What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-08 · 245 added, 332 removed, 433 unchanged (57% of the section changed)

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RESULTS OF OPERATIONS.

For the Three and Nine Months Ended September 30, 2022 and 2021

For the Three Months Ended March 31, 2023 and 2022

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, 2022 (the “2022 Form 10-K”), as filed on February 28, 2023 with the U.S.

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Cautionary Statement Regarding Forward-Looking Information

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.

This quarterly report on Form 10-Q for the three months ended March 31, 2023 (our “quarterly report”) contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us.

When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “scheduled,” “pending,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements.

Although we and our general partner believe that our expectations reflected in such forward-looking statements (including any forward-looking statements/expectations of third parties referenced in this quarterly report) are reasonable, neither we nor our general partner can give any assurances that such expectations will prove to be correct.

Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 2021 Form 10-K and within Part II, Item 1A of this quarterly report.

Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 2022 Form 10-K.

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.

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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 32.3% of the Partnership’s common units outstanding at September 30, 2022.

EPCO, together with its privately held affiliates, owned approximately 32.3% of the Partnership’s common units outstanding at March 31, 2023.

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 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.

As used in this quarterly report, the phrase “quarter-to-quarter” means the first quarter of 2023 compared to the first quarter of 2022.

Overview of Business

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Our financial position, results of operations and cash flows are subject to certain risks.

For information regarding such risks, see “ Risk Factors ” included under Part I, Item 1A of the 2021 Form 10-K and Part II, Item 1A of this quarterly report.

For information regarding such risks, see “ Risk Factors ” included under Part I, Item 1A of the 2022 Form 10-K.

We provide investors access to additional information regarding the Partnership and our consolidated businesses, including information relating to governance procedures and principles, through our website, www.enterpriseproducts.com .

Recent Developments

Enterprise Announces Three Expansions in the Permian Basin

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 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).

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

In April 2022, Enterprise and Oxy Low Carbon Ventures, LLC (“OLCV”), a subsidiary of Occidental, announced that we have executed a letter of intent to work toward a potential carbon dioxide (“CO 2 ”) transportation and sequestration solution for the Texas Gulf Coast.

The joint project would initially be focused on providing services to emitters in the industrial corridors from the greater Houston to Beaumont/Port Arthur areas.

The initiative would combine Enterprise’s leadership position in the midstream energy sector with OLCV’s extensive experience in subsurface characterization and CO 2 sequestration.

Enterprise would develop the CO 2 aggregation and transportation network utilizing a combination of new and existing pipelines along its expansive Gulf Coast footprint.

OLCV, through its 1PointFive business unit, is developing sequestration hubs on the Gulf Coast and across the U.S., some of which are expected to be anchored by direct air capture facilities.

The hubs will provide access to high quality pore space and efficient transportation infrastructure, bringing more options to emitters looking to explore viable carbon management strategies.

Enterprise and OLCV have begun exploring the commercialization of the potential joint service offering with customers.

Enterprise Announces Seven New Projects During Analyst and Investor Day

On April 12, 2022, Enterprise hosted a meeting with securities analysts and investors where we announced seven new projects that we expect will be completed by 2025.

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

a 400 MMcf/d expansion of our Acadian Gas System (second quarter of 2023);

our Plant 6 natural gas processing plant in the Midland Basin (second quarter of 2023);

a twelfth NGL fractionator (“Frac XII”) in Chambers County, Texas (third quarter of 2023);

our Mentone II 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.

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

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

an expansion of our Morgan’s Point terminal to increase ethylene export capacity (2023 and 2025).

Enterprise Announces Acquisition of Navitas Midstream

In January 2022, we announced that an affiliate of Enterprise entered into a definitive agreement to acquire Navitas Midstream Partners, LLC (“Navitas Midstream”) from an affiliate of Warburg Pincus LLC in a debt-free transaction for $3.25 billion in cash consideration (subject to adjustment in accordance with the agreement).

Navitas Midstream’s assets include approximately 1,750 miles of pipelines and over 1.0 Bcf/d of cryogenic natural gas processing capacity.

The purchase price was paid in cash at closing on February 17, 2022.

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

Issuance of $1.75 Billion of Senior Notes in January 2023

In January 2023, EPO issued $1.75 billion aggregate principal amount of senior notes comprised of (i) $750 million principal amount of senior notes due January 2026 (“Senior Notes FFF”) and (ii) $1.0 billion principal amount of senior notes due January 2033 (“Senior Notes GGG”).

Net proceeds from this offering were used by EPO for general company purposes, including for growth capital investments, and the repayment of debt (including the repayment of all of our $1.25 billion principal amount of 3.35% Senior Notes HH at their maturity in March 2023 and amounts outstanding under our commercial paper program).

Senior Notes FFF were issued at 99.893% of their principal amount and have a fixed-rate interest rate of 5.05% per year.

Senior Notes GGG were issued at 99.803% of their principal amount and have a fixed-rate interest rate of 5.35% per year.

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

Selected Energy Commodity Price Data

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2023 by quarter:

2022 Averages

Natural gas prices are based on Henry-Hub Inside FERC commercial index prices as reported by Platts, which is a division of S&P Global, Inc.

NGL prices for ethane, propane, normal butane, isobutane and natural gasoline are based on Mont Belvieu, Texas Non-TET commercial index prices as reported by Oil Price Information Service by IHS Markit (“IHS”).

Polymer grade propylene prices represent average contract pricing for such product as reported by IHS.

Refinery grade propylene (“RGP”) prices represent weighted-average spot prices for such product as reported by IHS.

Refinery grade propylene (“RGP”) prices represent weighted-average spot prices for such product as reported by IHS Markit (“IHS”).

The “Indicative Gas Processing Gross Spread” represents our generic estimate of the gross economic benefit from extracting NGLs from natural gas production based on certain pricing assumptions.

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In addition, the actual gas processing spread earned at each plant is further influenced by regional pricing and extraction dynamics.

The weighted-average indicative market price for NGLs was $0.95 per gallon in the 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 weighted-average indicative market price for NGLs was $0.66 per gallon in the first quarter of 2023 versus $0.95 per gallon in the first quarter of 2022.

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

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2023 by quarter:

2022 Averages

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

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Impact of Inflation

After being relatively moderate in recent years, inflation in the United States increased significantly in late 2021 into 2022.

This rise in inflation, coupled with supply chain disruptions, labor shortages and increased commodity prices, has generally resulted in higher costs in 2022.

Inflation rates in the United States increased significantly in 2022 and have continued to remain elevated in 2023 compared to historical levels.

While measures taken by the U.S.

Federal Reserve Bank have helped slow the growth of inflation in 2023 and pandemic-era supply chain disruptions have largely dissipated, the high cost environment that began in 2022 has generally remained intact in 2023.

However, to the extent that a rising cost environment impacts our results, there are typically offsetting benefits either inherent in our business or that result from other steps we take proactively to reduce the impact of inflation on our net operating results.

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and (3) higher commodity prices, which generally enhance our results in the form of increased volumetric throughput and demand for our services.

Additionally, we take measures to mitigate the impact of cost increases in certain commodities, including a portion of our electricity needs, using fixed-price, term purchase agreements.

Additionally, we take measures to mitigate the impact of cost increases in certain commodities, including a portion of our electricity needs, using fixed-price, term purchase agreements or financial derivatives.

For these reasons, the increased cost environment, caused in part by inflation, has not had a material impact on our historical results of operations for the periods presented in this report.

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See “ Capital Investments ” within this Part I, Item 2 for a discussion of the impact of inflation on our capital investment decisions.

Additionally, see Part II, Item 1A “ Risk Factors - Changes in price levels could negatively impact our revenue, our expenses, or both, which could adversely affect our business.

Income Statement Highlights

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Costs and expenses:

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

NGL Pipelines & Services:

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Total consolidated 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 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.

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 $ 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.

Total revenues for the first quarter of 2023 decreased $ 564 million when compared to the first quarter of 2022 primarily due to a $ 540 million decrease in marketing revenues.

Revenues from the marketing of NGLs and natural gas decreased a combined net $ 810 million quarter-to-quarter primarily due to lower average sales prices, which accounted for a $ 1.1 billion decrease, partially offset by higher sales volumes, which accounted for a $ 316 million increase.

Revenues from the marketing of crude oil and petrochemicals and refined products increased a combined net $ 270 million quarter-to-quarter primarily due to higher sales volumes, which accounted for a $ 1.0 b illion increase, partially offset by lower average sales prices, which accounted for a $ 743 million decrease.

Revenues from midstream services for the first quarter of 2023 decreased a net $ 24 million when compared to the first quarter of 2022.

R evenues from our crude oil pipeline assets decreased $ 84 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.

Revenues from our natural gas processing facilities decreased $33 million quarter-to-quarter primarily due to lower market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

Lastly, revenues from our natural gas pipeline assets increased $ 100 million quarter-to-quarter primarily due to higher demand for transportation services and the addition of the Midland Basin Gathering System, which was acquired in February 2022 .

Operating costs and expenses

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.

Total operating costs and expenses for the first quarter of 2023 decreased $ 640 million when compared to the first quarter of 2022.

Cost of sales

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.

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.

Cost of sales for the first quarter of 2023 decreased $ 767 m illion when compared to the first quarter of 2022.

The cost of sales associated with the marketing of NGLs, crude oil and natural gas decreased a combined net $ 898 million quarter-to-quarter primarily due to lower average purchase prices, which accounted for a $ 1.8 billion decrease, partially offset by higher sales volumes, which accounted for a $ 917 million increase.

The cost of sales associated with the marketing of petrochemicals and refined products increased $131 million primarily due to higher sales volumes, which accounted for an $83 million increase, and higher average purchase prices, which accounted for an additional $48 million increase.

Other operating costs and expenses

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.

Other operating costs and expenses for the first quarter of 2023 increased $ 111 million when compared to the first quarter of 2022 primarily due to higher maintenance, rental, employee compensation and other operating costs.

Depreciation, amortization and accretion expenses

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 .

The remainder of the quarter-to-quarter and period-to-period increases are due to assets placed into full or limited service since the end of the respective periods in 2021 (the Gillis Lateral natural gas pipeline and the Baymark ethylene pipeline) and major maintenance activities accounted for under the deferral method.

Asset impairment charges

Non-cash asset impairment charges for the 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.

Depreciation, amortization and accretion expense for the first quarter of 2023 increased a combined $ 21 million  

when compared to the first quarter of 2022 primarily due to the addition of assets attributable to the acquisition of our Midland Basin System in February 2022, which accounted for $ 12 million of the quarter-to-quarter increase.

The remainder of the quarter-to-quarter increase is due to assets placed into full or limited service since the end of the first quarter of 2022.

General and administrative 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.

General and administrative costs for the first quarter of 2023 decreased $ 5 million when compared to the first quarter of 2022 primarily due to lower employee compensation and professional services costs.

Equity in income of unconsolidated affiliates

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.

Equity income from our unconsolidated affiliates for the first quarter of 2023 decreased $ 13 million when compared to the first quarter of 2022 primarily due to lower earnings from investments in crude oil pipelines.

Operating income

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.

Operating income for the first quarter of 2023 increased $ 68 million when compared to the first quarter of 2022 due to the previously described quarter-to-quarter changes.

Interest expense

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

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.

The weighted-average interest rates on debt principal outstanding during the first quarters of 2023 and 2022 were 4.57% and 4.30%, 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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Capitalized interest amounts fluctuate based on the timing of when projects are placed into service, our capital investment levels and the interest rates charged on borrowings.

Primarily reflects facility commitment fees charged in connection with our revolving credit facilities and amortization of debt issuance costs.

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.

Interest charged on debt principal outstanding, which is a key driver of interest expense, increased a net $ 14 million quarter-to-quarter.

This increase was primarily due to the issuance of $1.75 billion fixed-rate senior notes in January 2023, which accounted for a $21 million increase, partially offset by a $12 million decrease as a result of the retirement of $1.4 billion and $1.25 billion of fixed-rate senior notes in February 2022 and March 2023, respectively, and the redemption of $350 million of junior subordinated notes in August 2022 .

In addition, interest expense on our outstanding variable-rate junior subordinated notes increased $5 million primarily due to a quarter-to-quarter increase in the 3-month LIBOR.

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 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”).

Our provision for income taxes for the first quarter of 2023 decreased $ 9 million  

when compared to the first quarter of 2022 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 September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Gross operating margin by segment:

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Operating income

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Segment gross operating margin:

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Natural gas processing and related NGL marketing activities

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 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 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).

Gross operating margin from natural gas processing and related NGL marketing activities for the first quarter of 2023 decreased $ 89 million when compared to the first quarter of 2022.

Gross operating margin from our NGL marketing activities decreased a net $77 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $72 million decrease, and lower sales volumes, which accounted for an additional $10 million decrease, partially offset by higher non-cash, mark-to-market earnings, which accounted for a $6 million increase.

Gross operating margin from our Delaware Basin natural gas processing facilities decreased $21 million quarter-to-quarter primarily due to lower average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes increased 197 MMcf/d and equity NGL-equivalent production volumes decreased 2 MBPD quarter-to-quarter.

Gross operating margin from our South Texas natural gas processing facilities decreased $7 million quarter-to-quarter primarily due to higher maintenance and other operating costs.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes increased 78 MMcf/d and 5 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 $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).

Fee-based natural gas processing volumes increased 59 MMcf/d and equity NGL-equivalent production volumes decreased 2 MBPD period-to-period.

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 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.

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

Fee-based natural gas processing volumes increased 185 MMcf/d and equity NGL-equivalent production volumes decreased 4 MBPD quarter-to-quarter (net to our interest).

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a net $15 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $49 million increase, and higher average processing fees, which accounted for an additional $5 million increase, partially offset by a 25 MBPD combined decrease in equity NGL-equivalent production volumes, which accounted for a $38 million decrease.

On a combined basis, fee-based natural gas processing volumes decreased 68 MMcf/d quarter-to-quarter.

Gross operating margin from our Midland Basin natural gas processing facilities, which represent the natural gas processing facilities we acquired in February 2022, increased a net $8 million quarter-to-quarter primarily due to an increase in total equity NGL-equivalent production volumes, which accounted for a $23 million increase, and an increase in total fee-based natural gas processing volumes, which accounted for an additional $22 million increase, partially offset by lower average processing margins (including the impact of hedging activities), which accounted for a $26 million decrease, and higher operating costs, which accounted for an additional $12 million decrease.

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities, which reflect the average daily operating rates from the time the asset was acquired, increased 154 MMcf/d and 4 MBPD, respectively, quarter-to-quarter.

NGL pipelines, storage and terminals

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.

Gross operating margin from our NGL pipelines, storage and terminal assets during the first quarter of 2023 increased $124 million when compared to the first quarter of 2022.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $30 million quarter-to-quarter  

primarily due to a combined 25 MBPD increase in transportation volumes, which accounted for a $23 million increase, and higher average transportation fees, which accounted for an additional $7 million increase.

Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) increased $24 million quarter-to-quarter primarily due to a 143 MBPD increase in LPG export volumes.

Gross operating margin from our related Houston Ship Channel Pipeline increased $7 million quarter-to-quarter primarily due to a 188 MBPD increase in transportation volumes.

Gross operating margin from our South Texas NGL Pipeline System increased $18 million quarter-to-quarter primarily due to higher storage and other fee revenues, which accounted for a $6 million increase, a 45 MBPD increase in transportation volumes, which accounted for a $4 million increase, and higher average transportation fees, which accounted for an additional $4 million increase.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $13 million quarter-to-quarter primarily due to a 39 MBPD increase in export volumes.

Gross operating margin from our South Louisiana NGL Pipeline System increased $6 million quarter-to-quarter primarily due to lower operating costs, which accounted for a $4 million increase, and an 18 MBPD increase in transportation volumes, which accounted for an additional $2 million increase.

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 $ 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.

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.

On a combined basis, gross operating margin from these pipelines increased a net $2 million quarter-to-quarter primarily due to higher other revenues, which accounted for a $7 million increase, and an 83 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $5 million increase, partially offset by higher maintenance and other operating costs, which accounted for a $10 million decrease.

NGL fractionation

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.

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.

Gross operating margin from NGL fractionation during the first quarter of 2023 decreased $48 million when compared to the first quarter of 2022.

Gross operating margin from our Chambers County NGL fractionation complex decreased $42 million quarter-to-quarter primarily due to lower ancillary service revenues, which accounted for a $26 million decrease, lower average fractionation fees, which accounted for a $12 million decrease, and a 5 MBPD (net to our interest) decrease in fractionation volumes, which accounted for an additional $5 million decrease.

Crude Oil Pipelines & Services

1 unchanged sentence

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Segment gross operating margin:

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Crude oil marine terminal volumes (MBPD)

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.

Gross operating margin from our Crude Oil Pipelines & Services segment for the first quarter of 2023 decreased $18 million when compared to the first quarter of 2022.

Gross operating margin from our EFS Midstream System decreased $75 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 in June 2022.

Our EFS Midstream System will continue to transport volumes produced on dedicated acreage through the remaining term of these agreements, most of which have a life-of-lease duration.

Gross operating margin from our equity investment in the Seaway Pipeline decreased $17 million quarter-to-quarter primarily due to lower average transportation and other fees.

Transportation volumes on our Seaway Pipeline increased 63 MBPD quarter-to-quarter (net to our interest).

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 South Texas Crude Oil Pipeline System decreased $11 million quarter-to-quarter primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term agreements in July 2022, which accounted for a $7 million decrease and lower average transportation fees, which accounted for an additional $6 million decrease.

Transportation volumes on our South Texas Crude Oil Pipeline System decreased 31 MBPD quarter-to-quarter.

Gross operating margin from our Midland terminal decreased $9 million quarter-to-quarter primarily due to higher operating costs.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) increased $44 million quarter-to-quarter primarily due to higher non-cash, mark-to-market earnings, which accounted for a $41 million increase, and higher average sales margins, which accounted for an additional $7 million increase.

Gross operating margin from our West Texas Pipeline System increased $44 million quarter-to-quarter primarily due to higher ancillary service and other revenues.

Transportation volumes on our West Texas Pipeline System increased 10 MBPD quarter-to-quarter.

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.

Gross operating margin from our Midland-to-ECHO System and related business activities increased $14 million quarter-to-quarter primarily due to a 63 MBPD (net to our interest) increase in transportation volumes.

Natural Gas Pipelines & Services

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Segment gross operating margin

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Natural gas pipeline transportation volumes (BBtus/d)

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.

Gross operating margin from our Natural Gas Pipelines & Services segment for the first quarter of 2023 increased $94 million when compared to the first quarter of 2022.

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 $29 million quarter-to-quarter primarily due to higher average gathering fees on our Jonah Gathering System and San Juan Gathering System.

The gathering fees on these systems are indexed to regional gas prices, which increased during the quarter.

Gathering volumes on our Rocky Mountain gathering systems decreased a combined 140 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 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 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 natural gas marketing activities increased $24 million quarter-to-quarter primarily due to higher average sales margins attributable to location price differentials.

Gross operating margin from our Texas Intrastate System increased $18 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $14 million increase, and a 555 BBtus/d increase in transportation volumes, which accounted for an additional $6 million increase.

Gross operating margin from our East Texas Gathering System increased $5 million quarter-to-quarter primarily due to a 352 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 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.

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 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 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.

Gross operating margin from our Midland Basin Gathering System, which was acquired in February 2022, increased a net $5 million quarter-to-quarter primarily due to an increase in total natural gas gathering volumes, which accounted for a $26 million increase, partially offset by higher rental and other operating costs, which accounted for a $21 million decrease.

Gathering volumes on our Midland Basin Gathering System, which reflect the average daily operating rates from the time the asset was acquired, increased 252 BBtus/d quarter-to-quarter.

Gross operating margin from our Acadian Gas System and Haynesville Gathering System increased a combined $5 million quarter-to-quarter primarily due to higher transportation volumes.

On a combined basis, transportation volumes increased 293 BBtus/d quarter-to-quarter.

Petrochemical & Refined Products Services

1 unchanged sentence

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Segment gross operating margin:

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Propylene production and related activities

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.

Gross operating margin from propylene production and related activities for the first quarter of 2023 decreased $28 million when compared to the first quarter of 2022.

Gross operating margin from our Chambers County propylene production facilities decreased a combined $38 million quarter-to-quarter primarily due to lower propylene sales volumes.

Propylene and associated by-product production volumes at these facilities decreased a combined 10 MBPD quarter-to-quarter (net to our interest) primarily due to planned major maintenance activities at our PDH 1 facility during the first quarter of 2023.

Butane isomerization and related operations

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.

Gross operating margin from butane isomerization and related operations were flat quarter-to-quarter primarily due to lower by-product average sales prices, which accounted for a $4 million decrease, partially offset by an 8 MBPD increase in isomerization volumes, which accounted for a $3 million increase.

Octane enhancement and related plant operations

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.

Gross operating margin from our octane enhancement and related plant operations for the first quarter of 2023 increased $25 million when compared to the first quarter of 2022 primarily due to higher average sales margins.

Refined products pipelines and related activities

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.

Gross operating margin from refined products pipelines and related activities for the first quarter of 2023 increased $16 million when compared to the first quarter of 2022.

Gross operating margin from our refined products marketing activities increased a net $24 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $25 million increase, and higher sales volumes, which accounted for an additional $9 million increase, partially offset by lower non-cash, mark-to-market earnings, which accounted for a $10 million decrease.

Gross operating margin from our refined products terminal in Beaumont, Texas increased $6 million quarter-to-quarter primarily due to higher storage and other fee revenues.

Refined product marine terminal volumes at Beaumont increased 132 MBPD quarter-to-quarter.

Gross operating margin from our TE Products Pipeline System decreased $16 million quarter-to-quarter primarily due to higher maintenance, storage and other operating costs.

Overall, transportation volumes on our TE Products Pipeline System increased a net 22 MBPD quarter-to-quarter.

Ethylene exports and related activities

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.

Gross operating margin from ethylene exports and related activities during the first quarter of 2023 decreased $3 million when compared to the first quarter of 2022 primarily due to a 1 MBPD (net to our interest) decrease in ethylene export volumes.

Marine transportation and other services

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.

Gross operating margin from marine transportation and other services increased a net $5 million quarter-to-quarter primarily due to higher average fees and fleet utilization rates, which accounted for a $9 million increase, partially offset by higher operating costs, which accounted for a $5 million decrease.

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 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.

At March 31, 2023, we had $4.0 billion of consolidated liquidity.

This amount was comprised of $3.9 billion of available borrowing capacity under EPO’s revolving credit facilities, which is the net of $4.2 billion of total borrowing capacity under EPO’s revolving credit facilities and $300 million outstanding under EPO’s commercial paper program, and $76 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 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.

Enterprise Declares Cash Distribution for First Quarter of 2023

On April 5 , 2023, we announced that the Board declared a quarterly cash distribution of $ 0.49 per common unit, or $ 1.96 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the first quarter of 2023.

The quarterly distribution is payable on May 12 , 2023 to unitholders of record as of the close of business on April 28, 2023.

The total amount to be paid is $ 1.08 billion, which includes $ 10 million for distribution equivalent rights on phantom unit awards.

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Consolidated Debt

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):

At March 31, 2023, the average maturity of EPO’s consolidated debt obligations was approximately 19.9 years.

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2023 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 issuances under its 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.

Senior Notes FFF were issued at 99.893% of their principal amount and have a fixed-rate interest rate of 5.05% per year.

Senior Notes GGG were issued at 99.803% of their principal amount and have a fixed-rate interest rate of 5.35% per year.

In March 2023, EPO entered into a new 364-Day Revolving Credit Agreement (the “March 2023 $1.5 Billion 364-Day Revolving Credit Agreement”) that replaced its September 2022 364-Day Revolving Credit Agreement.

The March 2023 $1.5 Billion 364-Day Revolving Credit Agreement matures in March 2024.

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.

As of March 31, 2023, there are no principal amounts outstanding under this new revolving credit agreement.

In March 2023, EPO entered into a new revolving credit agreement that matures in March 2028 (the “March 2023 $2.7 Billion Multi-Year Revolving Credit Agreement”).

The March 2023 $2.7 Billion Multi-Year Revolving Credit Agreement replaced EPO’s prior multi-year revolving credit agreement that was scheduled to mature in September 2026.

We proposed to reduce EPO’s borrowing capacity from $3.0 billion under the prior multi-year revolving credit agreement to $2.7 billion under the March 2023 $2.7 Billion Multi-Year Revolving Credit Agreement.

Under the new agreement, EPO retains the right to increase its borrowing capacity by up to $500 million to $3.2 billion, provided certain conditions for the election are met.

As of March 31, 2023, 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 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.

As of May 10 , 2023, the investment-grade credit ratings of EPO’s long-term senior unsecured debt securities were A- 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 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.

The Partnership repurchased 682,589 common units through open market purchases during the first quarter of 2023.

The total cost of these repurchases, including commissions and fees, was $ 17 million.

As of March 31, 2023, the remaining available capacity under the 2019 Buyback Program was $ 1.3 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 Nine Months

Ended September 30,

For the Three Months

Ended March 31,

Net cash flows provided by operating activities

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Changes in demand for our products and services may be caused by other factors, including prevailing economic conditions, reduced demand by consumers for the end products made with hydrocarbon products, increased competition, public health emergencies, adverse weather conditions and government regulations affecting prices and production levels.

We may also incur credit and price risk to the extent customers do not fulfill their contractual obligations to us in connection with our marketing activities and long-term take-or-pay agreements.

For a more complete discussion of these and other risk factors pertinent to our business, see “ Risk Factors ” included under Part I, Item 1A of the 2021 Form 10-K and Part II, Item 1A of this quarterly report.

We may also incur credit and price risk to the extent customers do not fulfill their contractual obligations to us in connection with our marketing activities and long-term take-or-pay and dedication agreements.

For a more complete discussion of these and other risk factors pertinent to our business, see “ Risk Factors ” included under Part I, Item 1A of the 2022 Form 10-K.

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 period-to-period fluctuations in our consolidated cash flow amounts:

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

Operating activities

Net cash flows provided by operating activities for the 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;

Net cash flows provided by operating activities for the first quarter of 2023 decreased a net $ 562 million when compared to the first quarter of 2022 primarily due to:

a $ 630 mill ion quarter-to-quarter decrease from changes in operating accounts primarily due to the use of working capital employed in our marketing activities, which includes the impact of (i) fluctuations in commodity prices, (ii) timing of our inventory purchase and sale strategies, and (iii) changes in margin deposit requirements associated with our commodity derivative instruments;

partially offset by

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.

a $ 73 million quarter-to-quarter increase resulting from higher partnership earnings (determined by adjusting our $ 91 million quarter-to-quarter 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 quarter-to-quarter changes in our consolidated net income and underlying segment results, see “ Income Statement Highlights ” and “ Business Segment Highlights ” within this Part I, Item 2.

Investing activities

Cash used in investing activities during the 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;

Cash used in investing activities during the first quarter of 2023 decreased a net $ 2.9 billion when compared to the first quarter of  

2022 primarily due to:

a net $ 3.2 billion cash outflow in February 2022 in connection with the acquisition of our Midland Basin System;

partially offset by

a $603 million period-to-period decrease in investments for property, plant and equipment (see “ Capital Investments ” within this Part I, Item 2 for additional information).

a $ 304 million quarter-to-quarter increase in investments for property, plant and equipment (see “ Capital Investments ” within this Part I, Item 2 for additional information).

Financing activities

Cash used in financing activities during the 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.

Cash used in financing activities during the first quarter of 2023 decreased a net $ 249 million when compared to the first quarter of  

2022 primarily due to:

a net cash inflow of $307 million related to debt transactions that occurred during the first quarter of 2023 compared to a net cash outflow of $20 million related to debt transactions that occurred during the first quarter of 2022.

During the first quarter of 2023, we issued $1.75 billion aggregate principal amount of senior notes, partially offset by the repayment of $1.25 billion principal amount of senior notes and net repayments of $194 million under EPO’s commercial paper program.

During the first quarter of 2022, we repaid $ 1.4 billion aggregate principal amount of senior notes, offset by net issuances of $1.4 billion under EPO’s commercial paper program;

partially offset by

a $ 52 million quarter-to-quarter increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit.

Non-GAAP Cash Flow Measures

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

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

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Sustaining capital expenditures (3)

Other, net (4)

Operational DCF (4)

Proceeds from asset sales

Proceeds from asset sales and other matters

Monetization of interest rate derivative instruments accounted for as cash flow hedges

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

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 September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Net cash flows provided by operating activities (GAAP)

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Distributions received from unconsolidated affiliates attributable to the return of capital

Proceeds from asset sales

Proceeds from asset sales and other matters

Net income attributable to noncontrolling interests

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We have approximately $6.1 billion of growth capital projects scheduled to be completed by the end of 2025 including the following projects (including their respective scheduled completion dates):

natural gas gathering expansion projects in the Delaware and Midland Basins (2022 and 2023);

natural gas gathering expansion projects in the Delaware and Midland Basins (2023);

our PDH 2 facility (second quarter of 2023);

a 400 MMcf/d expansion of our Acadian Gas System (second quarter of 2023);

our Plant 6 natural gas processing plant in the Midland Basin (second quarter of 2023);

our Poseidon natural gas processing plant in the Midland Basin (third quarter of 2023);

a twelfth NGL fractionator (“Frac XII”) in Chambers County, Texas (third quarter of 2023);

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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);

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

the expansion of our LPG and PGP export capacity at EHT (first half of 2025);

the expansion of our Shin Oak NGL Pipeline (first half of 2025);

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

an Ethane Export Terminal located in Orange County, Texas (2025);

an expansion of our Morgan’s Point terminal to increase ethylene export capacity (2024 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 EPO’s commercial paper program and cash on hand.

Shortly after closing on this transaction, we completed construction of the Leiker Plant and placed it into service in March 2022.

Based on information currently available, we expect our total capital investments for 2022, excluding business combinations and net of contributions from noncontrolling interests, to approximate $ 2.0 billion, which reflects growth capital investments of $ 1.6 billion and sustaining capital expenditures of $ 350 million.

These amounts do not include capital investments associated with our proposed deep-water offshore crude oil terminal (the Sea Port Oil Terminal, or SPOT), which remains subject to governmental approvals.

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.

Based on information currently available, we expect our total capital investments for 2023, net of contributions from noncontrolling interests, to approximate $ 2.8 billion to $3.2 billion, which reflects growth capital investments of $ 2.4 billion to $2.8 billion and sustaining capital expenditures of $ 400 million.

We received a favorable Record of Decision from the Department of Transportation’s Maritime Administration for SPOT during the fourth quarter of 2022;

however, we can give no assurance as to when or whether the project will ultimately be authorized to begin construction or operation.

Our forecast of capital investments is dependent upon our ability to generate the required funds from either operating cash flows or other means, including borrowings under debt agreements, the issuance of additional equity and debt securities, and potential divestitures.

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

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

Capital investments for property, plant and equipment:

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Cash used for business combinations, net (4)

Investments in unconsolidated affiliates

Growth and sustaining capital amounts presented in the table above are presented on a cash basis.

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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 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 an $87 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 an additional $48 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).

Amount for the three months ended March 31, 2022 represents net cash used for the acquisition of our Midland Basin System, which closed on February 17, 2022.

Comparison of First Quarter of 2023 with the First Quarter of 2022

In total, investments in growth capital projects increased $277 million quarter-to-quarter primarily due to the following:

higher investments in natural gas processing and gathering projects in the Permian Basin (e.g., construction of four natural gas processing plants and related gathering systems), which accounted for a $190 million increase;

higher investments in our Texas Western Products System, which accounted for a $29 million increase;

higher investments at our Chambers County complex (e.g., a quarter-to-quarter increase in spending on Frac XII, partially offset by a quarter-to-quarter decrease in spending on our PDH 2 facility), which accounted for an additional net $22 million increase.

Investments attributable to sustaining capital projects increased $27 million quarter-to-quarter primarily due to fluctuations in timing and costs of pipeline integrity and similar projects.

Critical Accounting Policies and Estimates

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The following types of estimates, in our opinion, are subjective in nature, require the exercise of professional judgment and involve complex analysis:

valuation of assets and liabilities acquired in a business combination

depreciation methods and estimated useful lives of property, plant and equipment;

measuring recoverability of long-lived assets and fair value of equity method investments;

valuation and amortization methods of customer relationships and contract-based intangible assets;

amortization methods of customer relationships and contract-based intangible assets;

methods we employ to measure the fair value of goodwill and related assets;

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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 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.

At March 31, 2023, the total amount of Guaranteed Debt was $29.1 billion, which was comprised of $26.3 billion of EPO’s senior notes, $2.3 billion of EPO’s junior subordinated notes, $300 million of short-term commercial paper notes and $239 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 $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.

The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $47.8 billion at March 31, 2023.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the first quarter of 2023 was $1.4 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 $47.3 billion at September 30, 2022 and $45.9 billion at December 31, 2021

of $47.8 billion at March 31, 2023 and $47.5 billion at December 31, 2022

Selected liability information:

Current portion of Guaranteed Debt, including interest of $219 million at September 30, 2022 and

Current portion of Guaranteed Debt, including interest of $239 million at March 31, 2023 and

$426 million at December 31, 2022

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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 Three

For the Twelve

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

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

$1.4 billion for the three months ended March 31, 2023 and

$5.9 billion for the twelve months ended December 31, 2022

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For information regarding our related party transactions, see Note 14 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report.

QUANT ITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

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

In order to manage risks associated with assets, liabilities and certain anticipated future transactions, we use derivative instruments such as futures, forward contracts, swaps and other instruments with similar characteristics.

Substantially all of our derivatives are used for non-trading activities.

We assess the risk associated with each of our derivative instrument portfolios using a sensitivity analysis model.

This approach measures the change in fair value of the derivative instrument portfolio based on a hypothetical 10% change in the underlying interest rates or quoted market prices on a particular day.

In addition to these variables, the fair value of each portfolio is influenced by changes in the notional amounts of the instruments outstanding and the discount rates used to determine the present values.

The sensitivity analysis approach does not reflect the impact that the same hypothetical price movement would have on the hedged exposures to which they relate.

Therefore, the impact on the fair value of a derivative instrument resulting from a change in interest rates or quoted market prices (as applicable) would normally be offset by a corresponding gain or loss on the hedged debt instrument, inventory value or forecasted transaction assuming:

the derivative instrument functions effectively as a hedge of the underlying risk;

the derivative instrument is not closed out in advance of its expected term;

the hedged forecasted transaction occurs within the expected time period.

We routinely review the effectiveness of our derivative instrument portfolios in light of current market conditions.

Accordingly, the nature and volume of our derivative instruments may change depending on the specific exposure being managed.

Commodity Hedging Activities

The price of energy commodities such as natural gas, NGLs, crude oil, petrochemicals and refined products and power are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control.

In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps and basis swaps.

At March 31, 2023, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging natural gas processing margins, (iii) hedging the fair value of commodity products held in inventory and (iv) hedging anticipated future purchases of power for certain operations in Southeast Texas.

For a summary of our portfolio of commodity derivative instruments outstanding, see Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report.

Sensitivity Analysis

The following tables show the effect of hypothetical price movements on the estimated fair values of our principal commodity derivative instrument portfolios at the dates indicated (dollars in millions).

The fair value information presented in the sensitivity analysis tables excludes the impact of applying Chicago Mercantile Exchange (“CME”) Rule 814, which deems that financial instruments cleared by the CME are settled daily in connection with variation margin payments.

As a result of this exchange rule, CME-related derivatives are considered to have no fair value at the balance sheet date for financial reporting purposes;

however, the derivatives remain outstanding and subject to future commodity price fluctuations until they are settled in accordance with their contractual terms.

Derivative transactions cleared on exchanges other than the CME (e.g., the Intercontinental Exchange or ICE) continue to be reported on a gross basis.

Natural gas marketing portfolio

Portfolio Fair Value at

Classification

Fair value assuming no change in underlying commodity prices

Asset (Liability)

Fair value assuming 10% increase in underlying commodity prices

Asset (Liability)

Fair value assuming 10% decrease in underlying commodity prices

Asset (Liability)

NGL and refined products marketing, natural gas processing and octane enhancement portfolio

Portfolio Fair Value at

Classification

Fair value assuming no change in underlying commodity prices

Asset (Liability)

Fair value assuming 10% increase in underlying commodity prices

Asset (Liability)

Fair value assuming 10% decrease in underlying commodity prices

Asset (Liability)

Crude oil marketing portfolio

Portfolio Fair Value at

Classification

Fair value assuming no change in underlying commodity prices

Asset (Liability)

Fair value assuming 10% increase in underlying commodity prices

Asset (Liability)

Fair value assuming 10% decrease in underlying commodity prices

Asset (Liability)

Commercial energy derivative portfolio

Portfolio Fair Value at

Classification

Fair value assuming no change in underlying commodity prices

Asset (Liability)

Fair value assuming 10% increase in underlying commodity prices

Asset (Liability)

Fair value assuming 10% decrease in underlying commodity prices

Asset (Liability)

Interest Rate Hedging Activities

We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements.

This strategy may be used in controlling our overall cost of capital associated with such borrowings.

As of the filing date of this quarterly report, we do not have any interest rate hedging instruments outstanding.

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