What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-09 · 249 added, 242 removed, 516 unchanged (49% of the section changed)

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RESULTS OF OPERATIONS.

For the Three and Six Months Ended June 30, 2022 and 2021

For the Three and Nine Months Ended September 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 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.

This quarterly report on Form 10-Q for the nine months ended September 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 June 30, 2022.

EPCO, together with its privately held affiliates, owned approximately 32.3% of the Partnership’s common units outstanding at September 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 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.

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

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

Overview of Business

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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.

In August 2022, we announced three new projects to support ongoing production growth in the Permian Basin.

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);

our Mentone III natural gas processing plant in the Delaware Basin (first quarter of 2024);

a 275 MBPD expansion of our Shin Oak NGL Pipeline (first half of 2025).

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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 (fourth quarter of 2023);

our Mentone II natural gas processing plant in the Delaware Basin (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.

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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.

We funded the cash consideration for this acquisition using proceeds from the issuance of short-term notes under EPO’s 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.

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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 $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 weighted-average indicative market price for NGLs was $0.95 per gallon in the third quarter of 2022 versus $0.84 per gallon in the third quarter of 2021.

Likewise, the weighted-average indicative market price for NGLs was $0.99 per gallon during the nine months ended September 30, 2022 compared to $0.70 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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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.

(1) provisions included in our long-term 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;

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Costs and expenses:

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Asset impairment charges

Net losses attributable to asset sales and related matters

Net losses (gains) attributable to asset sales and related matters

Total operating costs and expenses

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

NGL Pipelines & Services:

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Total consolidated revenues

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.

Third Quarter of 2022 Compared to Third Quarter of 2021.

Total revenues for the third quarter of 2022 increased $ 4.6 billion when compared to the third quarter of 2021 primarily due to a $ 4.5 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and natural gas increased a combined $ 4.7 billion quarter-to-quarter primarily due to higher average sales prices, which accounted for a $ 3.6 billion increase, and higher sales volumes, which accounted for an additional $ 1.1 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 midstream services for the third quarter of 2022 increased a net $ 90 million when compared to the third quarter of 2021.

R evenues from our natural gas pipeline assets increased $ 82 million quarter-to-quarter primarily due to the addition of the Midland Basin Gathering System from the Navitas Midstream acquisition and higher demand for natural gas transportation and gathering services in Texas and Louisiana.

Revenues from our natural gas processing facilities increased $69 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.

Lastly, r evenues from our crude oil pipeline assets decreased $ 70 million quarter-to-quarter primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term gathering agreements on our EFS Midstream System.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Total revenues for the nine months ended September 30, 2022 increased $ 15.1 billion when compared to the nine months ended September 30, 2021 primarily due to a $ 14.5 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and natural gas increased a combined $ 14.6 billion period-to-period primarily due to higher average sales prices, which accounted for an $ 11.2 billion increase, and higher sales volumes, which accounted for an additional $ 3.4 billion increase.

Revenues from midstream services for the nine months ended September 30, 2022 increased a net $ 579 million when compared to the nine months ended September 30, 2021.

Revenues from our natural gas processing facilities increased $411 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.

Revenues from our natural gas pipeline assets increased $ 167 million period-to-period primarily due to the addition of the Midland Basin Gathering System from the Navitas Midstream acquisition and higher demand for natural gas transportation and gathering services in Texas and Louisiana.

Lastly, revenues from our crude oil pipeline assets decreased $ 41 million period-to-period primarily due to lower deficiency revenues as a result of the aforementioned expiration of minimum volume commitments on our EFS Midstream System.

Operating costs and expenses

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.

Total operating costs and expenses for the three and nine months ended September 30, 2022 increased $ 4.4 billion and $ 14.5 billion, respectively, when compared to the same periods in 2021.

Cost of sales

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.

Third Quarter of 2022 Compared to Third Quarter of 2021.

Cost of sales for the third quarter of 2022 increased $ 4.2 billion when compared to the third quarter of 2021.

The cost of sales associated with our marketing of NGLs, crude oil and natural gas increased a combined $ 4.4 billion quarter-to-quarter primarily due to higher average purchase prices, which accounted for a $ 3.3 billion increase, and higher sales volumes, which accounted for an additional $ 1.1 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.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Cost of sales for the nine months ended September 30, 2022 increased $14.1 billion when compared to the nine months ended September 30, 2021.

The cost of sales associated with our marketing of NGLs, crude oil and natural gas increased a combined $14.6 billion period-to-period primarily due to higher average purchase prices, which accounted for an $ 11.5 billion increase, and higher sales volumes, which accounted for an additional $ 3.1 billion increase.

Other operating costs and expenses

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.

Other operating costs and expenses for the three and nine months ended September 30, 2022 increased $ 168 million and $ 392 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 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.

Depreciation, amortization and accretion expense for the three and nine months ended September 30, 2022 increased a combined $ 25 million and $ 90 million, respectively, when compared to the same periods in 2021.

The addition of assets attributable to the Navitas Midstream acquisition accounted for $ 25 million of the quarter-to-quarter increase and $ 61 million of the period-to-period increase .

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Asset impairment charges

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.

Non-cash asset impairment charges for the nine months ended September 30, 2022 decreased $ 65 million, when compared to the same period in 2021.

We recorded non-cash asset impairment charges of $44 million during the nine months ended September 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 nine months ended September 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 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.

General and administrative costs for the third quarter of 2022 increased $ 8 million when compared to the third quarter of 2021 primarily due to higher professional services costs.

General and administrative costs for the nine months ended September 30, 2022 increased $ 24 million when compared to the same period in 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 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.

Equity income from our unconsolidated affiliates for the three and nine months ended September 30, 2022 decreased $ 26 million and $ 112 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 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.

Operating income for the three and nine months ended September 30, 2022 increased $ 199 million and $ 442 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 June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Interest charged on debt principal outstanding (1)

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Interest costs capitalized in connection with construction projects (2)

The weighted-average interest rates on debt principal outstanding during the three and nine months ended September 30, 2022 were 4.33% and 4.32%, respectively.

The weighted-average interest rates on debt principal outstanding during the three and nine months ended September 30, 2021 were 4.35% and 4.36%, respectively.

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

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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 $ 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.

Amounts presented for the three and nine months ended September 30, 2022 include $4 million of debt issuance costs that were written off in connection with the partial redemption of our Junior Subordinated Notes D in August 2022.

Interest charged on debt principal outstanding, which is a key driver of interest expense, decreased $ 1 million quarter-to-quarter and $8 million period-to-period primarily due to the retirement of $1.4 billion of fixed-rate senior notes in February 2022 and the redemption of $350 million of variable-rate junior subordinated notes in August 2022 using a combination of available cash, commercial paper and proceeds from a senior notes issuance in September 2021 with a lower interest rate.

These actions resulted in lower weighted-average interest rates on outstanding debt obligations during the comparative periods.

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 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”).

Our provision for income taxes for the three and nine months ended September 30, 2022 increased $ 2 million and decreased $ 3 million, respectively, when compared to the same periods in 2021 primarily due to changes in 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 June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Gross operating margin by segment:

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Operating income

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Asset impairment charges in operating costs and expenses

Net losses attributable to asset sales and related matters in operating

Net losses (gains) attributable to asset sales and related matters in operating

costs and expenses

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Segment gross operating margin:

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Natural gas processing and related NGL marketing activities

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from natural gas processing and related NGL marketing activities for the third quarter of 2022 increased $ 221 million when compared to the third 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 $ 128 million.

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.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities were 972 MMcf/d and 57 MBPD, respectively, during the third quarter of 2022.

Our Midland Basin natural gas gathering activities are discussed under the Natural Gas Pipelines & Services segment.

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 NGL marketing activities increased a net $ 46 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $ 58 million increase, and higher sales volumes, which accounted for an additional $ 13 million increase, partially offset by lower non-cash, mark-to-market earnings, which accounted for a $ 24 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, transportation and plant assets, which accounted for an $ 80 million increase, partially offset by lower earnings from strategies that optimize our export assets, which accounted for a $ 10 million decrease.

Gross operating margin from our Delaware Basin natural gas processing facilities, which represent our legacy Permian Basin processing facilities, increased a net $ 36 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $96 million increase, and a 180 MMcf/d increase in fee-based natural gas processing volumes, which accounted for an additional $10 million increase, partially offset by a 26 MBPD decrease in equity NGL-equivalent production volumes, which accounted for a $68 million decrease .

Gross operating margin from our South Texas natural gas processing facilities increased $ 12 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.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes increased 64 MMcf/d and 2 MBPD, respectively, quarter-to-quarter.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from natural gas processing and related NGL marketing activities for the nine months ended September 30, 2022 increased $ 643 million when compared to the nine months ended September 30, 2021.

Our Midland Basin natural gas processing facilities generated gross operating margin of $ 309 million.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities were 925 MMcf/d and 54 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 Delaware Basin natural gas processing facilities increased $177 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $148 million increase, and a 170 MMcf/d increase in fee-based natural gas processing volumes, which accounted for an additional $21 million increase.

Equity NGL-equivalent production volumes at these facilities decreased 30 MBPD period-to-period .

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a combined $ 86 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $66 million increase, and higher average processing fees, which accounted for an additional $16 million increase.

On a combined basis, fee-based natural gas processing volumes and equity NGL-equivalent production volumes decreased 49 MMcf/d and 1 MBPD, respectively, period-to-period.

Gross operating margin from our South Texas natural gas processing facilities increased $ 72 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities).

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Gross operating margin from our Louisiana and Mississippi natural gas processing facilities increased $ 4 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.

Fee-based natural gas processing volumes decreased 94 MMcf/d and equity NGL-equivalent production volumes were flat period-to-period (net to our interest).

Gross operating margin from our NGL marketing activities decreased a net $ 13 million period-to-period primarily due to lower non-cash, mark-to-market earnings, which accounted for a $ 107 million decrease, partially offset by higher average sales margins, which accounted for a $ 50 million increase, and higher sales volumes, which accounted for an additional $ 39 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 $13 4 million increase, partially offset by lower earnings from strategies that optimize our transportation and export assets, which accounted for a $ 40 million decrease.

NGL pipelines, storage and terminals

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the third quarter of 2022 increased $ 41 million when compared to the third quarter of 2021.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $ 39 million quarter-to-quarter primarily due to a 30 MBPD increase in transportation volumes on the ATEX Pipeline, which accounted for an $18 million increase, and higher deficiency fees, which accounted for an additional $16 million increase.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $ 16 million quarter-to-quarter primarily due to higher average loading fees, which accounted for an $11 million increase, and a 34 MBPD increase in export volumes, which accounted for an additional $9 million increase.

Gross operating margin from our Chambers County storage complex increased $11 million quarter-to-quarter primarily due to higher storage revenues.

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 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.

On a combined basis, gross operating margin from these pipelines decreased a net $ 25 million quarter-to-quarter primarily due to 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 a $19 million decrease, and higher utility and other operating costs, which accounted for an additional $19 million decrease, partially offset by a 34 MBPD (net to our interest) increase in transportation volumes, which accounted for a $ 13 million increase.

Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) decreased $ 18 million quarter-to-quarter primarily due to lower average loading fees.

LPG export volumes at EHT increased 49 MBPD quarter-to-quarter.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the nine months ended September 30, 2022 decreased $ 36 million when compared to the nine months ended September 30, 2021.

On a combined basis, gross operating margin for our pipelines that serve Permian Basin and/or Rocky Mountain producers decreased a net $ 88 million period-to-period primarily due to 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 a $ 72 million decrease, lower average transportation fees, which accounted for a $ 56 million decrease, and higher utility and other operating costs, which accounted for an additional $21 million decrease, partially offset by a 132 MBPD (net to our interest) increase in transportation volumes, which accounted for a $ 69 million increase.

Gross operating margin from LPG-related activities at EHT decreased $ 63 million period-to-period primarily due to lower average loading fees.

LPG export volumes at EHT increased 35 MBPD period-to-period.

Gross operating margin from our related Houston Ship Channel Pipeline decreased $ 6 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.

Transportation volumes on our Houston Ship Channel Pipeline increased 39 MBPD period-to-period.

Gross operating margin for our Eastern ethane pipelines increased a combined $ 70 million period-to-period primarily due to a 20 MBPD increase in transportation volumes on the ATEX Pipeline, which accounted for a $41 million increase, and higher deficiency fees, which accounted for an additional $27 million increase.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $ 43 million period-to-period primarily due to higher average loading fees, which accounted for a $33 million increase, and a 17 MBPD increase in export volumes, which accounted for an additional $12 million increase.

Gross operating margin from our Chambers County storage complex increased $11 million period-to-period primarily due to higher storage revenues.

NGL fractionation

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from NGL fractionation during the third quarter of 2022 increased $11 million when compared to the third quarter of 2021.

The natural gasoline hydrotreater at our Chambers County complex, which was placed into service in October 2021, generated gross operating margin of $9 million during the third quarter of 2022.

Gross operating margin from our Norco NGL fractionator increased $8 million quarter-to-quarter primarily due to a 23 MBPD increase in fractionation volumes.

The Norco NGL fractionator was down for 29 days during the third quarter of 2021 due to damages sustained from Hurricane Ida.

Gross operating margin from our Hobbs NGL fractionator increased $4 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.

Gross operating margin from our Chambers County NGL fractionation complex decreased a net $11 million quarter-to-quarter primarily due to higher utility and other operating costs, which accounted for a $29 million decrease, partially offset by a 66 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $15 million increase, and higher average fractionation fees, which accounted for an additional $6 million increase.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from NGL fractionation during the nine months ended September 30, 2022 increased $34 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our Norco NGL fractionator increased $27 million period-to-period primarily due to an 18 MBPD increase in fractionation volumes, which accounted for a $19 million increase, and higher ancillary service revenues, which accounted for an additional $9 million increase.

The natural gasoline hydrotreater at our Chambers County complex, which was placed into service in October 2021, generated gross operating margin of $21 million during the nine months ended September 30, 2022.

Gross operating margin from our Hobbs NGL fractionator increased $18 million period-to-period primarily due to higher ancillary service revenues, which accounted for a $14 million increase, and higher average fractionation fees, which accounted for an additional $6 million increase.

Gross operating margin from our Chambers County NGL fractionation complex decreased a net $41 million period-to-period primarily due to $63 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 $45 million decrease, partially offset by a 78 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $62 million increase, and higher average fractionation fees, which accounted for an additional $44 million increase.

Crude Oil Pipelines & Services

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Segment gross operating margin:

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Crude oil marine terminal volumes (MBPD)

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the third quarter of 2022 decreased $8 million when compared to the third quarter of 2021.

Gross operating margin from our EFS Midstream System decreased $ 59 million quarter-to-quarter primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term gathering agreements.

Our EFS Midstream System will continue to transport volumes produced on dedicated acreage through the remaining term of these agreements.

Gross operating margin from our equity investment in the Seaway Pipeline decreased $ 19 million quarter-to-quarter primarily due to lower average transportation fees.

Transportation volumes on our Seaway Pipeline increased 96 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.

Gross operating margin from crude oil activities at EHT decreased $ 6 million quarter-to-quarter primarily due to lower storage and other revenues.

Crude oil terminal volumes at EHT increased 255 MBPD quarter-to-quarter.

Gross operating margin from our Midland-to-ECHO System and related business activities decreased a net $ 5 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $29 million decrease, partially offset by an 89 MBPD (net to our interest) increase in transportation volumes, which accounted for an $18 million increase, and higher average transportation fees, which accounted for an additional $7 million increase.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) increased $ 46 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $23 million increase, and higher non-cash, mark-to-market earnings, which accounted for an additional $20 million increase.

Gross operating margin from our West Texas Pipeline System increased $ 21 million quarter-to-quarter primarily due to higher ancillary service and other revenues.

Transportation volumes on our West Texas Pipeline System increased 5 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.

Gross operating margin from our South Texas Crude Oil Pipeline System increased a net $12 million quarter-to-quarter primarily due to higher ancillary service and other revenues, which accounted for a $28 million increase, partially offset by lower average transportation fees, which accounted for a $16 million decrease.

Transportation volumes on our South Texas Crude Pipeline System increased 7 MBPD quarter to quarter.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the nine months ended September 30, 2022 decreased $5 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our equity investment in the Seaway Pipeline decreased $ 52 million period-to-period primarily due to lower average transportation fees, which accounted for a $37 million decrease, and a $ 16 million decrease due to LaaR payments from power service providers in connection with the February 2021 winter storms.

Transportation volumes on our Seaway Pipeline increased 52 MBPD period-to-period (net to our interest).

Gross operating margin from our EFS Midstream System decreased a net $ 38 million period-to-period primarily due to lower deficiency revenues as a result of the aforementioned expiration of minimum volume commitments, which accounted for a $72 million decrease, partially offset by higher average transportation fees, which accounted for a $24 million increase.

Gross operating margin from crude oil activities at EHT decreased $ 25 million period-to-period primarily due to lower storage and other revenues, which accounted for a $ 14 million decrease, and higher operating costs, which accounted for an additional $ 9 million decrease.

Crude oil terminal volumes at EHT increased 187 MBPD period-to-period.

Gross operating margin from our West Texas Pipeline System increased a net $56 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for a $ 52 million increase, and a 65 MBPD increase in transportation volumes, which accounted for an additional $ 16 million increase, partially offset by lower average transportation fees, which accounted for a $ 9 million decrease.

Gross operating margin from our Midland terminal increased $ 26 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for an $ 18 million increase, and lower operating costs, which accounted for an additional $ 6 million increase.

Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $ 16 million period-to-period primarily due to an 80 MBPD (net to our interest) increase in transportation volumes, which accounted for a $32 million increase, and higher average transportation fees, which accounted for an additional $14 million increase, partially offset by lower average sales margins, which accounted for a $39 million decrease.

Gross operating margin from our South Texas Crude Oil Pipeline System increased a net $13 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for a $43 million increase, partially offset by an 8 MBPD decrease in transportation volumes, which accounted for a $15 million decrease, and lower average transportation fees, which accounted for an additional $13 million decrease.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) increased a net $4 million period-to-period primarily due to higher average sales margins, which accounted for a $21 million increase, lower operating costs, which accounted for a $12 million increase, and higher earnings from trucking activities, which accounted for an additional $9 million increase, partially offset by lower non-cash, mark-to-market earnings, which accounted for a $38 million decrease.

Natural Gas Pipelines & Services

1 unchanged sentence

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Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Segment gross operating margin

1 unchanged sentence

Natural gas pipeline transportation volumes (BBtus/d)

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the third quarter of 2022 increased $55 million when compared to the third quarter of 2021.

Gross operating margin from our Texas Intrastate System increased $40 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for an $18 million increase, higher ancillary and other revenues, which accounted for a $15 million increase, and higher capacity reservation revenues, which accounted for an additional $7 million increase.

Transportation volumes on our Texas Intrastate System increased 421 BBtus/d quarter-to-quarter.

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 $17 million quarter-to-quarter primarily due to higher average gathering fees.

Gathering volumes on our Rocky Mountain gathering systems decreased a combined 139 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 $15 million on gathering volumes of 1,323 BBtus/d.

Our Midland Basin natural gas processing activities are discussed under the NGL Pipelines & Services segment.

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 $4 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.

On a combined basis, transportation volumes increased 847 BBtus/d quarter-to-quarter 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 $4 million quarter-to-quarter primarily due to a 256 BBtus/d increase in gathering volumes.

Gross operating margin from our natural gas marketing activities decreased $22 million quarter-to-quarter primarily due to lower average sales margins.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the nine months ended September 30, 2022 decreased $233 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our natural gas marketing activities decreased $332 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.

The nine months ended September 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 189 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.

Gross operating margin from our Texas Intrastate System increased $52 million period-to-period primarily due to higher average transportation fees, which accounted for a $19 million increase, a 463 BBtus/d increase in transportation volumes, which accounted for a $13 million increase, and higher ancillary and other revenues, which accounted for an additional $24 million increase.

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 $42 million period-to-period primarily due to higher average gathering fees, which accounted for a $38 million increase, and higher condensate sales, which accounted for an additional $13 million increase, partially offset by a 195 BBtus/d combined decrease in gathering volumes, which accounted for a $9 million decrease.

Our Midland Basin Gathering System generated gross operating margin of $37 million on gathering volumes of 1,250 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 $17 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.

On a combined basis, transportation volumes increased 837 BBtus/d period-to-period 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 $14 million period-to-period primarily due to a 305 BBtus/d increase in gathering volumes.

Petrochemical & Refined Products Services

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Segment gross operating margin:

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Propylene production and related activities

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from propylene production and related activities for the third quarter of 2022 decreased $149 million when compared to the third quarter of 2021.

Gross operating margin from our Chambers County propylene production facilities decreased a combined net $141 million quarter-to-quarter primarily due to lower average propylene sales margins, which accounted for a $121 million decrease, lower average processing fees, which accounted for a $36 million decrease, and higher utility and other operating costs, which accounted for an additional $20 million decrease, partially offset by higher propylene sales volumes, which accounted for a $27 million increase.

Propylene and associated by-product production volumes at these facilities increased a combined 6 MBPD quarter-to-quarter (net to our interest).

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from propylene production and related activities for the nine months ended September 30, 2022 decreased $135 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our Chambers County propylene production facilities decreased a combined net $123 million period-to-period primarily due to lower average propylene sales margins, which accounted for an $84 million decrease, lower average processing fees, which accounted for a $75 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 $70 million decrease, partially offset by higher propylene sales volumes, which accounted for an $85 million increase, and higher by-product sales and other revenues, which accounted for an additional $21 million increase.

Propylene and associated by-product production volumes at these facilities increased a combined 9 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

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 .

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from butane isomerization and related operations increased a net $2 million quarter-to-quarter primarily due to higher average isomerization fees, which accounted for a $6 million increase, and higher by-product sales volumes, which accounted for an additional $5 million increase, partially offset by higher utility and other operating costs, which accounted for a $9 million decrease.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from butane isomerization and related operations increased a net $31 million period-to-period primarily due to higher by-product sales volumes and average prices, which accounted for a $26 million increase, and higher isomerization volumes, which accounted for an additional $17 million increase, partially offset by higher utility and other operating costs, which accounted for a $15 million decrease.

Octane enhancement and related plant operations

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from our octane enhancement and related plant operations increased a net $59 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $69 million increase, partially offset by higher utility and other operating costs, which accounted for a $14 million decrease.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from our octane enhancement and related plant operations increased a net $229 million period-to-period primarily due to higher average sales margins, which accounted for a $136 million increase, and higher sales volumes, which accounted for an additional $129 million increase, partially offset by higher utility, amortization expense from major maintenance activities accounted for under the deferral method and other operating costs, which accounted for a $32 million decrease.

The period-to-period increase in sales volumes at these facilities is primarily due to planned major maintenance activities during the nine months ended September 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

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from refined products pipelines and related activities for the third quarter of 2022 increased $8 million when compared to the third quarter of 2021.

Gross operating margin from our refined products marketing activities increased $17 million quarter-to-quarter primarily due to higher average sales margins.

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

Overall, transportation volumes on our TE Products Pipeline System decreased a net 69 MBPD quarter-to-quarter.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from refined products pipelines and related activities for the nine months ended September 30, 2022 decreased $36 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our refined products marketing activities decreased a net $27 million period-to-period primarily due to lower average sales margins, which accounted for a $38 million decrease, partially offset by higher non-cash mark-to-market earnings, which accounted for a $10 million increase.

Gross operating margin from our TE Products Pipeline System decreased $7 million period-to-period primarily due to lower average transportation and other fees.

Overall, transportation volumes on our TE Products Pipeline System decreased a net 199 MBPD period-to-period.

Ethylene exports and related activities

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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from ethylene exports and related activities during the third quarter of 2022 increased $10 million when compared to the third quarter of 2021.

Gross operating margin from our ethylene export terminal increased $3 million quarter-to-quarter primarily due to higher average loading fees.

Gross operating margin from our other ethylene activities increased $7 million quarter-to-quarter primarily due to a 24 MBPD increase in transportation volumes, which accounted for a $3 million increase, and higher storage and other revenues, which accounted for an additional $2 million increase.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from ethylene exports and related activities during the nine months ended September 30, 2022 increased $49 million when compared to the nine months ended September 30, 2021.

Gross operating margin from our ethylene export terminal increased $26 million period-to-period primarily due to an 11 MBPD (net to our interest) increase in export volumes.

Gross operating margin from our other ethylene activities increased $23 million period-to-period primarily due to a 32 MBPD increase in transportation volumes, which accounted for a $13 million increase, and higher storage and other revenues, which accounted for an additional $11 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.

Third Quarter of 2022 Compared to Third Quarter of 2021 .

Gross operating margin from marine transportation and other services increased $12 million quarter-to-quarter primarily due to higher average fees and fleet utilization rates.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021 .

Gross operating margin from marine transportation and other services increased $21 million period-to-period primarily due to higher average fees and fleet utilization rates.

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 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.

At September 30, 2022, we had $ 3.3 billion of consolidated liquidity.

This amount was comprised of $ 3.1 billion of available borrowing capacity under EPO’s revolving credit facilities, which is the net of $4.5 billion of total borrowing capacity under EPO’s revolving credit facilities and $1.4 billion outstanding under EPO’s commercial paper program, and $ 167 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 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.

Enterprise Declares Cash Distribution for Third Quarter of 2022

On October 4 , 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 third quarter of 2022.

The quarterly distribution is payable on November 14 , 2022 to unitholders of record as of the close of business on October 31, 2022.

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

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Consolidated Debt

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):

At September 30, 2022, the average maturity of EPO’s consolidated debt obligations was approximately 19.7 years.

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

Scheduled Maturities of Debt

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Junior Subordinated Notes

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.

In August 2022, EPO redeemed $350 million of the $700 million outstanding principal amount of its Junior Subordinated Notes D 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 was funded using cash on hand and proceeds from issuances under EPO’s commercial paper program.

In September 2022, EPO entered into a new $1.5 Billion 364-Day Revolving Credit Agreement (the “September 2022 $1.5 Billion 364-Day Revolving Credit Agreement”) that replaced its September 2021 364-Day Revolving Credit Agreement.

The September 2022 $1.5 Billion 364-Day Revolving Credit Agreement matures in September 2023.

EPO’s borrowing capacity was unchanged from the prior 364-day revolving credit agreement.

As of September 30, 2022, there are no principal amounts outstanding under this new revolving credit agreement.

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 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.

As of November 8, 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.

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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 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.

The Partnership repurchased 2,925,842 and 4,333,963 common units through open market purchases during the three and nine months ended September 30, 2022, respectively.

The total cost of these repurchases, including commissions and fees, was $ 72 million and $107 million, respectively.

As of September 30, 2022, the remaining available capacity under the 2019 Buyback Program was $ 1.4 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 Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Net cash flows provided by operating activities

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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:

The following information highlights significant period-to-period fluctuations in our consolidated cash flow amounts:

Operating activities

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);

Net cash flows provided by operating activities for the nine months ended September 30, 2022 decreased a net $1.1 billion when compared to the nine months ended September 30, 2021 primarily due to:

a $1.7 bill ion period-to-period decrease attributable to the use of working capital employed in our marketing activities primarily related to storage optimization strategies, the effect of higher commodity prices in accounts receivables, accounts payables and inventories, and the timing of cash receipts and payments related to operations;

partially offset by

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

a $733 million period-to-period increase resulting from higher partnership earnings (determined by adjusting our $472 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).

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 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:

Cash used in investing activities during the nine months ended September 30, 2022 increased a net $ 2.6 billion when compared to the nine months ended September 30, 2021 primarily due to:

a net $ 3.2 billion cash outflow in February 2022 in connection with the acquisition of Navitas Midstream;

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Financing activities

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.

Cash used in financing activities during the nine months ended September 30, 2022 increased $249 million when compared to the nine months ended September 30, 2021 primarily due to:

a $113 million period-to-period increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit;

a net $75 million cash inflow during the nine months ended September 30, 2021 in connection with the termination of forward-starting interest rate swaps.

The impact from debt activities was essentially flat period-to-period.

During the nine months ended September 30, 2022, we repaid $ 1.75 billion aggregate principal amount of senior and junior subordinated notes, partially offset by net issuances of $1.4 billion under EPO’s commercial paper program.

During the nine months ended September 30, 2021 we repaid $ 1.33 billion aggregate principal amount of senior notes, partially offset by the issuance of $1.0 billion principal amount of senior notes.

Non-GAAP Cash Flow Measures

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

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

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Change in fair market value of derivative instruments

Deferred income tax expense (benefit)

Deferred income tax expense

Sustaining capital expenditures (3)

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

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.

The nine months ended September 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.

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Net cash flows provided by operating activities (GAAP)

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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 (fourth quarter of 2023);

our Mentone II natural gas processing plant in the Delaware Basin (fourth quarter 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 Mentone III natural gas processing plant in the Delaware Basin (first quarter of 2024);

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

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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.

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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;

We currently anticipate receiving approval for SPOT during the fourth quarter of 2022;

however, we can give no assurance as to whether the project will ultimately be approved or the timing of such decision.

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

For the Six Months

Ended June 30,

For the Nine Months

Ended September 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 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;

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

Comparison of Nine Months Ended September 30, 2022 with Nine Months Ended September 30, 2021

In total, investments in growth capital projects decreased a net $514 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 and a period-to-period decrease in spending on our PDH 2 facility), which accounted for a $214 million decrease;

completion of our Gillis Lateral natural gas pipeline in December 2021, which accounted for a $163 million decrease;

completion of pipeline projects connecting our Chambers County complex with Gulf Coast assets, which accounted for a $105 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 projects attributable to our ethylene business (e.g., completion of our Baymark ethylene pipeline in November 2021), which accounted for an $87 million decrease;

partially offset by

higher investments in natural gas processing and gathering projects in the Permian Basin (e.g., Plant 6 and Mentone II), which accounted for a $133 million increase.

Investments attributable to sustaining capital projects decreased $89 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 $ 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 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.

At September 30, 2022, the total amount of Guaranteed Debt was $29.7 billion, which was comprised of $25.8 billion of EPO’s senior notes, $2.3 billion of EPO’s junior subordinated notes, $1.4 billion of short-term commercial paper notes and $219 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 $ 48.0 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.

The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $47.3 billion at September 30, 2022.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the nine months ended September 30, 2022 was $4.4 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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Selected asset information:

September 30,

Current receivables from Non-Obligor Subsidiaries

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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

of $47.3 billion at September 30, 2022 and $45.9 billion at December 31, 2021

Selected liability information:

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

Current portion of Guaranteed Debt, including interest of $219 million at September 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):

September 30,

For the Twelve

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Net income (loss) of Obligor Group excluding equity in earnings of Non-Obligor Subsidiaries of

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

ended December 31, 2021

$4.4 billion for the nine months ended September 30, 2022 and

$4.5 billion for the twelve months ended December 31, 2021

Related Party Transactions

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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