What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 195 added, 371 removed, 484 unchanged (54% of the section changed)

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RESULTS OF OPERATIONS.

For the Three and Nine Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

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, 2023 (the “2023 Form 10-K”), as filed on February 28, 2024 with the U.S.

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Cautionary Statement Regarding Forward-Looking Information

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

This quarterly report on Form 10-Q for the three months ended March 31, 2024 (our “quarterly report”) contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us.

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

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Bachmann, who is also a director and Vice Chairman of the Board;

Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP.

Randall Fowler, who is also a director and a Co-Chief Executive Officer of Enterprise GP.

Duncan Williams and Messrs.

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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, 2023.

EPCO, together with its privately held affiliates, owned approximately 32.3% of the Partnership’s common units outstanding at March 31, 2024.

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 2023 compared to the third quarter of 2022.

Likewise, the phrase “period-to-period” means the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

As used in this quarterly report, the phrase “quarter-to-quarter” means the first quarter of 2024 compared to the first quarter of 2023.

Overview of Business

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For information regarding such risks, see “ Risk Factors ” included under Part I, Item 1A of the 2023 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 Permian Growth Projects;

Conversion of Crude Oil Pipeline back to NGL Service

In October 2023, we announced the following four new projects to support ongoing production growth in the Permian Basin (including their respective scheduled completion dates):

the Bahia NGL Pipeline (first half of 2025);

our Mentone 4 natural gas processing plant in the Delaware Basin (second half of 2025);

our Orion natural gas processing plant in the Midland Basin (second half of 2025);

an NGL fractionator (“Frac 14”) and an associated deisobutanizer (“DIB”) unit in Chambers County, TX (second half of 2025)

In addition, we have taken initial steps to convert the Midland-to-Sealy segment of the Midland-to-ECHO 2 pipeline back to NGL service (as part of our Seminole NGL Pipeline).

We expect this conversion to be completed in December 2023.

Enterprise Begins Service At PDH 2 Plant

In July 2023, we placed into service our second propane dehydrogenation plant (“PDH 2”) in Chambers County, Texas.

Supported by long-term, fee-based contracts, PDH 2 has the capacity to consume 35 MBPD of propane to produce 1.65 billion pounds of PGP per year, which will help us supply our petrochemical customers with the feedstock to produce products that meet the needs of a growing global population.

With the completion and integration of our PDH 2 plant with our existing PDH 1 plant and other propylene production facilities, we now have the capacity to produce approximately 11 billion pounds of propylene per year.

Enterprise Begins Service At Its Twelfth NGL Fractionator in Chambers County, Texas

In July 2023, our twelfth NGL fractionator (“Frac 12”) located in Chambers County, Texas was placed into service.

The incremental 150 MBPD of nameplate capacity at Frac 12 will help accommodate growing NGL production from new natural gas processing plants in the Permian Basin and help satisfy the demand for feedstocks by the petrochemical and refining industries and LPG exports to developing nations.

Supported by long-term customer agreements, the addition of Frac 12 increases total NGL fractionation capacity to approximately 1.2 MMBPD at our Chambers County complex and approximately 1.7 MMBPD company-wide.

Enterprise Begins Service At Its Poseidon Natural Gas Processing Plant

In July 2023, we placed into service our Poseidon cryogenic natural gas processing plant (“Poseidon”), which is located in Glasscock County, Texas.

The new plant, which is our sixth in the Midland Basin, has a nameplate capacity of 300 MMcf/d and can extract more than 40 MBPD of NGLs.

Supported by long-term acreage dedication agreements, the new plant will support Permian Basin producers as they meet growing demand in the U.S.

Enterprise Receives Deepwater Port License for SPOT Project

In April 2024, we received the deepwater port license for the Sea Port Oil Terminal (“SPOT”) from the U.S.

Department of Transportation’s Maritime Administration.

The receipt of the deepwater port license is a significant milestone in the development and commercialization of SPOT.

As planned, SPOT would consist of proposed onshore and offshore facilities, including a fixed platform located approximately 30 nautical miles off the Texas coast in approximately 115 feet of water.

SPOT is designed to load Very Large Crude Carriers (“VLCCs”) and other crude oil tankers at rates of approximately 85,000 barrels per hour.

The platform would be connected to an onshore storage facility with approximately 4.8 MMBbls of capacity in Brazoria County, Texas, by two 36-inch, bi-directional pipelines.

The SPOT project includes state-of-the-art pipeline control, vapor recovery and leak detection systems that are designed to minimize emissions.

SPOT would provide customers with an integrated export solution that leverages our extensive supply, storage and distribution network along the Gulf Coast.

We continue our efforts to commercialize this project in order to support a final investment decision.

Enterprise to Build Mentone West 2;

Mentone 3 and Leonidas Begin Service

In April 2024, we announced plans to further expand our natural gas processing capabilities in the Delaware Basin with construction of a second natural gas processing train at our Mentone West location (“Mentone West 2”) in Loving County, Texas.

This natural gas processing train, which will have the capacity to process more than 300 MMcf/d of natural gas and extract in excess of 40 MBPD of NGLs, is expected to begin service during the first half of 2026.

Additionally, we placed into service our third natural gas processing train at Mentone in the Delaware Basin (“Mentone 3”) and our seventh Midland Basin natural gas processing train (“Leonidas”).

Both Mentone 3 and Leonidas are capable of processing over 300 MMcf/d of natural gas and extracting more than 40 MBPD of NGLs.

Supported by a combination of long-term producer dedications and minimum volume commitments, Mentone 3 and Leonidas will support Permian Basin producers as they meet growing demand in the U.S.

and internationally.

With the addition of Poseidon, we now have the capability to process 1.3 Bcf/d of natural gas and extract more than 185 MBPD of NGLs in the Midland Basin.

Enterprise Completes Expansion of Acadian Haynesville Extension

In May 2023, we completed an expansion of our Acadian Haynesville Extension natural gas pipeline.

This expansion adds approximately 400 MMcf/d of Haynesville natural gas takeaway capacity to meet growing industrial demand in the Mississippi River Corridor and supports the Louisiana liquefied natural gas export market.

The incremental compression added as part of the expansion project increased total natural gas transportation capacity on the Acadian Haynesville Extension from approximately 2.1 Bcf/d to 2.5 Bcf/d.

This expansion is underwritten by long-term, take-or-pay contracts.

Enterprise Begins Initial Service on TW Products System

In March 2024, we placed into service the first phase of our Texas Western Products System (“TW Products System”) and began truck loading operations at our new Permian terminal in Gaines County, Texas.

This facility features approximately 900,000 barrels of storage for gasoline and diesel, and truck loading capacity of 10 MBPD.

We expect the remainder of the system, which includes our Jal and Moriarty Terminals located in New Mexico and Grand Junction Terminal located in Utah, to be placed into service in the second and third quarters of 2024.

Enterprise Acquires Equity Interests from Western Midstream

In February 2024, we announced that we had acquired the remaining equity interests in Whitethorn Pipeline Company, LLC (“Whitethorn”) and Enterprise EF78 LLC (“EF78”) from affiliates of Western Midstream Partners, LP (“Western Midstream”) for $375 million in total cash consideration.

This transaction, which closed on February 16, 2024, was funded using cash on hand and proceeds from the issuance of short-term notes under our commercial paper program.

Additionally, on March 27, 2024, we acquired an additional 15% equity interest in Panola Pipeline Company, LLC (“Panola”) from an affiliate of Western Midstream for $25 million in cash consideration.

We funded the cash consideration using cash on hand.

Issuance of $2.0 Billion of Senior Notes in January 2024

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.

In January 2024, EPO issued $2.0 billion aggregate principal amount of senior notes comprised of (i) $1.0 billion principal amount of senior notes due January 2027 (“Senior Notes HHH”) and (ii) $1.0 billion principal amount of senior notes due January 2034 (“Senior Notes III”).

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 $850 million principal amount of 3.90% Senior Notes JJ at their maturity in February 2024 and amounts outstanding under our commercial paper program).

Senior Notes HHH were issued at 99.897% of their principal amount and have a fixed interest rate of 4.60% per year.

Senior Notes III were issued at 99.705% of their principal amount and have a fixed interest rate of 4.85% per year.

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

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2024 by quarter:

2023 Averages

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

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

The weighted-average indicative market price for NGLs was $0.61 per gallon in the third quarter of 2023 versus $0.95 per gallon in the third quarter of 2022.

Likewise, the weighted-average indicative market price for NGLs was $0.61 per gallon during the nine months ended September 30, 2023 compared to $0.99 per gallon during the same period in 2022.

The weighted-average indicative market price for NGLs was $0.62 per gallon in the first quarter of 2024 versus $0.66 per gallon in the first quarter of 2023.

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

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2024 by quarter:

2023 Averages

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

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Impact of Inflation

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

Inflation rates in the U.S.

increased significantly in 2022 and remain elevated in 2024 compared to recent historical levels.

While pandemic-era supply chain disruptions have largely dissipated and measures taken by the U.S.

Federal Reserve Bank have helped slow the growth of inflation in 2023, the high cost environment that began in 2022 has generally remained intact in 2023.

Federal Reserve Bank have helped slow the growth of inflation, the high cost environment that began in 2022 generally remains intact in 2024.

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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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Costs and expenses:

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Asset impairment charges

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

Net gains attributable to asset sales and related matters

Total operating 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 2023 Compared to Third Quarter of 2022.

Total revenues for the third quarter of 2023 decreased a net $ 3.5 billion when compared to the third quarter of 2022 primarily due to lower marketing revenues.

Revenues from the marketing of NGLs and petrochemicals and refined products decreased a combined $ 3.2 billion quarter-to-quarter primarily due to lower average sales prices, which accounted for a $ 2.9 billion decrease, and lower sales volumes, which accounted for an additional $ 265 million decrease.

Revenues from the marketing of natural gas decreased $1.0 billion quarter-to-quarter primarily due to lower average sales prices.

Revenues from the marketing of crude oil increased a net $613 million quarter-to-quarter primarily due to higher sales volumes, which accounted for a $ 1.4 b illion increase, partially offset by lower average sales prices, which accounted for a $ 837 million decrease.

Revenues from midstream services for the third quarter of 2023 increased $ 133 million when compared to the third quarter of 2022.

R evenues from our NGL, natural gas and petrochemicals and refined products pipeline assets increased a combined $66 million quarter-to-quarter primarily due to higher demand for transportation services.

Revenues from our Chambers County propylene production facilities increased $38 million quarter-to-quarter primarily due to higher propylene processing revenues as a result of contributions from our PDH 2 facility, which was placed into service in July 2023.

Lastly, revenues from our natural gas processing facilities increased $ 27 million quarter-to-quarter primarily due to an increase in total fee-based natural gas processing volumes as a result of the addition of Poseidon, which was placed into service in July 2023.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Total revenues for the nine months ended September 30, 2023 decreased $9.4 billion when compared to the nine months ended September 30, 2022 primarily due to lower marketing revenues.

Revenues from the marketing of NGLs decreased $5.8 billion period-to-period primarily due to lower average sales prices.

Revenues from the marketing of crude oil, natural gas and petrochemicals and refined products decreased a combined net $3.6 billion period-to-period primarily due to lower average sales prices, which accounted for a $6.8 billion decrease, partially offset by higher sales volumes, which accounted for a $3.2 billion increase.

Revenues from midstream services for the nine months ended September 30, 2023 decreased a net $41 million when compared to the nine months ended September 30, 2022.

Revenues from our natural gas processing facilities decreased $153 million period-to-period primarily due to lower market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

Revenues from our crude oil pipeline assets decreased $101 million period-to-period 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 and South Texas Crude Oil Pipeline System.

Lastly, revenues from our NGL and natural gas pipeline assets increased a combined $233 million period-to-period primarily due to higher demand for transportation services and the addition of the Midland Basin Gathering System, which was acquired in February 2022.

Total revenues for the first quarter of 2024 increased $ 2.3 billion when compared to the first quarter of 2023 primarily due to a $2.1 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and petrochemicals and refined products increased a combined net $ 2.5 billion quarter-to-quarter primarily due to higher sales volumes, which accounted for a $ 2.8 billion increase, partially offset by lower average sales prices, which accounted for a $ 362 million decrease.

Revenues from the marketing of natural gas decreased $ 343 million quarter-to-quarter primarily due to lower average sales prices.

Revenues from midstream services for the first quarter of 2024 increased $ 176 million when compared to the first quarter of 2023.

Revenues from our natural gas processing facilities increased $ 63 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.

Revenues from our Mont Belvieu propylene production facilities increased $40 million quarter-to-quarter primarily due to higher propylene processing revenues as a result of contributions from our PDH 2 facility, which was placed into service in July 2023.

Revenues from our Midland-to-ECHO System and related business activities increased $39 million quarter-to-quarter primarily due to higher transportation revenues.

Lastly, revenues from our ethylene pipelines increased $17 million quarter-to-quarter primarily due to higher deficiency fee revenues.

Operating costs and expenses

Total operating costs and expenses for the three and nine months ended September 30, 2023 decreased $3.4 billion and $9.3 billion, respectively, when compared to the same periods in 2022.

Total operating costs and expenses for the first quarter of 2024 increased $ 2.2 billion when compared to the first quarter of 2023.

Cost of sales

Third Quarter of 2023 Compared to Third Quarter of 2022.

Cost of sales for the third quarter of 2023 decreased a net $3.5 b illion when compared to the third quarter of 2022.

The cost of sales associated with the marketing of NGLs and petrochemicals and refined products decreased a combined $3.6 billion quarter-to-quarter primarily due to lower average purchase prices, which accounted for a $3.4 billion decrease, and lower volumes, which accounted for an additional $240 million decrease.

The cost of sales associated with the marketing of natural gas decreased $520 million primarily due to lower average purchase prices.

The cost of sales associated with the marketing of crude oil increased a net $641 million primarily due to higher volumes, which accounted for a $1.2 billion increase, partially offset by lower average purchase prices, which accounted for a $620 million decrease.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Cost of sales for the nine months ended September 30, 2023 decreased $9.5 billion when compared to the nine months ended September 30, 2022.

The cost of sales associated with our marketing of NGLs decreased $6.4 billion period-to-period primarily due to lower average purchase prices.

The cost of sales associated with the marketing of crude oil, natural gas and petrochemicals and refined products decreased a combined net $3.1 billion primarily due to lower average purchase prices, which accounted for a $5.9 billion decrease, partially offset by higher volumes, which accounted for a $2.8 billion increase.

Cost of sales for the first quarter of 2024 increased a net $ 2.1 b illion when compared to the first quarter of 2023.

The cost of sales associated with the marketing of crude oil and petrochemicals and refined products increased a combined $ 2.5 billion quarter-to-quarter primarily due to higher volumes, which accounted for a $ 2.3 billion increase, and higher average purchase prices, which accounted for an additional $ 157 million increase.

The cost of sales associated with the marketing of NGLs and natural gas decreased a combined net $ 358 million primarily due to lower average purchase prices, which accounted for a $761 million decrease, partially offset by higher volumes, which accounted for a $403 million increase.

Other operating costs and expenses

Other operating costs and expenses for the third quarter of 2023 increased $60 million when compared to the third quarter of 2022 primarily due to higher maintenance, rental, employee compensation and other operating costs.

Other operating costs and expenses for the nine months ended September 30, 2023 increased a net $182 million when compared to the nine months ended September 30, 2022 primarily due to higher maintenance, rental, employee compensation and other operating costs, which accounted for a $252 million increase, partially offset by lower utility costs, which accounted for a $70 million decrease.

Other operating costs and expenses for the first quarter of 2024 increased $ 86 million when compared to the first quarter of 2023 primarily due to higher employee compensation, chemical, rental, maintenance and other operating costs.

Depreciation, amortization and accretion expenses

Depreciation, amortization and accretion expense for the three and nine months ended September 30, 2023 increased a combined $46 million and $85 million, respectively, when compared to the same periods in 2022.

Depreciation expense increased $29 million quarter-to-quarter and $49 million period-to-period primarily due to the addition of our PDH 2 facility, which was placed into service in July 2023, assets attributable to the acquisition of our Midland Basin System in February 2022 and other assets placed into full or limited service since the end of the respective periods in 2022.

Additionally, amortization expense associated with our contract-based intangible assets accounted for an additional $7 million of the quarter-to-quarter increase and $17 million of the period-to-period increase .

Depreciation, amortization and accretion expense for the first quarter of 2024 increased a combined $ 48 million when compared to the first quarter of 2023 primarily due to higher depreciation expense on assets placed into full or limited service since the end of the first quarter of 2023.

General and administrative costs

General and administrative costs for the third quarter of 2023 increased $4 million when compared to the third quarter of 2022 primarily due to higher employee compensation costs.

General and administrative costs for the nine months ended September 30, 2023 decreased $7 million when compared to the same period in 2022 primarily due to lower professional services and employee compensation costs.

General and administrative costs for the first quarter of 2024 increased $ 9 million when compared to the first quarter of 2023 primarily due to higher employee compensation costs.

Equity in income of unconsolidated affiliates

Equity income from our unconsolidated affiliates for the three and nine months ended September 30, 2023 increased $11 million and $12 million, respectively, when compared to the same periods in 2022 primarily due to higher earnings from investments in crude oil pipelines.

Equity income from our unconsolidated affiliates for the first quarter of 2024 decreased a net $ 2 million when compared to the first quarter of 2023 primarily due to lower earnings from investments in NGL pipelines and services, which accounted for a combined $8 million decrease, partially offset by higher earnings from investments in crude oil pipelines, which accounted for a $5 million increase.

Operating income

Operating income for the three and nine months ended September 30, 2023 decreased $17 million and $134 million, respectively, when compared to the same periods in 2022 due to the previously described quarter-to-quarter and period-to-period changes.

Operating income for the first quarter of 2024 increased $ 88 million when compared to the first quarter of 2023 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, 2023 were 4.55% and 4.57%, respectively.

The weighted-average interest rate on debt principal outstanding during each of 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 first quarters of 2024 and 2023 were 4.60% and 4.56%, 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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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 $23 million increase, partially offset by a $13 million decrease as a result of the retirement of $1.25 billion of fixed-rate senior notes in March 2023 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 applicable 3-month variable rate.

Beginning on July 1, 2023, our junior subordinated notes subject to a variable rate replaced the applicable LIBOR Rate with the 3-month CME Term SOFR plus a 0.26161% tenor spread adjustment.

Interest charged on debt principal outstanding increased a net $52 million period-to-period.

This increase was primarily due to the aforementioned issuance of senior notes, which accounted for a $66 million increase, partially offset by a $40 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 the aforementioned junior subordinated notes in August 2022 .

In addition, interest expense on our outstanding variable-rate junior subordinated notes increased $16 million primarily due to a period-to-period increase in the applicable 3-month variable rate.

This increase was primarily due to the issuance of $2.0 billion fixed-rate senior notes in January 2024, which accounted for a $21 million increase, partially offset by a $13 million decrease as a result of the retirement of $1.25 billion and $850 million of fixed-rate senior notes in March 2023 and February 2024, respectively .

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.

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Our income taxes are primarily comprised of our state tax obligations under the Revised Texas Franchise Tax (“Texas Margin Tax”).

Our provision for income taxes for the three and nine months ended September 30, 2023 increased $4 million  

and decreased $9 million, respectively, when compared to the same periods in 2022.

Our provision for income taxes for the first quarter of 2024 increased $ 11 million when compared to the first quarter of 2023.

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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Within the context of this table, total segment gross operating margin represents a subtotal and corresponds to measures similarly titled within our business segment disclosures found under Note 10 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report.

Total gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.

Total gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.

Gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.

Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.

Our calculation of gross operating margin may or may not be comparable to similarly titled measures used by other companies.

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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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Asset impairment charges in operating costs and expenses

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

Net gains attributable to asset sales and related matters in operating

costs and expenses

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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 2023 Compared to Third Quarter of 2022 .

Gross operating margin from natural gas processing and related NGL marketing activities for the third quarter of 2023 decreased $192 million when compared to the third quarter of 2022.

Gross operating margin from our NGL marketing activities decreased $77 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $61 million decrease, and lower non-cash, mark-to-market earnings, which accounted for an additional $16 million decrease.

Gross operating margin from our Midland Basin natural gas processing facilities decreased a net $65 million quarter-to-quarter primarily due to lower average processing margins (including the impact of hedging activities), which accounted for a $70 million decrease, and higher utility and other operating expenses, which accounted for an additional $8 million decrease, partially offset by higher fee-based natural gas processing volumes, which accounted for a $13 million increase.

Fee-based processing volumes at our Midland Basin natural gas processing facilities increased 212 MMcf/d quarter-to-quarter primarily due to processing volumes contributed by our Poseidon natural gas processing plant, which was placed into service in July 2023.

Gross operating margin from our Delaware Basin natural gas processing facilities decreased $35 million quarter-to-quarter primarily due to lower average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes and equity NGL-equivalent production volumes at these facilities decreased 14 MMcf/d and 2 MBPD, respectively, quarter-to-quarter.

Gross operating margin from our South Texas natural gas processing facilities decreased a net $4 million quarter-to-quarter primarily due to lower average processing margins (including the impact of hedging activities), which accounted for a $5 million decrease, and a 6 MBPD decrease in equity NGL-equivalent production volumes, which accounted for an additional $5 million decrease, partially offset by a 181 MMcf/d increase in fee-based natural gas processing volumes, which accounted for a $3 million increase, and lower maintenance and other operating costs, which accounted for an additional $3 million increase.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from natural gas processing and related NGL marketing activities for the nine months ended September 30, 2023 decreased $558 million when compared to the nine months ended September 30, 2022.

Gross operating margin from our NGL marketing activities decreased $256 million period-to-period primarily due to lower average sales margins, which accounted for a $218 million decrease, and lower sales volumes, which accounted for an additional $35 million decrease.

Gross operating margin from our Midland Basin natural gas processing facilities decreased a net $146 million period-to-period primarily due to lower average processing margins (including the impact of hedging activities), which accounted for a $204 million decrease, and higher operating costs, which accounted for an additional $20 million decrease, partially offset by an increase in total equity NGL-equivalent production volumes, which accounted for a $24 million increase, and an increase in total fee-based natural gas processing volumes, which accounted for an additional $56 million increase.

Fee-based natural gas processing volumes at these facilities, which reflect the average daily operating rates from the time the asset was acquired, increased 173 MMcf/d and equity NGL-equivalent production volumes increased 1 MBPD period-to-period.

Gross operating margin from our Delaware Basin natural gas processing facilities decreased $86 million period-to-period primarily due to lower average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes at these facilities increased 81 MMcf/d and equity NGL-equivalent production volumes decreased 3 MBPD period-to-period .

Gross operating margin from our South Texas natural gas processing facilities decreased $40 million period-to-period primarily due to lower average processing margins (including the impact of hedging activities), which accounted for a $33 million decrease, and higher maintenance and other operating costs, which accounted for an additional $7 million decrease.

Fee-based natural gas processing volumes increased 96 MMcf/d and equity NGL-equivalent production volumes decreased 1 MBPD period-to-period.

Gross operating margin from our Louisiana and Mississippi natural gas processing facilities decreased $16 million  

period-to-period primarily due to lower average processing margins (including the impact of hedging activities).

Fee-based natural gas processing volumes increased 206 MMcf/d and equity NGL-equivalent production volumes decreased 3 MBPD period-to-period (net to our interest).

On a combined basis, gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) decreased $10 million period-to-period primarily due to a 10 MBPD decrease in equity NGL-equivalent production volumes.

Fee-based natural gas processing volumes decreased a combined 48 MMcf/d period-to-period.

Gross operating margin from natural gas processing and related NGL marketing activities for the first quarter of 2024 increased $32 million when compared to the first quarter of 2023.

Gross operating margin from our NGL marketing activities increased $22 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $13 million increase, and higher non-cash, mark-to-market earnings, which accounted for an additional $8 million increase.

Gross operating margin from our Delaware Basin natural gas processing facilities increased $18 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $13 million increase, and higher fee-based natural gas processing volumes, which accounted for an additional $6 million increase.

Fee-based natural gas processing volumes at our Delaware Basin natural gas processing facilities increased 160 MMcf/d quarter-to-quarter, primarily due to processing volumes contributed by our Mentone 2 natural gas processing train, which was placed into service in October 2023.

Gross operating margin from our Midland Basin natural gas processing facilities increased a net $15 million quarter-to-quarter primarily due to higher fee-based natural gas processing volumes, which accounted for a $10 million increase, and a 13 MBPD increase in equity NGL-equivalent production volumes, which accounted for an additional $9 million increase, partially offset by higher operating expenses, which accounted for a $7 million decrease.

Fee-based natural gas processing volumes at our Midland Basin natural gas processing facilities increased 269 MMcf/d quarter-to-quarter primarily due to contributions from our Poseidon natural gas processing train, which was placed into service in July 2023.

Gross operating margin from our South Texas natural gas processing facilities increased a net $11 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $ 12 million increase, and lower maintenance and other operating costs, which accounted for an additional $5 million increase, partially offset by a 9 MBPD decrease in equity NGL-equivalent production volumes, which accounted for an $ 8 million decrease.

Fee-based natural gas processing volumes increased 57 MMcf/d quarter-to quarter.

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) decreased a combined $35 million quarter-to-quarter primarily due to lower average processing margins (including the impact of hedging activities).

On a combined basis, fee-based natural gas processing volumes and equity NGL-equivalent production volumes increased 339 MMcf/d and 14 MBPD, respectively, quarter-to-quarter.

NGL pipelines, storage and terminals

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the third quarter of 2023 increased $93 million when compared to the third quarter of 2022.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $25 million quarter-to-quarter  

primarily due to higher average transportation fees.

Gross operating margin from our NGL pipelines, storage and terminal assets during the first quarter of 2024 increased $59 million when compared to the first quarter of 2023.

Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) increased $22 million quarter-to-quarter primarily due to an 83 MBPD increase in LPG export volumes, which accounted for a $13 million increase, and higher average loading fees, which accounted for an additional $9 million increase.

Gross operating margin at our Morgan’s Point Ethane Export Terminal decreased $8 million quarter-to-quarter primarily due to lower average loading fees, which accounted for a $6 million decrease, and a 12 MBPD decrease in export volumes, which accounted for an additional $2 million decrease.

Gross operating margin from our related Houston Ship Channel Pipeline System increased $11 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $5 million increase, and an 86 MBPD increase in transportation volumes, which accounted for an additional $4 million increase.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $20 million quarter-to-quarter primarily due to higher average transportation fees.

Transportation volumes on these pipelines increased a combined 43 MBPD quarter-to-quarter.

Gross operating margin from our Mont Belvieu storage complex increased $18 million quarter-to-quarter primarily due to higher storage revenues.

A number of our pipelines, including the Mid-America Pipeline System, Seminole NGL Pipeline, Chaparral NGL Pipeline, and Shin Oak NGL Pipeline, serve Permian Basin and/or Rocky Mountain producers.

On a combined basis, gross operating margin from these pipelines increased a net $19 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $19 million increase, and a  

64 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $5 million increase, partially offset by lower other revenues, which accounted for a $3 million decrease.

Gross operating margin from our South Texas NGL Pipeline System increased $14 million quarter-to-quarter primarily due to a 36 MBPD increase in transportation volumes, which accounted for a $7 million increase, and higher average transportation and related fees, which accounted for an additional $7 million increase.

Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) increased $13 million quarter-to-quarter primarily due to higher average loading fees.

LPG export volumes at EHT increased 9 MBPD quarter-to-quarter.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $9 million quarter-to-quarter primarily due to a 15 MBPD increase in export volumes, which accounted for a $4 million increase, and higher average loading fees, which accounted for an additional $3 million increase.

Gross operating margin from our related Houston Ship Channel Pipeline System increased $9 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $4 million increase, and a 69 MBPD increase in transportation volumes, which accounted for an additional $3 million increase.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the nine months ended September 30, 2023 increased $276 million when compared to the nine months ended September 30, 2022.

On a combined basis gross operating margin for our Eastern ethane pipelines increased $58 million period-to-period  

primarily due to a combined 82 MBPD increase in transportation volumes.

Gross operating margin from LPG-related activities at EHT increased $49 million period-to-period primarily due to higher average loading fees, which accounted for a $25 million increase, and a 49 MBPD increase in LPG export volumes, which accounted for an additional $19 million increase.

Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $34 million period-to-period primarily due to a 25 MBPD increase in export volumes, which accounted for a $21 million increase, and higher average loading fees, which accounted for an additional $9 million increase.

Gross operating margin from our related Houston Ship Channel Pipeline System increased $23 million period-to-period primarily due to a 105 MBPD increase in transportation volumes, which accounted for a $14 million increase, and higher average transportation fees, which accounted for an additional $9 million increase.

Gross operating margin from our South Texas NGL Pipeline System increased $31 million period-to-period primarily due to higher average transportation and related fees, which accounted for a $19 million increase, a 26 MBPD increase in transportation volumes, which accounted for a $6 million increase, and higher storage and other revenues, which accounted for an additional $6 million increase.

On a combined basis, gross operating margin for our pipelines that serve Permian Basin and/or Rocky Mountain producers increased a net $24 million period-to-period primarily due to higher average transportation fees, which accounted for a $27 million increase, a 72 MBPD (net to our interest) increase in transportation volumes, which accounted for a $9 million increase, and higher other revenues, which accounted for an additional $9 million increase, partially offset by higher maintenance and other operating costs, which accounted for a $21 million decrease.

Gross operating margin from our Chambers County storage complex increased $13 million period-to-period primarily due to lower operating costs, which accounted for a $7 million increase, and higher storage revenues, which accounted for an additional $6 million increase.

Gross operating margin from our South Louisiana NGL Pipeline System increased $11 million period-to-period primarily due to higher average transportation fees, which accounted for a $4 million increase, lower operating costs, which accounted for a $4 million increase, and a 16 MBPD increase in transportation volumes, which accounted for an additional $3 million increase.

On a combined basis, gross operating margin from these pipelines increased a net $15 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $20 million increase, and a 45 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $15 million increase, partially offset by lower other revenues, which accounted for a $13 million decrease and higher operating costs, which accounted for an additional $7 million decrease.

Gross operating margin from our equity investments in the Texas Express Pipeline, Texas Express Gathering System and Front Range Pipeline decreased a combined $12 million quarter-to-quarter primarily due to lower transportation fees on our Texas Express Pipeline and Gathering System, which accounted for a $10 million decrease, and a 16 MBPD (net to our interest) decrease in transportation volumes, which accounted for an additional $3 million decrease.

Gross operating margin from our South Texas NGL Pipeline System decreased $7 million quarter-to-quarter primarily due to lower average transportation and related fees, which accounted for an $8 million decrease, and higher maintenance and other operating costs, which accounted for an additional $3 million decrease, partially offset by a 17 MBPD increase in transportation volumes, which accounted for a $4 million increase.

NGL fractionation

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from NGL fractionation during the third quarter of 2023 decreased $1 million when compared to the third quarter of 2022.

Gross operating margin from our Chambers County NGL fractionation complex was flat quarter-to-quarter primarily due to a 114 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $20 million increase, and lower utility and other operating costs, which accounted for an additional $8 million increase, offset by lower average fractionation fees, which accounted for a $24 million decrease, and lower ancillary service revenues, which accounted for an additional $5 million decrease.

NGL fractionation volumes at our Chambers County NGL fractionation complex increased primarily due to contributions from Frac 12, which entered service in July 2023.

On a combined basis, gross operating margin from our other NGL fractionators decreased $3 million quarter-to-quarter primarily due to lower average fractionation fees.

NGL fractionation volumes from our other NGL fractionators increased a combined 34 MBPD (net to our interest) quarter-to-quarter.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from NGL fractionation during the nine months ended September 30, 2023 decreased $48 million when compared to the nine months ended September 30, 2022.

Gross operating margin from our Chambers County NGL fractionation complex decreased a net $35 million period-to-period primarily due to lower average fractionation fees, which accounted for a $53 million decrease , and lower ancillary services revenues, which accounted for an additional $46 million decrease, partially offset by lower utility and other operating costs, which accounted for a $40 million increase, and a 155 MBPD (net to our interest) increase in fractionation volumes, which accounted for an additional $21 million increase.

NGL fractionation volumes from our Chambers County NGL fractionation complex increased primarily due to contributions from Frac 12.

On a combined basis, gross operating margin from our other NGL fractionators decreased a net $16 million period-to-period primarily due to lower average fractionation fees, which accounted for a $26 million decrease, and lower ancillary service revenues, which accounted for an additional $8 million decrease, partially offset by a combined 32 MBPD (net to our interest) increase in NGL fractionation volumes, which accounted for a $13 million increase.

Gross operating margin from NGL fractionation during the first quarter of 2024 increased $37 million when compared to the first quarter of 2023.

Gross operating margin from our Mont Belvieu NGL fractionation complex increased $39 million quarter-to-quarter primarily due to a 209 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $ 39 million increase, and higher ancillary service revenues, which accounted for an additional $ 13 million increase, partially offset by higher storage and other operating costs, which accounted for a $9 million decrease.

NGL fractionation volumes at our Mont Belvieu NGL fractionation complex increased primarily due to contributions from Frac 12, which entered service in July 2023 and the acquisition of the remaining equity interest in EF78 in February 2024.

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

Midland-to-ECHO System and related business activities

Other crude oil pipelines, terminals and related marketing results

Selected volumetric data:

1 unchanged sentence

Crude oil marine terminal volumes (MBPD)

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the third quarter of 2023 increased $17 million when compared to the third quarter of 2022.

Gross operating margin from our West Texas Pipeline System increased $72 million quarter-to-quarter primarily due to higher ancillary service and other revenues.

Transportation volumes on our West Texas Pipeline System increased 46 MBPD quarter-to-quarter.

Gross operating margin from our Midland-to-ECHO System and related business activities increased $52 million quarter-to-quarter primarily due to a 137 MBPD (net to our interest) increase in transportation volumes, which accounted for a $27 million increase, and higher average transportation fees and related margins from marketing activities, which accounted for an additional $25 million increase.

Gross operating margin from our ECHO terminal increased $13 million quarter-to-quarter primarily due to higher terminaling and storage revenues, which accounted for a $9 million increase, and lower utility and other operating costs, which accounted for an additional $4 million increase.

Gross operating margin from crude oil activities at EHT increased $11 million quarter-to-quarter primarily due to higher loading revenues.

Gross operating margin from our Crude Oil Pipelines & Services segment for the first quarter of 2024 increased $ 14 million when compared to the first quarter of 2023.

Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $21 million quarter-to-quarter primarily due to higher average transportation fees and related margins from marketing activities, which accounted for a $25 million increase, and a 65 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $9 million increase, partially offset by higher operating costs, which accounted for a $10 million decrease.

Gross operating margin from crude oil activities at EHT increased a net $ 1 million quarter-to-quarter primarily due to higher loading revenues, which accounted for a $7 million increase, partially offset by lower storage and other revenues, which accounted for a $5 million decrease.

Crude oil terminal volumes at EHT increased 273 MBPD quarter-to-quarter.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) decreased $100 million quarter-to-quarter primarily due to lower non-cash, mark-to-market earnings, which accounted for a $75 million decrease, and lower average sales margins, which accounted for an additional $28 million decrease.

Gross operating margin from our South Texas Crude Oil Pipeline System decreased $25 million quarter-to-quarter primarily due to lower ancillary service and other revenues.

Transportation volumes on our South Texas Crude Oil Pipeline System decreased 15 MBPD quarter-to-quarter.

Gross operating margin from our equity investment in the Seaway Pipeline decreased $6 million quarter-to-quarter primarily due to lower transportation and related fee revenues.

Transportation volumes on our Seaway Pipeline increased 104 MBPD (net to our interest) quarter-to-quarter.

Gross operating margin from our EFS Midstream System decreased a net $4 million quarter-to-quarter primarily due to lower average transportation fees, which accounted for a $9 million decrease, partially offset by a 165 MMcf/d and 20 MBPD increase in natural gas and condensate transportation volumes, respectively, which accounted for a $6 million increase.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the nine months ended September 30, 2023 increased $14 million when compared to the nine months ended September 30, 2022.

Gross operating margin from our West Texas Pipeline System increased $160 million period-to-period primarily due to higher ancillary service and other revenues.

Transportation volumes on our West Texas Pipeline System increased 24 MBPD period-to-period.

Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $125 million period-to-period primarily due to higher average transportation fees and related margins from marketing activities, which accounted for a $76 million increase, and a 108 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $62 million increase, partially offset by higher chemical, utility and other operating costs, which accounted for a $19 million decrease.

Gross operating margin from our ECHO terminal increased $17 million period-to-period primarily due to higher terminaling and storage revenues, which accounted for a $14 million increase, and lower utility and other operating costs, which accounted for an additional $3 million increase.

Gross operating margin from crude oil activities at EHT increased a net $8 million period-to-period primarily due to higher loading revenues, which accounted for a $17 million increase, partially offset by lower storage and other revenues, which accounted for a $10 million decrease.

Crude oil terminal volumes at EHT increased 123 MBPD period-to-period.

Gross operating margin from our EFS Midstream system decreased $162 million period-to-period primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term gathering agreements at the end of June 2022, which accounted for a $106 million decrease, and lower average transportation fees, which accounted for an additional $51 million decrease.

Gross operating margin from our South Texas Crude Oil Pipeline System decreased $67 million period-to-period primarily due to lower ancillary service and other revenues, which accounted for a $29 million decrease, lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term agreements at the end of July 2022, which accounted for an $18 million decrease, and lower average transportation fees, which accounted for an additional $13 million decrease.

Transportation volumes on our South Texas Crude Oil Pipeline System decreased 32 MBPD period-to-period.

Gross operating margin from our equity investment in the Seaway Pipeline decreased $48 million period-to-period primarily due to lower transportation and related fee revenues.

Transportation volumes on our Seaway Pipeline increased 73 MBPD (net to our interest) period-to-period.

Gross operating margin from our Midland terminal decreased $13 million period-to-period primarily due to lower ancillary service and other revenues.

Gross operating margin from our crude oil marketing activities (excluding those attributable to the Midland-to-ECHO System) decreased $5 million period-to-period primarily due to lower average sales margins.

Gross operating margin from our Texas in-basin crude oil pipelines, terminals and other marketing activities (excluding our Midland-to-ECHO System and Seaway Pipeline) decreased a combined net $10 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $21 million decrease, higher operating costs, which accounted for a $7 million decrease, and lower average transportation fees, which accounted for an additional $5 million decrease, partially offset by higher sales volumes, which accounted for a $12 million increase, and higher other revenues which accounted for an additional $13 million increase.

Crude oil transportation volumes on these pipelines decreased a combined 2 MBPD (net to our interest) quarter-to-quarter.

Natural Gas 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

1 unchanged sentence

Natural gas pipeline transportation volumes (BBtus/d)

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the third quarter of 2023 decreased $39 million when compared to the third 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 decreased $26 million quarter-to-quarter primarily due to lower average gathering fees, which accounted for a $16 million decrease, higher maintenance and other operating costs, which accounted for a $5 million decrease, and a combined 90 BBtus/d decrease in gathering volumes, which accounted for an additional $2 million decrease.

Gross operating margin from our natural gas marketing activities decreased $11 million quarter-to-quarter primarily due to lower average sales margins attributable to location price differentials.

Gross operating margin from our Acadian Gas System and Haynesville Gathering System decreased a combined $10 million quarter-to-quarter primarily due to lower other revenues.

On a combined basis, transportation volumes increased 51 BBtus/d quarter-to-quarter.

Gross operating margin from our East Texas Gathering System increased $5 million quarter-to-quarter primarily due to a 240 BBtus/d increase in gathering volumes.

Gross operating margin from our Midland Basin Gathering System, increased a net $3 million quarter-to-quarter primarily due to a 308 BBtus/d increase in natural gas gathering volumes, which accounted for a $9 million increase, partially offset by higher rental and other operating costs, which accounted for a $6 million decrease.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the nine months ended September 30, 2023 increased $64 million when compared to the nine months ended September 30, 2022.

Gross operating margin from our natural gas marketing activities increased $24 million period-to-period primarily due to higher average sales margins attributable to location price differentials.

Gross operating margin from our East Texas Gathering System increased a net $17 million period-to-period primarily due to a 350 BBtus/d increase in gathering volumes, which accounted for a $22 million increase, partially offset by higher maintenance and other operating costs, which accounted for a $5 million decrease.

Gross operating margin from our Texas Intrastate System increased a net $15 million period-to-period primarily due to a 627 BBtus/d increase in transportation volumes, which accounted for a $19 million increase, and higher average transportation fees, which accounted for an additional $17 million increase, partially offset by higher operating costs, which accounted for a $13 million decrease, and lower ancillary and other revenues, which accounted for an additional $8 million decrease.

Gross operating margin from our Delaware Basin Gathering System increased $11 million period-to-period primarily due to higher ancillary service and other revenues, which accounted for a $6 million increase, and a 95 BBtus/d increase in gathering volumes, which accounted for an additional $4 million increase.

Gross operating margin from our Midland Basin Gathering System increased a net $7 million period-to-period primarily due to an increase in total natural gas gathering volumes, which accounted for a $43 million increase, partially offset by higher rental and other operating costs, which accounted for a $36 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 250 BBtus/d period-to-period.

On a combined basis, gross operating margin from our Jonah Gathering System, Piceance Basin Gathering System and San Juan Gathering System in the Rocky Mountains decreased a net $20 million period-to-period primarily due to higher maintenance and other operating costs, which accounted for a $15 million decrease, a 119 BBtus/d decrease in gathering volumes, which accounted for a $9 million decrease, and a decrease in condensate sales, which accounted for an additional $5 million decrease, partially offset by higher average gathering fees, which accounted for a $10 million increase.

Gross operating margin from our Natural Gas Pipelines & Services segment for the first quarter of 2024 decreased $2 million when compared to the first quarter of 2023.

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 decreased $ 37 million quarter-to-quarter primarily due to lower average gathering fees.

The gathering fees on these systems are indexed to regional gas prices, which were lower during the first quarter of 2024 compared to the first quarter of 2023.

Gathering volumes on our Rocky Mountain gathering systems decreased a combined 16 BBtus/d quarter-to-quarter.

Gross operating margin from our natural gas marketing activities increased $ 17 million quarter-to-quarter primarily due to higher sales volumes and higher average sales margins.

Gross operating margin from our Texas Intrastate System increased $14 million quarter-to-quarter primarily due to higher capacity reservation fees and other revenues, which accounted for an $8 million increase, and lower operating costs, which accounted for an additional $4 million increase.

Transportation volumes on our Texas Intrastate System increased 46 BBtus/d quarter-to-quarter.

Gross operating margin from our Delaware and Midland Basin Gathering Systems increased a combined $4 million quarter-to-quarter primarily due to a 503 BBtus/d increase in natural gas gathering volumes, which accounted for a $ 16 million increase, partially offset by higher rental, maintenance and other operating costs, which accounted for a $ 12 million decrease.

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:

12 unchanged sentences

Marine terminal volumes, primarily refined products and petrochemicals (MBPD)

Reflects aggregate sales volumes for our octane enhancement and iBDH facilities located at our Chambers County complex and our HPIB facility located adjacent to the Houston Ship Channel.

Reflects aggregate sales volumes for our octane enhancement and iBDH facilities located at our Mont Belvieu complex and our HPIB facility located adjacent to the Houston Ship Channel.

Propylene production and related activities

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from propylene production and related activities for the third quarter of 2023 increased $10 million when compared to the third quarter of 2022.

Gross operating margin from our propylene pipeline systems increased a combined $6 million quarter-to-quarter primarily due to higher average transportation fees.

On a combined basis, transportation volumes decreased 5 MBPD (net to our interest) quarter-to-quarter.

On a combined basis, gross operating margin from our Chambers County propylene production facilities decreased a net $1 million quarter-to-quarter primarily due to lower propylene sales volumes, which accounted for a $19 million decrease, higher chemical, maintenance and other operating costs, which accounted for a $13 million decrease, and lower average propylene sales margins, which accounted for an additional $8 million decrease, partially offset by higher propylene processing revenues, which accounted for a $33 million increase, and higher storage and other revenues, which accounted for an additional $6 million increase.

Propylene and associated by-product production volumes at these facilities increased a combined 1 MBPD (net to our interest) quarter-to-quarter primarily due to contributions from our PDH 2 facility, which was placed into service in July 2023, partially offset by downtime at our PDH 1 facility for unplanned maintenance during the third quarter of 2023.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from propylene production and related activities for the nine months ended September 30, 2023 decreased $47 million when compared to the nine months ended September 30, 2022.

On a combined basis, gross operating margin from our Chambers County propylene production facilities decreased a net $72 million period-to-period primarily due to lower propylene sales volumes, which accounted for a $67 million decrease, and lower average propylene sales margins, which accounted for an additional $38 million decrease, partially offset by higher propylene processing revenues, which accounted for a $22 million increase, and higher storage and other revenues, which accounted for an additional $11 million increase.

Propylene and associated by-product production volumes at these facilities, which reflect the average daily operating rates from the time the asset was placed into service, decreased a combined 1 MBPD (net to our interest) period-to-period primarily due to major maintenance activities at our PDH 1 facility during the first and third quarters of 2023 and major maintenance at three of our propylene splitters during the second quarter of 2023, partially offset by production from our PDH 2 facility, which was placed into service in July 2023.

Gross operating margin from our propylene pipeline systems increased a combined $14 million period-to-period primarily due to higher average transportation fees.

On a combined basis, transportation volumes decreased 4 MBPD (net to our interest) period-to-period.

Gross operating margin from propylene production and related activities for the first quarter of 2024 decreased $45 million when compared to the first quarter of 2023.

On a combined basis, gross operating margin from our Mont Belvieu propylene production facilities decreased a net $38 million quarter-to-quarter primarily due to lower propylene sales volumes, which accounted for a $38 million decrease, higher operating costs, which accounted for a $34 million decrease, and lower average propylene sales margins, which accounted for an additional $13 million decrease, partially offset by higher propylene processing revenues, which accounted for a $39 million increase.

Propylene and associated by-product production volumes at these facilities were flat quarter-to-quarter (net to our interest) primarily due to contributions from our PDH 2 facility, which was placed into service in July 2023, offset by downtime for maintenance at our PDH 1 facility and several of our propylene splitters during the first quarter of 2024.

Maintenance activities on our propylene splitters were completed in early April 2024 and maintenance activities on our PDH 1 facility are expected to be completed during the second quarter of 2024.

Our PDH 2 facility is expected to experience downtime beginning in June 2024 to address start up issues that once resolved will allow us to achieve nameplate production capacity.

We anticipate a resumption of operations at the PDH 2 facility during the third quarter of 2024.

Butane isomerization and related operations

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from butane isomerization and related operations was flat quarter-to-quarter primarily due to lower utility and other operating costs, which accounted for a $4 million increase, and a 17 MBPD increase in transportation volumes, which accounted for an additional $2 million increase, offset by lower average isomerization fees, which accounted for a $6 million decrease.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from butane isomerization and related operations increased a net $8 million period-to-period primarily due to lower utility and other operating costs, which accounted for a $15 million increase, and a 16 MBPD increase in transportation volumes, which accounted for an additional $3 million increase, partially offset by lower by-product sales, which accounted for a $10 million decrease.

Gross operating margin from butane isomerization and related operations for the first quarter of 2024 increased $7 million when compared to the first quarter of 2023 primarily due to a 19 MBPD increase in isomerization volumes.

Octane enhancement and related plant operations

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from our octane enhancement and related plant operations for the third quarter of 2023 increased $60 million when compared to the third quarter of 2022 primarily due to higher average sales margins, which accounted for a $35 million increase, higher sales volumes, which accounted for a $16 million increase, and lower utility and other operating costs, which accounted for an additional $8 million increase.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from our octane enhancement and related plant operations during the nine months ended September 30, 2023 increased $33 million when compared to the nine months ended September 30, 2022 primarily due to higher average sales margins, which accounted for a $24 million increase, and lower utility and other operating costs, which accounted for an additional $7 million increase.

Gross operating margin from our octane enhancement and related plant operations for the first quarter of 2024 increased $57 million when compared to the first quarter of 2023 primarily due to higher sales volumes, which accounted for a $25 million increase, higher deficiency revenues, which accounted for an $18 million increase, and higher average sales margins, which accounted for an additional $10 million increase.

Refined products pipelines and related activities

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from refined products pipelines and related activities for the third quarter of 2023 increased $26 million when compared to the third quarter of 2022.

Gross operating margin from our refined products marketing activities increased a net $13 million quarter-to-quarter primarily due to higher average sales margins, which accounted for a $22 million increase, partially offset by lower sales volumes, which accounted for an $11 million decrease.

Gross operating margin from our refined products terminal in Beaumont, Texas increased $5 million quarter-to-quarter primarily due to higher storage and other fee revenues.

Refined product marine terminal volumes at Beaumont increased 157 MBPD quarter-to-quarter.

Gross operating margin from our TE Products Pipeline System increased $3 million quarter-to-quarter primarily due to higher average transportation and related fees.

Overall, transportation volumes on our TE Products Pipeline System increased 26 MBPD quarter-to-quarter.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from refined products pipelines and related activities for the nine months ended September 30, 2023 increased $67 million when compared to the nine months ended September 30, 2022.

Gross operating margin from our refined products marketing activities increased $64 million period-to-period primarily due to higher average sales margins.

Gross operating margin from our refined products terminal in Beaumont, Texas increased $16 million period-to-period primarily due to higher storage and other fee revenues.

Refined product marine terminal volumes at Beaumont increased 118 MBPD period-to-period.

Gross operating margin from our TE Products Pipeline System decreased $20 million period-to-period primarily due to higher operating costs.

Overall, transportation volumes on our TE Products Pipeline System increased 34 MBPD period-to-period.

Gross operating margin from refined products pipelines and related activities for the first quarter of 2024 decreased $15 million when compared to the first quarter of 2023.

Gross operating margin from our refined products marketing activities decreased a net $16 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $20 million decrease, partially offset by higher sales volumes, which accounted for a $4 million increase.

Ethylene exports and related activities

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from ethylene exports and related activities during the third quarter of 2023 was flat when compared to the third quarter of 2022.

On a combined basis, gross operating margin from our ethylene pipelines, storage and related marketing activities increased $2 million quarter-to-quarter primarily due to a combined 30 MBPD (net to our interest) increase in transportation volumes.

Gross operating margin from our ethylene export terminal decreased a net $2 million quarter-to-quarter primarily due to lower average loading fees, which accounted for a $4 million decrease, and higher operating costs, which accounted for an additional $3 million decrease, partially offset by a 6 MBPD (net to our interest) increase in ethylene export volumes, which accounted for a $5 million increase.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from ethylene exports and related activities during the nine months ended September 30, 2023 increased a net $1 million when compared to the nine months ended September 30, 2022.

On a combined basis, gross operating margin from our ethylene pipelines, storage and related marketing activities increased $7 million period-to-period primarily due to a combined 21 MBPD (net to our interest) increase in transportation volumes.

Gross operating margin from our ethylene export terminal decreased a net $6 million period-to-period primarily due to lower average loading fees, which accounted for a $7 million decrease, and higher operating costs, which accounted for an additional $2 million decrease, partially offset by a 1 MBPD (net to our interest) increase in ethylene export volumes, which accounted for a $3 million increase.

Gross operating margin from ethylene exports and related activities for the first quarter of 2024 increased $19 million when compared to the first quarter of 2023 primarily due to higher deficiency fee revenues from our ethylene pipelines and ethylene export terminal.

Ethylene transportation volumes increased 26 MBPD and ethylene export volumes decreased 3 MBPD quarter-to-quarter (net to our interest).

Marine transportation and other services

Third Quarter of 2023 Compared to Third Quarter of 2022 .

Gross operating margin from marine transportation and other services increased a net $2 million quarter-to-quarter primarily due to higher average fees, which accounted for a $5 million increase, partially offset by higher operating costs, which accounted for a $3 million decrease.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 .

Gross operating margin from marine transportation and other services increased a net $15 million period-to-period primarily due to higher average fees, which accounted for a $16 million increase, and higher fleet utilization rates, which accounted for an additional $7 million increase, partially offset by higher operating costs, which accounted for a $9 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, 2023, we had $3.8 billion of consolidated liquidity.

This amount was comprised of $3.6 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 $620 million outstanding under EPO’s commercial paper program, and $171 million of unrestricted cash on hand.

At March 31, 2024, we had $ 4.5 billion of consolidated liquidity.

This amount was comprised of $ 4.2 billion of available borrowing capacity under EPO’s revolving credit facilities and $ 283 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 2023

On October 5, 2023, we announced that the Board declared a quarterly cash distribution of $0.50 per common unit, or $2.00 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the third quarter of 2023.

The quarterly distribution is payable on November 14, 2023 to unitholders of record as of the close of business on October 31, 2023.

In addition, we have a registration statement on file with the SEC covering the issuance of up to $2.5 billion of the Partnership’s common units in amounts, at prices and on terms based on market conditions and other factors at the time of such offerings (referred to as the Partnership’s at-the-market (“ATM”) program).

Enterprise Declares Cash Distribution for First Quarter of 2024

On April 5 , 2024, we announced that the Board declared a quarterly cash distribution of $ 0.515 per common unit, or $ 2.06 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the first quarter of 2024.

The quarterly distribution is payable on May 14 , 2024 to unitholders of record as of the close of business on April 30, 2024.

The total amount to be paid is $ 1.13 billion, which includes $ 11 million for distribution equivalent rights on phantom unit awards.

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Consolidated Debt

At September 30, 2023, the average maturity of EPO’s consolidated debt obligations was approximately 19.3 years.

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at September 30, 2023 for the years indicated (dollars in millions):

At March 31, 2024, the average maturity of EPO’s consolidated debt obligations was approximately 18.8 years.

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at March 31, 2024 for the years indicated (dollars in millions):

Scheduled Maturities of Debt

Commercial Paper Notes

Junior Subordinated Notes

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.

Senior Notes HHH were issued at 99.897% of their principal amount and have a fixed interest rate of 4.60% per year.

Senior Notes III were issued at 99.705% of their principal amount and have a fixed interest rate of 4.85% per year.

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 $850 million principal amount of 3.90% Senior Notes JJ at their maturity in February 2024 and amounts outstanding under our commercial paper program).

In March 2024, EPO entered into a new 364-Day Revolving Credit Agreement (the “March 2024 $1.5 Billion 364-Day Revolving Credit Agreement”) that replaced its prior 364-day revolving credit agreement.

The March 2024 $1.5 Billion 364-Day Revolving Credit Agreement matures in March 2025.

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

As of September 30, 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 September 30, 2023, there are no principal amounts outstanding under this new revolving credit agreement.

As of March 31, 2024, 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 9 , 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 A- from Fitch Ratings.

As of May 9 , 2024, the investment-grade credit ratings of EPO’s long-term senior unsecured debt securities were A- from Standard and Poor’s, A3 from Moody’s and A- 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 elected not to repurchase common units during the three months ended September 30, 2023.

During the nine months ended September 30, 2023, the Partnership repurchased 3,592,710 common units through open market purchases.

During the first quarter of 2024, the Partnership repurchased 1,386,835 common units through open market purchases.

The total cost of these repurchases, including commissions and fees, was $ 40 million.

As of September 30, 2023, the remaining available capacity under the 2019 Buyback Program was $1.2 billion.

As of March 31, 2024, the remaining available capacity under the 2019 Buyback Program was $ 1.0 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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Operating activities

Net cash flows provided by operating activities for the nine months ended September 30, 2023 decreased $111 million when compared to the nine months ended September 30, 2022 primarily due to:

an $88 million period-to-period decrease resulting from lower partnership earnings (determined by adjusting our $108 million period-to-period decrease in net income for changes in the non-cash items identified on our Unaudited Condensed Statements of Consolidated Cash Flows);

a $24 mill ion period-to-period 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.

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.

Net cash flows provided by operating activities for the first quarter of 2024 increased $528 million when compared to the first quarter of 2023 primarily due to:

a $403 mill ion quarter-to-quarter increase 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;

a $132 million quarter-to-quarter increase resulting from higher partnership earnings (determined by adjusting our $ 61 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, 2023 decreased a net $2.1 billion when compared to the nine months ended September 30,  

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 $1.1 billion period-to-period increase in investments for property, plant and equipment (see “ Capital Investments ” within this Part I, Item 2 for additional information).

Cash used in investing activities during the first quarter of 2024 increased $401 million when compared to the first quarter of 2023 primarily due to an 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, 2023 decreased a net $840 million when compared to the nine months ended September 30,  

2022 primarily due to:

a net cash inflow of $627 million related to debt transactions that occurred during the nine months ended September 30, 2023 compared to a net cash outflow of $347 million related to debt transactions that occurred during the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, we issued $1.75 billion aggregate principal amount of senior notes and issued a net $126 million under EPO’s commercial paper program, partially offset by the repayment of $1.25 billion principal amount of senior notes.

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;

Cash used in financing activities during the first quarter of 2024 increased a net $133 million when compared to the first quarter of 2023 primarily due to:

a $400 million cash outflow during the first quarter of 2024 in connection with the acquisition of noncontrolling interests.

In February 2024, we acquired the remaining 20% equity interest in Whitethorn and remaining 25% equity interest in EF78 from affiliates of Western Midstream for total cash consideration of $375 million.

In March 2024, we acquired an additional 15% equity interest in Panola from an affiliate of Western Midstream for $25 million in cash consideration;

a $53 million quarter-to-quarter increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit;

partially offset by

a $154 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 cash inflow of $649 million related to debt transactions that occurred during the first quarter of 2024 compared to a net cash inflow of $307 million related to debt transactions that occurred during the first quarter of 2023.

During the first quarter of 2024, we issued $2.0 billion aggregate principal amount of senior notes, partially offset by the repayment of $850 million principal amount of senior notes and net repayments of $450 million under EPO’s commercial paper program.

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.

Non-GAAP Cash Flow Measures

Distributable Cash Flow

Distributable Cash Flow and Operational Distributable Cash Flow

Our partnership agreement requires us to make quarterly distributions to our common unitholders of all available cash, after any cash reserves established by Enterprise GP in its sole discretion.

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The retention of cash allows us to reinvest in our growth and reduce our future reliance on the equity and debt capital markets.

We measure available cash by reference to distributable cash flow (“DCF”), which is a non-GAAP cash flow measure.

We measure available cash by reference to distributable cash flow (“DCF”), which is a non-GAAP liquidity measure.

DCF is an important financial measure for our common unitholders since it serves as an indicator of our success in providing a cash return on investment.

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Enterprise GP has a non-economic ownership interest in the Partnership and is not entitled to receive any cash distributions from it based on incentive distribution rights or other equity interests.

Our use of DCF for the limited purposes described above and in this quarterly report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure to DCF.

Operational distributable cash flow (“Operational DCF”), which is defined as DCF excluding the impact of proceeds from asset sales and other matters and monetization of interest rate derivative instruments, is a supplemental non-GAAP liquidity measure that quantifies the portion of cash available for distribution to common unitholders that was generated from our normal operations.

We believe that it is important to consider this non-GAAP measure as it provides an enhanced perspective of our assets’ ability to generate cash flows without regard for certain items that do not reflect our core operations.

Our use of DCF and Operational DCF for the limited purposes described above and in this quarterly report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure to DCF and Operational DCF.

For a discussion of net cash flows provided by operating activities, see “ Cash Flow Statement Highlights ” within this Part I, Item 2.

The following table summarizes our calculation of DCF for the periods indicated (dollars in millions):

The following table summarizes our calculation of DCF and Operational DCF for the periods indicated (dollars in millions):

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)

Adjustments to net income attributable to common unitholders to derive DCF (addition or subtraction indicated by sign):

Adjustments to net income attributable to common unitholders to derive DCF and Operational DCF (addition or subtraction indicated by sign):

Depreciation, amortization and accretion expenses

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Sustaining capital expenditures (3)

Operational DCF (4)

Operational DCF (non-GAAP)

Proceeds from asset sales and other matters

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

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

See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report for information regarding our cash distributions declared with respect to the periods indicated.

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Distribution coverage ratio is determined by dividing DCF by total cash distributions paid to common unitholders and in connection with distribution equivalent rights with respect to the period.

The following table presents a reconciliation of net cash flows provided by operating activities to DCF for the periods indicated (dollars in millions):

The following table presents a reconciliation of net cash flows provided by operating activities to DCF and Operational DCF for the periods indicated (dollars in millions):

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)

Adjustments to reconcile net cash flows provided by operating activities to DCF (addition or subtraction indicated by sign):

Adjustments to reconcile net cash flows provided by operating activities to DCF and Operational DCF (addition or subtraction indicated by sign):

Net effect of changes in operating accounts

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Distributions received from unconsolidated affiliates attributable to the return of capital

Proceeds from asset sales and other matters

Net income attributable to noncontrolling interests

Operational DCF (non-GAAP)

Proceeds from asset sales and other matters

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

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Capital Investments

Through the third quarter of 2023, we placed into service the 400 MMcf/d expansion of our Acadian Gas System, PDH 2 facility, Frac 12 and our Poseidon natural gas processing plant.

In October 2023, we placed our Mentone 2 natural gas processing plant into service.

Since the beginning of 2024, we placed into service two natural gas processing trains in the Permian Basin and the first phase of our TW Products System.

We have approximately $6.9 billion of growth capital projects scheduled to be completed by the first half of 2026, including the following major projects (including their respective scheduled completion dates):

the second phase of our TW Products System (second and third quarters of 2024);

natural gas gathering expansion projects in the Delaware and Midland Basins (2024 and 2025);

our Texas Western Products System, which is comprised of two wholly owned subsidiaries that will lease capacity on our Chaparral Pipeline and a portion of our Seminole and Mid-America Pipeline System’s Rocky Mountain segment, will offer westbound transportation service of refined products from the U.S.

Gulf Coast to markets in West Texas, New Mexico, Colorado and Utah (fourth quarter of 2023 through second quarter of 2024);

our Mentone 3 natural gas processing plant in the Delaware 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 Bahia NGL Pipeline (first half of 2025);

an NGL fractionator (“Frac 14”) and an associated DIB unit in Chambers County, Texas (second half of 2025);

our Mentone 4 natural gas processing plant in the Delaware Basin (second half of 2025);

an eighth natural gas processing plant (“Orion”) in the Midland Basin (second half of 2025);

an NGL fractionator (“Frac 14”) and an associated DIB unit at our Mont Belvieu NGL fractionation complex in Chambers County, Texas (second half of 2025);

our first natural gas processing train at our Mentone West location in the Delaware Basin (second half of 2025);

an eighth natural gas processing train (“Orion”) in the Midland Basin (second half of 2025);

an expansion of our Morgan’s Point terminal to increase ethylene export capacity (second half of 2024 and second half of 2025);

an Ethane and Propane Export Terminal located in Orange County, Texas (second half of 2025 and first half of 2026).

Based on information currently available, we expect our total capital investments for 2023, net of contributions from noncontrolling interests, to approximate $3.4 billion, which reflects growth capital investments of $3.0  

billion and sustaining capital expenditures of $400  

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 state and federal permitting, mitigation and related requirements.

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 Neches River Ethane / Propane Export Facility located in Orange County, Texas (second half of 2025 and first half of 2026);

our second natural gas processing train at our Mentone West location in the Delaware Basin (first half of 2026).

Based on information currently available, we expect our total capital investments for 2024, net of contributions from noncontrolling interests, to approximate $3.8 billion to $4.3 billion, which reflects growth capital investments of $3.25 billion to $3.75 billion and sustaining capital expenditures of $550 million.

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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Sustaining capital projects (3)

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 our Midland Basin System, which closed on February 17, 2022.

Comparison of Nine Months Ended September 30, 2023 with Nine Months Ended September 30, 2022

In total, investments in growth capital projects increased a net $985 million period-to-period 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 $632 million increase;

higher investments in ethane, LPG and ethylene export expansion projects at our Gulf Coast terminals, which accounted for a $175 million increase;

higher investments in our Texas Western Products System, which accounted for a $164 million increase;

higher investments in Frac 12 (placed into service in July 2023) at our Chambers County complex, which accounted for an additional $81 million increase;

partially offset by

lower investments in PDH 2 (placed into service in July 2023) at our Chambers County complex, which accounted for an $87 million decrease.

Investments attributable to sustaining capital projects increased $66 million period-to-period primarily due to fluctuations in timing and costs of pipeline integrity and similar projects.

Comparison of First Quarter of 2024 with the First Quarter of 2023

In total, investments in growth capital projects increased $367 million quarter-to-quarter primarily due to the following:

higher investments in ethane, ethylene, and LPG export expansion projects at our Gulf Coast terminals, which accounted for a $163 million increase;

higher investments in the construction of natural gas processing trains and related gathering system expansions in the Delaware and Midland Basins, which accounted for a $112 million increase;

higher investments in our Bahia NGL Pipeline, which accounted for an additional $76 million increase.

Investments attributable to sustaining capital projects increased $27 million quarter-to-quarter primarily due to higher major maintenance activities performed at certain of our reaction-based plants (e.g., our PDH 1 and iBDH facilities) and 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;

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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, 2023, the total amount of Guaranteed Debt was $29.4 billion, which was comprised of $26.3 billion of EPO’s senior notes, $2.3 billion of EPO’s junior subordinated notes, $620 million of short-term commercial paper notes and $237 million of related accrued interest.

At March 31, 2024, the total amount of Guaranteed Debt was $30.0 billion, which was comprised of $27.4 billion of EPO’s senior notes, $2.3 billion of EPO’s junior subordinated notes, and $253 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 $47.5 billion at September 30, 2023.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the nine months ended September 30, 2023 was $4.3 billion.

The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $47.8 billion at March 31, 2024.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the first quarter of 2024 was $1.6 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 $47.5 billion at September 30, 2023 and December 31, 2022

of $47.8 billion at March 31, 2024 and $46.8 billion at December 31, 2023

Selected liability information:

Current portion of Guaranteed Debt, including interest of $237 million at September 30, 2023 and

Current portion of Guaranteed Debt, including interest of $253 million at March 31, 2024 and

$455 million at December 31, 2023

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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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Operating income of Obligor Group

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

$4.3 billion for the nine months ended September 30, 2023 and

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

$1.6 billion for the three months ended March 31, 2024 and

$6.0 billion for the twelve months ended December 31, 2023

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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.

In addition to these variables, the fair value of each portfolio is influenced by changes in the notional amounts of the instruments outstanding.

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.

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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 September 30, 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.

At March 31, 2024, 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.

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Classification

September 30,

Fair value assuming no change in underlying commodity prices

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Classification

September 30,

Fair value assuming no change in underlying commodity prices

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Classification

September 30,

Fair value assuming no change in underlying commodity prices

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Classification

September 30,

Fair value assuming no change in underlying commodity prices

5 unchanged sentences

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.

We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), treasury locks 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.

1 unchanged sentence

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