What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-10 · 279 added, 139 removed, 479 unchanged (47% of the section changed)

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RESULTS OF OPERATIONS.

For the Three Months Ended March 31, 2022 and 2021

For the Three and Six Months Ended June 30, 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.

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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.

This quarterly report on Form 10-Q for the six months ended June 30, 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.

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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.

EPCO, together with its privately held affiliates, owned approximately 32.2% of the Partnership’s common units outstanding at June 30, 2022.

As generally used in the energy industry and in this quarterly report, the acronyms below have the following meanings:

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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.

As used in this quarterly report, the phrase “quarter-to-quarter” means the second quarter of 2022 compared to the second quarter of 2021.

Likewise, the phrase “period-to-period” means the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Overview of Business

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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 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 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);

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

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

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Recent Developments

Enterprise Announces Three Expansions in the Permian Basin

In August 2022, we announced three new projects to support ongoing production growth in the Permian Basin, which are all expected to be completed during the first half of 2024.

The announcement included the following projects (including their respective scheduled completion dates):

our Plant 7 natural gas processing plant in the Midland Basin (first quarter of 2024);

our Mentone III cryogenic natural gas processing plant (first quarter of 2024);

a 275 MBPD expansion of our Shin Oak NGL Pipeline (first half of 2024).

Enterprise and OLCV Sign Letter of Intent for Gulf Coast CO 2 Transportation and Sequestration Project

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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 Mentone II cryogenic natural gas processing plant (fourth quarter 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);

Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (fourth quarter of 2023);

an Ethane Terminal located along the coast between Corpus Christi, Texas and New Orleans, Louisiana (2025);

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2022 by quarter:

2022 Averages

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.

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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 weighted-average indicative market price for NGLs was $1.06 per gallon in the second quarter of 2022 versus $0.64 per gallon in the second quarter of 2021.

Likewise, the weighted-average indicative market price for NGLs was $1.01 per gallon during the six months ended June 30, 2022 compared to $0.63 per gallon during the same period in 2021.

The following table presents selected average index prices for crude oil for the periods indicated:

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2022 by quarter:

2022 Averages

WTI prices are based on commercial index prices at Cushing, Oklahoma as measured by the NYMEX.

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Costs and expenses:

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

NGL Pipelines & Services:

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Total consolidated revenues

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.

Second Quarter of 2022 Compared to Second Quarter of 2021.

Total revenues for the second quarter of 2022 increased $ 6.6 billion when compared to the second quarter of 2021 primarily due to a $ 6.4 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and natural gas increased a combined $ 6.4 billion quarter-to-quarter primarily due to higher average sales prices, which accounted for a $ 4.3 billion increase, and higher sales volumes, which accounted for an additional $ 2.1 billion increase.

Revenues from midstream services for the second quarter of 2022 increased a net $ 247 million when compared to the second quarter of 2021.

Revenues from our natural gas processing facilities increased $197 million quarter-to-quarter primarily due to higher market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

R evenues from our natural gas pipeline assets increased $ 68 million quarter-to-quarter primarily due to the addition of the Midland Basin Gathering system from the Navitas Midstream acquisition, which contributed $38 million during the quarter, higher demand for natural gas transportation and gathering services in Texas and Louisiana, which accounted for a $17 million increase, and higher gathering fees on our San Juan Basin Gathering System, which accounted for an additional $12 million increase.

Lastly, r evenues from our terminal facilities decreased a net $ 15 million quarter-to-quarter primarily due to lower deficiency fee revenues, which accounted for a $25 million decrease, partially offset by higher loading fee revenues from our ethylene export terminal, which accounted for a $14 million increase.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Total revenues for the six months ended June 30, 2022 increased $ 10.5 billion when compared to the six months ended June 30, 2021 primarily due to a $ 10.0 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and natural gas increased a combined $ 9.9 billion period-to-period primarily due to higher average sales prices, which accounted for a $ 7.6 billion increase, and higher sales volumes, which accounted for an additional $ 2.3 billion increase.

Revenues from midstream services for the six months ended June 30, 2022 increased $ 489 million when compared to the six months ended June 30, 2021.

Revenues from our natural gas processing facilities increased $342 million period-to-period primarily due to higher market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

Revenues from our natural gas pipeline assets increased $ 85 million period-to-period primarily due to the addition of the Midland Basin Gathering system from the Navitas Midstream acquisition, which contributed $54 million during the period, higher demand for natural gas transportation and gathering services in Texas and Louisiana, which accounted for a $17 million increase, and higher gathering fees on our San Juan Basin Gathering System, which accounted for an additional $14 million increase.

Revenues from our terminal facilities increased $24 million period-to-period primarily due to higher loading fee revenues from our ethylene export terminal.

Revenues from our crude oil pipeline assets increased $ 28 million period-to-period primarily due to higher demand for crude oil transportation services.

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.

Total operating costs and expenses for the three and six months ended June 30, 2022 increased $ 6.3 billion and $ 10.1 billion, respectively, when compared to the same periods in 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.

Second Quarter of 2022 Compared to Second Quarter of 2021.

Cost of sales for the second quarter of 2022 increased $ 6.1 billion when compared to the second quarter of 2021.

The cost of sales associated with our marketing of NGLs, crude oil and natural gas increased a combined $6.3 billion quarter-to-quarter primarily due to higher average purchase prices, which accounted for a $ 4.3 billion increase, and higher sales volumes, which accounted for an additional $ 2.0 billion increase.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Cost of sales for the six months ended June 30, 2022 increased $ 9.9 billion when compared to the six months ended June 30, 2021.

The cost of sales associated with our marketing of NGLs, crude oil and natural gas increased a combined $ 10.2 billion period-to-period primarily due to higher average purchase prices, which accounted for an $ 8.1 billion increase, and higher sales volumes, which accounted for an additional $ 2.1 billion 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.

Other operating costs and expenses for the three and six months ended June 30, 2022 increased $ 182 million and $224 million, respectively, when compared to the same periods in 2021 primarily due to higher utility and employee compensation 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.

Depreciation, amortization and accretion expense for the three and six months ended June 30, 2022 increased a combined $ 37 million and $ 65 million, respectively, when compared to the same periods in 2021.

The addition of assets attributable to the Navitas Midstream acquisition accounted for $ 23 million of the quarter-to-quarter increase and $ 36 million of the period-to-period increase .

The remainder of the quarter-to-quarter and period-to-period increases are due to assets placed into full or limited service since the end of the respective periods in 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 .

Non-cash asset impairment charges for the three and six months ended June 30, 2022 decreased $ 13 m illion and $ 65 million, respectively, when compared to the same periods in 2021.

We recorded non-cash asset impairment charges of $44 million during the six months ended June 30, 2021 for the sale of a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System .

The remainder of our asset impairment charges for the three and six months ended June 30, 2022 and 2021 are attributable to the write-off of assets that are no longer expected to be used or constructed.

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.

General and administrative costs for the three and six months ended June 30, 2022 increased $ 10 million and $ 16 million, respectively, when compared to the same periods in 2021 primarily due to higher employee compensation 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.

Equity income from our unconsolidated affiliates for the three and six months ended June 30, 2022 decreased $ 54 million and $ 86 million, respectively, when compared to the same periods in 2021 primarily due to lower earnings from investments in crude oil pipelines.

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.

Operating income for the three and six months ended June 30, 2022 increased $ 272 million and $ 243 million, respectively, when compared to the same periods in 2021 due to the previously described quarter-to-quarter and period-to-period changes.

Interest expense

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Interest charged on debt principal outstanding

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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.

Interest charged on debt principal outstanding, which is a key driver of interest expense, decreased $ 3 million quarter-to-quarter primarily due to the effects of lower overall interest rates during the second quarter of 2022.

Our weighted-average debt principal balance for the second quarter of 2022 was $ 29.4 billion compared to $ 28.9 billion for the second quarter of 2021 .

For the six months ended June 30, 2022, interest charged on debt principal outstanding decreased $ 7 million period-to-period primarily due to the effects of lower overall interest rates during the six months ended June 30, 2022.

Our weighted-average debt principal balance for the six months ended June 30, 2022 was $29.7 billion compared to $29.5 billion for the six months ended June 30, 2021.

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.

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”).

Our provision for income taxes for the three and six months ended June 30, 2022 decreased $ 14 million and $ 5 million, respectively, when compared to the same periods in 2021 primarily due to lower income tax expense related to state tax obligations under the Revised Texas Franchise Tax (the “Texas Margin Tax”).

Business Segment Highlights

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Gross operating margin by segment:

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Operating income

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

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NGL fractionation volumes (MBPD)

Equity NGL production volumes (MBPD) (1)

Equity NGL-equivalent production volumes (MBPD) (1)

Fee-based natural gas processing volumes (MMcf/d) (2,3)

Represents the NGL volumes we earn and take title to in connection with our processing activities.

Primarily represents the NGL and condensate volumes we earn and take title to in connection with our processing activities.

The total equity NGL-equivalent production volumes also include residue natural gas volumes from our natural gas processing business.

Volumes reported correspond to the revenue streams earned by our natural gas processing plants.

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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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from natural gas processing and related NGL marketing activities for the second quarter of 2022 increased $301 million when compared to the second quarter of 2021.

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 $139 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.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities were 910 MMcf/d and 55 MBPD, respectively, during the second quarter of 2022.

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).

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.

Gross operating margin from our Delaware Basin natural gas processing facilities, which represent our legacy Permian Basin processing facilities, increased $77 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes at these facilities increased 143 MMcf/d and equity NGL-equivalent production volumes decreased 40 MBPD quarter-to-quarter.

Gross operating margin from our NGL marketing activities increased a net $49 million quarter-to-quarter primarily due to higher sales volumes, which accounted for a $41 million increase, and higher average sales margins, which accounted for an additional $33 million increase, partially offset by lower non-cash, mark-to-market earnings, which accounted for a $26 million decrease.

The quarter-to-quarter increase in gross operating margin can be attributed to higher earnings from NGL marketing strategies that optimize our storage and plant assets, which accounted for a $91 million increase, partially offset by lower earnings from strategies that optimize our export and transportation assets, which accounted for a $16 million decrease.

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a combined $27 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 and equity NGL-equivalent production volumes decreased 41 MMcf/d and 4 MBPD, respectively, quarter-to-quarter.

Gross operating margin from our South Texas natural gas processing facilities increased $10 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes increased 17 MMcf/d and equity NGL-equivalent production volumes decreased 6 MBPD quarter-to-quarter.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from natural gas processing and related NGL marketing activities for the six months ended June 30, 2022 increased $422 million when compared to the six months ended June 30, 2021.

Our Midland Basin natural gas processing facilities generated gross operating margin of $181 million.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities were 892 MMcf/d and 52 MBPD, respectively, following the acquisition date.

Gross operating margin from our Delaware Basin natural gas processing facilities increased $141 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes at these facilities increased 164 MMcf/d and equity NGL-equivalent production volumes decreased 32 MBPD period-to-period .

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a combined $88 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities).

On a combined basis, fee-based natural gas processing volumes decreased 41 MMcf/d and equity NGL-equivalent production volumes increased 1 MBPD period-to-period.

Gross operating margin from our South Texas natural gas processing facilities increased $60 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes increased 56 MMcf/d and equity NGL-equivalent production volumes decreased 4 MBPD period-to-period.

Gross operating margin from our Louisiana and Mississippi natural gas processing facilities increased $7 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes decreased 165 MMcf/d and 4 MBPD, respectively, period-to-period (net to our interest).

Gross operating margin from our NGL marketing activities decreased a net $59 million period-to-period primarily due to lower non-cash, mark-to-market earnings, which accounted for an $82 million decrease, and lower average sales margins, which accounted for an additional $8 million decrease, partially offset by higher sales volumes, which accounted for a $26 million increase.

The period-to-period increase in gross operating margin can be attributed to higher earnings from NGL marketing strategies that optimize our storage and plant assets, which accounted for a $74 million increase, partially offset by lower earnings from strategies that optimize our transportation and export assets, which accounted for a $51 million decrease.

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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the second quarter of 2022 decreased $16 million when compared to the second quarter of 2021.

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 $35 million quarter-to-quarter primarily due to lower average transportation fees, which accounted for a $27 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 114 MBPD (net to our interest), which accounted for a $19 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 from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) decreased a net $18 million quarter-to-quarter primarily due to lower average loading fees, which accounted for a $26 million decrease, partially offset by higher export volumes of 73 MBPD, which accounted for an $8 million increase.

Gross operating margin from our related Houston Ship Channel Pipeline decreased $4 million quarter-to-quarter primarily due to lower average transportation fees.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $27 million quarter-to-quarter primarily due to higher transportation volumes on the ATEX Pipeline of 34 MBPD.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $15 million quarter-to-quarter primarily due to higher average loading fees.

Gross operating margin from our Dixie Pipeline and related terminals increased a combined $9 million quarter-to-quarter primarily due to higher transportation volumes of 40 MBPD.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the six months ended June 30, 2022 decreased $77 million when compared to the six months ended June 30, 2021.

On a combined basis, gross operating margin for our pipelines that serve Permian Basin and/or Rocky Mountain producers decreased a net $62 million period-to-period primarily due to lower average transportation fees, which accounted for a $58 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 $53 million decrease, partially offset by higher transportation volumes of 181 MBPD (net to our interest), which accounted for a $56 million increase.

Gross operating margin from LPG-related activities at EHT decreased $45 million period-to-period primarily due to lower average loading fees.

Gross operating margin from our related Houston Ship Channel Pipeline decreased $4 million period-to-period primarily due to lower average transportation fees.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $31 million period-to-period primarily due to higher transportation volumes on the ATEX Pipeline of 16 MBPD.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $27 million period-to-period 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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from NGL fractionation during the second quarter of 2022 decreased $56 million when compared to the second quarter of 2021.

Gross operating margin from our Chambers County NGL fractionation complex decreased a net $84 million quarter-to-quarter primarily due to $58 million in margins earned on the optimization of our power supply arrangements and $40 million of payments received in connection with our participation in the Texas Load Resources Demand Response Program (“LaaR”) during the second quarter of 2021 in connection with the winter storms that impacted Texas in February 2021 (the “February 2021 winter storms”).

Gross operating margin at our Chambers County NGL fractionation complex was further impacted by higher utility and other operating costs, which accounted for an additional $7 million decrease, partially offset by higher fractionation volumes of 48 MBPD (net to our interest), which accounted for a $12 million increase, and higher average fractionation fees, which accounted for an additional $13 million increase.

Gross operating margin from our Norco NGL fractionator increased $14 million quarter-to-quarter primarily due to higher fractionation volumes of 31 MBPD, which accounted for an $8 million increase, and higher ancillary service revenues, which accounted for an additional $4 million increase.

Gross operating margin from our Hobbs NGL fractionator increased $6 million quarter-to-quarter primarily due to higher ancillary service revenues.

The natural gasoline hydrotreater at our Chambers County complex, which was placed into service in October 2021, generated gross operating margin of $6 million during the second quarter of 2022.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from NGL fractionation during the six months ended June 30, 2022 increased $23 million when compared to the six months ended June 30, 2021.

Gross operating margin from our Norco NGL fractionator increased $18 million period-to-period primarily due to higher fractionation volumes of 15 MBPD, which accounted for a $10 million increase, and higher ancillary service revenues, which accounted for an additional $7 million increase.

Gross operating margin from our Hobbs NGL fractionator increased $15 million period-to-period primarily due to higher ancillary service revenues, which accounted for an $11 million increase, and higher fractionation volumes of 7 MBPD, which accounted for an additional $5 million increase.

The natural gasoline hydrotreater at our Chambers County complex, which was placed into service in October 2021, generated gross operating margin of $12 million during the six months ended June 30, 2022.

Gross operating margin from our Chambers County NGL fractionation complex decreased a net $30 million period-to-period primarily due to the aforementioned LaaR payments and margins earned on the optimization of our power supply arrangements in connection with the February 2021 winter storms, which accounted for a $103 million decrease, and higher utility and other operating costs, which accounted for an additional $18 million decrease, partially offset by higher fractionation volumes of 84 MBPD (net to our interest), which accounted for an $85 million increase, and higher ancillary service revenues, which accounted for an additional $13 million increase.

Crude Oil Pipelines & Services

1 unchanged sentence

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

4 unchanged sentences

Crude oil marine terminal volumes (MBPD)

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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the second quarter of 2022 decreased $ 12 million when compared to the second quarter of 2021.

Gross operating margin from our equity investment in the Seaway Pipeline decreased a net $ 25 million quarter-to-quarter primarily due to lower average transportation fees, which accounted for a $ 17 million decrease, and $16 million in LaaR payments from power service providers in connection with the February 2021 winter storms, partially offset by higher ancillary service and other revenues, which accounted for a $7 million increase.

Transportation volumes on our Seaway Pipeline increased 71 MBPD quarter-to-quarter (net to our interest).

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) decreased $ 22 million quarter-to-quarter primarily due to higher non-cash, mark-to-market losses during the second quarter of 2022.

Gross operating margin from crude oil activities at EHT decreased $ 11 million quarter-to-quarter primarily due to lower throughput and other revenues, which accounted for a $ 7 million decrease, and lower loading revenues, which accounted for an additional $ 3 million decrease.

Crude oil terminal volumes at EHT increased 48 MBPD quarter-to-quarter.

Gross operating margin from our West Texas Pipeline System increased $ 20 million quarter-to-quarter primarily due to higher ancillary service and other revenues.

Transportation volumes on our West Texas Pipeline System increased 82 MBPD quarter-to-quarter.

Gross operating margin from our EFS Midstream system increased $16 million quarter-to-quarter primarily due to higher average transportation fees.

Gross operating margin from our Midland terminal increased $ 10 million quarter-to-quarter primarily due to higher ancillary service and other revenues.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the six months ended June 30, 2022 increased $ 3 million when compared to the six months ended June 30, 2021.

Gross operating margin from our West Texas Pipeline System increased a net $ 36 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for a $32 million increase, and higher transportation volumes of 95 MBPD, which accounted for an additional $15 million increase, partially offset by lower average transportation fees, which accounted for a $9 million decrease.

Gross operating margin from our Midland terminal increased $ 24 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for a $ 17 million increase, and lower operating costs, which accounted for an additional $8 million increase.

Gross operating margin from our Midland-to-ECHO System and related business activities increased $ 21 million period-to-period primarily due to higher transportation volumes of 77 MBPD (net to our interest).

Gross operating margin from our EFS Midstream system increased $21 million period-to-period primarily due to higher average transportation fees.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) decreased $ 42 million period-to-period primarily due to higher non-cash, mark-to-market losses during 2022.

Gross operating margin from our equity investment in the Seaway Pipeline decreased a net $ 33 million period-to-period primarily due to lower average transportation fees, which accounted for a $ 23 million decrease, and a $16 million decrease due to the aforementioned LaaR payments from power service providers in connection with the February 2021 winter storms, partially offset by higher ancillary service and other revenues, which accounted for a $9 million increase.

Transportation volumes on our Seaway Pipeline increased 31 MBPD period-to-period (net to our interest).

Gross operating margin from crude oil activities at EHT decreased $ 19 million period-to-period primarily due to lower storage and other revenues, which accounted for a $ 9 million decrease, and higher operating costs, which accounted for an additional $ 7 million decrease.

Crude oil terminal volumes at EHT increased 152 MBPD period-to-period.

Natural Gas Pipelines & Services

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin

1 unchanged sentence

Natural gas pipeline transportation volumes (BBtus/d)

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.

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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the second quarter of 2022 increased $27 million compared to the second quarter of 2021.

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 $17 million quarter-to-quarter primarily due to higher average gathering fees, which accounted for a $15 million increase, and higher condensate sales, which accounted for an additional $ 6 million increase, partially offset by lower aggregate gathering volumes of 165 BBtus/d, which accounted for a $3 million decrease.

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 Texas Intrastate System increased $12 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for an $8 million increase, and higher capacity reservation revenues, which accounted for an additional $3 million increase.

Transportation volumes on our Texas Intrastate System increased 245 BBtus/d quarter-to-quarter.

Gross operating margin from our Acadian Gas System and Haynesville Gathering System increased a combined $7 million quarter-to-quarter primarily due to higher transportation volumes.

On a combined basis, transportation volumes increased 870 BBtus/d primarily due to the Gillis Lateral pipeline, which was placed into service in December 2021.

Gross operating margin from our natural gas marketing activities increased $5 million quarter-to-quarter primarily due to higher average sales margins and sales volumes.

Gross operating margin from our East Texas Gathering System increased $4 million quarter-to-quarter primarily due to higher gathering volumes of 339 BBtus/d.

Gross operating margin from our Delaware Basin Gathering System, which represents our legacy Permian Basin gathering system, decreased $31 million quarter-to-quarter primarily due to lower condensate sales.

Natural gas gathering volumes on our Delaware Basin Gathering System increased 196 BBtus/d quarter-to-quarter.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the six months ended June 30, 2022 decreased $288 million when compared to the six months ended June 30, 2021.

Gross operating margin from our natural gas marketing activities decreased $310 million period-to-period primarily due to lower average sales margins.

The six months ended June 30, 2021 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 February 2021 winter storms.

Gross operating margin from our Delaware Basin Gathering System decreased $54 million period-to-period primarily due to lower condensate sales.

Natural gas gathering volumes on our Delaware Basin Gathering System increased 163 BBtus/d period-to-period.

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 $24 million period-to-period primarily due to higher average gathering fees, which accounted for a $20 million increase, and higher condensate sales, which accounted for an additional $10 million increase, partially offset by lower aggregate gathering volumes of 223 BBtus/d, which accounted for a $7 million decrease.

Our Midland Basin Gathering System generated gross operating margin of $22 million on gathering volumes of 1,201 BBtus/d following the acquisition date.

Gross operating margin from our Texas Intrastate System increased $13 million period-to-period primarily due to higher transportation volumes of 484 BBtus/d, which accounted for an $8 million increase, and higher average transportation fees, which accounted for an additional $6 million increase.

Gross operating margin from our Acadian Gas System and Haynesville Gathering System increased a combined $12 million period-to-period primarily due to higher transportation volumes.

On a combined basis, transportation volumes increased 832 BBtus/d primarily due to the Gillis Lateral pipeline, which was placed into service in December 2021.

Gross operating margin from our East Texas Gathering System increased $9 million period-to-period primarily due to higher gathering volumes of 329 BBtus/d.

Petrochemical & Refined Products Services

1 unchanged sentence

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

14 unchanged sentences

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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from propylene production and related activities for the second quarter of 2022 decreased $50 million when compared to the second quarter of 2021.

Gross operating margin from our Chambers County propylene production facilities decreased a combined $ 46 million quarter-to-quarter primarily due to lower average processing fees, which accounted for a $31 million decrease, and higher utility and other operating costs, which accounted for an additional $ 20 million decrease.

Propylene and associated by-product production volumes at these facilities decreased a combined 2 MBPD quarter-to-quarter (net to our interest).

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from propylene production and related activities for the six months ended June 30, 2022 increased $14 million when compared to the six months ended June 30, 2021.

Gross operating margin from our Chambers County propylene production facilities increased a combined net $ 18 million period-to-period primarily due to higher sales volumes, which accounted for a $ 57 million increase, higher average sales margins, which accounted for a $ 39 million increase, and higher by-product sales and other revenues, which accounted for an additional $10 million increase, partially offset by lower average processing fees, which accounted for a $39 million decrease, and higher utility, amortization expense from major maintenance activities accounted for under the deferral method and other operating costs, which accounted for an additional $ 49 million decrease.

Propylene and associated by-product production volumes at these facilities increased a combined 10 MBPD period-to-period (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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from butane isomerization and related operations increased a net $14 million quarter-to-quarter primarily due to higher by-product sales volumes and average prices, which accounted for an $11 million increase, and higher isomerization volumes, which accounted for an additional $10 million increase, partially offset by higher utility and other operating costs, which accounted for a $4 million decrease.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from butane isomerization and related operations increased a net $29 million period-to-period primarily due to higher by-product sales volumes and average prices, which accounted for a $21 million increase, and higher isomerization volumes, which accounted for an additional $19 million increase, partially offset by higher utility and other operating costs, which accounted for a $5 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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from our octane enhancement and related plant operations increased a net $126 million quarter-to-quarter primarily due to higher sales volumes, which accounted for an $84 million increase, and higher average sales margins, which accounted for an additional $51 million increase, partially offset by higher utility and other operating costs, which accounted for a $9 million decrease.

The quarter-to-quarter increase in sales volumes at these facilities is primarily due to planned major maintenance activities at our octane enhancement plant that were completed at the beginning of May 2021.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from our octane enhancement and related plant operations increased a net $170 million period-to-period primarily due to higher sales volumes, which accounted for a $124 million increase, and higher average sales margins, which accounted for an additional $68 million increase, partially offset by higher utility and other operating costs, which accounted for an $18 million decrease.

The period-to-period increase in sales volumes at these facilities is primarily due to planned major maintenance activities during the six months ended June 30, 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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from refined products pipelines and related activities for the second quarter of 2022 decreased $13 million when compared to the second quarter of 2021.

Gross operating margin from our refined products marketing activities decreased a net $7 million quarter-to-quarter primarily due to lower non-cash mark-to-market earnings, which accounted for a $21 million decrease, partially offset by higher average sales margins, which accounted for a $14 million increase.

Gross operating margin from our TE Products Pipeline System decreased $6 million quarter-to-quarter primarily due to lower average transportation and other fees.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from refined products pipelines and related activities for the six months ended June 30, 2022 decreased $44 million when compared to the six months ended June 30, 2021.

Gross operating margin from our refined products marketing activities decreased a net $44 million period-to-period primarily due to lower average sales margins, which accounted for a $51 million decrease, partially offset by higher non-cash mark-to-market earnings, which accounted for a $6 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.

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from ethylene exports and related activities during the second quarter of 2022 increased $13 million when compared to the second quarter of 2021.

Gross operating margin from our ethylene export terminal increased $10 million quarter-to-quarter primarily due to a 10 MBPD (net to our interest) increase in export volumes.

Gross operating margin from our other ethylene activities increased $3 million quarter-to-quarter primarily due to higher transportation volumes of 30 MBPD.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from ethylene exports and related activities during the six months ended June 30, 2022 increased $39 million when compared to the six months ended June 30, 2021.

Gross operating margin from our ethylene export terminal increased $24 million period-to-period primarily due to a 13 MBPD (net to our interest) increase in export volumes.

Gross operating margin from our other ethylene activities increased $15 million period-to-period primarily due to higher transportation volumes of 35 MBPD, which accounted for a $10 million increase, and higher storage revenues, which accounted for an additional $7 million increase.

Marine transportation and other services

Second Quarter of 2022 Compared to Second Quarter of 2021 .

Gross operating margin from marine transportation and other services increased $5 million quarter-to-quarter primarily due to higher average fees.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 .

Gross operating margin from marine transportation and other services increased $9 million period-to-period primarily due to higher average fees.

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.

At June 30, 2022, we had $ 4.1 billion of consolidated liquidity, which was comprised of $ 3.9 billion of available borrowing capacity under EPO’s revolving credit facilities and $ 231 million of unrestricted cash on hand.

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.

Enterprise Declares Cash Distribution for Second Quarter of 2022

On July 7 , 2022, we announced that the Board declared a quarterly cash distribution of $0.475 per common unit, or $1.90 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the second quarter of 2022.

The quarterly distribution is payable on August 12 , 2022 to unitholders of record as of the close of business on July 29, 2022.

The total amount to be paid is $ 1.04 billion, which includes $ 9 million for distribution equivalent rights on phantom unit awards.

2 unchanged sentences

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):

At June 30, 2022, the average maturity of EPO’s consolidated debt obligations was approximately 20.8 years.

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at June 30, 2022 for the years indicated (dollars in millions):

Scheduled Maturities of Debt

2 unchanged sentences

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.

Expected Renewal of September 2021 364-Day Revolving Credit Agreement

EPO’s September 2021 364-Day Revolving Credit Agreement is scheduled to mature in September 2022.

As a result, EPO expects to renew this credit agreement during the third quarter of 2022.

At June 30, 2022, there were no principal amounts outstanding under the September 2021 364-Day Revolving Credit Agreement.

Partial Redemption of Junior Subordinated Notes D

On August 1, 2022, EPO called for redemption $350 million of the $700 million outstanding principal amount of its Junior Subordinated Notes D.

The redemption date for such notes is August 31, 2022.

These notes are redeemable at EPO’s election on or after August 16, 2022 at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

The redemption is expected to be made using cash on hand and proceeds from the issuance of short-term notes under EPO’s commercial paper program.

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.

As of August 9 , 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.

4 unchanged sentences

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.

The Partnership repurchased 1,408,121 common units through open market purchases during the three and six months ended June 30, 2022.

The total cost of these repurchases, including commissions and fees, was $ 35 million.

As of June 30, 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,

For the Six Months

Ended June 30,

Net cash flows provided by operating activities

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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;

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);

Net cash flows provided by operating activities for the six months ended June 30, 2022 increased a net $ 247 million when compared to the six months ended June 30, 2021 primarily due to:

a $ 466 million period-to-period increase resulting from higher partnership earnings (determined by adjusting our $ 262 million period-to-period increase in net income for changes in the non-cash items identified on our Unaudited Condensed Statements of Consolidated Cash Flows);

partially offset by

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.

a $ 181 mill ion period-to-period decrease primarily due to the timing of cash receipts and payments related to operations.

For information regarding significant period-to-period 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:

Cash used in investing activities during the six months ended June 30, 2022 increased a net $ 2.6 billion when compared to the six months ended June 30, 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).

a $ 570 million period-to-period 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.

Cash used in financing activities during the six months ended June 30, 2022 decreased $ 371 million when compared to the six months ended June 30, 2021.

The period-to-period decrease was primarily due to a net cash outflow of $ 760 million related to debt transactions during the six months ended June 30, 2022 compared to a net cash outflow of $ 1.3 billion during the six months ended June 30, 2021.

We repaid $ 1.4 billion aggregate principal amount of senior notes during the six months ended June 30, 2022 compared to repayments of $ 1.3 billion during the six months ended June 30, 2021.

In addition, net issuances of short-term notes under EPO’s commercial paper program were $ 640 million during the six months ended June 30, 2022.

Non-GAAP Cash Flow Measures

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Net income attributable to common unitholders (GAAP) (1)

5 unchanged sentences

Change in fair market value of derivative instruments

Deferred income tax expense

Deferred income tax expense (benefit)

Sustaining capital expenditures (3)

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Sustaining capital expenditures include cash payments and accruals applicable to the period.

The first quarter of 2021 includes $107 million of trade accounts receivable that we do not expect to collect in the normal billing cycle.

The six months ended June 30, 2021 includes $100 million of trade accounts receivable that we do not expect to collect in the normal billing cycle.

Represents DCF before proceeds from asset sales and the monetization of interest rate derivative instruments accounted for as cash flow hedges.

5 unchanged sentences

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Net cash flows provided by operating activities (GAAP)

14 unchanged sentences

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 Mentone II cryogenic natural gas processing plant (fourth quarter of 2023);

Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (second half of 2023);

Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (fourth quarter of 2023);

our Mentone III cryogenic natural gas processing plant (first quarter of 2024);

our Plant 7 natural gas processing plant in the Midland Basin (first quarter of 2024);

the expansion of our Shin Oak NGL Pipeline (first half of 2024);

an Ethane Terminal located along the coast between Corpus Christi, Texas and New Orleans, Louisiana (2025);

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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.

Based on information currently available, we expect our total capital investments for 2022, excluding business combinations and net of contributions from noncontrolling interests, to approximate $ 2.0 billion, which reflects growth capital investments of $ 1.6 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.

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The following table summarizes our capital investments for the periods indicated (dollars in millions):

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Capital investments for property, plant and equipment:

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Sustaining capital expenditures include the costs of major maintenance activities at our reaction-based plants, which are accounted for using the deferral method.

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;

Amount for the six months ended June 30, 2022 represents net cash used for the acquisition of Navitas Midstream, which closed on February 17, 2022.

Comparison of Six Months Ended June 30, 2022 with Six Months Ended June 30, 2021

In total, investments in growth capital projects decreased $486 million period-to-period primarily due to the following:

lower investments at our Chambers County complex (e.g., completion of our natural gasoline hydrotreater in October 2021), which accounted for a $144 million decrease;

completion of our Gillis Lateral natural gas pipeline in December 2021, which accounted for a $105 million decrease;

completion of pipeline projects connecting our Chambers County complex with Gulf Coast assets, which accounted for a $73 million decrease;

lower investments in projects attributable to our ethylene business, which accounted for a $29 million decrease;

lower investments in projects attributable to our ethylene business (e.g.

completion of our Baymark ethylene pipeline in November 2021), which accounted for a $55 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 $36 million decrease.

lower investments in natural gas pipelines and related infrastructure in support of East Texas and Louisiana producers, which accounted for a $22 million decrease.

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.

Investments attributable to sustaining capital projects decreased $84 million period-to-period primarily due to lower major maintenance activities performed at certain of our reaction-based plants (e.g., PDH 1, octane enhancement and HPIB facilities).

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.

Our product purchase commitments increased from $ 18.8 billion at December 31, 2021 to $ 27.0 billion at June 30, 2022 primarily due to an increase in crude oil and NGL prices between the two reporting dates.

Critical Accounting Policies and Estimates

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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.

At June 30, 2022, the total amount of Guaranteed Debt was $29.5 billion, which was comprised of $26.4 billion of EPO’s senior notes, $2.6 billion of EPO’s junior subordinated notes and $435 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.

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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.

The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $ 48.0 billion at June 30, 2022.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the six months ended June 30, 2022 was $ 2.9 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.

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Long-term receivables from Non-Obligor Subsidiaries

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

Other noncurrent assets, excluding investments in Non-Obligor Subsidiaries

of $ 48.0 billion at June 30, 2022 and $45.9 billion at December 31, 2021

Selected liability information:

Current portion of Guaranteed Debt, including interest of $ 220 million at March 31, 2021 and $453

Current portion of Guaranteed Debt, including interest of $ 435 million at June 30, 2022 and

$453 million at December 31, 2021

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The following table presents summarized income statement information for the combined Obligor Group for the periods indicated (dollars in millions):

For the Three

For the Twelve

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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

$ 2.9 billion for the six months ended June 30, 2022 and $4.5 billion for the twelve months

ended December 31, 2021

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis