What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-09 · 269 added, 146 removed, 533 unchanged (44% of the section changed)

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RESULTS OF OPERATIONS.

For the Three Months Ended March 31, 2024 and 2023

For the Three and Six Months Ended June 30, 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 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.

This quarterly report on Form 10-Q for the three and six months ended June 30, 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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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 March 31, 2024.

EPCO, together with its privately held affiliates, owned approximately 32.3% of the Partnership’s common units outstanding at June 30, 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 first quarter of 2024 compared to the first quarter of 2023.

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

Likewise, the phrase “period-to-period” means the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Overview of Business

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Recent Developments

Issuance of $2.5 Billion of Senior Notes in August 2024

In August 2024, EPO issued $2.5 billion aggregate principal amount of senior notes comprised of (i) $1.1 billion principal amount of senior notes due February 2035 (“Senior Notes JJJ”) and (ii) $1.4 billion principal amount of senior notes due February 2055 (“Senior Notes KKK”).

Net proceeds from this offering will be used by EPO for general company purposes, including for growth capital investments, and the repayment of debt (including the repayment of all or a portion of our $1.15 billion principal amount of 3.75% Senior Notes MM at their maturity in February 2025).

Senior Notes JJJ were issued at 99.400% of their principal amount and have a fixed interest rate of 4.95% per year.

Senior Notes KKK were issued at 99.663% of their principal amount and have a fixed interest rate of 5.55% per year.

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

Enterprise to Expand LPG Export Capacity at EHT

In July 2024, we announced plans to move forward with the construction of a fourth refrigeration train at our Enterprise Hydrocarbon Terminal (“EHT”).

The addition of a fourth refrigeration train (“Ref 4”), which is expected to be placed into service by the end of 2026, will increase our propane and butane export capabilities by approximately 300 MBPD.

In addition to providing incremental LPG export capacity, Ref 4 will increase the instantaneous loading rates for propane and butane at EHT, while also making additional capacity available for propylene exports.

Enterprise Receives Deepwater Port License for SPOT Project

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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.

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

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

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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.

Additionally, we placed into service and began truck loading operations at our Jal and Moriarty Terminals located in New Mexico during the second quarter of 2024.

We expect the Grand Junction Terminal located in Utah to be placed into service in the third quarter of 2024.

Enterprise Acquires Equity Interests from Western Midstream

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2024 by quarter:

2024 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 $0.62 per gallon in the first quarter of 2024 versus $0.66 per gallon in the first quarter of 2023.

The weighted-average indicative market price for NGLs was $0.59 per gallon in the second quarter of 2024 versus $0.55 per gallon in the second quarter of 2023.

Likewise, the weighted-average indicative market price for NGLs was $0.61 per gallon during each of the six months ended June 30, 2024 and 2023.

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

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2024 by quarter:

2024 Averages

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

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Costs and expenses:

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Asset impairment charges

Net gains attributable to asset sales and related matters

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

Total operating costs and expenses

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

NGL Pipelines & Services:

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Total consolidated revenues

Total revenues for the first quarter of 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.

Second Quarter of 2024 Compared to Second Quarter of 2023.

Total revenues for the second quarter of 2024 increased $2.8 billion when compared to the second quarter of 2023 primarily due to a net $2.7 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and petrochemicals and refined products increased a combined $2.9 billion quarter-to-quarter primarily due to higher sales volumes, which accounted for a $2.1 billion increase, and higher average sales prices, which accounted for an additional $814 million increase.

Revenues from the marketing of natural gas decreased $204 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.

Revenues from midstream services for the second quarter of 2024 increased $104 million when compared to the second quarter of 2023.

Revenues from our natural gas pipeline assets increased $40 million quarter-to-quarter primarily due to higher average transportation fees on our Texas Intrastate System and higher demand for transportation services on our Permian Basin Gathering Systems.

Revenues from our natural gas processing facilities increased $37 million quarter-to-quarter primarily due to an increase in equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

Lastly, revenues from our Mont Belvieu area propylene production facilities increased $34 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.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Total revenues for the six months ended June 30, 2024 increased $5.1 billion when compared to the six months ended June 30, 2023 primarily due to a net $4.9 billion increase in marketing revenues.

Revenues from the marketing of NGLs, crude oil and petrochemicals and refined products increased a combined $5.4 billion period-to-period primarily due to higher sales volumes, which accounted for a $4.9 billion increase, and higher average sales prices, which accounted for an additional $489 million increase.

Revenues from the marketing of natural gas decreased $547 million period-to-period primarily due to lower average sales prices.

Revenues from midstream services for the six months ended June 30, 2024 increased $280 million when compared to the six months ended June 30, 2023.

Revenues from our natural gas processing facilities increased $100 million period-to-period primarily due to an increase in equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.

Revenues from our Mont Belvieu area propylene production facilities increased $73 million period-to-period 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 $29 million period-to-period primarily due to higher demand for transportation services.

Lastly, revenues from our ethylene pipelines increased $22 million period-to-period primarily due to higher deficiency fee revenues.

Operating costs and expenses

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

Total operating costs and expenses for the three and six months ended June 30, 2024 increased $2.6 billion and $4.8 billion, respectively when compared to the same periods in 2023.

Cost of sales

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.

Second Quarter of 2024 Compared to Second Quarter of 2023.

Cost of sales for the second quarter of 2024 increased $2.5 b illion when compared to the second quarter of 2023.

The cost of sales associated with the marketing of NGLs, 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 $2.0 billion increase, and higher average purchase prices, which accounted for an additional $497 million increase.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Cost of sales for the six months ended June 30, 2024 increased a net $4.6 billion when compared to the six months ended June 30, 2023.

The cost of sales associated with the marketing of crude oil and petrochemicals and refined products increased a combined $4.9 billion period-to-period primarily due to higher volumes, which accounted for a $4.0 billion increase, and higher average purchase prices, which accounted for an additional $912 million increase.

The cost of sales associated with the marketing of NGLs and natural gas decreased a combined net $299 million period-to-period primarily due to lower average purchase prices, which accounted for a $1.0 billion decrease, partially offset by higher volumes, which accounted for a $740 million increase.

Other operating costs and expenses

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.

Other operating costs and expenses for the three and six months ended June 30, 2024 increased $79 million and $165 million, respectively, when compared to the same periods in 2023 primarily due to higher employee compensation, rental, utility, chemical, maintenance and other operating costs.

Depreciation, amortization and accretion expenses

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.

Depreciation, amortization and accretion expense for the three and six months ended June 30, 2024 increased a combined $33 million and $81 million, respectively, when compared to the same periods in 2023 primarily due to higher depreciation expense on assets placed into full or limited service since the end of the respective periods in 2023.

General and administrative 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.

General and administrative costs for the three and six months ended June 30, 2024 increased $1 million and $10 million, respectively, when compared to the same periods in 2023 primarily due to higher employee compensation costs.

Equity in income of unconsolidated affiliates

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.

Equity income from our unconsolidated affiliates for the three and six months ended June 30, 2024 decreased $20 million and $22 million, respectively, when compared to the same periods in 2023 primarily due to lower earnings from investments in crude oil and NGL pipelines.

Operating income

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.

Operating income for the three and six months ended June 30, 2024 increased $186 million and $274 million, respectively, when compared to the same periods in 2023 due to the previously described quarter-to-quarter and period-to-period changes.

Interest expense

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Interest charged on debt principal outstanding (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 first quarters of 2024 and 2023 were 4.60% and 4.56%, respectively.

The weighted-average interest rates on debt principal outstanding during the three and six months ended June 30, 2024 were 4.62% and 4.61%, respectively.

The weighted-average interest rate on debt principal outstanding during the three and six months ended June 30, 2023 were 4.58% and 4.57%, 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 $17 million quarter-to-quarter.

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 .

This increase was primarily due to the issuance of $2.0 billion fixed-rate senior notes in January 2024, which accounted for a $ 24 million increase, partially offset by a $ 8 million decrease as a result of the retirement of $850 million of fixed-rate senior notes in February 2024 .

Interest charged on debt principal outstanding increased a net $31 million period-to-period.

This increase was primarily due to the aforementioned issuance of senior notes, which accounted for a $ 45 million increase, partially offset by a $21 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 first quarter of 2024 increased $ 11 million when compared to the first quarter of 2023.

Our provision for income taxes for the three and six months ended June 30, 2024 increased $2 million and $13 million, respectively, when compared to the same periods in 2023.

Business Segment Highlights

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Gross operating margin by segment:

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Operating income

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Asset impairment charges in operating costs and expenses

Net gains attributable to asset sales and related matters in operating

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

costs and expenses

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

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Natural gas processing and related NGL marketing activities

Gross operating margin from natural gas processing and related NGL marketing activities for the first quarter of 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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from natural gas processing and related NGL marketing activities for the second quarter of 2024 increased $ 76 million when compared to the second quarter of 2023.

Gross operating margin from our Midland Basin natural gas processing facilities increased $61 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $32 million increase, a 23 MBPD increase in equity NGL-equivalent production volumes , which accounted for a $16 million increase, and higher fee-based natural gas processing volumes , which accounted for an additional $13 million increase.

Fee-based natural gas processing volumes at our Midland Basin natural gas processing facilities increased 342 MMcf/d quarter-to-quarter primarily due to contributions from our Poseidon and Leonidas natural gas processing trains, which were placed into service in July 2023 and late March 2024, respectively.

Gross operating margin from our Delaware Basin natural gas processing facilities increased a net $20 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $15 million increase, and higher fee-based natural gas processing volumes, which accounted for an additional $13 million increase, partially offset by lower average processing fees, which accounted for a $9 million decrease.

Fee-based natural gas processing volumes at our Delaware Basin natural gas processing facilities increased 359 MMcf/d quarter-to-quarter, primarily due to processing volumes contributed by our Mentone 2 and Mentone 3 natural gas processing trains, which were placed into service in October 2023 and late March 2024, respectively.

Equity NGL-equivalent production volumes at these facilities increased 3 MBPD quarter-to-quarter.

Gross operating margin from our South Texas natural gas processing facilities increased $16 million quarter-to-quarter primarily due to higher average processing margins (including the impact of hedging), which accounted for an $8 million increase, a 153 MMcf/d increase in fee-based natural gas processing volumes, which accounted for a $4 million increase, and lower operating costs, which accounted for an additional $4 million increase.

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a combined $6 million quarter-to-quarter primarily due to a 256 MMcf/d increase in fee-based natural gas processing volumes.

On a combined basis, equity NGL-equivalent production volumes increased 9 MBPD quarter-to-quarter.

Gross operating margin from our NGL marketing activities decreased a net $ 34 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $ 57 million decrease, partially offset by higher sales volumes, which accounted for a $21 million increase.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from natural gas processing and related NGL marketing activities for the six months ended June 30, 2024 increased $ 108 million when compared to the six months ended June 30, 2023.

Gross operating margin from our Midland Basin natural gas processing facilities increased $76 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $35 million increase, an 18 MBPD increase in equity NGL-equivalent production volumes, which accounted for a $21 million increase, and higher fee-based natural gas processing volumes, which accounted for an additional $23 million increase.

Fee-based natural gas processing volumes at our Midland Basin natural gas processing facilities increased 305 MMcf/d period-to-period primarily due to contributions from the aforementioned Poseidon and Leonidas natural gas processing trains.

Gross operating margin from our Delaware Basin natural gas processing facilities increased a net $39 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $26 million increase, and higher fee-based natural gas processing volumes, which accounted for an additional $21 million increase, partially offset by lower average processing fees, which accounted for a $10 million decrease.

Fee-based natural gas processing volumes at our Delaware Basin natural gas processing facilities increased 260 MMcf/d period-to-period, primarily due to processing volumes contributed by the aforementioned Mentone 2 and Mentone 3 natural gas processing trains.

Gross operating margin from our South Texas natural gas processing facilities increased a net $27 million period-to-period primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $19 million increase, lower operating costs, which accounted for a $9 million increase, and a 104 MMcf/d increase in fee-based natural gas processing volumes, which accounted for an additional $4 million increase, partially offset by a 5 MBPD decrease in equity NGL-equivalent production volumes, which accounted for a $7 million decrease.

Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) decreased a combined $30 million period-to-period 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 298 MMcf/d and 11 MBPD, respectively, period-to-period.

Gross operating margin from our NGL marketing activities decreased a net $12 million period-to-period primarily due to lower average sales margins, which accounted for a $ 46 million decrease, partially offset by higher sales volumes, which accounted for a $24 million increase, and higher non-cash, mark-to-market earnings, which accounted for an additional $11 million increase.

NGL pipelines, storage and terminals

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the second quarter of 2024 increased $103 million when compared to the second quarter of 2023.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $21 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.

Transportation volumes on these pipelines decreased a combined 48 MBPD quarter-to-quarter.

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 $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.

On a combined basis, gross operating margin from these pipelines increased a net $21 million quarter-to-quarter primarily due to a 179 MBPD (net to our interest) increase in transportation volumes, which accounted for a $27 million increase, and higher average transportation fees, which accounted for an additional $8 million increase, partially offset by lower other revenues, which accounted for an $8 million decrease, and higher operating costs, which accounted for an additional $6 million decrease.

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

Gross operating margin from LPG-related activities at our Enterprise Hydrocarbons Terminal (“EHT”) increased $18 million quarter-to-quarter primarily due to a 72 MBPD increase in LPG export volumes, which accounted for a $10 million increase, and higher average loading fees, which accounted for an additional $10 million increase.

Gross operating margin from our related Houston Ship Channel Pipeline System increased $9 million quarter-to-quarter primarily due to a 139 MBPD increase in transportation volumes.

Gross operating margin from our Dixie Pipeline and related terminals increased $11 million quarter-to-quarter primarily due to lower operating costs, which accounted for a $6 million increase, and higher average transportation fees, which accounted for an additional $3 million increase.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from our NGL pipelines, storage and terminal assets during the six months ended June 30, 2024 increased $162 million when compared to the six months ended June 30, 2023.

Gross operating margin for our Eastern ethane pipelines, which include our ATEX and Aegis pipelines, increased a combined $41 million period-to-period primarily due to higher average transportation fees.

Transportation volumes on these pipelines decreased a combined 3 MBPD period-to-period.

Gross operating margin from LPG-related activities at EHT increased $40 million period-to-period primarily due to a 78 MBPD increase in LPG export volumes, which accounted for a $23 million increase, and higher average loading fees, which accounted for an additional $19 million increase.

Gross operating margin from our related Houston Ship Channel Pipeline System increased $20 million period-to-period primarily due to a 112 MBPD increase in transportation volumes, which accounted for an $11 million increase, and higher average transportation fees, which accounted for an additional $9 million increase.

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

On a combined basis, gross operating margin from these pipelines increased a net $36 million period-to-period primarily due to a 112 MBPD (net to our interest) increase in transportation volumes, which accounted for a $41 million increase, and higher average transportation fees, which accounted for an additional $30 million increase, partially offset by lower other revenues, which accounted for a $23 million decrease, and higher operating costs, which accounted for an additional $12 million decrease.

Gross operating margin from our Mont Belvieu area storage complex increased $36 million period-to-period primarily due to higher storage revenues.

Gross operating margin from our Dixie Pipeline and related terminals increased $18 million period-to-period primarily due to lower operating costs, which accounted for a $6 million increase, higher average transportation fees, which accounted for a $4 million increase, higher storage and other revenues, which accounted for a $4 million increase, and a 13 MBPD increase in transportation volumes, which accounted for an additional $4 million increase.

NGL fractionation

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from NGL fractionation during the second quarter of 2024 increased $36 million when compared to the second quarter of 2023.

Gross operating margin from our Mont Belvieu area NGL fractionation complex increased a net $25 million quarter-to-quarter primarily due to a 216 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $32 million increase, and higher ancillary service revenues, which accounted for an additional $15 million increase, partially offset by higher operating costs, which accounted for a $27 million decrease.

NGL fractionation volumes at our Mont Belvieu area 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.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from NGL fractionation during the six months ended June 30, 2024 increased $73 million when compared to the six months ended June 30, 2023.

Gross operating margin from our Mont Belvieu area NGL fractionation complex increased a net $65 million period-to-period primarily due to a 212 MBPD (net to our interest) increase in fractionation volumes, which accounted for a $71 million increase, and higher ancillary service revenues, which accounted for an additional $29 million increase, partially offset by higher operating costs, which accounted for a $36 million decrease.

NGL fractionation volumes at our Mont Belvieu area NGL fractionation complex increased primarily due to contributions from Frac 12 and the acquisition of the remaining equity interest in EF78.

Crude Oil Pipelines & Services

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

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Crude oil marine terminal volumes (MBPD)

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the second quarter of 2024 decreased $5 million when compared to the second quarter of 2023.

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 $23 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $24 million decrease, lower average transportation fees, which accounted for a $6 million decrease, and higher operating costs, which accounted for an additional $6 million decrease, partially offset by higher sales volumes, which accounted for a $12 million increase.

Crude oil transportation volumes on these pipelines increased a combined 14 MBPD (net to our interest) quarter-to-quarter.

Gross operating margin from crude oil activities at EHT increased a net $8 million quarter-to-quarter primarily due to higher loading revenues, which accounted for a $7 million increase, and lower operating costs, which accounted for an additional $4 million increase, partially offset by lower storage revenues, which accounted for a $3 million decrease.

Crude oil terminal volumes at EHT increased 138 MBPD quarter-to-quarter.

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.

Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $4 million quarter-to-quarter primarily due to a 153 MBPD (net to our interest) increase in transportation volumes, which accounted for a $13 million increase, lower operating costs, which accounted for an $11 million increase, higher other revenues, which accounted for a $10 million increase, and higher non-cash, mark-to-market earnings, which accounted for an additional $7 million increase, partially offset by lower margins from marketing activities, which accounted for a $37 million decrease.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from our Crude Oil Pipelines & Services segment for the six months ended June 30, 2024 increased $9 million when compared to the six months ended June 30, 2023.

Gross operating margin from our Midland-to-ECHO System and related business activities increased a net $25 million period-to-period primarily due to a 110 MBPD (net to our interest) increase in transportation volumes, which accounted for an $18 million increase, higher other revenues, which accounted for a $13 million increase, and higher average transportation fees, which accounted for an additional $11 million increase, partially offset by lower margins from marketing activities, which accounted for a $19 million decrease.

Gross operating margin from crude oil activities at EHT increased a net $9 million period-to-period primarily due to higher loading revenues, which accounted for a $14 million increase, and lower operating costs, which accounted for an additional $3 million increase, partially offset by lower storage revenues, which accounted for an $8 million decrease.

Crude oil terminal volumes at EHT increased 205 MBPD period-to-period.

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 $32 million period-to-period primarily due to lower average sales margins, which accounted for a $41 million decrease, higher operating costs, which accounted for a $12 million decrease, and lower average transportation fees, which accounted for an additional $11 million decrease, partially offset by higher sales volumes, which accounted for a $23 million increase.

Crude oil transportation volumes on these pipelines increased a combined 6 MBPD (net to our interest) period-to-period.

Natural Gas Pipelines & Services

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin

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Natural gas pipeline transportation volumes (BBtus/d)

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the second quarter of 2024 increased $55 million when compared to the second quarter of 2023.

Gross operating margin from our Texas Intrastate System increased a net $36 million quarter-to-quarter primarily due to higher average transportation fees, which accounted for a $32 million increase, higher capacity reservation fees and other revenues, which accounted for an additional $16 million increase, partially offset by higher operating costs, which accounted for an $8 million decrease, and a 294 BBtus/d decrease in transportation volumes, which accounted for an additional $4 million decrease.

Gross operating margin from our natural gas marketing activities increased $24 million quarter-to-quarter primarily due to higher average sales margins.

Gross operating margin from our Delaware and Midland Basin Gathering Systems increased a combined net $5 million quarter-to-quarter primarily due to an 831 BBtus/d increase in natural gas gathering volumes, which accounted for a $24 million increase, partially offset by higher operating costs, which accounted for a $19 million decrease.

Gross operating margin from our Haynesville Gathering System decreased $11 million quarter-to-quarter primarily due to lower deficiency fees, which accounted for a $7 million decrease, and a 168 BBtus/d decrease in transportation volumes, which accounted for an additional $3 million decrease.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from our Natural Gas Pipelines & Services segment for the six months ended June 30, 2024 increased $53 million when compared to the six months ended June 30, 2023.

Gross operating margin from our Texas Intrastate System increased a net $50 million period-to-period primarily due to higher average transportation fees, which accounted for a $32 million increase, higher capacity reservation fees and other revenues, which accounted for an additional $24 million increase, partially offset by higher operating costs, which accounted for an $3 million decrease, and a 124 BBtus/d decrease in transportation volumes, which accounted for an additional $3 million decrease.

Gross operating margin from our natural gas marketing activities increased $41 million period-to-period primarily due to higher average sales margins.

Gross operating margin from our Delaware and Midland Basin Gathering Systems increased a combined net $10 million period-to-period primarily due to a 666 BBtus/d increase in natural gas gathering volumes, which accounted for a $35 million increase, partially offset by higher operating costs, which accounted for a $29 million decrease.

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 $36 million period-to-period primarily due to lower average gathering fees.

The gathering fees on these systems are indexed to regional gas prices, which were lower during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Gathering volumes on our Rocky Mountain gathering systems decreased a combined 69 BBtus/d period-to-period.

Gross operating margin from our Haynesville Gathering System decreased $14 million period-to-period primarily due to lower deficiency fees, which accounted for a $7 million decrease, and a 168 BBtus/d decrease in gathering volumes, which accounted for an additional $6 million decrease.

Petrochemical & Refined Products Services

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For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Segment gross operating margin:

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

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.

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

Propylene production and related activities

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from propylene production and related activities for the second quarter of 2024 increased $6 million when compared to the second quarter of 2023.

On a combined basis, gross operating margin from our Mont Belvieu area propylene production facilities increased a net $10 million quarter-to-quarter primarily due to higher propylene processing revenues, which accounted for a $38 million increase, and higher average propylene sales margins, which accounted for an additional $15 million increase, partially offset by lower propylene sales volumes, which accounted for a $37 million decrease, and higher operating costs, which accounted for an additional $9 million decrease.

Propylene and associated by-product production volumes at these facilities increased a combined 12 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, and higher production from our propylene splitters, which underwent scheduled maintenance during the second quarter of 2023.

Partially offsetting this increase was lower production from our PDH 1 facility due to scheduled maintenance that was completed during the second quarter of 2024.

Our PDH 2 facility experienced 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.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from propylene production and related activities for the six months ended June 30, 2024 decreased $39 million when compared to the six months ended June 30, 2023.

On a combined basis, gross operating margin from our Mont Belvieu area propylene production facilities decreased a net $28 million period-to-period primarily due to lower propylene sales volumes, which accounted for a $74 million decrease, and higher operating costs, which accounted for an additional $44 million decrease, partially offset by higher propylene processing revenues, which accounted for a $78 million increase, and higher storage and other revenues, which accounted for an additional $9 million increase.

Propylene and associated by-product production volumes at these facilities increased a combined 6 MBPD (net to our interest) period-to-period primarily due to contributions from our PDH 2 facility, which was placed into service in July 2023, partially offset by downtime for maintenance at our PDH 1 facility during the first half of 2024.

Butane isomerization and related operations

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from butane isomerization and related operations for the second quarter of 2024 decreased $7 million when compared to the second quarter of 2023 primarily due to lower ancillary service revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from butane isomerization and related operations for the six months ended June 30, 2024 was flat when compared to the six months ended June 30, 2023 primarily due to a 9 MBPD increase in isomerization volumes, which accounted for a $4 million increase, and a 41 MBPD increase in standalone DIB processing volumes, which accounted for an additional $4 million increase, offset by lower ancillary service and other revenues, which accounted for an $8 million decrease.

Octane enhancement and related plant operations

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from our octane enhancement and related plant operations for the second quarter of 2024 increased $14 million when compared to the second quarter of 2023 primarily due to higher average sales margins, which accounted for an $8 million increase, and higher sales volumes, which accounted for an additional $5 million increase.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from our octane enhancement and related plant operations for the six months ended June 30, 2024 increased $71 million when compared to the six months ended June 30, 2023 primarily due to higher sales volumes, which accounted for a $29 million increase, higher average sales margins, which accounted for a $19 million increase, and higher deficiency revenues, which accounted for an additional $18 million increase.

Refined products pipelines and related activities

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from refined products pipelines and related activities for the second quarter of 2024 decreased $8 million when compared to the second quarter of 2023.

Gross operating margin from our refined products marketing activities decreased a net $6 million quarter-to-quarter primarily due to lower average sales margins, which accounted for a $12 million decrease, partially offset by higher sales volumes, which accounted for a $6 million increase.

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

Refined product marine terminal volumes at Beaumont increased 63 MBPD quarter-to-quarter.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from refined products pipelines and related activities for the six months ended June 30, 2024 decreased $23 million when compared to the six months ended June 30, 2023.

Gross operating margin from our refined products marketing activities decreased a net $22 million period-to-period primarily due to lower average sales margins, which accounted for a $32 million decrease, partially offset by higher sales volumes, which accounted for an $11 million increase.

Gross operating margin from our refined products terminal in Beaumont, Texas decreased $7 million period-to-period primarily due to lower loading and other fee revenues.

Refined product marine terminal volumes at Beaumont increased 43 MBPD period-to-period.

Gross operating margin from our TE Products Pipeline System increased $6 million period-to-period primarily due to lower operating costs.

Overall, transportation volumes on our TE Products Pipeline System increased 29 MBPD period-to-period.

Ethylene exports and related activities

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).

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from ethylene exports and related activities for the second quarter of 2024 increased a net $1 million when compared to the second quarter of 2023 primarily due to a combined 49 MBPD (net to our interest) increase in transportation volumes, which accounted for a $4 million increase, partially offset by a 4 MBPD (net to our interest) decrease in ethylene export volumes, which accounted for a $3 million decrease.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from ethylene exports and related activities for the six months ended June 30, 2024 increased a net $20 million when compared to the six months ended June 30, 2023 primarily due to higher deficiency fee revenues from our ethylene pipelines and ethylene export terminal, which accounted for a $20 million increase, and a combined 38 MBPD (net to our interest) increase in transportation volumes, which accounted for an additional $7 million increase, partially offset by a 4 MBPD (net to our interest) decrease in ethylene export volumes, which accounted for a $7 million decrease.

Marine transportation and other services

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.

Second Quarter of 2024 Compared to Second Quarter of 2023 .

Gross operating margin from marine transportation and other services for the second quarter of 2024 increased $3 million when compared to the second quarter of 2023 primarily due to higher average fees.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 .

Gross operating margin from marine transportation and other services for the six months ended June 30, 2024 increased a net $5 million when compared to the six months ended June 30, 2023 primarily due to higher average fees, which accounted for a $10 million increase, partially offset by higher operating costs, which accounted for a $5 million decrease.

Liquidity and Capital Resources

Based on current market conditions (as of the filing date of this quarterly report), we believe that the Partnership and its consolidated businesses will have sufficient liquidity, cash flow from operations and access to capital markets to fund their capital investments and working capital needs for the reasonably foreseeable future.

At 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.

At June 30, 2024, we had $3.4 billion of consolidated liquidity.

This amount was comprised of $3.3 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 $900 million outstanding under EPO’s commercial paper program, and $138 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.

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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.

Enterprise Declares Cash Distribution for Second Quarter of 2024

On July 10, 2024, we announced that the Board declared a quarterly cash distribution of $0.525 per common unit, or $2.10 per unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the second quarter of 2024.

The quarterly distribution is payable on August 14, 2024 to unitholders of record as of the close of business on July 31, 2024.

The total amount to be paid is $1.15 billion, which includes $11 million for distribution equivalent rights on phantom unit awards.

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Consolidated Debt

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):

At June 30, 2024, the average maturity of EPO’s consolidated debt obligations was approximately 18.1 years.

The following table presents the scheduled maturities of principal amounts of EPO’s consolidated debt obligations at June 30, 2024 for the years indicated (dollars in millions):

Scheduled Maturities of Debt

Commercial Paper Notes

Junior Subordinated Notes

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

As of June 30, 2024, there are no principal amounts outstanding under this new revolving credit agreement.

Senior Notes JJJ were issued at 99.400% of their principal amount and have a fixed interest rate of 4.95% per year.

Senior Notes KKK were issued at 99.663% of their principal amount and have a fixed interest rate of 5.55% per year.

For additional information regarding our consolidated debt obligations, see Notes 7 and 18 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report.

Credit 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.

As of August 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.

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 March 31, 2024, the remaining available capacity under the 2019 Buyback Program was $ 1.0 billion.

The Partnership repurchased 1,419,581 and 2,806,416 common units through open market purchases during the three and six months ended June 30, 2024, respectively.

The total cost of these repurchases, including commissions and fees, was $40 million and $80 million, respectively.

As of June 30, 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 Three Months

Ended March 31,

Net cash flows provided by operating activities

Cash used in investing activities

Cash used in financing activities

Net cash flows provided by operating activities are largely dependent on earnings from our consolidated business activities.

For the Six Months

Ended June 30,

Net cash flow provided by operating activities

Net cash flow used in investing activities

Net cash flow used in financing activities

Net cash flow provided by operating activities are largely dependent on earnings from our consolidated business activities.

Changes in energy commodity prices may impact the demand for natural gas, NGLs, crude oil, petrochemicals and refined products, which could impact sales of our products and the demand for our midstream services.

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For additional information regarding our cash flow amounts, please refer to the Unaudited Condensed Statements of Consolidated Cash Flows included under Part I, Item 1 of this quarterly report.

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

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

Operating activities

Net cash flows provided by operating activities for the 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.

Net cash flow provided by operating activities for the six months ended June 30, 2024 increased a net $200 million when compared to the six months ended June 30, 2023 primarily due to:

a $337 million period-to-period increase resulting from higher partnership earnings (determined by adjusting our $200 million period-to-period increase in net income for changes in the non-cash items identified on our Unaudited Condensed Statements of Consolidated Cash Flows);

partially offset by

a $124 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.

Investing activities

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).

Net cash flow used in investing activities during the six months ended June 30, 2024 increased $879 million when compared to the six months ended June 30, 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 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.

Net cash flow used in financing activities during the six months ended June 30, 2024 decreased a net $722 million when compared to the six months ended June 30, 2023 primarily due to:

a net cash inflow of $1.5 billion related to debt transactions that occurred during the six months ended June 30, 2024 compared to a net cash inflow of $361 million related to debt transactions that occurred during the six months ended June 30, 2023.

During the six months ended June 30, 2024, we issued $2.0 billion aggregate principal amount of senior notes and issued a net $450 million under EPO’s commercial paper program, partially offset by the repayment of $850 million principal amount of senior notes.

During the six months ended June 30, 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 $140 million under EPO’s commercial paper program;

partially offset by

a $400 million cash outflow during the six months ended June 30, 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 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.

a $106 million period-to-period increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit.

Non-GAAP Cash Flow Measures

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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.

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 flow provided by operating activities, which is the most comparable GAAP measure to DCF and Operational DCF.

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

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

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

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

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Change in fair market value of derivative instruments

Deferred income tax expense

Deferred income tax expense (benefit)

Sustaining capital expenditures (3)

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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 and Operational DCF for the periods indicated (dollars in millions):

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

For the Three Months

Ended March 31,

Net cash flows provided by operating activities (GAAP)

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

Ended June 30,

For the Six Months

Ended June 30,

Net cash flow provided by operating activities (GAAP)

Adjustments to reconcile net cash flow 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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Capital Investments

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);

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

We have approximately $6.7 billion of growth capital projects scheduled to be completed by the end of 2026, including the following major projects (including their respective scheduled completion dates):

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

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 at our Mont Belvieu NGL fractionation complex in Chambers County, Texas (second half of 2025);

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

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

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

the expansion of our LPG and PGP export capacity at EHT, including Ref 4 (fourth quarter of 2026).

Based on information currently available, we expect our total capital investments for 2024, net of contributions from noncontrolling interests, to approximate $4.1 billion to $4.35 billion, which reflects growth capital investments of $3.5 billion to $3.75 billion and sustaining capital expenditures of $600 million.

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

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.

These amounts do not include capital investments associated with our proposed deep-water offshore crude oil terminal (SPOT), which remains subject to a final investment decision.

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

We may revise our forecast of capital investments due to factors beyond our control, such as adverse economic conditions, weather-related issues and changes in supplier prices resulting from raw material or labor shortages, supply chain disruptions or inflation.

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

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Capital investments for property, plant and equipment:

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

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:

Comparison of Six Months Ended June 30, 2024 with Six Months Ended June 30, 2023

In total, investments in growth capital projects increased $710 million period-to-period primarily due to the following:

higher investments in ethane, ethylene, and LPG export expansion projects at our Gulf Coast terminals, which accounted for a $291 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.

higher investments in our Bahia NGL Pipeline, which accounted for a $242 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 an additional $149 million increase.

Investments attributable to sustaining capital projects increased $168 million period-to-period 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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If EPO were to default on any of its Guaranteed Debt, the Partnership would be responsible for full and unconditional repayment of such obligations.

At March 31, 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.

At June 30, 2024, the total amount of Guaranteed Debt was $31.1 billion, which was comprised of $27.4 billion of EPO’s senior notes, $2.3 billion of EPO’s junior subordinated notes, $900 million of short-term commercial paper notes, and $487 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 $47.8 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.

The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $49.7 billion at June 30, 2024.

The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the six months ended June 30, 2024 was $3.2 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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Other noncurrent assets, excluding investments in Non-Obligor Subsidiaries

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

of $49.7 billion at June 30, 2024 and $46.8 billion at December 31, 2023

Selected liability information:

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

Current portion of Guaranteed Debt, including interest of $487 million at June 30, 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):

For the Three

For the Twelve

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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

$3.2 billion for the six months ended June 30, 2024 and

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

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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 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.

At June 30, 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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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