ENTERPRISE PRODUCTS PARTNERS L.P. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. For the Three Months Ended March 31, 2022 and 2021 The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying Notes included in this quarterly report on Form 10-Q and the Audited Consolidated Financial Statements and related Notes, together with our discussion and analysis of financial position and results of operations, included in our annual report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), as filed on February 28, 2022 with the U.S. Securities and Exchange Commission (“SEC”). Our financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). Cautionary Statement Regarding Forward-Looking Information This quarterly report on Form 10-Q for the three months ended March 31, 2022 (our “quarterly report”) contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us. When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “scheduled,” “pending,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. Although we and our general partner believe that our expectations reflected in such forward-looking statements (including any forward-looking statements/expectations of third parties referenced in this quarterly report) are reasonable, neither we nor our general partner can give any assurances that such expectations will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 2021 Form 10-K and within Part II, Item 1A of this quarterly report. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. You should not put undue reliance on any forward-looking statements. The forward-looking statements in this quarterly report speak only as of the date hereof. Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason. Key References Used in this Management’s Discussion and Analysis Unless the context requires otherwise, references to “we,” “us” or “our” within this quarterly report 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. 38 Table of Contents 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. As generally used in the energy industry and in this quarterly report, the acronyms below have the following meanings: /d = per day MMBPD = million barrels per day BBtus = billion British thermal units MMBtus = million British thermal units Bcf = billion cubic feet MMcf = million cubic feet BPD = barrels per day MWac = megawatts, alternating current MBPD = thousand barrels per day MWdc = megawatts, direct current MMBbls = million barrels TBtus = trillion British thermal units As used in this quarterly report, the phrase “quarter-to-quarter” means the first quarter of 2022 compared to the first quarter of 2021. Overview of Business 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. The safe operation of our assets is a top priority. We are committed to protecting the environment and the health and safety of the public and those working on our behalf by conducting our business activities in a safe and environmentally responsible manner. For additional information, see “ Environmental, Safety and Conservation ” within the Regulatory Matters section of Part I, Items 1 and 2 of the 2021 Form 10-K. 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. 39 Table of Contents Our financial position, results of operations and cash flows are subject to certain risks. For information regarding such risks, see “ Risk Factors ” included under Part I, Item 1A of the 2021 Form 10-K and Part II, Item 1A of this quarterly report. We provide investors access to additional information regarding the Partnership and our consolidated businesses, including information relating to governance procedures and principles, through our website, www.enterpriseproducts.com . Recent Developments Enterprise and OLCV Sign Letter of Intent for Gulf Coast CO 2 Transportation and Sequestration Project In April 2022, Enterprise and Oxy Low Carbon Ventures, LLC (“OLCV”), a subsidiary of Occidental announced that we have executed a letter of intent to work toward a potential carbon dioxide (“CO 2 ”) transportation and sequestration solution for the Texas Gulf Coast. The joint project would initially be focused on providing services to emitters in the industrial corridors from the greater Houston to Beaumont/Port Arthur areas. The initiative would combine Enterprise’s leadership position in the midstream energy sector with OLCV’s extensive experience in subsurface characterization and CO 2 sequestration. Enterprise would develop the CO 2 aggregation and transportation network utilizing a combination of new and existing pipelines along its expansive Gulf Coast footprint. OLCV, through its 1PointFive business unit, is developing sequestration hubs on the Gulf Coast and across the U.S., some of which are expected to be anchored by direct air capture facilities. The hubs will provide access to high quality pore space and efficient transportation infrastructure, bringing more options to emitters looking to explore viable carbon management strategies. Enterprise and OLCV have begun exploring the commercialization of the potential joint service offering with customers. Enterprise Announces Seven New Projects During Analyst and Investor Day On April 12, 2022, Enterprise hosted a meeting with securities analysts and investors where we announced seven new projects that we expect will be completed by 2025. The announced projects included the following (including their respective scheduled completion dates): • a 400 MMcf/d expansion of our Acadian Gas System (second quarter of 2023); • our Plant 6 natural gas processing plant in the Midland Basin (second quarter of 2023); • a twelfth NGL fractionator (“Frac XII”) in Chambers County, Texas (third quarter of 2023); • our Mentone II cryogenic natural gas processing plant (second half of 2023); • our Texas Western Products System, created by repurposing a portion of our Mid-America Pipeline System’s Rocky Mountain segment and adding westbound service to our Chaparral Pipeline business to transport refined products from the U.S. Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (second half of 2023); • an Ethane Terminal located along the coast between Corpus Christi, Texas and New Orleans, Louisiana (2025); and • an expansion of our Morgan’s Point terminal to increase ethylene export capacity (2023 and 2025). Enterprise Announces Acquisition of Navitas Midstream In January 2022, we announced that an affiliate of Enterprise entered into a definitive agreement to acquire Navitas Midstream Partners, LLC (“Navitas Midstream”) from an affiliate of Warburg Pincus LLC in a debt-free transaction for $3.25 billion in cash consideration (subject to adjustment in accordance with the agreement). Navitas Midstream’s assets include approximately 1,750 miles of pipelines and over 1.0 Bcf/d of cryogenic natural gas processing capacity. The purchase price was paid in cash at closing on February 17, 2022. We funded the cash consideration for this acquisition using proceeds from the issuance of short-term notes under our commercial paper program and cash on hand. See Note 12 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report for additional information regarding this acquisition. 40 Table of Contents Selected Energy Commodity Price Data The following table presents selected average index prices for natural gas and selected NGL and petrochemical products for the periods indicated: Polymer Refinery Indicative Gas Natural Normal Natural Grade Grade Processing Gas, Ethane, Propane, Butane, Isobutane, Gasoline, Propylene, Propylene, Gross Spread $/MMBtu $/gallon $/gallon $/gallon $/gallon $/gallon $/pound $/pound $/gallon (1) (2) (2) (2) (2) (2) (3) (3) (4) 2021 by quarter: 1st Quarter $2.71 $0.24 $0.89 $0.94 $0.93 $1.33 $0.73 $0.44 $0.38 2nd Quarter $2.83 $0.26 $0.87 $0.97 $0.98 $1.46 $0.67 $0.27 $0.41 3rd Quarter $4.02 $0.35 $1.16 $1.34 $1.34 $1.62 $0.82 $0.36 $0.51 4th Quarter $5.84 $0.39 $1.24 $1.46 $1.46 $1.82 $0.66 $0.33 $0.41 2021 Averages $3.85 $0.31 $1.04 $1.18 $1.18 $1.56 $0.72 $0.35 $0.43 2022 by quarter: 1st Quarter $4.96 $0.40 $1.30 $1.59 $1.60 $2.21 $0.63 $0.39 $0.55 (1) Natural gas prices are based on Henry-Hub Inside FERC commercial index prices as reported by Platts, which is a division of S&P Global, Inc. (2) NGL prices for ethane, propane, normal butane, isobutane and natural gasoline are based on Mont Belvieu, Texas Non-TET commercial index prices as reported by Oil Price Information Service by IHS Markit (“IHS”). (3) Polymer grade propylene prices represent average contract pricing for such product as reported by IHS. Refinery grade propylene (“RGP”) prices represent weighted-average spot prices for such product as reported by IHS. (4) The “Indicative Gas Processing Gross Spread” represents our generic estimate of the gross economic benefit from extracting NGLs from natural gas production based on certain pricing assumptions. Specifically, it is the amount by which the assumed economic value of a composite gallon of NGLs in Chambers County, Texas exceeds the value of the equivalent amount of energy in natural gas at Henry Hub, Louisiana. Our estimate of the indicative spread does not consider the operating costs incurred by a natural gas processing facility to extract the NGLs nor the transportation and fractionation costs to deliver the NGLs to market. In addition, the actual gas processing spread earned at each plant is further influenced by regional pricing and extraction dynamics. The weighted-average indicative market price for NGLs was $0.95 per gallon in the first quarter of 2022 versus $0.61 per gallon in the first quarter of 2021. The following table presents selected average index prices for crude oil for the periods indicated: WTI Midland Houston LLS Crude Oil, Crude Oil, Crude Oil Crude Oil, $/barrel $/barrel $/barrel $/barrel (1) (2) (2) (3) 2021 by quarter: 1st Quarter $57.84 $59.00 $59.51 $59.99 2nd Quarter $66.07 $66.41 $66.90 $67.95 3rd Quarter $70.56 $70.74 $71.17 $71.51 4th Quarter $77.19 $77.82 $78.27 $78.41 2021 Averages $67.92 $68.49 $68.96 $69.47 2022 by quarter: 1st Quarter $94.29 $96.43 $96.77 $96.77 (1) WTI prices are based on commercial index prices at Cushing, Oklahoma as measured by the NYMEX. (2) Midland and Houston crude oil prices are based on commercial index prices as reported by Argus. (3) Light Louisiana Sweet (“LLS”) prices are based on commercial index prices as reported by Platts. 41 Table of Contents Fluctuations in our consolidated revenues and cost of sales amounts are explained in large part by changes in energy commodity prices. An increase in our consolidated marketing revenues due to higher energy commodity sales prices may not result in an increase in gross operating margin or cash available for distribution, since our consolidated cost of sales amounts would also be expected to increase due to comparable increases in the purchase prices of the underlying energy commodities. The same type of relationship would be true in the case of lower energy commodity sales prices and purchase costs. We attempt to mitigate commodity price exposure through our hedging activities and the use of fee-based arrangements. See Note 14 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report and “ Quantitative and Qualitative Disclosures About Market Risk ” under Part I, Item 3 of this quarterly report for information regarding our commodity hedging activities. Impact of Inflation After being relatively moderate in recent years, inflation in the United States increased significantly in late 2021 into 2022. This rise in inflation, coupled with supply chain disruptions, labor shortages and increased commodity prices, has generally resulted in higher costs in 2022. However, to the extent that a rising cost environment impacts our results, there are typically offsetting benefits either inherent in our business or that result from other steps we take proactively to reduce the impact of inflation on our net operating results. These benefits include: (1) provisions included in our fee-based revenue contracts that offset cost increases in the form of rate escalations based on positive changes in the U.S. Consumer Price Index, Producer Price Index for Finished Goods or other factors; (2) provisions in other revenue contracts that enable us to pass through higher energy costs to customers in the form of gas, electricity and fuel rebills or surcharges; and (3) higher commodity prices, which generally enhance our results in the form of increased volumetric throughput and demand for our services. Additionally, we take measures to mitigate the impact of cost increases in certain commodities, including a portion of our electricity needs, using fixed-price, term purchase agreements. For these reasons, the increased cost environment, caused in part by inflation, has not had a material impact on our historical results of operations for the periods presented in this report. However, a significant or prolonged period of high inflation could adversely impact our results if costs were to increase at a rate greater than the increase in the revenues we receive. See “Capital Investments” within this Part I, Item 2 for a discussion of the impact of inflation on our capital investment decisions. Additionally, see Part II, Item 1A “Risk Factors - Changes in price levels could negatively impact our revenue, our expenses, or both, which could adversely affect our business.” 42 Table of Contents Income Statement Highlights The following table summarizes the key components of our consolidated results of operations for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Revenues $ 13,008 $ 9,155 Costs and expenses: Operating costs and expenses: Cost of sales 10,098 6,263 Other operating costs and expenses 757 715 Depreciation, amortization and accretion expenses 526 498 Asset impairment charges 14 66 Net losses attributable to asset sales and related matters 2 11 Total operating costs and expenses 11,397 7,553 General and administrative costs 62 56 Total costs and expenses 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 ) Other, net 3 1 Total other expense, net (316 ) (322 ) Income before income taxes 1,350 1,373 Provision for income taxes (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 Revenues The following table presents each business segment’s contribution to consolidated revenues for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 NGL Pipelines & Services: Sales of NGLs and related products $ 5,040 $ 3,006 Midstream services 714 578 Total 5,754 3,584 Crude Oil Pipelines & Services: Sales of crude oil 3,716 1,839 Midstream services 356 326 Total 4,072 2,165 Natural Gas Pipelines & Services: Sales of natural gas 880 1,335 Midstream services 269 252 Total 1,149 1,587 Petrochemical & Refined Products Services: Sales of petrochemicals and refined products 1,754 1,599 Midstream services 279 220 Total 2,033 1,819 Total consolidated revenues $ 13,008 $ 9,155 43 Table of Contents Total revenues for the first quarter of 2022 increased $ 3.9 billion when compared to the first quarter of 2021 primarily due to a $ 3.6 billion increase in marketing revenues. Revenues from the marketing of NGLs, petrochemicals and refined products increased a combined net $ 2.2 billion quarter-to-quarter primarily due to higher average sales prices, which accounted for a $ 3.1 billion increase, partially offset by lower sales volumes, which accounted for a $ 919 million decrease. Revenues from the marketing of crude oil increased $ 1.9 billion quarter-to-quarter primarily due to higher average sales prices, which accounted for a $ 1.3 billion increase, and higher sales volumes, which accounted for an additional $ 545 million increase. Revenues from the marketing of natural gas decreased a net $455 million quarter-to-quarter primary due to lower average sales prices, which accounted for a $534 million decrease, partially offset by higher sales volumes, which accounted for a $79 million increase. Revenues from midstream services for the first quarter of 2022 increased $ 242 million when compared to the first quarter of 2021. Revenues from our natural gas processing facilities increased $145 million quarter-to-quarter primarily due to higher market values for the equity NGLs we receive as non-cash consideration for processing services. Revenues from our terminal facilities increased $ 40 million quarter-to-quarter primarily due to higher deficiency and loading fee revenues. Revenues from our crude oil pipeline assets increased $30 million quarter-to-quarter primarily due to higher demand for crude oil transportation services. Lastly, revenues from our natural gas pipeline assets increased $ 16 million quarter-to-quarter primarily due to the addition of the Midland Basin Gathering system from the Navitas Midstream acquisition. Operating costs and expenses Total operating costs and expenses for the first quarter of 2022 increased $ 3.8 billion when compared to the first quarter of 2021. Cost of sales Cost of sales for the first quarter of 2022 increased $ 3.8 billion when compared to the first quarter of 2021. The cost of sales associated with our marketing of NGLs, petrochemicals and refined products increased a combined net $ 1.9 billion quarter-to-quarter primarily due to higher average purchase prices, which accounted for a $ 3.0 billion increase, partially offset by lower sales volumes, which accounted for a $ 1.1 billion decrease. The cost of sales associated with our marketing of crude oil increased $ 1.9 billion quarter-to-quarter primarily due to higher average purchase prices, which accounted for a $ 1.4 billion increase, and higher sales volumes, which accounted for an additional $ 527 million increase. Other operating costs and expenses Other operating costs and expenses for the first quarter of 2022 increased $ 42 million when compared to the first quarter of 2021 primarily due to higher utility costs. Depreciation, amortization and accretion expenses Depreciation, amortization and accretion expense for the first quarter of 2022 increased a combined $ 28 million when compared to the first quarter of 2021 primarily due to the addition of assets attributable to the Navitas Midstream acquisition, which accounted for $13 million of the quarter-to-quarter increase. The remainder of the quarter-to-quarter increase is due to assets placed into full or limited service since the first quarter of 2021 (the Gillis Lateral natural gas pipeline and the Baymark ethylene pipeline) and major maintenance activities accounted for under the deferral method. Asset impairment charges Non-cash asset impairment charges for the first quarter of 2022 decreased $ 52 m illion when compared to the first quarter of 2021 primarily due to a $43 million charge attributable to a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System and classified as held-for-sale at March 31, 2021 . General and administrative costs General and administrative costs for the first quarter of 2022 increased $ 6 million when compared to the first quarter of 2021 primarily due to higher employee compensation and professional services costs. Equity in income of unconsolidated affiliates Equity income from our unconsolidated affiliates for the first quarter of 2022 decreased $ 32 million when compared to the first quarter of 2021 primarily due to lower earnings from investments in crude oil pipelines. 44 Table of Contents Operating income Operating income for the first quarter of 2022 decreased $ 29 million when compared to the first quarter of 2021 due to the previously described quarter-to-quarter changes. Interest expense The following table presents the components of our consolidated interest expense for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Interest charged on debt principal outstanding $ 323 $ 327 Impact of interest rate hedging program, including related amortization 8 9 Interest costs capitalized in connection with construction projects (1) (17 ) (20 ) Other (2) 5 7 Total $ 319 $ 323 (1) We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase. Capitalized interest amounts become part of the historical cost of an asset and are charged to earnings (as a component of depreciation expense) on a straight-line basis over the estimated useful life of the asset once the asset enters its intended service. When capitalized interest is recorded, it reduces interest expense from what it would be otherwise. Capitalized interest amounts fluctuate based on the timing of when projects are placed into service, our capital investment levels and the interest rates charged on borrowings. (2) Primarily reflects facility commitment fees charged in connection with our revolving credit facilities and amortization of debt issuance costs. Interest charged on debt principal outstanding, which is a key driver of interest expense, decreased $ 4 million quarter-to-quarter primarily due to the effects of lower overall interest rates during the first quarter of 2022. Our weighted-average debt principal balance for the first quarters of 2022 and 2021 was $ 30.0 billion. For additional information regarding our debt obligations, see Note 7 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report. For a discussion of our capital projects, see “ Capital Investments ” within this Part I, Item 2. Income taxes Our provision for income taxes for the first quarter of 2022 increased $9 million when compared to the first quarter of 2021 primarily due to higher income tax expense related to state tax obligations under the Revised Texas Franchise Tax (the “Texas Margin Tax”). Business Segment Highlights 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. 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. 45 Table of Contents The following table presents gross operating margin by segment and total gross operating margin, a non-generally accepted accounting principle (“non-GAAP”) financial measure, for the periods indicated (dollars in millions): 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 (1) 2,264 2,303 Net adjustment for shipper make-up rights (6 ) 20 Total gross operating margin (non-GAAP) $ 2,258 $ 2,323 (1) Within the context of this table, total segment gross operating margin represents a subtotal and corresponds to measures similarly titled within our business segment disclosures found under Note 10 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report. Total gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges. Total 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. Segment gross operating margin for NGL Pipelines & Services and Crude Oil Pipelines & Services reflect adjustments for shipper make-up rights that are included in management’s evaluation of segment results. However, these adjustments are excluded from non-GAAP total gross operating margin. The GAAP financial measure most directly comparable to total gross operating margin is operating income. For a discussion of operating income and its components, see the previous section titled “ Income Statement Highlights ” within this Part I, Item 2. The following table presents a reconciliation of operating income to total gross operating margin for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Operating income $ 1,666 $ 1,695 Adjustments to reconcile operating income to total 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 Total gross operating margin (non-GAAP) $ 2,258 $ 2,323 (1) Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin. Each of our business segments benefits from the supporting role of our marketing activities. The main purpose of our marketing activities is to support the utilization and expansion of assets across our midstream energy asset network by increasing the volumes handled by such assets, which results in additional fee-based earnings for each business segment. In performing these support roles, our marketing activities also seek to participate in supply and demand opportunities as a supplemental source of gross operating margin for us. The financial results of our marketing efforts fluctuate due to changes in volumes handled and overall market conditions, which are influenced by current and forward market prices for the products bought and sold. 46 Table of Contents NGL Pipelines & Service s The following table presents segment gross operating margin and selected volumetric data for the NGL Pipelines & Services segment for the periods indicated (dollars in millions, volumes as noted): For the Three Months Ended March 31, 2022 2021 Segment gross operating margin: Natural gas processing and related NGL marketing activities $ 415 $ 294 NGL pipelines, storage and terminals 566 627 NGL fractionation 244 165 Total $ 1,225 $ 1,086 Selected volumetric data: NGL pipeline transportation volumes (MBPD) 3,568 3,276 NGL marine terminal volumes (MBPD) 642 652 NGL fractionation volumes (MBPD) 1,317 1,190 Equity NGL production volumes (MBPD) (1) 155 162 Fee-based natural gas processing volumes (MMcf/d) (2,3) 4,894 4,018 (1) Represents the NGL volumes we earn and take title to in connection with our processing activities. (2) Volumes reported correspond to the revenue streams earned by our natural gas processing plants. (3) Fee-based natural gas processing volumes are measured at either the wellhead or plant inlet in MMcf/d. Natural gas processing and related NGL marketing activities Gross operating margin from natural gas processing and related NGL marketing activities for the first quarter of 2022 increased $121 million when compared to the first quarter of 2021. Gross operating margin from our Delaware Basin natural gas processing facilities, which represent our legacy Permian Basin processing facilities, increased $ 64 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging). Fee-based natural gas processing volumes at these facilities increased 187 MMcf/d and equity NGL production decreased 24 MBPD quarter-to-quarter. Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a combined $62 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities). On a combined basis, fee-based natural gas processing volumes decreased 44 MMcf/d and equity NGL production increased 7 MBPD quarter-to-quarter. Gross operating margin from our South Texas natural gas processing facilities increased $ 50 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities). Fee-based natural gas processing volumes increased 95 MMcf/d and equity NGL production decreased 2 MBPD quarter-to-quarter. Our Midland Basin natural gas processing facilities, which represent the natural gas processing facilities we acquired in February 2022 as part of our acquisition of Navitas Midstream, generated gross operating margin of $42 million. Fee-based natural gas processing volumes and equity NGL production at these facilities were 854 MMcf/d and 19 MBPD, respectively, following the acquisition date. Our Midland Basin natural gas gathering activities are discussed under the Natural Gas Pipelines & Services segment. Gross operating margin from our Louisiana and Mississippi natural gas processing facilities increased $ 9 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities). Fee-based natural gas processing volumes and equity NGL production decreased 233 MMcf/d and 2 MBPD, respectively, quarter-to-quarter (net to our interest). 47 Table of Contents Gross operating margin from our NGL marketing activities decreased $ 108 million quarter-to-quarter primarily due to lower non-cash, mark-to-market earnings, which accounted for a $ 56 million decrease, lower average sales margins, which accounted for a $46 million decrease, and lower sales volumes, which accounted for an additional $10 million decrease. The quarter-to-quarter decrease in gross operating margin can be attributed primarily to lower earnings from NGL marketing strategies that optimize our transportation, storage and plant assets. NGL pipelines, storage and terminals Gross operating margin from our NGL pipelines, storage and terminal assets during the first quarter of 2022 decreased $ 61 million when compared to the first quarter of 2021. Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) decreased $27 million quarter-to-quarter primarily due to lower average loading fees. A number of our pipelines, including the Mid-America Pipeline System, Seminole NGL Pipeline, Chaparral NGL Pipeline, and Shin Oak NGL Pipeline, serve Permian Basin and/or Rocky Mountain producers. On a combined basis, gross operating margin from these pipelines decreased a net $ 26 million quarter-to-quarter primarily due to lower average transportation fees, which accounted for a $32 million decrease, and lower deficiency fees as a result of certain contracts associated with the Rocky Mountain segment of our Mid-America Pipeline System reaching their termination date in September 2021, which accounted for an additional $26 million decrease, partially offset by higher transportation volumes of 249 MBPD (net to our interest), which accounted for a $37 million increase. Gross operating margin from our Dixie Pipeline and related terminals decreased a combined $ 4 million quarter-to-quarter primarily due to lower transportation volumes of 19 MBPD. Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $12 million quarter-to-quarter primarily due to higher average loading fees. NGL fractionation Gross operating margin from NGL fractionation during the first quarter of 2022 increased $ 79 million when compared to the first quarter of 2021. Gross operating margin from our Chambers County NGL fractionation complex increased a net $ 54 million quarter-to-quarter primarily due to higher fractionation volumes of 121 MBPD (net to our interest), which accounted for a $ 59 million increase, and higher ancillary service revenues, which accounted for an additional $ 12 million increase, partially offset by higher utility and other operating costs, which accounted for a $ 16 million decrease. Gross operating margin from our Hobbs NGL fractionator increased $ 8 million quarter-to-quarter primarily due to higher ancillary service revenues, which accounted for a $5 million increase, and higher fractionation volumes of 11 MBPD, which accounted for an additional $3 million increase. The natural gasoline hydrotreater at our Chambers County complex, which was placed into service in October 2021, generated gross operating margin of $7 million. 48 Table of Contents Crude Oil Pipelines & Services The following table presents segment gross operating margin and selected volumetric data for the Crude Oil Pipelines & Services segment for the periods indicated (dollars in millions, volumes as noted): For the Three Months Ended March 31, 2022 2021 Segment gross operating margin: Midland-to-ECHO System and related business activities $ 101 $ 79 Other crude oil pipelines, terminals and related marketing results 314 321 Total $ 415 $ 400 Selected volumetric data: Crude oil pipeline transportation volumes (MBPD) 2,198 1,935 Crude oil marine terminal volumes (MBPD) 796 572 Gross operating margin from our Crude Oil Pipelines & Services segment for the first quarter of 2022 increased $15 million when compared to the first quarter of 2021. Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $ 22 million quarter-to-quarter primarily due to higher transportation volumes of 166 MBPD (net to our interest). Gross operating margin from our Midland and ECHO terminals increased a combined $21 million quarter-to-quarter primarily due to lower operating costs, which accounted for a $13 million increase, and higher ancillary service and other revenues, which accounted for an additional $6 million increase. Gross operating margin from our West Texas Pipeline System increased $16 million quarter-to-quarter primarily due to higher transportation volumes of 110 MBPD. Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) decreased $ 21 million quarter-to-quarter primarily due to higher non-cash, mark-to-market losses during the first quarter of 2022. Gross operating margin from our South Texas Crude Oil Pipeline System decreased $ 9 million quarter-to-quarter primarily due to lower transportation volumes of 41 MBPD. Gross operating margin from our equity investment in the Seaway Pipeline decreased $ 8 million quarter-to-quarter primarily due to lower transportation volumes of 11 MBPD quarter-to-quarter (net to our interest). Gross operating margin from crude oil activities at EHT decreased $ 7 million quarter-to-quarter primarily due to lower storage revenues, which accounted for a $4 million decrease, and higher utility and other operating costs, which accounted for an additional $3 million decrease. Crude oil terminal volumes at EHT increased 256 MBPD quarter-to-quarter. Natural Gas Pipelines & Services The following table presents segment gross operating margin and selected volumetric data for the Natural Gas Pipelines & Services segment for the periods indicated (dollars in millions, volumes as noted): For the Three Months Ended March 31, 2022 2021 Segment gross operating margin $ 220 $ 535 Selected volumetric data: Natural gas pipeline transportation volumes (BBtus/d) 16,416 13,704 Gross operating margin from our Natural Gas Pipelines & Services segment for the first quarter of 2022 decreased $315 million compared to the first quarter of 2021. 49 Table of Contents Gross operating margin from our natural gas marketing activities decreased $ 316 million quarter-to-quarter primarily due to lower average sales margins. The first quarter of 2021 results reflect increased natural gas sales as a result of our efforts to meet the needs of electricity generators, natural gas utilities and industrial customers during the winter storms that impacted Texas and the southern U.S. in February 2021. Gross operating margin from our Delaware Basin Gathering System, which represents our legacy Permian Basin gathering system, decreased $ 23 million quarter-to-quarter primarily due to lower condensate sales. Natural gas gathering volumes on our Delaware Basin Gathering System increased 1 29 BBtus/d quarter-to-quarter. Our Midland Basin Gathering System, which represents the natural gas gathering system we acquired in February 2022 as part of our acquisition of Navitas Midstream, generated gross operating margin of $6 million following the acquisition date. Our Midland Basin natural gas processing activities are discussed under the NGL Pipelines & Services segment. On a combined basis, gross operating margin from our Jonah Gathering System, Piceance Basin Gathering System, and San Juan Gathering System in the Rocky Mountains increased a net $6 million quarter-to-quarter primarily due to higher average gathering fees, which accounted for a $7 million increase, and higher condensate sales, which accounted for an additional $5 million increase, partially offset by lower gathering volumes of 280 BBtus/d, which accounted for an $8 million decrease. Gross operating margin from our East Texas Gathering System increased $5 million quarter-to-quarter primarily due to higher gathering volumes of 320 BBtus/d. Gross operating margin from our Acadian Gas System and Haynesville Gathering System increased a combined $ 4 million quarter-to-quarter primarily due to higher transportation volumes. On a combined basis, transportation volumes increased 793 BBtus/d primarily due to the Gillis Lateral pipeline, which was placed into service in December 2021. Petrochemical & Refined Products Services The following table presents segment gross operating margin and selected volumetric data for the Petrochemical & Refined Products Services segment for the periods indicated (dollars in millions, volumes as noted): For the Three Months Ended March 31, 2022 2021 Segment gross operating margin: Propylene production and related activities $ 210 $ 146 Butane isomerization and related operations 26 11 Octane enhancement and related plant operations 60 16 Refined products pipelines and related activities 71 102 Ethylene exports and related activities 32 6 Marine transportation and other services 5 1 Total $ 404 $ 282 Selected volumetric data: Propylene production volumes (MBPD) 105 83 Butane isomerization volumes (MBPD) 90 63 Standalone deisobutanizer (“DIB”) processing volumes (MBPD) 151 139 Octane enhancement and related plant sales volumes (MBPD) (1) 34 29 Pipeline transportation volumes, primarily refined products and petrochemicals (MBPD) 745 749 Marine terminal volumes, primarily refined products and petrochemicals (MBPD) 208 266 (1) Reflects aggregate sales volumes for our octane enhancement and iBDH facilities located at our Chambers County complex and our HPIB facility located adjacent to the Houston Ship Channel. 50 Table of Contents Propylene production and related activities Gross operating margin from propylene production and related activities for the first quarter of 2022 increased $ 64 million when compared to the first quarter of 2021. Gross operating margin from our Chambers County propylene production facilities increased a combined net $63 million quarter-to-quarter primarily due to higher sales volumes, which accounted for a $48 million increase, and higher average sales margins, which accounted for an additional $45 million increase, partially offset by higher utility, maintenance and other operating costs, which accounted for a $29 million decrease, and lower average processing fees, which accounted for an additional $8 million decrease. Propylene and associated by-product production volumes at these facilities increased a combined 24 MBPD quarter-to-quarter (net to our interest) primarily due to planned major maintenance activities at our PDH 1 facility during the first quarter of 2021. Butane isomerization and related operations Gross operating margin from butane isomerization and related operations increased a net $ 15 million quarter-to-quarter primarily due to higher isomerization volumes, which accounted for a $9 million increase, and higher by-product sales volumes and average prices, which accounted for an additional $10 million increase, partially offset by higher utility and other operating costs, which accounted for a $2 million decrease. Octane enhancement and related plant operations Gross operating margin from our octane enhancement and related plant operations increased $ 44 million quarter-to-quarter primarily due to higher sales volumes. The quarter-to-quarter increase in sales volumes at these facilities is primarily due to planned major maintenance activities during the first quarter of 2021, which were completed in the last week of January 2021 for our HPIB plant and the beginning of May 2021 for our octane enhancement plant. Refined products pipelines and related activities Gross operating margin from refined products pipelines and related activities for the first quarter of 2022 decreased $ 31 million when compared to the first quarter of 2021. Gross operating margin from our refined products marketing activities decreased a net $ 36 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $64 million decrease, partially offset by higher non-cash mark-to-market earnings, which accounted for a $28 million increase. Ethylene exports and related activities Gross operating margin from ethylene exports and related activities during the first quarter of 2022 increased $ 26 million when compared to the first quarter of 2021. Gross operating margin from our ethylene export terminal increased $ 15 million quarter-to-quarter primarily due to higher export volumes of 16 MBPD (net to our interest). Gross operating margin from our other ethylene activities increased $ 11 million quarter-to-quarter primarily due to higher transportation volumes of 45 MBPD (net to our interest), which accounted for a $ 5 million increase, and higher storage fees, which accounted for an additional $ 4 million increase. Marine transportation and other services Gross operating margin from marine transportation and other services increased $ 4 million quarter-to-quarter primarily due to higher average fees. 51 Table of Contents Liquidity and Capital Resources Based on current market conditions (as of the filing date of this quarterly report), we believe that the Partnership and its consolidated businesses will have sufficient liquidity, cash flow from operations and access to capital markets to fund their capital investments and working capital needs for the reasonably foreseeable future. At March 31, 2022, we had $ 3.9 billion of consolidated liquidity, which was comprised of $ 3.1 billion of available borrowing capacity under EPO’s revolving credit facilities, $500 million of available capacity under a delayed draw term loan agreement (the “March 2022 Delayed Draw Term Loan Agreement”) and $ 231 million of unrestricted cash on hand. As a result of EPO’s election to not borrow any amount under the March 2022 Delayed Draw Term Loan Agreement by April 30, 2022, the agreement automatically terminated on such date, in accordance with its terms. We may issue debt and equity securities to assist us in meeting our future funding and liquidity requirements, including those related to capital investments. We have a universal shelf registration statement on file with the SEC which allows the Partnership and EPO to issue an unlimited amount of equity and debt securities, respectively. Enterprise Declares Cash Distribution for First Quarter of 2022 On April 7 , 2022, we announced that the Board declared a quarterly cash distribution of $0.465 per common unit, or $1.86 per 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 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. Consolidated Debt At March 31, 2022, the average maturity of EPO’s consolidated debt obligations was approximately 20.7 years. The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2022 for the years indicated (dollars in millions): 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. 52 Table of Contents For additional information regarding our consolidated debt obligations, see Note 7 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report. Credit Ratings As of May 10 , 2022, the investment-grade credit ratings of EPO’s long-term senior unsecured debt securities were BBB+ from Standard and Poor’s, Baa1 from Moody’s and BBB+ from Fitch Ratings. In addition, the credit ratings of EPO’s short-term senior unsecured debt securities were A-2 from Standard and Poor’s, P-2 from Moody’s and F-2 from Fitch Ratings. EPO’s credit ratings reflect only the view of a rating agency and should not be interpreted as a recommendation to buy, sell or hold any of our securities. A credit rating can be revised upward or downward or withdrawn at any time by a rating agency, if it determines that circumstances warrant such a change. A credit rating from one rating agency should be evaluated independently of credit ratings from other rating agencies. Common Unit Repurchases Under 2019 Buyback Program In January 2019, we announced that the Board had approved a $2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides the Partnership with an additional method to return capital to investors. The Partnership did not repurchase common units through open market purchases during the first quarter of 2022. As of March 31, 2022, the remaining available capacity under the 2019 Buyback Program was $ 1.5 billion. Cash Flow Statement Highlights The following table summarizes our consolidated cash flows from operating, investing and financing activities for the periods indicated (dollars in millions). For the Three Months Ended March 31, 2022 2021 Net cash flows provided by operating activities $ 2,145 $ 2,023 Cash used in investing activities 3,532 657 Cash used in financing activities 1,125 2,190 Net cash flows provided by operating activities are largely dependent on earnings from our consolidated business activities. Changes in energy commodity prices may impact the demand for natural gas, NGLs, crude oil, petrochemicals and refined products, which could impact sales of our products and the demand for our midstream services. Changes in demand for our products and services may be caused by other factors, including prevailing economic conditions, reduced demand by consumers for the end products made with hydrocarbon products, increased competition, public health emergencies, adverse weather conditions and government regulations affecting prices and production levels. We may also incur credit and price risk to the extent customers do not fulfill their contractual obligations to us in connection with our marketing activities and long-term take-or-pay agreements. For a more complete discussion of these and other risk factors pertinent to our business, see “ Risk Factors ” included under Part I, Item 1A of the 2021 Form 10-K and Part II, Item 1A of this quarterly report. For additional information regarding our cash flow amounts, please refer to the Unaudited Condensed Statements of Consolidated Cash Flows included under Part I, Item 1 of this quarterly report. The following information highlights significant quarter-to-quarter fluctuations in our consolidated cash flow amounts: Operating activities Net cash flows provided by operating activities for the first quarter of 2022 increased a net $ 122 million when compared to the first quarter of 2021 primarily due to: • a $ 476 million quarter-to-quarter increase attributable to the return of working capital employed in our marketing activities; and • a $ 33 million quarter-to-quarter increase resulting from higher partnership earnings (determined by adjusting our $ 32 million quarter-to-quarter decrease in net income for changes in the non-cash items identified on our Unaudited Condensed Statements of Consolidated Cash Flows); partially offset by 53 Table of Contents • a $ 384 mill ion quarter-to-quarter decrease primarily due to the timing of cash receipts and payments related to operations. For information regarding significant quarter-to-quarter changes in our consolidated net income and underlying segment results, see “ Income Statement Highlights ” and “ Business Segment Highlights ” within this Part I, Item 2. Investing activities Cash used in investing activities during the first quarter of 2022 increased a net $ 2.9 billion when compared to the first quarter of 2021 primarily due to: • a net $ 3.2 billion cash outflow in February 2022 in connection with the acquisition of Navitas Midstream; partially offset by • a $ 330 million quarter-to-quarter decrease in investments for property, plant and equipment (see “ Capital Investments ” within this Part I, Item 2 for additional information). Financing activities Cash used in financing activities during the first quarter of 2022 decreased $ 1.1 billion when compared to the first quarter of 2021. The quarter-to-quarter decrease was primarily due to a net cash outflow of $ 20 million related to debt transactions during the first quarter of 2022 compared to a net cash outflow of $ 1.1 billion during the first quarter of 2021. We repaid $ 1.4 billion aggregate principal amount of senior notes during the first quarter of 2022 compared to repayments of $ 1.3 billion during the first quarter of 2021. In addition, net issuances of short-term notes under EPO’s commercial paper program were $1.4 billion during the first quarter of 2022 compared to $ 115 million during the first quarter of 2021. Non-GAAP Cash Flow Measures Distributable Cash Flow Our partnership agreement requires us to make quarterly distributions to our common unitholders of all available cash, after any cash reserves established by Enterprise GP in its sole discretion. Cash reserves include those for the proper conduct of our business, including those for capital investments, debt service, working capital, operating expenses, common unit repurchases, commitments and contingencies and other amounts. The retention of cash allows us to reinvest in our growth and reduce our future reliance on the equity and debt capital markets. We measure available cash by reference to distributable cash flow (“DCF”), which is a non-GAAP cash flow measure. DCF is an important financial measure for our common unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flows at a level that can sustain our declared quarterly cash distributions. DCF is also a quantitative standard used by the investment community with respect to publicly traded partnerships since the value of a partnership unit is, in part, measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder. Our management compares the DCF we generate to the cash distributions we expect to pay our common unitholders. Using this metric, management computes our distribution coverage ratio. Our calculation of DCF may or may not be comparable to similarly titled measures used by other companies. Based on the level of available cash each quarter, management proposes a quarterly cash distribution rate to the Board, which has sole authority in approving such matters. Enterprise GP has a non-economic ownership interest in the Partnership and is not entitled to receive any cash distributions from it based on incentive distribution rights or other equity interests. Our use of DCF for the limited purposes described above and in this quarterly report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure to DCF. For a discussion of net cash flows provided by operating activities, see “ Cash Flow Statement Highlights ” within this Part I, Item 2. 54 Table of Contents The following table summarizes our calculation of DCF for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Net income attributable to common unitholders (GAAP) (1) $ 1,296 $ 1,341 Adjustments to net income attributable to common unitholders to derive DCF (addition or subtraction indicated by sign): Depreciation, amortization and accretion expenses 551 525 Cash distributions received from unconsolidated affiliates (2) 120 131 Equity in income of unconsolidated affiliates (117 ) (149 ) Asset impairment charges 14 66 Change in fair market value of derivative instruments 42 (16 ) Deferred income tax expense 9 5 Sustaining capital expenditures (3) (75 ) (144 ) Other, net (4) (14 ) (103 ) Operational DCF (5) $ 1,826 $ 1,656 Proceeds from asset sales 11 6 Monetization of interest rate derivative instruments accounted for as cash flow hedges – 75 DCF (non-GAAP) $ 1,837 $ 1,737 Cash distributions paid to common unitholders with respect to period, including distribution equivalent rights on phantom unit awards $ 1,023 $ 991 Cash distribution per common unit declared by Enterprise GP with respect to period (6) $ 0.4650 $ 0.4500 Total DCF retained by the Partnership with respect to period (7) $ 814 $ 746 Distribution coverage ratio (8) 1.8 x 1.8 x (1) For a discussion of the primary drivers of changes in our comparative income statement amounts, see “ Income Statement Highlights ” within this Part I, Item 2. (2) Reflects aggregate distributions received from unconsolidated affiliates attributable to both earnings and the return of capital. (3) Sustaining capital expenditures include cash payments and accruals applicable to the period. (4) The first quarter of 2021 includes $107 million of trade accounts receivable that we do not expect to collect in the normal billing cycle. (5) Represents DCF before proceeds from asset sales and the monetization of interest rate derivative instruments accounted for as cash flow hedges. (6) See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report for information regarding our cash distributions declared with respect to the periods indicated. (7) Cash retained by the Partnership may be used for capital investments, debt service, working capital, operating expenses, common unit repurchases, commitments and contingencies and other amounts. The retention of cash reduces our reliance on the capital markets. (8) Distribution coverage ratio is determined by dividing DCF by total cash distributions paid to common unitholders and in connection with distribution equivalent rights with respect to the period. 55 Table of Contents The following table presents a reconciliation of net cash flows provided by operating activities to DCF for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Net cash flows provided by operating activities (GAAP) $ 2,145 $ 2,023 Adjustments to reconcile net cash flows provided by operating activities to DCF (addition or subtraction indicated by sign): Net effect of changes in operating accounts (191 ) (99 ) Sustaining capital expenditures (75 ) (144 ) Distributions received from unconsolidated affiliates attributable to the return of capital 11 19 Proceeds from asset sales 11 6 Net income attributable to noncontrolling interests (34 ) (21 ) Monetization of interest rate derivative instruments accounted for as cash flow hedges – 75 Other, net (30 ) (122 ) DCF (non-GAAP) $ 1,837 $ 1,737 Capital Investments We have approximately $ 4.6 billion of growth capital projects scheduled to be completed by the end of 2025 including the following projects (including their respective scheduled completion dates): • natural gas gathering expansion projects in the Delaware and Midland Basins (2022 and 2023); • our PDH 2 facility (second quarter of 2023); • a 400 MMcf/d expansion of our Acadian Gas System (second quarter of 2023); • our Plant 6 natural gas processing plant in the Midland Basin (second quarter of 2023); • a twelfth NGL fractionator (“Frac XII”) in Chambers County, Texas (third quarter of 2023); • our Mentone II cryogenic natural gas processing plant (second half of 2023); • our Texas Western Products System, created by repurposing a portion of our Mid-America Pipeline System’s Rocky Mountain segment and adding westbound service to our Chaparral Pipeline business to transport refined products from the U.S. Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (second half of 2023); • an Ethane Terminal located along the coast between Corpus Christi, Texas and New Orleans, Louisiana (2025); and • an expansion of our Morgan’s Point terminal to increase ethylene export capacity (2023 and 2025). In February 2022, we acquired Navitas Midstream from an affiliate of Warburg Pincus LLC for $3.2 billion in net cash consideration, which was funded using proceeds from the issuance of short-term notes under our commercial paper program and cash on hand. Shortly after closing on this transaction, we completed construction of the Leiker Plant and placed it into service in March 2022. Based on information currently available, we expect our total capital investments for 2022, net of contributions from noncontrolling interests, to approximate $ 1.9 billion, which reflects growth capital investments of $ 1.5 billion and sustaining capital expenditures of $ 350 million. These amounts do not include capital investments associated with our proposed deep-water offshore crude oil terminal (the Sea Port Oil Terminal, or SPOT), which remains subject to governmental approvals. We currently anticipate receiving approval for SPOT during the second half of 2022; however, we can give no assurance as to whether the project will ultimately be approved or the timing of such decision. 56 Table of Contents Our forecast of capital investments is dependent upon our ability to generate the required funds from either operating cash flows or other means, including borrowings under debt agreements, the issuance of additional equity and debt securities, and potential divestitures. We may revise our forecast of capital investments due to factors beyond our control, such as adverse economic conditions, weather-related issues and changes in supplier prices resulting from raw material or labor shortages, supply chain disruptions or inflation. Furthermore, our forecast of capital investments may change over time based on future decisions by management, which may include changing the scope or timing of projects or cancelling projects altogether. Our success in raising capital, having the ability to increase revenues commensurate with cost increases and our ability to partner with other companies to share project costs and risks, continue to be significant factors in determining how much capital we can invest. We believe our access to capital resources is sufficient to meet the demands of our current and future growth needs and, although we currently expect to make the forecast capital investments noted above, we may revise our plans in response to changes in economic and capital market conditions. The following table summarizes our capital investments for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 2021 Capital investments for property, plant and equipment: (1) Growth capital projects (2) $ 265 $ 573 Sustaining capital projects (3) 84 106 Total $ 349 $ 679 Cash used for business combinations, net (4) $ 3,204 $ – Investments in unconsolidated affiliates $ – $ 1 (1) Growth and sustaining capital amounts presented in the table above are presented on a cash basis. In total, these amounts represent “Capital expenditures” as presented on our Unaudited Condensed Statements of Consolidated Cash Flows. (2) Growth capital projects either (a) result in new sources of cash flow due to enhancements of or additions to existing assets (e.g., additional revenue streams, cost savings resulting from debottlenecking of a facility, etc.) or (b) expand our asset base through construction of new facilities that will generate additional revenue streams and cash flows. (3) Sustaining capital projects are capital expenditures (as defined by GAAP) resulting from improvements to existing assets. Such expenditures serve to maintain existing operations but do not generate additional revenues or result in significant cost savings. Sustaining capital expenditures include the costs of major maintenance activities at our reaction-based plants, which are accounted for using the deferral method. (4) Amount for the three months ended March 31, 2022 represents net cash used for the acquisition of Navitas Midstream, which closed on February 17, 2022. Comparison of First Quarter of 2022 with the First Quarter of 2021 In total, investments in growth capital projects decreased $308 million quarter-to-quarter primarily due to the following: • completion of projects at our Chambers County complex (e.g., our natural gasoline hydrotreater), which accounted for a $63 million decrease; • completion of pipeline projects connecting our Chambers County complex with gulf coast assets, which accounted for a $41 million decrease; • lower investments in projects attributable to our ethylene business, which accounted for a $29 million decrease; • completion of projects associated with crude oil pipelines (e.g., expansion projects involving the Midland-to-ECHO System and related crude oil infrastructure supporting Permian Basin producers), which accounted for a $28 million decrease; and • lower investments in natural gas pipelines and related infrastructure in support of East Texas and Louisiana producers, which accounted for a $22 million decrease. 57 Table of Contents Investments attributable to sustaining capital projects decreased $22 million quarter-to-quarter primarily due to lower major maintenance activities performed at certain of our reaction-based plants (PDH 1, octane enhancement and HPIB facilities). These costs accounted for $69 million of the quarter-to-quarter decrease in sustaining capital investments, which was partially offset by changes in the timing and cost of pipeline integrity and similar projects. Product Purchase Commitments We have long-term 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. Critical Accounting Policies and Estimates A discussion of our critical accounting policies and estimates is included in our 2021 Form 10-K. The following types of estimates, in our opinion, are subjective in nature, require the exercise of professional judgment and involve complex analysis: • depreciation methods and estimated useful lives of property, plant and equipment; • measuring recoverability of long-lived assets and fair value of equity method investments; • valuation and amortization methods of customer relationships and contract-based intangible assets; • methods we employ to measure the fair value of goodwill and related assets; and • the use of estimates for revenue and expenses. When used to prepare our Unaudited Condensed Consolidated Financial Statements, the foregoing types of estimates are based on our current knowledge and understanding of the underlying facts and circumstances. Such estimates may be revised as a result of changes in the underlying facts and circumstances. Subsequent changes in these estimates may have a significant impact on our consolidated financial position, results of operations and cash flows. Other Matters Parent-Subsidiary Guarantor Relationship The Partnership (the “Parent Guarantor”) has guaranteed the payment of principal and interest on the consolidated debt obligations of EPO (the “Subsidiary Issuer”), with the exception of the remaining debt obligations of TEPPCO Partners, L.P. (collectively, the “Guaranteed Debt”). If EPO were to default on any of its Guaranteed Debt, the Partnership would be responsible for full and unconditional repayment of such obligations. At March 31, 2022, the total amount of Guaranteed Debt was $ 30.0 billion, which was comprised of $ 27.2 billion of EPO’s senior notes, $ 2.6 billion of EPO’s junior subordinated notes and $ 220 million of related accrued interest. The Partnership’s guarantees of EPO’s senior note obligations, commercial paper notes and borrowings under bank credit facilities represent unsecured and unsubordinated obligations of the Partnership that rank equal in right of payment to all other existing or future unsecured and unsubordinated indebtedness of the Partnership. In addition, these guarantees effectively rank junior in right of payment to any existing or future indebtedness of the Partnership that is secured and unsubordinated, to the extent of the assets securing such indebtedness. 58 Table of Contents The Partnership’s guarantees of EPO’s junior subordinated notes represent unsecured and subordinated obligations of the Partnership that rank equal in right of payment to all other existing or future subordinated indebtedness of the Partnership and senior in right of payment to all existing or future equity securities of the Partnership. The Partnership’s guarantees of EPO’s junior subordinated notes effectively rank junior in right of payment to (i) any existing or future indebtedness of the Partnership that is secured, to the extent of the assets securing such indebtedness and (ii) all other existing or future unsecured and unsubordinated indebtedness of the Partnership. The Partnership may be released from its guarantee obligations only in connection with EPO’s exercise of its legal or covenant defeasance options as described in the underlying agreements. Selected Financial Information of Obligor Group The following tables present summarized financial information of the Partnership (as Parent Guarantor) and EPO (as Subsidiary Issuer) on a combined basis (collectively, the “Obligor Group”), after the elimination of intercompany balances and transactions among the Obligor Group. In accordance with Rule 13.01 of Regulation S-X, the summarized financial information of the Obligor Group excludes the Obligor Group’s equity in income and investments in the consolidated subsidiaries of EPO that are not party to the guarantee obligations (the “Non-Obligor Subsidiaries”). The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $ 48.8 billion at March 31, 2022. The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the first quarter of 2022 was $ 1.3 billion. Although the net assets and earnings of the Non-Obligor Subsidiaries are not directly available to the holders of the Guaranteed Debt to satisfy the repayment of such obligations, there are no significant restrictions on the ability of the Non-Obligor Subsidiaries to pay distributions or make loans to EPO or the Partnership. EPO exercises control over the Non-Obligor Subsidiaries. We continue to believe that the unaudited condensed consolidated financial statements of the Partnership presented under Part I, Item 1 of this quarterly report provide a more appropriate view of our credit standing. Our investment grade credit ratings are based on the Partnership’s consolidated financial statements and not the Obligor Group’s financial information presented below. The following table presents summarized balance sheet information for the combined Obligor Group at the dates indicated (dollars in millions): Selected asset information: March 31, 2022 December 31, 2021 Current receivables from Non-Obligor Subsidiaries $ 662 $ 358 Other current assets 6,141 7,994 Long-term receivables from Non-Obligor Subsidiaries 187 187 Other noncurrent assets, excluding investments in Non-Obligor Subsidiaries of $ 48.8 billion at March 31, 2022 and $45.9 billion at December 31, 2021 8,874 8,791 Selected liability information: Current portion of Guaranteed Debt, including interest of $ 220 million at March 31, 2021 and $453 million at December 31, 2021 $ 2,849 $ 1,853 Current payables to Non-Obligor Subsidiaries 1,924 1,829 Other current liabilities 5,925 4,743 Noncurrent portion of Guaranteed Debt, principal only 27,157 28,407 Noncurrent payables to Non-Obligor Subsidiaries ‒ 27 Other noncurrent liabilities 79 48 Mezzanine equity of Obligor Group: Preferred units $ 49 $ 49 59 Table of Contents The following table presents summarized income statement information for the combined Obligor Group for the periods indicated (dollars in millions): For the Three Months Ended March 31, 2022 For the Twelve Months Ended December 31, 2021 Revenues from Non-Obligor Subsidiaries $ 2,244 $ 13,114 Revenues from other sources 6,855 16,676 Operating income of Obligor Group 284 1,490 Net income (loss) of Obligor Group excluding equity in earnings of Non-Obligor Subsidiaries of $ 1.3 billion for the three months ended March 31, 2022 and $4.5 billion for the twelve months ended December 31, 2021 (50 ) 145 Related Party Transactions For information regarding our related party transactions, see Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report.