

Preferred units outstanding at March 31, 2021

We present the capital accounts attributable to our preferred unitholders as mezzanine equity on our consolidated balance sheets since the terms of the preferred units allow for cash redemption by such unitholders in the event of a Change of Control (as defined in our partnership agreement), without regard to the likelihood of such an event.

In February 2021, the Partnership made a quarterly distribution to its third party and related party preferred unitholders valued at $ 0.9 million, consisting of paid-in-kind distributions of 274 new preferred units and $ 0.6 million of cash.

In March 2021, a privately held affiliate of EPCO sold its entire ownership interest in the Partnership’s preferred units to third parties.

Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Interest Rate

Accumulated Other Comprehensive Income, December 31, 2019

Accumulated Other Comprehensive Income (Loss), December 31, 2020

Other comprehensive income (loss) for period, before reclassifications

1 unchanged sentence

Total other comprehensive income (loss) for period

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

Accumulated Other Comprehensive Income, March 31, 2021

Cash Flow Hedges

Interest Rate

Accumulated Other Comprehensive Income (Loss), December 31, 2018

Accumulated Other Comprehensive Income, December 31, 2019

Other comprehensive income (loss) for period, before reclassifications

1 unchanged sentence

Total other comprehensive income (loss) for period

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:

Accumulated Other Comprehensive Income (Loss), March 31, 2020

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Losses (gains) on cash flow hedges:

5 unchanged sentences

For information regarding our interest rate and commodity derivative instruments, see Note 13.

Cash Distributions

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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash Distributions

On April 8, 2021, we announced that the Board declared a quarterly cash distribution of $ 0.45 per common unit, or $ 1.80 per common unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the first quarter of 2021.

The quarterly distribution is payable on May 12, 2021 to unitholders of record as of the close of business on April 30, 2021.

The total amount to be paid is $ 991.5 million, which includes $ 8.1 million for distribution equivalent rights (“DERs”) on phantom unit awards.

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

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

We classify our revenues into sales of products and midstream services.

2 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

NGL Pipelines & Services:

29 unchanged sentences

Substantially all of our revenues are derived from contracts with customers as defined within ASC 606, Revenue from Contracts with Customers .

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unbilled Revenue and Deferred Revenue

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

The following table provides information regarding our contract assets and contract liabilities at March 31, 2021:

Contract Asset

6 unchanged sentences

Other long-term liabilities

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table presents significant changes in our unbilled revenue and deferred revenue balances for the three months ended March 31, 2021:

Balance at December 31, 2020

3 unchanged sentences

Other changes

Balance at September 30, 2020

Balance at March 31, 2021

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

2 unchanged sentences

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 September 30, 2020.

These amounts represent the revenues we expect to recognize in future periods from these contracts as of March 31, 2021.

Consideration

Three Months Ended December 31, 2020

Nine Months Ended December 31, 2021

One Year Ended December 31, 2022

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(i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) Petrochemical & Refined Products Services.

Our business segments are generally organized and managed according to the types of services rendered (or technologies employed) and products produced and/or sold.

Financial information regarding these segments is evaluated regularly by our co-chief operating decision makers in deciding how to allocate resources and in assessing our operating and financial performance.

The co-principal executive officers of our general partner have been identified as our chief operating decision makers.

While these two officers evaluate results in a number of different ways, the business segment structure is the primary basis for which the allocation of resources and financial results are assessed.

The following information summarizes the assets and operations of each business segment:

Our NGL Pipelines & Services business segment includes our natural gas processing and related NGL marketing activities, NGL pipelines, NGL fractionation facilities, NGL and related product storage facilities, and NGL marine terminals .

Our Crude Oil Pipelines & Services business segment includes our crude oil pipelines, crude oil storage and marine terminals, and related crude oil marketing activities.

Our Natural Gas Pipelines & Services business segment includes our natural gas pipeline systems that provide for the gathering, treating and transportation of natural gas.

This segment also includes our natural gas marketing activities.

Our Petrochemical & Refined Products Services business segment includes our (i) propylene production facilities, which include propylene fractionation units and a PDH facility, and related pipelines and marketing activities, (ii) butane isomerization complex and related deisobutanizer operations, (iii) octane enhancement, iBDH and HPIB production facilities, (iv) refined products pipelines, terminals and related marketing activities, (v) ethylene export terminal and related operations;

and (vi) marine transportation business .

Segment Gross Operating Margin

5 unchanged sentences

Our calculation of gross operating margin may or may not be comparable to similarly titled measures used by other companies.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents our measurement of total segment gross operating margin for the periods presented.

1 unchanged sentence

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Operating income

2 unchanged sentences

Depreciation, amortization and accretion expense in operating costs and expenses (1)

Asset impairment and related charges in operating costs and expenses

Net gains attributable to asset sales in operating costs and expenses

Asset impairment charges in operating costs and expenses

Net losses attributable to asset sales and related matters in operating costs

General and administrative costs

2 unchanged sentences

Total segment gross operating margin

Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin.

Since make-up rights entail a future performance obligation by the pipeline to the shipper, these receipts are recorded as deferred revenue for GAAP purposes;

4 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Gross operating margin by segment:

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

NGL Pipelines & Services

Crude Oil Pipelines & Services

Natural Gas Pipelines & Services

Petrochemical & Refined Products Services

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.

Summarized Segment Financial Information

Information by business segment, together with reconciliations to amounts presented on our Unaudited Condensed Statements of Consolidated Operations, is presented in the following table:

Information by business segment, together with reconciliations to amounts presented on, or included in, our Unaudited Condensed Statements of Consolidated Operations, is presented in the following table:

Reportable Business Segments

Petrochemical

& Refined Products Services

Revenues from third parties:

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Three months ended March 31, 2021

Three months ended March 31, 2020

Revenues from related parties:

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Three months ended March 31, 2021

Three months ended March 31, 2020

Intersegment and intrasegment revenues:

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Three months ended March 31, 2021

Three months ended March 31, 2020

Total revenues:

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Three months ended March 31, 2021

Three months ended March 31, 2020

Equity in income (loss) of unconsolidated affiliates:

Three months ended September 30, 2020

Three months ended September 30, 2019

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Three months ended March 31, 2021

Three months ended March 31, 2020

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

2 unchanged sentences

and derived from a wide customer base.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Information by business segment, together with reconciliations to our Unaudited Condensed Consolidated Balance Sheet totals, is presented in the following table:

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Property, plant and equipment, net:

At September 30, 2020

At March 31, 2021

At December 31, 2020

Investments in unconsolidated affiliates:

At September 30, 2020

At March 31, 2021

At December 31, 2020

Intangible assets, net:

At September 30, 2020

At March 31, 2021

At December 31, 2020

At September 30, 2020

At March 31, 2021

At December 31, 2020

Segment assets:

At September 30, 2020

At March 31, 2021

At December 31, 2020

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Revenue and Expense Information

1 unchanged sentence

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Consolidated revenues:

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Depreciation, amortization and accretion

Asset impairment and related charges

Ne t gains attributable to asset sales

Asset impairment charges

Net losses attributable to asset sales and related matters

General and administrative costs

Total consolidated costs and expenses

Represents the cost of operating our plants, pipelines and other fixed assets excluding:

depreciation, amortization and accretion charges;

asset impairment and related charges;

and net losses (or gains) attributable to asset sales.

Represents the cost of operating our plants, pipelines and other fixed assets excluding depreciation, amortization and accretion charges;

asset impairment charges;

and net losses (or gains) attributable to asset sales and related matters.

Fluctuations in our product sales revenues and related cost of sales amounts are explained in part by changes in energy commodity prices.

In general, lower energy commodity prices result in a decrease in our revenues attributable to product sales;

however, these lower commodity prices also decrease the associated cost of sales as purchase costs are lower.

The same type of correlation would be true in the case of higher energy commodity sales prices and purchase costs.

ENTERPRISE PRODUCTS PARTNERS L.P.

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.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained.

Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.

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 nine months ended September 30, 2020 and 2019.

OTA Deferred Tax Liability

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 nine months ended September 30, 2020 .

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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular Disclosures Regarding Income Taxes

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

For the Three Months

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 benefit (provision):

Total deferred portion

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 September 30,

For the Nine Months

Ended September 30,

Pre-Tax Net Book Income (“NBI”)

Texas Margin Tax (1)

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

Federal benefit attributable to settlement of

Liquidity Option (2)

Other differences

Benefit from (provision for) income taxes

Effective income tax rate

Although the Texas Margin Tax is not considered a state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses.

The total benefit recognized in income tax expense on March 5, 2020 from settlement of the Liquidity Option was $ 72.2 million, which is comprised of $ 4.4 million of state income tax benefit and $ 67.8 million of federal income tax benefit.

Deferred income taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse.

In general, higher energy commodity prices result in an increase in our revenues attributable to product sales;

however, these higher commodity prices also increase the associated cost of sales as purchase costs are higher.

The same type of correlation would be true in the case of lower energy commodity sales prices and purchase costs.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30,

Deferred tax liabilities:

Attributable to investment in OTA

Attributable to property, plant and equipment

Attributable to investments in other entities

Total deferred tax liabilities

Less deferred tax assets:

Net operating loss carryovers (1)

Temporary differences related to Texas Margin Tax

Total deferred tax assets

Total net deferred tax liabilities

These losses expire in various years between 2020 and 2037 and are subject to limitations on their utilization.

Earnings Per Unit

The following table presents our calculation of basic and diluted earnings per unit for the periods indicated:

The following table presents our calculation of basic and diluted earnings per common unit for the periods indicated:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

BASIC EARNINGS PER COMMON UNIT

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Net income attributable to common unitholders

Net income attributable to preferred units

Net income attributable to limited partners

Diluted weighted-average number of units outstanding:

Distribution-bearing common units

Phantom units (2)

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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 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See Note 12 for information regarding our phantom units.

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

See Note 12 for information regarding phantom unit awards.

See Note 8 for information regarding preferred units.

Equity-Based Awards

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Equity-classified awards:

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Profits interest awards

Liability-classified awards

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

Equity-classified awards are expected to result in the issuance of common units upon vesting.

Equity-classified awards are expected to result in the issuance of the Partnership’s common units upon vesting.

Compensation expense for liability-classified awards is recognized over the requisite service or vesting period based on the fair value of the award remeasured at each reporting date.

Liability-classified awards are settled in cash upon vesting.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Phantom Unit Awards

Subject to customary forfeiture provisions, phantom unit awards allow recipients to acquire EPD common units once a defined vesting period expires (at no cost to the recipient apart from fulfilling required service and other conditions).

Subject to customary forfeiture provisions, phantom unit awards allow recipients to acquire the Partnership’s common units once a defined vesting period expires (at no cost to the recipient apart from fulfilling required service and other conditions).

The following table presents phantom unit award activity for the period indicated:

2 unchanged sentences

Phantom unit awards at December 31, 2020

Phantom unit awards at September 30, 2020

Phantom unit awards at March 31, 2021

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

The aggregate grant date fair value of phantom unit awards issued during 2020 was $ 190.4 million based on a grant date market price of EPD common units ranging from $ 17.24 to $ 25.76 per unit.

The aggregate grant date fair value of phantom unit awards issued during 2021 was $ 164.0 million based on a grant date market price of the Partnership’s common units ranging from $ 20.79 to $ 21.44 per unit.

An estimated annual forfeiture rate of 2.0 % was applied to these awards.

Each phantom unit award includes a distribution equivalent right (“ DER”), which entitles the participant to nonforfeitable cash payments equal to the product of the number of phantom unit awards outstanding for the participant and the cash distribution per common unit paid by EPD to its common unitholders.

Each phantom unit award includes a DER, which entitles the participant to nonforfeitable cash payments equal to the product of the number of phantom unit awards outstanding for the participant and the cash distribution per common unit paid by the Partnership to its common unitholders.

Cash payments made in connection with DERs are charged to partners’ equity when the phantom unit award is expected to result in the issuance of common units;

2 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

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 $ 196.6 million at September 30, 2020, of which our share of such cost is currently estimated to be $ 165.5 million.

For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $ 269.8 million at March 31, 2021, of which our share of such cost is currently estimated to be $ 229.2 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 2.3 years.

Profits Interest Awards

EPCO has established four limited partnerships (referred to as “Employee Partnerships”) that serve as long-term incentive arrangements for key employees of EPCO by providing them a profits interest in one or more of the Employee Partnerships.

At March 31, 2021 , our share of the total unrecognized compensation cost related to the Employee Partnerships was $ 14.9 million , which we expect to recognize over a weighted-average period of 2.6 years.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Profits Interest Awards

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

Hedging Activities and Fair Value Measurements

In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices.

5 unchanged sentences

Forward-Starting Swaps

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

Number and Type

of Derivatives

Weighted-Average

Future long-term debt offering

1 forward-starting swap

Cash flow hedge

Future long-term debt offering

5 forward-starting swaps

Cash flow hedge

Future long-term debt offering

2 forward-starting swaps (1)

Cash flow hedge

Future long-term debt offering

1 forward starting swap (1)

Cash flow hedge

Future long-term debt offering

2 forward starting swaps (1)

Cash flow hedge

Future long-term debt offering

2 forward starting swaps (1)

Cash flow hedge

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

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 %.

In January 2020, we terminated an aggregate $ 575 million notional amount of forward-starting swaps, which resulted in net cash payments of $ 33.3 million.

These swaps were unwound in connection with our issuance of Senior Notes BBB due January 2051.

As a result of favorable market conditions, we terminated an aggregate $ 675.0 million notional amount of forward-starting swaps in March 2021, which resulted in a net cash payment of $ 0.1 million.

Since the original swaptions associated with these forward-starting swaps were not designated as hedging instruments and were subject to mark-to-market accounting, we previously incurred an unrealized, mark-to-market loss at inception of the forward starting swaps of $ 47.6 million that was reflected as an increase in interest expense in 2019.

Immediately following exercise of the swaptions and our being put into the forward-starting swaps, these instruments were designated as cash flow hedges.

For the period from inception through the termination date in March 2021, we recognized cumulative gains on the forward-starting swaps of $ 47.5 million in accumulated other comprehensive income, of which $ 45.9 million will be reclassified to earnings (as a decrease in interest expense) over the life of the associated debt obligations.

We reclassified $ 1.6 million of the cumulative gain as a decrease in interest expense in March 2021.

We terminated an additional aggregate $ 400.0 million notional amount of forward-starting swaps in March 2021 due to favorable market conditions, which resulted in net cash proceeds of $ 75.3 million.

As cash flow hedges, gains on these derivative instruments are reflected as a component of accumulated other comprehensive income and will be reclassified to earnings (as a decrease in interest expense) over the life of the associated future debt obligations.

As a result of these terminations, we do not have any interest rate derivative instruments outstanding at March 31, 2021.

ENTERPRISE PRODUCTS PARTNERS L.P.

3 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 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):

At March 31, 2021, 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 natural gas processing margins and (iii) hedging the fair value of commodity products held in inventory.

The following table summarizes our portfolio of commodity derivative instruments outstanding at March 31, 2021 (volume measures as noted):

Derivative Purpose

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Cash flow hedge

Forecasted sales of NGLs (million barrels (“MMBbls”)) (3)

Cash flow hedge

Octane enhancement:

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Petrochemical marketing:

Forecasted purchases of petrochemical products (MMBbls)

Cash flow hedge

Forecasted sales of petrochemical products (MMBbls)

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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, December 2021 and December 2022, 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.

The carrying amount of our inventories subject to fair value hedges was $ 256.8 million and $ 144.0 million at March 31, 2021 and December 31, 2020, respectively.

ENTERPRISE PRODUCTS PARTNERS L.P.

5 unchanged sentences

Liability Derivatives

September 30, 2020

March 31, 2021

December 31, 2020

September 30, 2020

March 31, 2021

December 31, 2020

35 unchanged sentences

(v) = (iii) + (iv)

As of September 30, 2020:

Interest rate derivatives

As of March 31, 2021:

Commodity derivatives

As of December 31, 2020:

Interest rate derivatives

Commodity derivatives

9 unchanged sentences

(v) = (iii) + (iv)

As of September 30, 2020:

Interest rate derivatives

As of March 31, 2021:

Commodity derivatives

14 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Commodity derivatives

4 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Commodity derivatives

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Change in Value Recognized in

Other Comprehensive Income (Loss) on Derivative

Other Comprehensive Income (Loss)

on Derivative

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Interest rate derivatives

1 unchanged sentence

Commodity derivatives – Operating costs and expenses (1)

The fair value of these derivative instruments will be reclassified to their respective locations on the Unaudited Condensed Statement of Consolidated Operations upon settlement of the underlying derivative transactions, as appropriate.

The fair value of these derivative instruments will be reclassified to their respective locations on the Unaudited Condensed Statement of Consolidated Operations when the forecasted transactions affect earnings.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Derivatives in Cash Flow

1 unchanged sentence

Gain (Loss) Reclassified from

Accumulated Other Comprehensive Income (Loss) to Income

Accumulated Other

Comprehensive Income (Loss)

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Interest rate derivatives

3 unchanged sentences

Operating costs and expenses

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Over the next twelve months, we expect to reclassify $ 39.8 million of losses attributable to interest rate derivative instruments from accumulated other comprehensive loss to earnings as an increase in interest expense.

Likewise, we expect to reclassify $ 174.3 million of gains attributable to commodity derivative instruments from accumulated other comprehensive income to earnings, $ 175.5 million as an increase in revenue and $ 1.2 million as an increase in operating costs and expenses.

Likewise, we expect to reclassify $ 92.1 million of gains attributable to commodity derivative instruments from accumulated other comprehensive income to earnings, with $ 92.0 million as an increase in revenue and $ 0.1 million as a decrease in operating costs and expenses.

The following table presents the effect of our derivative instruments not designated as hedging instruments on our Unaudited Condensed Statements of Consolidated Operations for the periods indicated:

4 unchanged sentences

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Interest rate derivatives

Interest expense

Ended March 31,

Commodity derivatives

1 unchanged sentence

Operating costs and expenses

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.

The $ 42.2 million loss recognized for the three months ended March 31, 2021 (as noted in the preceding table) from derivatives not designated as hedging instruments consists of $ 104.5 million of realized losses and $ 62.3 million of net unrealized mark-to-market gains attributable to commodity derivatives.

Fair Value Measurements

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At September 30, 2020

At March 31, 2021

Fair Value Measurements Using

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Financial assets:

Interest rate derivatives

Commodity derivatives:

3 unchanged sentences

Financial liabilities:

Interest rate derivatives

Commodity derivatives:

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Financial assets:

Interest rate derivatives

Commodity derivatives:

3 unchanged sentences

Financial liabilities:

Liquidity Option (see Note 8)

Interest rate derivatives

3 unchanged sentences

Total commodity derivatives

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.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the aggregate, the fair value of our commodity hedging portfolios at March 31, 2021 was a net derivative liability of $ 340.7 million prior to the impact of CME Rule 814.

Financial assets and liabilities recorded on the balance sheet at March 31, 2021 using significant unobservable inputs (Level 3) are not material to the Unaudited Condensed Consolidated Financial Statements.

Nonrecurring Fair Value Measurements

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

We did not have any significant nonrecurring fair value measurements at March 31, 2021 or 2020.

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

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 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.

The estimated total fair value of our fixed-rate debt obligations was $ 31.72 billion and $ 35.00 billion at March 31, 2021 and December 31, 2020, respectively.

The aggregate carrying value of these debt obligations was $ 28.58 billion and $ 29.90 billion at March 31, 2021 and December 31, 2020, 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 September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Revenues – related parties:

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

September 30,

Accounts receivable - related parties:

6 unchanged sentences

however, such agreements and transactions may not be as favorable to us as we could have obtained from unaffiliated third parties.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Relationship with EPCO and Affiliates

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 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:

At March 31, 2021, 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

Limited Partner

702,863,875 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.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Of the total number of Partnership common units held by EPCO and its privately held affiliates, 92,976,464 have been pledged as security under the separate credit facilities of EPCO and its privately held affiliates at March 31, 2021.

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.

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 the Partnership’s common units.

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 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.

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 respective debt obligations.

During the three months ended March 31, 2021 and 2020, we paid EPCO and its privately held affiliates cash distributions totaling $ 306.1 million and $ 302.8 million, respectively.

We have no employees.

All of our operating functions and general and administrative support services are provided by employees of EPCO pursuant to the ASA or by other service providers.

All of our administrative and operating functions are provided either by employees of EPCO (pursuant to the ASA) or by other service providers.

We and our general partner are parties to the ASA.

The following table presents our related party costs and expenses attributable to the ASA with EPCO for the periods indicated:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Operating costs and expenses

2 unchanged sentences

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.

For each of the three months ended March 31, 2021 and 2020, we recognized $ 3.4 million of related party operating lease expense in connection with these office space leases.

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 March 31,

Deferred tax benefit (expense) attributable to

OTA Holdings, Inc.

Revised Texas Franchise Tax (“Texas Margin Tax”)

Benefit from (provision for) income taxes

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

For the Three Months

Ended March 31,

Current portion of income tax benefit (provision):

Total current portion

Deferred portion of income tax benefit (provision):

Total deferred portion

Total benefit from (provision for) income taxes

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 March 31,

Pre-Tax Net Book Income (“NBI”)

Texas Margin Tax (1)

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

Federal benefit attributable to settlement of

Liquidity Option Agreement (2)

Valuation allowance on deferred tax assets (3)

Benefit from (provision for) income taxes

Effective income tax rate

The total benefit recognized in income tax expense in March 2020 from settlement of the Liquidity Option Agreement was $ 72.2 million, which is comprised of $ 4.4 million of state income tax benefit and $ 67.8 million of federal income tax benefit.

Management believes that it is more likely than not that the net deferred tax assets attributable to OTA will not be fully realizable.

Accordingly, we provided for a valuation allowance against OTA’s net deferred tax assets at March 31, 2021.

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

Deferred tax liabilities:

Attributable to investment in OTA

Attributable to property, plant and equipment

Attributable to investments in other entities

Total deferred tax liabilities

Less deferred tax assets:

Net operating loss carryovers (1)

Temporary differences related to Texas Margin Tax

Total deferred tax assets

Total net deferred tax liabilities before valuation allowance

Valuation allowance on deferred tax assets

Total net deferred tax liabilities

Of the loss amount presented for March 31, 2021, $ 0.1 million expires in various years between 2021 and 2037.

The remaining $ 2.8 million has an indefinite carryover period.

All losses are subject to limitations on their utilization.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OTA Deferred Tax Liability

On March 5, 2020, the Partnership settled its obligations under a put option agreement (the “Liquidity Option Agreement” or “Liquidity Option”) with OTA and Marquard & Bahls AG, and became the owner of OTA and indirectly assumed its 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 recorded by the Partnership 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.

OTA recognized an additional net, non-cash deferred income tax benefit of $ 115.0 million at March 31, 2020 primarily due to a decrease in the outside basis difference of its investment in the Partnership attributable to a decline in the market price of the Partnership’s common units subsequent to March 5, 2020 through March 31, 2020.

In total, our earnings for the three months ended March 31, 2020 reflect $ 187.2 million of net deferred income tax benefit attributable to OTA.

Commitments and Contingent Liabilities

2 unchanged sentences

We will vigorously defend the Partnership in litigation matters.

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As reported in our 2019 Form 10-K, we prevailed on our appeal on January 31, 2020 when the Supreme Court of Texas unanimously affirmed the opinion of the Dallas Court of Appeals.

On March 6, 2020, the Supreme Court of Texas issued its mandate to the Dallas County Civil District Court, bringing this lawsuit and the resulting appeal to a close.

Our accruals for litigation contingencies were $ 0.2 million and $ 6.1 million at March 31, 2021 and December 31, 2020, respectively, and recorded in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities.”

PDH Litigation

In July 2013, we executed a contract with Foster Wheeler USA Corporation (“Foster Wheeler”) pursuant to which Foster Wheeler was to serve as the general contractor responsible for the engineering, procurement, construction and installation of our initial propane dehydrogenation (“PDH 1”) facility.

In July 2013, we executed a contract with Foster Wheeler USA Corporation (“Foster Wheeler”) pursuant to which Foster Wheeler was to serve as the general contractor responsible for the engineering, procurement, construction and installation of our first propane dehydrogenation facility (“PDH 1”).

In November 2014, Foster Wheeler was acquired by an affiliate of AMEC plc to form Amec Foster Wheeler plc, and Foster Wheeler is now known as Amec Foster Wheeler USA Corporation (“AFW”).

6 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 $ 30.15 billion and $ 27.88 billion at September 30, 2020 and December 31, 2019, respectively.

In total, the principal amount of our consolidated debt obligations were $ 28.94 billion and $ 30.15 billion at March 31, 2021 and December 31, 2020, respectively.

The year-to-date reduction in debt principal amount outstanding is primarily due to EPO’s repayment of Senior Notes TT and RR, partially offset by the issuance of short-term notes under its commercial paper program.

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

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease Accounting Matters

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

There has been no significant change in our operating lease obligations since those disclosed in the 2020 Form 10-K.

The following table presents information regarding operating leases where we are the lessee at March 31, 2021:

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

At March 31, 2021 , lease liabilities of $ 27.1 million and $ 317.3 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, 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table disaggregates our total operating lease expense for the periods indicated :

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Long-term operating leases:

7 unchanged sentences

Total operating lease expense

Fixed lease expense is charged to earnings on a straight-line basis over the contractual term, with any variable lease payments expensed as incurred.

Short-term operating lease expense is expensed as incurred.

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 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.

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.

Cash payments attributable to operating lease obligations were $ 9.1 million and $ 10.1 million for the three months ended March 31, 2021 and 2020, respectively.

Operating lease income for the three months ended March 31, 2021 and 2020 was $ 3.0 million and $ 3.5 million, respectively.

Purchase Obligations

We have contractual future product purchase commitments for natural gas, NGLs, crude oil, petrochemicals and refined products.

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

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.

Settlement of Liquidity Option

See Note 8 for information regarding settlement of the Liquidity Option on March 5, 2020.

We have contractual future product purchase commitments for natural gas, NGLs, crude oil, petrochemicals and refined products representing enforceable and legally binding agreements as of the reporting date.

Our product purchase commitments increased from $ 14.8 billion at December 31, 2020 to $ 19.34 billion at March 31, 2021 primarily due to an increase in crude oil and NGL prices between the two reporting dates.

ENTERPRISE PRODUCTS PARTNERS L.P.

1 unchanged sentence

Supplemental Cash Flow Information

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

For the Nine Months

Ended September 30,

The following table provides information regarding the net effect of changes in our operating accounts and cash payments for interest and income taxes for the periods indicated:

For the Three Months

Ended March 31,

Decrease (increase) in:

11 unchanged sentences

Cash payments for interest, net of $ 19.6 and $ 30.5 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.

three months ended March 31, 2021 and 2020, respectively

Cash payments (refunds) for federal and state income taxes

We incurred liabilities for construction in progress that had not been paid at March 31, 2021 and December 31, 2020 of $ 283.4 million and $ 236.1 million, respectively.

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

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidating Financial Information

EPO conducts all of our business.

Currently, we have no independent operations and no material assets outside those of EPO.

EPO has issued publicly traded debt securities.

As the parent company of EPO, EPD guarantees substantially all of the debt obligations of EPO.

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

See Note 7 for additional information regarding our consolidated debt obligations.

EPO’s consolidated subsidiaries have no significant restrictions on their ability to pay distributions or make loans to EPD.

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Balance Sheet

September 30, 2020

EPO and Subsidiaries

Current assets:

Cash and cash equivalents and restricted cash

Accounts receivable – trade, net

Accounts receivable – related parties

Derivative assets

Prepaid and other current assets

Total current assets

Property, plant and equipment, net

Investments in unconsolidated affiliates

Intangible assets, net

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of debt

Accounts payable – trade

Accounts payable – related parties

Accrued product payables

Accrued interest

Derivative liabilities

Other current liabilities

Total current liabilities

Long-term debt

Deferred tax liabilities

Other long-term liabilities

Commitments and contingent liabilities

Redeemable preferred limited partner interests

Partners’ and other owners’ equity

Noncontrolling interests in consolidated subsidiairies

Total liabilities, preferred units, and equity

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Balance Sheet

December 31, 2019

EPO and Subsidiaries

Current assets:

Cash and cash equivalents and restricted cash

Accounts receivable – trade, net

Accounts receivable – related parties

Derivative assets

Prepaid and other current assets

Total current assets

Property, plant and equipment, net

Investments in unconsolidated affiliates

Intangible assets, net

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of debt

Accounts payable – trade

Accounts payable – related parties

Accrued product payables

Accrued interest

Derivative liabilities

Other current liabilities

Total current liabilities

Long-term debt

Deferred tax liabilities

Other long-term liabilities

Commitments and contingent liabilities

Partners’ and other owners’ equity

Noncontrolling interests in consolidated subsidiairies

Total liabilities and equity

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2020

EPO and Subsidiaries

Costs and expenses:

Operating costs and expenses

General and administrative costs

Total costs and expenses

Equity in income of unconsolidated affiliates

Operating income

Other income (expense):

Interest expense

Total other expense, net

Income before income taxes

Benefit from (provision for) income taxes

Net income attributable to noncontrolling interests

Net income attributable to preferred units

Net income attributable to entity

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2019

EPO and Subsidiaries

Costs and expenses:

Operating costs and expenses

General and administrative costs

Total costs and expenses

Equity in income of unconsolidated affiliates

Operating income

Other income (expense):

Interest expense

Total other expense, net

Income before income taxes

Provision for income taxes

Net income attributable to noncontrolling interests

Net income attributable to entity

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

Costs and expenses:

Operating costs and expenses

General and administrative costs

Total costs and expenses

Equity in income of unconsolidated affiliates

Operating income

Other income (expense):

Interest expense

Total other expense, net

Income before income taxes

Benefit from (provision for) income taxes

Net income attributable to noncontrolling interests

Net income attributable to preferred units

Net income attributable to entity

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2019

EPO and Subsidiaries

Costs and expenses:

Operating costs and expenses

General and administrative costs

Total costs and expenses

Equity in income of unconsolidated affiliates

Operating income

Other income (expense):

Interest expense

Total other expense, net

Income before income taxes

Provision for income taxes

Net income attributable to noncontrolling interests

Net income attributable to entity

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2020

EPO and Subsidiaries

Comprehensive income

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 September 30, 2019

EPO and Subsidiaries

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to entity

Unaudited Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

Comprehensive income

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 Nine Months Ended September 30, 2019

EPO and Subsidiaries

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to entity

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2020

EPO and Subsidiaries

Operating activities:

Reconciliation of net income to net cash flows provided by operating activities:

Depreciation, amortization and accretion

Equity in income of unconsolidated affiliates

Distributions received from unconsolidated affiliates attributable to earnings

Net effect of changes in operating accounts and other operating activities

Net cash flows provided by operating activities

Investing activities:

Capital expenditures

Proceeds from asset sales

Other investing activities

Cash used in investing activities

Financing activities:

Borrowings under debt agreements

Repayments of debt

Cash distributions paid to owners

Cash payments made in connection with DERs

Cash distributions paid to noncontrolling interests

Cash contributions from noncontrolling interests

Repurchase of common units under 2019 Buyback Program

Net cash proceeds from the issuance of preferred unit

Cash contributions from owners

Other financing activities

Cash provided by (used in) financing activities

Net change in cash and cash equivalents,

including restricted cash

Cash and cash equivalents, including

restricted cash, at beginning of period

Cash and cash equivalents, including

restricted cash, at end of period

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enterprise Products Partners L.P.

Unaudited Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2019

EPO and Subsidiaries

Operating activities:

Reconciliation of net income to net cash flows provided by operating activities:

Depreciation, amortization and accretion

Equity in income of unconsolidated affiliates

Distributions received from unconsolidated affiliates attributable to earnings

Net effect of changes in operating accounts and other operating activities

Net cash flows provided by operating activities

Investing activities:

Capital expenditures

Proceeds from asset sales

Other investing activities

Cash used in investing activities

Financing activities:

Borrowings under debt agreements

Repayments of debt

Cash distributions paid to owners

Cash payments made in connection with DERs

Cash distributions paid to noncontrolling interests

Cash contributions from noncontrolling interests

Net cash proceeds from issuance of common units

Repurchase of common units under 2019 Buyback Program

Cash contributions from owners

Other financing activities

Cash provided by (used in) financing activities

Net change in cash and cash equivalents,

including restricted cash

Cash and cash equivalents, including

restricted cash, at beginning of period

Cash and cash equivalents, including

restricted cash, at end of period

We recognized non-cash charges totaling $ 11.5 million for involuntary conversions during the first quarter of 2021 that are a component of net losses attributable to asset sales and related matters.

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