ENTERPRISE PRODUCTS PARTNERS L.P. 10-Q

ITEM 1. FINANCIAL STATEMENTS. EN TERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) March 31, 2022 December 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 231 $ 2,820 Restricted cash 222 145 Accounts receivable – trade, net of allowance for credit losses of $ 55 at March 31, 2022 and $ 53 at December 31, 2021 8,995 6,967 Accounts receivable – related parties 23 21 Inventories (see Note 3) 2,652 2,681 Derivative assets (see Note 14) 443 237 Prepaid and other current assets 412 399 Total current assets 12,978 13,270 Property, plant and equipment, net (see Note 4) 44,033 42,088 Investments in unconsolidated affiliates (see Note 5) 2,426 2,428 Intangible assets, net (see Note 6) 4,101 3,151 Goodwill (see Note 6) 5,608 5,449 Other assets 1,173 1,140 Total assets $ 70,319 $ 67,526 LIABILITIES AND EQUITY Current liabilities: Current maturities of debt (see Note 7) $ 2,629 $ 1,400 Accounts payable – trade 868 632 Accounts payable – related parties 62 167 Accrued product payables 10,578 8,093 Accrued interest 220 453 Derivative liabilities (see Note 14) 460 254 Other current liabilities 557 626 Total current liabilities 15,374 11,625 Long-term debt (see Note 7) 26,889 28,135 Deferred tax liabilities (see Note 16) 549 518 Other long-term liabilities 801 760 Commitments and contingent liabilities (see Note 17) Redeemable preferred limited partner interests: (see Note 8) Series A cumulative convertible preferred units (“preferred units”) ( 50,412 units outstanding at March 31, 2022 and December 31, 2021 ) 49 49 Equity: (see Note 8) Partners’ equity: Common limited partner interests ( 2,180,453,144 units issued and outstanding at March 31, 2022 , 2,176,379,587 units issued and outstanding at December 31, 2021 ) 26,610 26,340 Treasury units, at cost ( 1,297 ) ( 1,297 ) Accumulated other comprehensive income 240 286 Total partners’ equity 25,553 25,329 Noncontrolling interests in consolidated subsidiaries 1,104 1,110 Total equity 26,657 26,439 Total liabilities, preferred units, and equity $ 70,319 $ 67,526 See Notes to Unaudited Condensed Consolidated Financial Statements. 2 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (Dollars in millions, except per unit amounts) For the Three Months Ended March 31, 2022 2021 Revenues: Third parties $ 12,992 $ 9,141 Related parties 16 14 Total revenues (see Note 9) 13,008 9,155 Costs and expenses: Operating costs and expenses: Third party and other costs 11,082 7,229 Related parties 315 324 Total operating costs and expenses 11,397 7,553 General and administrative costs: Third party and other costs 25 21 Related parties 37 35 Total general and administrative costs 62 56 Total costs and expenses (see Note 10) 11,459 7,609 Equity in income of unconsolidated affiliates 117 149 Operating income 1,666 1,695 Other income (expense): Interest expense ( 319 ) ( 323 ) Interest income 1 1 Other, net 2 – Total other expense, net ( 316 ) ( 322 ) Income before income taxes 1,350 1,373 Provision for income taxes (see Note 16) ( 19 ) ( 10 ) Net income 1,331 1,363 Net income attributable to noncontrolling interests ( 34 ) ( 21 ) Net income attributable to preferred units ( 1 ) ( 1 ) Net income attributable to common unitholders $ 1,296 $ 1,341 Earnings per unit: (see Note 11) Basic and diluted earnings per common unit $ 0.59 $ 0.61 See Notes to Unaudited Condensed Consolidated Financial Statements. 3 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (Dollars in millions) For the Three Months Ended March 31, 2022 2021 Net income $ 1,331 $ 1,363 Other comprehensive income (loss): Cash flow hedges: (see Note 14) Commodity hedging derivative instruments: Changes in fair value of cash flow hedges ( 99 ) ( 461 ) Reclassificati on of losses to ne t income 45 616 Interest rate hedging derivative instruments: Changes in fair value of cash flow hedges – 183 Reclassification of losses to net income 8 8 Total cash flow hedges ( 46 ) 346 Total other comprehens ive income (loss) ( 46 ) 346 Comprehensive income 1,285 1,709 Comprehensive income attributable to noncontrolling interests ( 34 ) ( 21 ) Comprehensive income attributable to preferred units ( 1 ) ( 1 ) Comprehensive income attributable to common unitholders $ 1,250 $ 1,687 See Notes to Unaudited Condensed Consolidated Financial Statements. 4 Table of Contents ENTERPRISE PRODUCT S PARTNERS L.P. UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (Dollars in millions) For the Three Months Ended March 31, 2022 2021 Operating activities: Net income $ 1,331 $ 1,363 Reconciliation of net income to net cash flows provided by operating activities: Depreciation and accretion 440 426 Amortization of intangible assets 41 36 Amortization of major maintenance costs for reaction-based plants 12 3 Other amortization expense 58 60 Impairment of assets other than goodwill (see Note 4) 14 66 Equity in income of unconsolidated affiliates ( 117 ) ( 149 ) Distributions received from unconsolidated affiliates attributable to earnings 109 112 Net losses attributable to asset sales and related matters 2 11 Deferred income tax expense 9 5 Change in fair market value of derivative instruments 42 ( 16 ) Non-cash expense related to long-term operating leases (see Note 17) 13 9 Net effect of changes in operating accounts (see Note 18) 191 99 Other operating activities – ( 2 ) Net cash flows provided by operating activities 2,145 2,023 Investing activities: Capital expenditures ( 349 ) ( 679 ) Cash used for business combinations, net of cash received (See Note 12) ( 3,204 ) – Investments in unconsolidated affiliates – ( 1 ) Distributions received from unconsolidated affiliates attributable to the return of capital 11 19 Proceeds from asset sales 11 6 Other investing activities ( 1 ) ( 2 ) Cash used in investing activities ( 3,532 ) ( 657 ) Financing activities: Borrowings under debt agreements 13,444 7,532 Repayments of debt ( 13,464 ) ( 8,742 ) Monetization of interest rate derivative instruments – 75 Cash distributions paid to common unitholders (see Note 8) ( 1,012 ) ( 982 ) Cash payments made in connection with distribution equivalent rights ( 8 ) ( 7 ) Cash distributions paid to noncontrolling interests ( 42 ) ( 30 ) Cash contributions from noncontrolling interests 2 13 Repurchase of common units under 2019 Buyback Program – ( 14 ) Other financing activities ( 45 ) ( 35 ) Cas h used in financing ac tivities ( 1,125 ) ( 2,190 ) Net change in cash and cash equivalents, including restricted cash ( 2,512 ) ( 824 ) Cash and cash equivalents, including restricted cash, at beginning of period 2,965 1,158 Cash and cash equivalents, including restricted cash, at end of period $ 453 $ 334 See Notes to Unaudited Condensed Consolidated Financial Statements. 5 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY (Dollars in millions) Partners’ Equity Common Limited Partner Interests Treasury Units Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests in Consolidated Subsidiaries Total Balance, December 31, 2021 $ 26,340 $ ( 1,297 ) $ 286 $ 1,110 $ 26,439 Net income 1,296 – – 34 1,330 Cash distributions paid to common unitholders ( 1,012 ) – – – ( 1,012 ) Cash payments made in connection with distribution equivalent rights ( 8 ) – – – ( 8 ) Cash distributions paid to noncontrolling interests – – – ( 42 ) ( 42 ) Cash contributions from noncontrolling interests – – – 2 2 Amortization of fair value of equity-based awards 38 – – – 38 Cash flow hedges – – ( 46 ) – ( 46 ) Other, net ( 44 ) – – – ( 44 ) Balance, March 31, 2022 $ 26,610 $ ( 1,297 ) $ 240 $ 1,104 $ 26,657 Partners’ Equity Common Limited Partner Interests Treasury Units Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests in Consolidated Subsidiaries Total Balance, December 31, 2020 $ 25,767 $ ( 1,297 ) $ ( 165 ) $ 1,073 $ 25,378 Net income 1,341 – – 21 1,362 Cash distributions paid to common unitholders ( 982 ) – – – ( 982 ) Cash payments made in connection with distribution equivalent rights ( 7 ) – – – ( 7 ) Cash distributions paid to noncontrolling interests – – – ( 30 ) ( 30 ) Cash contributions from noncontrolling interests – – – 13 13 Amortization of fair value of equity-based awards 38 – – – 38 Repurchase and cancellation of common units under 2019 Buyback Program ( 14 ) – – – ( 14 ) Cash flow hedges – – 346 – 346 Other, net ( 34 ) – – 1 ( 33 ) Balance, March 31, 2021 $ 26,109 $ ( 1,297 ) $ 181 $ 1,078 $ 26,071 See Notes to Unaudited Condensed Consolidated Financial Statements. For information regarding Unit History, Accumulated Other Comprehensive Income (Loss), see Note 8. 6 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS KEY REFERENCES USED IN THESE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 the “Partnership” or “Enterprise” 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 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: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors (the “Board”) of Enterprise GP; (ii) Richard H. Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP. Ms. 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. The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are: (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO; and (iii) Mr. Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO. Ms. 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, 2022. 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. 7 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. 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 were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products. We 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”)); and • a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. Like many publicly traded partnerships, we have no employees. All of our management, administrative and operating functions are performed by employees of EPCO pursuant to an administrative services agreement (the “ASA”) or by other service providers. See Note 15 for information regarding related party matters. Our results of operations for the three months ended March 31, 2022 are not necessarily indicative of results expected for the full year of 2022. In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation. Although we believe the disclosures in these financial statements are adequate and make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. 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, 2021 (the “2021 Form 10-K”) filed with the SEC on February 28, 2022. 8 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of Significant Accounting Policies 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 2021 Form 10-K. Allowance for Credit Losses We estimate our allowance for credit losses 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, 2021: Allowance for credit losses, December 31, 2021 $ 53 Charged to costs and expenses 2 Allowance for credit losses, March 31, 2022 $ 55 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. March 31, 2022 December 31, 2021 Cash and cash equivalents $ 231 $ 2,820 Restricted cash 222 145 Total cash, cash equivalents and restricted cash shown in the Unaudited Condensed Statements of Consolidated Cash Flows $ 453 $ 2,965 Restricted cash primarily represents amounts held in segregated bank accounts by our clearing brokers as margin in support of our commodity derivative instruments portfolio and related physical purchases and sales of natural gas, NGLs, crude oil, refined products and power. Additional cash may be restricted to maintain our commodity derivative instruments portfolio as prices fluctuate or margin requirements change. See Note 14 for information regarding our derivative instruments and hedging activities. Note 3. Inventories Our inventory amounts by product type were as follows at the dates indicated: March 31, 2022 December 31, 2021 NGLs $ 2,107 $ 2,027 Petrochemicals and refined products 328 343 Crude oil 196 285 Natural gas 21 26 Total $ 2,652 $ 2,681 9 Table of Contents 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. The following table presents our total cost of sales amounts and lower of cost or net realizable value adjustments for the periods indicated: For the Three Months Ended March 31, 2022 2021 Cost of sales (1) $ 10,098 $ 6,263 Lower of cost or net realizable value adjustments recognized in cost of sales 4 10 (1) 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. Note 4. Property, Plant and Equipment The historical costs of our property, plant and equipment and related balances were as follows at the dates indicated: Estimated Useful Life in Years March 31, 2022 December 31, 2021 Plants, pipelines and facilities (1) 3 - 45 (5) $ 53,769 $ 51,636 Underground and other storage facilities (2) 5 - 40 (6) 4,331 4,327 Transportation equipment (3) 3 - 10 216 209 Marine vessels (4) 15 - 30 919 918 Land 387 379 Construction in progress 1,830 1,616 Subtotal 61,452 59,085 Less accumulated depreciation 17,504 17,083 Subtotal property, plant and equipment, net 43,948 42,002 Capitalized major maintenance costs for reaction-based plants, net of accumulated amortization (7) 85 86 Property, plant and equipment, net $ 44,033 $ 42,088 (1) Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; laboratory and shop equipment and related assets. (2) Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets. (3) Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations. (4) Marine vessels include tow boats, barges and related equipment used in our marine transportation business. (5) In general, the estimated useful lives of major assets within this category are: processing plants, 20 - 35 years; pipelines and related equipment, 5 - 45 years; terminal facilities, 10 - 35 years; buildings, 20 - 40 years; office furniture and equipment, 3 - 20 years; and laboratory and shop equipment, 5 - 35 years. (6) In general, the estimated useful lives of assets within this category are: underground storage facilities, 5 - 35 years; storage tanks, 10 - 40 years; and water wells, 5 - 35 years. (7) 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 2.1 years. Property, plant and equipment at March 31, 2022 and December 31, 2021 includes $ 92 million and $ 81 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset. 10 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table presents information regarding our asset retirement obligations, or AROs, since December 31, 2021: ARO liability balance, December 31, 2021 $ 176 Liabilities incurred (1) 14 Revisions in estimated cash flows (2) – Liabilities settled (3) – Accretion expense (4) 2 ARO liability balance, March 31, 2022 $ 192 (1) Represents the initial recognition of estimated ARO liabilities during period. (2) Represents subsequent adjustments to estimated ARO liabilities during period. (3) Represents cash payments to settle ARO liabilities during period. (4) Represents net change in ARO liability balance attributable to the passage of time and other adjustments, including true-up amounts associated with revised closure estimates. Of the $ 192 million total ARO liability recorded at March 31, 2022 , $ 17 million was reflected as a current liability and $ 175 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 March 31, 2022 2021 Depreciation expense (1) $ 438 $ 424 Accretion expense (1) 2 2 Capitalized interest (2) 17 20 (1) Depreciation and accretion expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations. (2) We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life as a component of depreciation expense. When capitalized interest is recorded, it reduces interest expense from what it would be otherwise. Note 5. Investments in Unconsolidated Affiliates The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated. We account for these investments using the equity method. March 31, 2022 December 31, 2021 NGL Pipelines & Services $ 654 $ 656 Crude Oil Pipelines & Services 1,737 1,738 Natural Gas Pipelines & Services 32 31 Petrochemical & Refined Products Services 3 3 Total $ 2,426 $ 2,428 The following table presents our equity in inc ome of u nconsolidated affiliates by business segment for the periods indicated: For the Three Months Ended March 31, 2022 2021 NGL Pipelines & Services $ 34 $ 28 Crude Oil Pipelines & Services 81 119 Natural Gas Pipelines & Services 2 1 Petrochemical & Refined Products Services – 1 Total $ 117 $ 149 11 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 6. Intangible Assets and Goodwill Identifiable Intangible Assets The following table summarizes our intangible assets by business segment at the dates indicated: March 31, 2022 December 31, 2021 Gross Value Accumulated Amortization Carrying Value Gross Value Accumulated Amortization Carrying Value NGL Pipelines & Services: Customer relationship intangibles $ 449 $ ( 238 ) $ 211 $ 449 $ ( 236 ) $ 213 Contract-based intangibles 749 ( 67 ) 682 165 ( 61 ) 104 Segment total 1,198 ( 305 ) 893 614 ( 297 ) 317 Crude Oil Pipelines & Services: Customer relationship intangibles 2,195 ( 373 ) 1,822 2,195 ( 355 ) 1,840 Contract-based intangibles 283 ( 265 ) 18 283 ( 263 ) 20 Segment total 2,478 ( 638 ) 1,840 2,478 ( 618 ) 1,860 Natural Gas Pipelines & Services: Customer relationship intangibles 1,350 ( 559 ) 791 1,350 ( 550 ) 800 Contract-based intangibles 639 ( 185 ) 454 232 ( 183 ) 49 Segment total 1,989 ( 744 ) 1,245 1,582 ( 733 ) 849 Petrochemical & Refined Products Services: Customer relationship intangibles 181 ( 77 ) 104 181 ( 75 ) 106 Contract-based intangibles 45 ( 26 ) 19 45 ( 26 ) 19 Segment total 226 ( 103 ) 123 226 ( 101 ) 125 Total intangible assets $ 5,891 $ ( 1,790 ) $ 4,101 $ 4,900 $ ( 1,749 ) $ 3,151 The following table presents the amortization expense of our intangible assets by business segment for the periods indicated: For the Three Months Ended March 31, 2022 2021 NGL Pipelines & Services $ 8 $ 6 Crude Oil Pipelines & Services 20 18 Natural Gas Pipelines & Services 11 10 Petrochemical & Refined Products Services 2 2 Total $ 41 $ 36 The following table presents our forecast of amortization expense associated with existing intangible assets for the periods indicated: Remainder of 2022 2023 2024 2025 2026 $ 148 $ 204 $ 212 $ 211 $ 206 12 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Goodwill 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. The following table presents changes in the carrying amount of goodwill for the period presented: NGL Pipelines & Services Crude Oil Pipelines & Services Natural Gas Pipelines & Services Petrochemical & Refined Products Services Consolidated Total Balance at December 31, 2021 $ 2,652 $ 1,841 $ – $ 956 $ 5,449 Goodwill related to acquisition (1) 159 – – – 159 Balance at March 31, 2022 $ 2,811 $ 1,841 $ – $ 956 $ 5,608 (1) This amount represents the goodwill recognized in connection with our acquisition of Navitas Midstream in February 2022. See Note 12 for additional information regarding this acquisition. 13 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 7. Debt Obligations The following table presents our consolidated debt obligations (arranged by company and maturity date) at the dates indicated: March 31, 2022 December 31, 2021 EPO senior debt obligations: Commercial Paper Notes, variable-rates $ 1,380 $ – Senior Notes VV, 3.50 % fixed-rate, due February 2022 – 750 Senior Notes CC, 4.05 % fixed-rate, due February 2022 – 650 September 2021 364-Day Revolving Credit Agreement, variable-rate, due September 2022 – – Senior Notes HH, 3.35 % fixed-rate, due March 2023 1,250 1,250 Senior Notes JJ, 3.90 % fixed-rate, due February 2024 850 850 Senior Notes MM, 3.75 % fixed-rate, due February 2025 1,150 1,150 Senior Notes PP, 3.70 % fixed-rate, due February 2026 875 875 September 2021 Multi-Year Revolving Credit Agreement, variable-rate, due September 2026 – – Senior Notes SS, 3.95 % fixed-rate, due February 2027 575 575 Senior Notes WW, 4.15 % fixed-rate, due October 2028 1,000 1,000 Senior Notes YY, 3.125 % fixed-rate, due July 2029 1,250 1,250 Senior Notes AAA, 2.80 % fixed-rate, due January 2030 1,250 1,250 Senior Notes D, 6.875 % fixed-rate, due March 2033 500 500 Senior Notes H, 6.65 % fixed-rate, due October 2034 350 350 Senior Notes J, 5.75 % fixed-rate, due March 2035 250 250 Senior Notes W, 7.55 % fixed-rate, due April 2038 400 400 Senior Notes R, 6.125 % fixed-rate, due October 2039 600 600 Senior Notes Z, 6.45 % fixed-rate, due September 2040 600 600 Senior Notes BB, 5.95 % fixed-rate, due February 2041 750 750 Senior Notes DD, 5.70 % fixed-rate, due February 2042 600 600 Senior Notes EE, 4.85 % fixed-rate, due August 2042 750 750 Senior Notes GG, 4.45 % fixed-rate, due February 2043 1,100 1,100 Senior Notes II, 4.85 % fixed-rate, due March 2044 1,400 1,400 Senior Notes KK, 5.10 % fixed-rate, due February 2045 1,150 1,150 Senior Notes QQ, 4.90 % fixed-rate, due May 2046 975 975 Senior Notes UU, 4.25 % fixed-rate, due February 2048 1,250 1,250 Senior Notes XX, 4.80 % fixed-rate, due February 2049 1,250 1,250 Senior Notes ZZ, 4.20 % fixed-rate, due January 2050 1,250 1,250 Senior Notes BBB, 3.70 % fixed-rate, due January 2051 1,000 1,000 Senior Notes DDD, 3.20 % fixed-rate, due February 2052 1,000 1,000 Senior Notes EEE, 3.30 % fixed-rate, due February 2053 1,000 1,000 Senior Notes NN, 4.95 % fixed-rate, due October 2054 400 400 Senior Notes CCC, 3.95 % fixed rate, due January 2060 1,000 1,000 Total principal amount of senior debt obligations 27,155 27,175 EPO Junior Subordinated Notes C, variable-rate, due June 2067 (1) 232 232 EPO Junior Subordinated Notes D, fixed/variable-rate, due August 2077 (2) 700 700 EPO Junior Subordinated Notes E, fixed/variable-rate, due August 2077 (3) 1,000 1,000 EPO Junior Subordinated Notes F, fixed/variable-rate, due February 2078 (4) 700 700 TEPPCO Junior Subordinated Notes, variable-rate, due June 2067 (1) 14 14 Total principal amount of senior and junior debt obligations 29,801 29,821 Other, non-principal amounts ( 283 ) ( 286 ) Less current maturities of debt ( 2,629 ) ( 1,400 ) Total long-term debt $ 26,889 $ 28,135 (1) Variable rate is reset quarterly and based on 3-month London Interbank Offered Rate ("LIBOR") , plus 2.778 %. (2) Fixed rate of 4.875 % through August 15, 2022; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 2.986 %. (3) Fixed rate of 5.250 % through August 15, 2027; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 3.033 %. (4) Fixed rate of 5.375 % through February 14, 2028; thereafter, a variable rate reset quarterly and based on 3-month LIBOR plus 2.57 %. References to “TEPPCO” mean TEPPCO Partners, L.P. prior to its merger with one of our wholly owned subsidiaries in October 2009. 14 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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, 2022: Range of Interest Rates Paid Weighted-Average Interest Rate Paid Commercial Paper Notes 0.20 % to 0.98 % 0.50 % EPO Junior Subordinated Notes C and TEPPCO Junior Subordinated Notes 2.95 % to 3.30 % 3.07 % Amounts borrowed under EPO’s September 2021 364-Day Revolving Credit Agreement and September 2021 Multi-Year Revolving Credit Agreement bear interest, at EPO’s election, equal to: (i) LIBOR, plus an additional variable spread; or (ii) an alternate base rate, which is the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.5%, or (c) LIBOR for an interest period of one month in effect on such day plus 1%, and a variable spread. The applicable spreads are determined based on EPO's debt ratings. 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 The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2022 for the next five years, and in total thereafter: Scheduled Maturities of Debt Total Remainder of 2022 2023 2024 2025 2026 Thereafter Commercial Paper Notes $ 1,380 $ 1,380 $ – $ – $ – $ – $ – Senior Notes 25,775 – 1,250 850 1,150 875 21,650 Junior Subordinated Notes 2,646 – – – – – 2,646 Total $ 29,801 $ 1,380 $ 1,250 $ 850 $ 1,150 $ 875 $ 24,296 In February 2022, EPO repaid all of the $ 750 million and $ 650 million in principal amount of its Senior Notes VV and CC, respectively, using remaining cash on hand attributable to its September 2021 senior notes offering and proceeds from the issuance of short-term notes under its commercial paper program. March 2022 Delayed Draw Term Loan Agreement On March 1, 2022, EPO entered into a delayed draw term loan agreement (the “March 2022 Delayed Draw Term Loan Agreement”). Under the terms of the March 2022 Delayed Draw Term Loan Agreement, EPO could have borrowed up to an aggregate of $ 500 million by April 30, 2022 at a variable interest rate based on EPO’s senior debt credit rating. However, because EPO elected not to borrow under the facility by April 30, 2022, the March 2022 Delayed Draw Term Loan Agreement automatically terminated at that date in accordance with its terms. 15 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Letters of Credit At March 31, 2022, EPO had $ 100 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, 2022. 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 such obligations. Note 8. Capital Accounts Common Limited Partner Interests The following table summarizes changes in the number of our common units outstanding since December 31, 2021: Common units outstanding at December 31, 2021 2,176,379,587 Common units issued in connection with the vesting of phantom unit awards, net 4,051,207 Other 22,350 Common units outstanding at March 31, 2022 2,180,453,144 Registration Statements We have a universal shelf registration statement 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 $ 2.5 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, 2022 . The Partnership’s capacity to issue additional common units under the ATM program remains at $ 2.5 billion as of March 31, 2022. We may issue additional equity and debt securities to assist us in meeting our future liquidity requirements, including those related to capital investments. Common Unit Repurchases Under 2019 Buyback Program In January 2019, we announced that the Board of Enterprise GP had approved a $ 2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides 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. No time limit has been set for completion of the program, and it may be suspended or discontinued at any time. The Partnership did not repurchase any common units during the three months ended March 31, 2022 . During the three months ended March 31, 2021 , the Partnership repurchased 709,816 common units under the 2019 Buyback Program. The total cost of these repurchases, including commissions and fees, was $ 14 million. Common units repurchased under the 2019 Buyback Program are immediately cancelled upon acquisition. At March 31, 2022, the remaining available capacity under the 2019 Buyback Program was $ 1.5 billion. 16 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Common Units Issued in Connection With the Vesting of Phantom Unit Awards After taking into account tax withholding requirements, the Partnership issued 4,051,207 new common units to employees in connection with the vesting of phantom unit awards during the three months ended March 31, 2022. See Note 13 for information regarding our phantom unit awards. Common Units Delivered Under DRIP and EUPP The Partnership has registration statements on file with the SEC in connection with its distribution reinvestment plan (“DRIP”) and employee unit purchase plan (“EUPP”). In July 2019, the Partnership announced that, beginning with the quarterly distribution payment paid in August 2019, it would use common units purchased on the open market, rather than issuing new common units, to satisfy its delivery obligations under the DRIP and EUPP. This election is subject to change in future quarters depending on the Partnership’s need for equity capital. During the three months ended March 31, 2022 , agents of the Partnership purchased 1,574,806 common units on the open market and delivered them to participants in the DRIP and EUPP. Apart from $ 1 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 May 12, 2022. Preferred Units There were 50,412 of our Series A Cumulative Convertible Preferred Units (“preferred units”) outstanding at March 31, 2022. 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. During the three months ended March 31, 2022, the Partnership made quarterly cash distributions to its preferred unitholders of $ 1 million. Accumulated Other Comprehensive Income (Loss) The following tables present the components of accumulated other comprehensive income (loss) as reported on our Unaudited Condensed Consolidated Balance Sheets at the dates indicated: Cash Flow Hedges Commodity Derivative Instruments Interest Rate Derivative Instruments Other Total Accumulated Other Comprehensive Income (Loss), December 31, 2021 $ 137 $ 147 $ 2 $ 286 Other comprehensive income (loss) for period, before reclassifications ( 99 ) – – ( 99 ) Reclassification of losses (gains) to net income during period 45 8 – 53 Total other comprehensive income (loss) for period ( 54 ) 8 – ( 46 ) Accumulated Other Comprehensive Income (Loss), March 31, 2022 $ 83 $ 155 $ 2 $ 240 Cash Flow Hedges Commodity Derivative Instruments Interest Rate Derivative Instruments Other Total Accumulated Other Comprehensive Income (Loss), December 31, 2020 $ ( 93 ) $ ( 74 ) $ 2 $ ( 165 ) Other comprehensive income (loss) for period, before reclassifications ( 461 ) 183 – ( 278 ) Reclassification of losses (gains) to net income during period 616 8 – 624 Total other comprehensive income (loss) for period 155 191 – 346 Accumulated Other Comprehensive Income (Loss), March 31, 2021 $ 62 $ 117 $ 2 $ 181 17 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 March 31, Losses (gains) on cash flow hedges: Location 2022 2021 Interest rate derivatives Interest expense $ 8 $ 8 Commodity derivatives Revenue 39 597 Commodity derivatives Operating costs and expenses 6 19 Total $ 53 $ 624 For information regarding our interest rate and commodity derivative instruments, see Note 14. Cash Distributions On April 7, 2022, we announced that the Board declared a quarterly cash distribution of $ 0.4650 per common unit, or $ 1.86 per common unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the first quarter of 2022. The quarterly distribution is payable on May 12, 2022 to unitholders of record as of the close of business on April 29, 2022. The total amount to be paid is $ 1.0 billion, which includes $ 9 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. Management will evaluate any future increases in cash distributions on a quarterly basis. 18 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 9. Revenues We classify our revenues into sales of products and midstream services. Product sales relate primarily to our various marketing activities whereas midstream services represent our other integrated businesses (i.e., gathering, processing, transportation, fractionation, storage and terminaling). The following table presents our revenues by business segment, and further by revenue type, for the periods indicated: For the Three Months Ended March 31, 2022 2021 NGL Pipelines & Services: Sales of NGLs and related products $ 5,040 $ 3,006 Segment midstream services: Natural gas processing and fractionation 340 183 Transportation 229 275 Storage and terminals 145 120 Total segment midstream services 714 578 Total NGL Pipelines & Services 5,754 3,584 Crude Oil Pipelines & Services: Sales of crude oil 3,716 1,839 Segment midstream services: Transportation 239 209 Storage and terminals 117 117 Total segment midstream services 356 326 Total Crude Oil Pipelines & Services 4,072 2,165 Natural Gas Pipelines & Services: Sales of natural gas 880 1,335 Segment midstream services: Transportation 269 252 Total segment midstream services 269 252 Total Natural Gas Pipelines & Services 1,149 1,587 Petrochemical & Refined Products Services: Sales of petrochemicals and refined products 1,754 1,599 Segment midstream services: Fractionation and isomerization 69 53 Transportation, including marine logistics 138 117 Storage and terminals 72 50 Total segment midstream services 279 220 Total Petrochemical & Refined Products Services 2,033 1,819 Total consolidated revenues $ 13,008 $ 9,155 Substantially all of our revenues are derived from contracts with customers as defined within Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers . Unbilled Revenue and Deferred Revenue The following table provides information regarding our contract assets and contract liabilities at March 31, 2022: Contract Asset Location Balance Unbilled revenue (current amount) Prepaid and other current assets $ 56 Total $ 56 Contract Liability Location Balance Deferred revenue (current amount) Other current liabilities $ 179 Deferred revenue (noncurrent) Other long-term liabilities 252 Total $ 431 19 Table of Contents 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 three months ended March 31, 2022: Unbilled Revenue Deferred Revenue Balance at December 31, 2021 $ 15 $ 446 Amount included in opening balance transferred to other accounts during period (1) ( 2 ) ( 136 ) Amount recorded during period (2) 49 237 Amounts recorded during period transferred to other accounts (1) ( 6 ) ( 112 ) Other changes – ( 4 ) Balance at March 31, 2022 $ 56 $ 431 (1) Unbilled revenues are transferred to accounts receivable once we have an unconditional right to consideration from the customer. Deferred revenues are recognized as revenue upon satisfaction of our performance obligation to the customer. (2) Unbilled revenue represents revenue that has been recognized upon satisfaction of a performance obligation, but cannot be contractually invoiced (or billed) to the customer at the balance sheet date until a future period. Deferred revenue is recorded when payment is received from a customer prior to our satisfaction of the associated performance obligation. 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 March 31, 2022. Period Fixed Consideration Nine Months Ended December 31, 2022 $ 2,781 One Year Ended December 31, 2023 3,172 One Year Ended December 31, 2024 2,925 One Year Ended December 31, 2025 2,563 One Year Ended December 31, 2026 2,403 Thereafter 9,825 Total $ 23,669 Note 10. Business Segments and Related Information Our operations are reported under four business segments: (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 co-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. 20 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS • 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 We evaluate segment performance based on our financial measure of gross operating margin. Gross operating margin is an important performance measure of the core profitability of our operations and forms the basis of our internal financial reporting. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results. Gross operating margin is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges. Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests. Our calculation of gross operating margin may or may not be comparable to similarly titled measures used by other companies. The following table presents our measurement of total segment gross operating margin for the periods presented. The GAAP financial measure most directly comparable to total segment gross operating margin is operating income. For the Three Months Ended March 31, 2022 2021 Operating income $ 1,666 $ 1,695 Adjustments to reconcile operating income to total segment gross operating margin (addition or subtraction indicated by sign): Depreciation, amortization and accretion expense in operating costs and expenses (1) 514 495 Asset impairment charges in operating costs and expenses 14 66 Net losses attributable to asset sales and related matters in operating costs and expenses 2 11 General and administrative costs 62 56 N on-refundable payments received from shippers attributable to make-up rights (2) 34 19 Subsequent recognition of revenues attributable to make-up rights (3) ( 28 ) ( 39 ) Total segment gross operating margin $ 2,264 $ 2,303 (1) Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin. (2) 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; however, these receipts are included in gross operating margin in the period of receipt since they are nonrefundable to the shipper. (3) As deferred revenues attributable to make-up rights are subsequently recognized as revenue under GAAP, gross operating margin must be adjusted to remove such amounts to prevent duplication since the associated non-refundable payments were previously included in gross operating margin. Gross operating margin by segment is calculated by subtracting segment operating costs and expenses from segment revenues, with both segment totals reflecting the adjustments noted in the preceding table, as applicable, and before the elimination of intercompany transactions. The following table presents gross operating margin by segment for the periods indicated: For the Three Months Ended March 31, 2022 2021 Gross operating margin by segment: NGL Pipelines & Services $ 1,225 $ 1,086 Crude Oil Pipelines & Services 415 400 Natural Gas Pipelines & Services 220 535 Petrochemical & Refined Products Services 404 282 Total segment gross operating margin $ 2,264 $ 2,303 21 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Summarized Segment Financial Information 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 NGL Pipelines & Services Crude Oil Pipelines & Services Natural Gas Pipelines & Services Petrochemical & Refined Products Services Adjustments and Eliminations Consolidated Total Revenues from third parties: Three months ended March 31, 2022 $ 5,752 $ 4,063 $ 1,144 $ 2,033 $ – $ 12,992 Three months ended March 31, 2021 3,581 2,157 1,584 1,819 – 9,141 Revenues from related parties: Three months ended March 31, 2022 2 9 5 – – 16 Three months ended March 31, 2021 3 8 3 – – 14 Intersegment and intrasegment revenues: Three months ended March 31, 2022 18,315 9,914 203 3,222 ( 31,654 ) – Three months ended March 31, 2021 13,089 7,420 146 6,234 ( 26,889 ) – Total revenues: Three months ended March 31, 2022 24,069 13,986 1,352 5,255 ( 31,654 ) 13,008 Three months ended March 31, 2021 16,673 9,585 1,733 8,053 ( 26,889 ) 9,155 Equity in income of unconsolidated affiliates: Three months ended March 31, 2022 34 81 2 – – 117 Three months ended March 31, 2021 28 119 1 1 – 149 Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates. Our consolidated revenues reflect the elimination of intercompany transactions. Substantially all of our consolidated revenues are earned in the U.S. and derived from a wide customer base. Information by business segment, together with reconciliations to our Unaudited Condensed Consolidated Balance Sheet totals, is presented in the following table: Reportable Business Segments NGL Pipelines & Services Crude Oil Pipelines & Services Natural Gas Pipelines & Services Petrochemical & Refined Products Services Adjustments and Eliminations Consolidated Total Property, plant and equipment, net: (see Note 4) At March 31, 2022 $ 17,730 $ 6,917 $ 9,832 $ 7,724 $ 1,830 $ 44,033 At December 31, 2021 17,202 6,974 8,560 7,736 1,616 42,088 Investments in unconsolidated affiliates: (see Note 5) At March 31, 2022 654 1,737 32 3 – 2,426 At December 31, 2021 656 1,738 31 3 – 2,428 Intangible assets, net: (see Note 6) At March 31, 2022 893 1,840 1,245 123 – 4,101 At December 31, 2021 317 1,860 849 125 – 3,151 Goodwill: (see Note 6) At March 31, 2022 2,811 1,841 – 956 – 5,608 At December 31, 2021 2,652 1,841 – 956 – 5,449 Segment assets: At March 31, 2022 22,088 12,335 11,109 8,806 1,830 56,168 At December 31, 2021 20,827 12,413 9,440 8,820 1,616 53,116 22 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Supplemental Revenue and Expense Information The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated: For the Three Months Ended March 31, 2022 2021 Consolidated revenues: NGL Pipelines & Services $ 5,754 $ 3,584 Crude Oil Pipelines & Services 4,072 2,165 Natural Gas Pipelines & Services 1,149 1,587 Petrochemical & Refined Products Services 2,033 1,819 Total consolidated revenues $ 13,008 $ 9,155 Consolidated costs and expenses Operating costs and expenses: Cost of sales $ 10,098 $ 6,263 Other operating costs and expenses (1) 757 715 Depreciation, amortization and accretion 526 498 Asset impairment charges 14 66 Net losses attributable to asset sales and related matters 2 11 General and administrative costs 62 56 Total consolidated costs and expenses $ 11,459 $ 7,609 (1) 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 cost of sales amounts are explained in large part by changes in energy commodity prices. In general, higher energy commodity prices result in an increase in our revenues attributable to product sales; however, these higher commodity prices would also be expected to increase the associated cost of sales as purchase costs are higher. The same type of relationship would be true in the case of lower energy commodity sales prices and purchase costs. 23 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 11. Earnings Per Unit The following table presents our calculation of basic and diluted earnings per common unit for the periods indicated: For the Three Months Ended March 31, 2022 2021 BASIC EARNINGS PER COMMON UNIT Net income attributable to common unitholders $ 1,296 $ 1,341 Earnings allocated to phantom unit awards (1) ( 11 ) ( 11 ) Net income allocated to common unitholders $ 1,285 $ 1,330 Basic weighted-average number of common units outstanding 2,178 2,183 Basic earnings per common unit $ 0.59 $ 0.61 DILUTED EARNINGS PER COMMON UNIT Net income attributable to common unitholders $ 1,296 $ 1,341 Net income attributable to preferred units 1 1 Net income attributable to limited partners $ 1,297 $ 1,342 Diluted weighted-average number of units outstanding: Distribution-bearing common units 2,178 2,183 Phantom units (2) 19 17 Preferred units (2) 2 3 Total 2,199 2,203 Diluted earnings per common unit $ 0.59 $ 0.61 (1) Phantom units are considered participating securities for purposes of computing basic earnings per unit. See Note 13 for information regarding our phantom units. (2) 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 13 for information regarding phantom unit awards. See Note 8 for information regarding preferred units. Note 12. Business Combinations On February 17, 2022, an affiliate of Enterprise acquired all of the member interests in Navitas Midstream Partners, LLC ("Navitas Midstream") for $ 3.2 billion in cash. We funded the cash consideration using proceeds from the issuance of short-term notes under our commercial paper program and cash on hand. Navitas Midstream's assets (the “Midland Basin System”) include approximately 1,750 miles of pipelines and over 1.0 Bcf/d of cryogenic natural gas processing capacity. The acquired business expands our natural gas processing and NGL businesses to the Midland Basin in West Texas. The acquisition of Navitas Midstream was accounted for under the acquisition method in accordance with ASC 805, Business Combinations . The preliminary allocation of purchase consideration was based upon the estimated fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition. The preliminary allocation was made to major categories of assets and liabilities based on management’s best estimates and supported by an independent third-party analysis. 24 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table presents the preliminary fair value allocation of assets acquired and liabilities assumed in the acquisition at February 17, 2022 (the effective date of the acquisition). The allocation is provisional and subject to ongoing efforts to clarify the values assigned to tangible and identifiable intangible assets. Purchase price for 100% interest in Navitas Midstream $ 3,231 Recognized amounts of identifiable assets acquired and liabilities assumed: Assets acquired in business combination: Current assets, including cash of $ 27 million $ 127 Property, plant and equipment 2,076 Contract-based intangible asset 989 Other assets 34 Total assets acquired $ 3,226 Liabilities assumed in business combination: Current liabilities $ ( 114 ) Long-term liabilities ( 40 ) Total liabilities assumed $ ( 154 ) Total identifiable net assets $ 3,072 Goodwill $ 159 The estimated fair value of the acquired property, plant and equipment was determined using the cost approach. The fair value of property, plant and equipment primarily consisted of personal property of $ 1.6 billion, real property of $ 250 million and construction in progress of $ 171 million. See Note 4 for additional information regarding our property, plant and equipment. The contract-based intangible asset represents the estimated value we assigned to the acquired long-term contracts with customers that dedicate future lease production to our system. The estimated fair value of the acquired contract-based intangible assets was determined using an income approach, specifically a discounted cash flow analysis. The fair value estimate incorporates Level 3 inputs including: (i) management’s long-term forecast of cash flows generated by the Midland Basin System based on the estimated economic life of the hydrocarbon resource basin served and resource depletion rates; and (ii) a discount rate of 15.5 % , which is based on a benchmarking analysis with reference to the implied rate of return on the Navitas Midstream acquisition and a market participant weighted average cost of capital. We will amortize the value assigned to this intangible asset using a units-of-production method. The estimated useful life of the acquired contract-based intangible asset is 30 years. We recorded $ 159 million of goodwill in connection with this transaction. In general, we attribute this goodwill to our ability to leverage the acquired business with our existing NGL asset base to create future business opportunities. The financial results for the processing activities of the acquired business will be reported under the NGL Pipelines & Services business segment and the gathering activities will be reported under the Natural Gas Pipelines & Services business segment. The contribution of this newly acquired business to our consolidated revenues and net income was not material during the three months ended March 31, 2022. Additionally, acquisition related costs were not material during the three months ended March 31, 2022. On a historical pro forma basis, our revenues, costs and expenses, operating income, net income attributable to common unitholders and earnings per unit for the three months ended March 31, 2022 and 2021 would not have differed materially from those we actually reported had the acquisition been completed on January 1, 2021 rather than February 17, 2022. 25 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 13. Equity-Based Awards An allocated portion of the fair value of EPCO’s equity-based awards is charged to us under the ASA. The following table summarizes compensation expense we recognized in connection with equity-based awards for the periods indicated: For the Three Months Ended March 31, 2022 2021 Equity-classified awards: Phantom unit awards $ 38 $ 38 Profits interest awards 1 1 Total $ 39 $ 39 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 the Partnership’s common units upon vesting. Phantom Unit Awards 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: Number of Units Weighted- Average Grant Date Fair Value per Unit (1) Phantom unit awards at December 31, 2021 17,170,919 $ 24.31 Granted (2) 7,948,380 $ 24.10 Vested ( 5,891,941 ) $ 25.20 Forfeited ( 181,820 ) $ 23.95 Phantom unit awards at March 31, 2022 19,045,538 $ 23.95 (1) Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued. (2) The aggregate grant date fair value of phantom unit awards issued during 2022 was $ 192 million based on a grant date market price of the Partnership’s common units ranging from $ 24.10 to $ 24.42 per unit. An estimated annual forfeiture rate of 2.0 % was applied to these awards. 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; otherwise, such amounts are expensed. The following table presents supplemental information regarding phantom unit awards for the periods indicated: For the Three Months Ended March 31, 2022 2021 Cash payments made in connection with DERs $ 8 $ 7 Total intrinsic value of phantom unit awards that vested during period 141 113 For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $ 284 million at March 31, 2022, of which our share of such cost is currently estimated to be $ 238 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. 26 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Profits Interest Awards EPCO has two 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, 2022 , our share of the total unrecognized compensation cost related to the Employee Partnerships was $ 8 million , which we expect to recognize over a weighted-average period of 1.7 years. Note 14. 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. In order to manage risks associated with assets, liabilities and certain anticipated future transactions, we use derivative instruments such as futures, forward contracts, swaps, options and other instruments with similar characteristics. Substantially all of our derivatives are used for non-trading activities. Interest Rate Hedging Activities We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements. This strategy may be used in controlling our overall cost of capital associated with such borrowings. We do not have any interest rate derivative instruments outstanding at March 31, 2022. Commodity Hedging Activities The prices of natural gas, NGLs, crude oil, petrochemicals and refined products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control. 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 March 31, 2022, 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. 27 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes our portfolio of commodity derivative instruments outstanding at March 31, 2022 (volume measures as noted): Volume (1) Accounting Derivative Purpose Current (2) Long-Term (2) Treatment Derivatives designated as hedging instruments: Natural gas processing: Forecasted natural gas purchases for plant thermal reduction (billion cubic feet (“Bcf”)) 14.5 0.1 Cash flow hedge Forecasted sales of NGLs (MMBbls) 1.1 n/a Cash flow hedge Octane enhancement: Forecasted sales of octane enhancement products (MMBbls) 21.9 0.6 Cash flow hedge Natural gas marketing: Natural gas storage inventory management activities (Bcf) 1.4 n/a Fair value hedge NGL marketing: Forecasted purchases of NGLs and related hydrocarbon products (MMBbls) 116.6 9.1 Cash flow hedge Forecasted sales of NGLs and related hydrocarbon products (MMBbls) 117.2 2.6 Cash flow hedge NGLs inventory management activities (MMBbls) 0.9 n/a Fair value hedge Crude oil marketing: Forecasted purchases of crude oil (MMBbls) 3.9 n/a Cash flow hedge Forecasted sales of crude oil (MMBbls) 2.7 n/a Cash flow hedge Petrochemical marketing: Forecasted purchases of petrochemical products (MMBbls) 0.1 n/a Cash flow hedge Forecasted sales of petrochemical products (MMBbls) 0.6 n/a Cash flow hedge Commercial energy: Forecasted purchases of power related to asset operations (terawatt hours (“TWh”)) 1.2 n/a Cash flow hedge Derivatives not designated as hedging instruments: Natural gas risk management activities (Bcf) (3) 18.1 0.1 Mark-to-market NGL risk management activities (MMBbls) (3) 46.4 8.7 Mark-to-market Refined products risk management activities (MMBbls) (3) 3.4 n/a Mark-to-market Crude oil risk management activities (MMBbls) (3) 32.0 0.3 Mark-to-market (1) 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. (2) 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 2023, May 2022 and December 2023, respectively. (3) 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 $ 98 million and $ 102 million at March 31, 2022 and December 31, 2021, respectively. 28 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Tabular Presentation of Fair Value Amounts, and Gains and Losses on Derivative Instruments and Related Hedged Items The following table provides a balance sheet overview of our derivative assets and liabilities at the dates indicated: Asset Derivatives Liability Derivatives March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments Commodity derivatives Current assets $ 334 Current assets $ 195 Current liabilities $ 349 Current liabilities $ 212 Commodity derivatives Other assets 5 Other assets – Other liabilities 3 Other liabilities 1 Total commodity derivatives 339 195 352 213 Total derivatives designated as hedging instruments $ 339 $ 195 $ 352 $ 213 Derivatives not designated as hedging instruments Commodity derivatives Current assets $ 109 Current assets $ 42 Current liabilities $ 111 Current liabilities $ 42 Commodity derivatives Other assets 3 Other assets 2 Other liabilities 8 Other liabilities 1 Total commodity derivatives 112 44 119 43 Total derivatives not designated as hedging instruments $ 112 $ 44 $ 119 $ 43 Certain of our commodity derivative instruments are subject to master netting arrangements or similar agreements. The following tables present our derivative instruments subject to such arrangements at the dates indicated: Offsetting of Financial Assets and Derivative Assets Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Amounts of Assets Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet Amounts That Would Have Been Presented On Net Basis Financial Instruments Cash Collateral Received Cash Collateral Paid (i) (ii) (iii) = (i) – (ii) (iv) (v) = (iii) + (iv) As of March 31, 2022: Commodity derivatives $ 451 $ – $ 451 $ ( 449 ) $ – $ – $ 2 As of December 31, 2021: Commodity derivatives $ 239 $ – $ 239 $ ( 233 ) $ – $ – $ 6 Offsetting of Financial Liabilities and Derivative Liabilities Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Amounts of Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet Amounts That Would Have Been Presented On Net Basis Financial Instruments Cash Collateral Received Cash Collateral Paid (i) (ii) (iii) = (i) – (ii) (iv) (v) = (iii) + (iv) As of March 31, 2022: Commodity derivatives $ 471 $ – $ 471 $ ( 449 ) $ – $ ( 15 ) $ 7 As of December 31, 2021: Commodity derivatives $ 256 $ – $ 256 $ ( 233 ) $ – $ ( 17 ) $ 6 29 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Derivative assets and liabilities recorded on our Unaudited Condensed Consolidated Balance Sheets are presented on a gross-basis and determined at the individual transaction level. The tabular presentation above provides a means for comparing the gross amount of derivative assets and liabilities, excluding associated accounts payable and receivable, to the net amount that would likely be receivable or payable under a default scenario based on the existence of rights of offset in the respective derivative agreements. Any cash collateral paid or received is reflected in these tables, but only to the extent that it represents variation margins. Any amounts associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts or those that are determined solely on their volumetric notional amounts are excluded from these tables. The following tables present the effect of our derivative instruments designated as fair value hedges on our Unaudited Condensed Statements of Consolidated Operations for the periods indicated: Derivatives in Fair Value Hedging Relationships Location Gain (Loss) Recognized in Income on Derivative For the Three Months Ended March 31, 2022 2021 Commodity derivatives Revenue $ ( 65 ) $ ( 120 ) Total $ ( 65 ) $ ( 120 ) Derivatives in Fair Value Hedging Relationships Location Gain (Loss) Recognized in Income on Hedged Item For the Three Months Ended March 31, 2022 2021 Commodity derivatives Revenue $ 21 $ 170 Total $ 21 $ 170 The gain (loss) corresponding to the hedge ineffectiveness on the fair value hedges was negligible for all periods presented. The remaining gain (loss) for each period presented is primarily attributable to prompt-to-forward month price differentials that were excluded from the assessment of hedge effectiveness. The following tables present the effect of our derivative instruments designated as cash flow hedges on our Unaudited Condensed Statements of Consolidated Operations and Unaudited Condensed Statements of Consolidated Comprehensive Income for the periods indicated: Derivatives in Cash Flow Hedging Relationships Change in Value Recognized in Other Comprehensive Income (Loss) on Derivative For the Three Months Ended March 31, 2022 2021 Interest rate derivatives $ – $ 183 Commodity derivatives – Revenue (1) ( 121 ) ( 442 ) Commodity derivatives – Operating costs and expenses (1) 22 ( 19 ) Total $ ( 99 ) $ ( 278 ) (1) 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. 30 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Derivatives in Cash Flow Hedging Relationships Location Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Income For the Three Months Ended March 31, 2022 2021 Interest rate derivatives Interest expense $ ( 8 ) $ ( 8 ) Commodity derivatives Revenue ( 39 ) ( 597 ) Commodity derivatives Operating costs and expenses ( 6 ) ( 19 ) Total $ ( 53 ) $ ( 624 ) Over the next twelve months, we expect to reclassify $ 16 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 $ 80 million of gains attributable to commodity derivative instruments from accumulated other comprehensive income to earnings, with $ 56 million as an increase in revenue and $ 24 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: Derivatives Not Designated as Hedging Instruments Location Gain (Loss) Recognized in Income on Derivative For the Three Months Ended March 31, 2022 2021 Commodity derivatives Revenue $ 43 $ ( 43 ) Commodity derivatives Operating costs and expenses 4 1 Total $ 47 $ ( 42 ) The $ 47 million gain recognized for the three months ended March 31, 2022 (as noted in the preceding table) from derivatives not designated as hedging instruments consists of $ 57 million of realized gains and $ 10 million of net unrealized mark-to-market losses attributable to commodity derivatives. Fair Value Measurements The following tables set forth, by level within the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated. These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of such inputs requires judgment. The values for commodity derivatives are presented before and after the application of Chicago Mercantile Exchange (“CME”) Rule 814, which deems that financial instruments cleared by the CME are settled daily in connection with variation margin payments. As a result of this exchange rule, CME-related derivatives are considered to have no fair value at the balance sheet date for financial reporting purposes; however, the derivatives remain outstanding and subject to future commodity price fluctuations until they are settled in accordance with their contractual terms. Derivative transactions cleared on exchanges other than the CME (e.g., the Intercontinental Exchange or ICE) continue to be reported on a gross basis. 31 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS At March 31, 2022 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Financial assets: Commodity derivatives: Value before application of CME Rule 814 $ 357 $ 2,076 $ 1 $ 2,434 Impact of CME Rule 814 ( 327 ) ( 1,656 ) – ( 1,983 ) Total commodity derivatives 30 420 1 451 Total $ 30 $ 420 $ 1 $ 451 Financial liabilities: Commodity derivatives: Value before application of CME Rule 814 $ 578 $ 1,746 $ 1 $ 2,325 Impact of CME Rule 814 ( 546 ) ( 1,308 ) – ( 1,854 ) Total commodity derivatives 32 438 1 471 Total $ 32 $ 438 $ 1 $ 471 At December 31, 2021 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Financial assets: Commodity derivatives: Value before application of CME Rule 814 $ 122 $ 1,110 $ – $ 1,232 Impact of CME Rule 814 ( 122 ) ( 871 ) – ( 993 ) Total commodity derivatives – 239 – 239 Total $ – $ 239 $ – $ 239 Financial liabilities: Commodity derivatives: Value before application of CME Rule 814 $ 199 $ 1,001 $ – $ 1,200 Impact of CME Rule 814 ( 199 ) ( 745 ) – ( 944 ) Total commodity derivatives – 256 – 256 Total $ – $ 256 $ – $ 256 In the aggregate, the fair value of our commodity hedging portfolios at March 31, 2022 was a net derivative asset of $ 109 million prior to the impact of CME Rule 814. Financial assets and liabilities recorded on the balance sheet at March 31, 2022 using significant unobservable inputs (Level 3) are not material to the Unaudited Condensed Consolidated Financial Statements. 32 Table of Contents 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 $ 28.9 billion and $ 33.5 billion at March 31, 2022 and December 31, 2021, respectively. The aggregate carrying value of these debt obligations was $ 28.2 billion and $ 29.6 billion at March 31, 2022 and December 31, 2021, 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. Changes in market rates of interest affect the fair value of our fixed-rate debt. The carrying values of our variable-rate long-term debt obligations approximate their fair values since the associated interest rates are market-based. We do not have any long-term investments in debt or equity securities recorded at fair value. Note 15. Related Party Transactions The following table summarizes our related party transactions for the periods indicated: For the Three Months Ended March 31, 2022 2021 Revenues – related parties: Unconsolidated affiliates $ 16 $ 14 Costs and expenses – related parties: EPCO and its privately held affiliates $ 291 $ 292 Unconsolidated affiliates 61 67 Total $ 352 $ 359 The following table summarizes our related party accounts receivable and accounts payable balances at the dates indicated: March 31, 2022 December 31, 2021 Accounts receivable - related parties: EPCO and its privately held affiliates $ 1 $ 1 Unconsolidated affiliates 22 20 Total $ 23 $ 21 Accounts payable - related parties: EPCO and its privately held affiliates $ 42 $ 151 Unconsolidated affiliates 20 16 Total $ 62 $ 167 We believe that the terms and provisions of our related party agreements are fair to us; however, such agreements and transactions may not be as favorable to us as we could have obtained from unaffiliated third parties. 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 March 31, 2022, 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 Common Units Outstanding 702,377,022 common units 32.2 % 33 Table of Contents 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, 2022. 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 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 respective debt obligations. During the three months ended March 31, 2022 and 2021, we paid EPCO and its privately held affiliates cash distributions totaling $ 316 million and $ 306 million, respectively. We have no employees. 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 March 31, 2022 2021 Operating costs and expenses $ 251 $ 255 General and administrative expenses 36 33 Total costs and expenses $ 287 $ 288 We lease office space from privately held affiliates of EPCO at rental rates that approximate market rates. For each of the three months ended March 31, 2022 and 2021 , we recognized $ 3 million of related party operating lease expense in connection with these office space leases. Note 16. Income Taxes The following table presents the components of our consolidated provision for income taxes for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Deferred tax expense attributable to OTA Holdings, Inc. (“OTA”) $ ( 7 ) $ ( 6 ) Revised Texas Franchise Tax (“Texas Margin Tax”) ( 12 ) ( 3 ) Other – ( 1 ) Provision for income taxes $ ( 19 ) $ ( 10 ) Our federal, state and foreign income tax benefit (provision) is summarized below: For the Three Months Ended March 31, 2022 2021 Current portion of income tax benefit (provision): Federal $ – $ 1 State ( 10 ) ( 5 ) Foreign – ( 1 ) Total current portion ( 10 ) ( 5 ) Deferred portion of income tax benefit (provision): Federal ( 7 ) ( 6 ) State ( 2 ) 1 Total deferred portion ( 9 ) ( 5 ) Total provision for income taxes $ ( 19 ) $ ( 10 ) 34 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of the 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, 2022 2021 Pre-Tax Net Book Income (“NBI”) $ 1,350 $ 1,373 Texas Margin Tax (1) ( 12 ) ( 3 ) State income tax provision, net of federal benefit – ( 1 ) Federal income tax provision computed by applying the federal statutory rate to NBI of corporate entities ( 3 ) ( 3 ) Valuation allowance (2) ( 4 ) ( 3 ) Provision for income taxes $ ( 19 ) $ ( 10 ) Effective income tax rate ( 1.4 )% ( 0.7 )% (1) 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. (2) 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. The following table presents the significant components of deferred tax assets and deferred tax liabilities at the dates indicated: March 31, December 31, 2022 2021 Deferred tax liabilities: Attributable to investment in OTA $ 391 $ 384 Attributable to property, plant and equipment 120 118 Attributable to investments in other entities 5 5 Other 36 14 Total deferred tax liabilities 552 521 Deferred tax assets: Net operating loss carryovers (1) 4 14 Temporary differences related to Texas Margin Tax 3 3 Total deferred tax assets 7 17 Valuation allowance 4 14 Total deferred tax assets, net of valuation allowance 3 3 Total net deferred tax liabilities $ 549 $ 518 (1) The loss amount presented as of March 31, 2022 has an indefinite carryover period. All losses are subject to limitations on their utilization. Note 17. Commitments and Contingent Liabilities Litigation As part of our normal business activities, we may be named as defendants in legal proceedings, including those arising from regulatory and environmental matters. Although we are insured against various risks to the extent we believe it is prudent, there is no assurance that the nature and amount of such insurance will be adequate, in every case, to fully indemnify us against losses arising from future legal proceedings. We will vigorously defend the Partnership in litigation matters. There were no accruals for litigation contingencies at March 31, 2022. Our accruals for litigation contingencies were immaterial at December 31, 2021. We have classified our accruals for litigation contingencies in our Unaudited Condensed Consolidated Balance Sheets as a component of “Other current liabilities” or “Other long-term liabilities” based on management’s estimate regarding the timing of settlement. 35 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PDH 1 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 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”). In December 2015, Enterprise and AFW entered into a transition services agreement under which AFW was partially terminated from the PDH 1 project. In December 2015, Enterprise engaged a second contractor, Optimized Process Designs LLC, to complete the construction and installation of PDH 1. On September 2, 2016, we terminated AFW for cause and filed a lawsuit in the 151st Judicial Civil District Court of Harris County, Texas against AFW and its parent company, Amec Foster Wheeler plc, asserting claims for breach of contract, breach of warranty, fraudulent inducement, string-along fraud, gross negligence, professional negligence, negligent misrepresentation and attorneys’ fees. Trial for the case began on April 19, 2022. We intend to diligently prosecute these claims and seek all direct, consequential, and exemplary damages to which we may be entitled. Contractual Obligations Scheduled Maturities of Debt We have long-term and short-term payment obligations under debt agreements. In total, the principal amount of our consolidated debt obligations were $ 29.8 billion at March 31, 2022 and December 31, 2021. See Note 7 for additional information regarding our scheduled future maturities of debt principal. Lease Accounting Matters There has been no significant change in our operating lease obligations since those disclosed in the 2021 Form 10-K. The following table presents information regarding operating leases where we are the lessee at March 31, 2022: Asset Category ROU Asset Carrying Value (1) Lease Liability Carrying Value (2) Weighted- Average Remaining Term Weighted- Average Discount Rate (3) Storage and pipeline facilities $ 184 $ 184 11 years 3.5 % Transportation equipment 20 22 3 years 2.7 % Office and warehouse space 164 195 15 years 2.9 % Total $ 368 $ 401 (1) Right-of-use (“ROU”) asset amounts are a component of “Other assets” on our Unaudited Condensed Consolidated Balance Sheet. (2) At March 31, 2022, lease liabilities of $ 51 million and $ 350 million were included within “Other current liabilities” and “Other long-term liabilities,” respectively. (3) 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 information available at the lease commencement date or January 1, 2019 for leases existing at the adoption date for ASC 842, Leases . 36 Table of Contents ENTERPRISE PRODUCTS PARTNERS L.P. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table disaggregates our total operating lease expense for the periods indicated : For the Three Months Ended March 31, 2022 2021 Long-term operating leases: Fixed lease expense: Non-cash lease expense (amortization of ROU assets) $ 13 $ 9 Related accretion expense on lease liability balances 3 3 Total fixed lease expense 16 12 Variable lease expense – 1 Subtotal operating lease expense 16 13 Short-term operating leases 17 13 Total operating lease expense $ 33 $ 26 Cash payments attributable to operating lease liabilities were $ 12 million and $ 9 million for the three months ended March 31, 2022 and 2021, respectively. Operating lease income for each of the three months ended March 31, 2022 and 2021 was $ 3 million. Purchase Obligations 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 $ 18.8 billion at December 31, 2021 to $ 25.9 billion at March 31, 2022 primarily due to an increase in crude oil and NGL prices between the two reporting dates. Note 18. Supplemental Cash Flow Information 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, 2022 2021 Decrease (increase) in: Accounts receivable – trade $ ( 1,934 ) $ ( 1,215 ) Accounts receivable – related parties ( 3 ) ( 2 ) Inventories 65 ( 96 ) Prepaid and other current assets 948 158 Other assets 29 2 Increase (decrease) in: Accounts payable – trade 216 84 Accounts payable – related parties ( 105 ) ( 64 ) Accrued product payables 2,371 1,592 Accrued interest ( 232 ) ( 231 ) Other current liabilities ( 1,132 ) ( 160 ) Other long-term liabilities ( 32 ) 31 Net effect of changes in operating accounts $ 191 $ 99 Cash payments for interest, net of $ 17 and $ 20 capitalized during the three months ended March 31, 2022 and 2021 , respectively $ 540 $ 541 Cash refunds for federal and state income taxes $ ( 14 ) $ ( 5 ) We incurred liabilities for construction in progress that had not been paid at March 31, 2022 and December 31, 2021 of $ 138 million and $ 183 million, respectively. Such amounts are not included under the caption “Capital expenditures” on the Unaudited Condensed Statements of Consolidated Cash Flows. 37 Table of Contents