Enterprise Announces Record Cash Flow of $118.9 Million; Pipeline Volumes Increase 196%.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Oct. 30, 2001 Enterprise Products Partners L.P. (NYSE NYSE See: New York Stock Exchange :EPD EPD expected progeny difference. ) today announced record cash flow and increased earnings for the third quarter ending on Sept. 30, 2001. Cash Flow generated during the third quarter of 2001 was a record $118.9 million, or $1.60 per unit based on the total number of Common and Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. units outstanding. This is a 74 percent increase from Cash Flow earned during the third quarter of 2000 of $68.2 million, or $0.97 per unit based on outstanding Common and Subordinated units. For the third quarter of 2001, this level of Cash Flow provided 2.6 times coverage of the cash distribution to partners, which was increased during the quarter to a quarterly rate of $0.625 per unit. The 14.5 million Special units that are outstanding do not receive cash distributions until their conversion into Common units, which occurs over the next two years. The Cash Flow generated during the third quarter would have provided 2.1 times coverage of the cash distribution requirement had the Special units been eligible to participate in the distribution. For the first nine months of 2001, Cash Flow was $238.0 million, or $3.37 per unit based on the average number of Common and Subordinated units outstanding, versus $212.2 million, or $3.11 per unit, for the same period in 2000. Cash Flow generated during the first nine months of 2001 provided 1.9 times coverage of the cash distributions paid to partners. Had the Special units been eligible to participate in cash distributions during this period, Cash Flow would have provided 1.6 times coverage of the distribution to partners. "The third quarter was an outstanding quarter for Enterprise," stated O.S. "Dub" Andras Andras demon of discord. [Occultism: Jobes, 93] See : Discord , president and chief executive officer of Enterprise. "Cash Flow generated during the quarter exceeded our previous record from the first quarter of 2000 by 41 percent, or $34.3 million. Enterprise's pipeline businesses had volume and margin growth of 196 percent and 118 percent, respectively, from the third quarter of last year. Our results reflect over $650 million of investments in natural gas, NGL NGL - A dialect of IGL. and petroleum liquid pipelines and storage facilities that have been completed or initiated during the past eighteen months. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: from our Processing segment increased 79 percent due to increased demand for NGLs and lower natural gas prices." "In the third quarter, we increased the cash distribution rate to our partners by 6.4 percent. We have increased the cash distribution rate by a total of 13.6 percent during 2001, which surpassed our annual objective of at least 10 percent growth. This was the fifth increase in the last eight quarters for a total increase of 39 percent," said Andras. "Our distribution increases; however, reflect only a part of our growth. In the third quarter of 2001, our Cash Flow exceeded the amount of our cash distribution to partners by $70.9 million. This surplus will be reinvested in the growth of the partnership. Moreover, during the past nine quarters, we have generated $647.2 million of Cash Flow of which $308.7 million, or 48 percent, has been reinvested to fund expansions and acquisitions. We believe our level of reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. is unprecedented among the publicly traded partnerships Publicly Traded Partnership A limited partnership that also has interests traded in the equity securities market. Notes: This is also known as a master limited partnership. See also: Master Limited Partnership, Partnership, Public Company . It also gives us a great deal of financial flexibility. At Sept. 30, 2001, we had $67.1 million of cash on hand and our net debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. was 40 percent," stated Andras. Andras continued, "We are very excited about the growth potential of the Manta Ray-Nautilus-Neptune corridor and its attraction to deepwater Deepwater or Deep Water may refer to:
Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . We believe this corridor, which consists of the Manta Ray manta ray or devil ray or devilfish Any of several genera of warm-water marine rays, constituting the family Mobulidae, that are wider than they are long. , Nautilus nautilus, in zoology nautilus, cephalopod mollusk belonging to the sole surviving genus (Nautilus) of a subclass that flourished 200 million years ago, known as the nautiloids. and Nemo natural gas pipelines and the Neptune processing plant, maximizes the revenue for deepwater producers by giving their natural gas and NGL production access to the highest value markets. Enterprise owns an approximate 26 percent interest in both Nautilus and Manta Ray; 34 percent interest in Nemo; and a 66 percent interest in the Neptune facility, which we also operate." "Today, we are more optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about Enterprise's opportunities for growth than at any other time in our thirty-three year history. We are confident that we will achieve our annual goal to invest $400 million in growth-oriented, natural gas and NGL infrastructure projects and acquisitions. We have recently announced our execution of a letter of intent to acquire a major petroleum liquid storage business that serves the largest petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. and refinery complex in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. located near our Mont Belvieu facilities. This transaction should be completed by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . We are also constructing $110 million of pipeline projects which should be completed and begin contributing cash flow by the end of this year and in the first quarter of 2002. We believe demand for the Manta Ray-Nautilus-Neptune corridor will require expansions of processing and fractionation fractionation /frac·tion·a·tion/ (frak?shun-a´shun) 1. in radiology, division of the total dose of radiation into small doses administered at intervals. 2. facilities. Today, we are in the planning phase In amphibious operations, the phase normally denoted by the period extending from the issuance of the order initiating the amphibious operation up to the embarkation phase. The planning phase may occur during movement or at any other time upon receipt of a new mission or change in the of an expansion that would double the size of the Neptune plant by the end of 2003. We are also currently evaluating a number of significant acquisition opportunities," stated Andras. Net income for the third quarter of 2001 was $75.0 million, or $0.85 per unit on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, a 49 percent increase from net income of $50.3 million, or $0.60 per unit, for the third quarter of 2000. For the first nine months of 2001, net income increased 33 percent to $220.3 million, or $2.55 per unit on a fully diluted basis, versus $165.3 million, or $2.00 per unit, in 2000. Revenues for the third quarter were $729.6 million compared to $721.9 million in the prior year quarter. Gross operating margin increased 49 percent to $110.8 million versus $74.5 million reported for the third quarter of 2000. The growth was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Processing, Pipeline and Fractionation segments. Fractionation -- For the third quarter of 2001, Fractionation gross operating margin increased 8 percent to $35.2 million versus $32.5 million in 2000. This increase was primarily due to an increase in propylene propylene /pro·pyl·ene/ (pro´pi-len) a gaseous hydrocarbon, CH3CHdbondCH2. propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. fractionation margin. NGL fractionation volumes increased 5 percent to 224,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. ("BPD Borderline personality disorder (BPD) A pattern of behavior characterized by impulsive acts, intense but chaotic relationships with others, identity problems, and emotional instability. "). Pipelines -- Gross margin in the Pipeline segment increased 118 percent in the current quarter to $22.4 million from $10.3 million in the third quarter of 2000. Net Pipeline volumes increased 196 percent from 289,000 BPD to 854,000 BPD on an energy equivalent basis where 3.8 million British thermal units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. ("MMBtu") of natural gas is equivalent to one barrel of NGLs. Approximately two-thirds of the volume growth was attributable to a full quarter of results from the recent natural gas pipeline acquisitions, Acadian Gas, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and interests in the Manta Ray, Nautilus, Stingray stingray: see ray. stingray or whip-tailed ray Any of various species (family Dasyatidae) of rays noted for their slender, whiplike tail with barbed, usually venomous spines. and Nemo pipelines in the Gulf of Mexico. Natural gas throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. for the third quarter of 2001 was 1,426,463 MMBtu per day. Net liquid volumes increased 66 percent to 479,000 BPD compared to 289,000 BPD in the same period of 2000. The increase in liquid volumes was primarily due to increased demand for Enterprise's import/export terminal and related pipelines; its Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. liquids
pipeline system; and the Lou-Tex NGL pipeline, which began commercial
operations during the fourth quarter of 2000.Processing -- For the third quarter of 2001, Processing generated gross operating margin of $52.0 million, a 79 percent increase, compared to $29.1 million in 2000. The Processing segment includes Enterprise's natural gas processing Natural gas processing plants, or fractionators, are used to purify the raw natural gas extracted from underground gas fields and brought up to the surface by gas wells. The processed natural gas, used as fuel by residential, commercial and industial consumers, is almost pure business and its related merchant activities. Enterprise's equity NGL production was 62,000 BPD for the current quarter versus 73,000 BPD last year. The margin for the Processing segment for the third quarter of 2001 includes $34.6 million of non-cash, mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gains related to natural gas and NGL hedging positions at Sept. 30, 2001. During the quarter, we received cash by closing certain hedging positions of which the associated non-cash, mark-to-market gains had been included in net income earlier in the year. "With the increased demand for NGLs and moderation in natural gas prices, our equity NGL production has continued to increase. In addition, in August, Shell commenced production at their Brutus Brutus, in ancient Rome Brutus (br `təs), in ancient Rome, a surname of the Junian gens.Lucius Junius Brutus, fl. 510 B.C., was the founder of the Roman republic. development, which should significantly increase our NGL production. At the current level of NGL demand and natural gas prices, we would expect our equity NGL production to be over 80,000 BPD in the fourth quarter," stated Andras. Today, Enterprise will host a conference call that will further discuss third quarter earnings. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at 9:30 a.m. Eastern Time at http://www.epplp.com. To access the Webcast, participants should visit the home page of the Web site, at least fifteen minutes prior to the start of the conference call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. Several adjustments to net income are required to calculate "Cash Flow." These adjustments include the addition of (1) non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) such as depreciation and amortization expense; (2) lease expenses for which the partnership does not have the payment obligation; (3) principal payments on notes receivable held by the company; (4) actual cash distributions from unconsolidated affiliates less the related equity income, and (5) other miscellaneous adjustments such as the subtraction subtraction, fundamental operation of arithmetic; the inverse of addition. If a and b are real numbers (see number), then the number a−b is that number (called the difference) which when added to b (the subtractor) equals of non-cash, mark-to-market gains related to hedging activities. Cash Flow is also reduced for maintenance capital expenditures. Gross operating margin represents operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation, amortization, lease expense for which Enterprise does not have the payment obligation, general and administrative expenses and gain or loss on sale of assets. Enterprise's equity earnings from unconsolidated affiliates are included in gross margin. Enterprise Products Partners L.P. is the second largest publicly traded, midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. energy partnership with an enterprise value of approximately $5.1 billion. Enterprise is a leading provider of midstream energy services to producers and consumers of natural gas and natural gas liquids ("NGLs"). The company's services include natural gas transportation, processing and storage and NGL fractionation (or separation), transportation, storage and import/export terminalling. The company's assets are geographically focused on the United States' Gulf Coast, which accounts for approximately 55 percent of both domestic natural gas and NGL production and 75 percent of domestic NGL demand. This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 21E of the Securities Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by, and information currently available to, management. Although Enterprise believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to the company's latest filings with the Securities and Exchange Commission for a list of factors that may cause actual results to differ materially from those in the forward-looking statements contained in this press release.
Enterprise Products Partners L.P.
Statement of Consolidated Operations - UNAUDITED
For the Three Months and Nine Months Ended September 30, 2001 and 2000
($ in 000s, except per unit amounts)
For the three months For the nine months
ended Sept. 30, ended Sept. 30,
--------------------------------------------
2001 2000 2001 2000
-------- -------- ---------- ----------
Revenue
Revenue from
consolidated
operations $723,329 $717,113 $2,519,041 $2,056,307
Equity income in
unconsolidated
affiliates 6,289 4,750 17,350 23,290
-------- -------- ---------- ----------
Total Revenue 729,618 721,863 2,536,391 2,079,597
Costs and Expenses:
Operating costs
and expenses 634,496 659,021 2,263,876 1,878,233
Selling, general and
administrative 7,716 6,978 21,621 20,020
-------- -------- ---------- ----------
Total Costs and
Expenses 642,212 665,999 2,285,497 1,898,253
-------- -------- ---------- ----------
Operating Income 87,406 55,864 250,894 181,344
Other Income
(Expense):
Interest expense (12,610) (7,486) (35,928) (23,330)
Interest income
(expense) from
unconsolidated
affiliates -- (88) 31 182
Dividend income
from unconsolidated
affiliates 392 2,241 2,024 6,236
Interest income
- other 861 317 6,338 3,023
Other, net (275) (71) (806) (496)
-------- -------- ---------- ----------
Total Other Income
(Expense) (11,632) (5,087) (28,341) (14,385)
-------- -------- ---------- ----------
Income before
minority interest 75,774 50,777 222,553 166,959
Minority interest (767) (514) (2,245) (1,689)
-------- -------- ---------- ----------
Net income $75,007 $50,263 $220,308 $165,270
======== ======== ========== ==========
Allocation of Net
Income to:
Limited partners $73,408 $49,566 $216,339 $163,423
General partner $1,599 $697 $3,969 $1,847
Per Unit data
(Fully Diluted):
Net income per
Common, Subordinated
& Special Units $0.85 $0.60 $2.55 $2.00
Average LP Common,
Subordinated &
Special Units
Outstanding (000s) 86,103 83,182 84,819 81,862
Other Financial data:
Depreciation and
Amortization $14,011 $9,605 $37,245 $27,952
Leases paid by EPCO $2,660 $2,660 $7,980 $7,984
Collection of notes
receivable from
unconsolidated
affiliates $ -- $ -- $ -- $6,519
Distributions
received from
unconsolidated
affiliates $17,390 $11,729 $30,602 $25,997
Non-cash changes to
mark-to-market
valuations related
to natural gas
and NGL hedging
activities $(17,860) $ -- $34,512 $ --
Non-cash changes to
mark-to-market
valuations related
to interest rate
hedging activities $1,410 $ -- $4,918 $ --
Maintenance capital
expenditures $1,104 $1,855 $3,793 $2,327
Total Capital
Expenditures $35,551 $45,911 $92,641 $200,157
Investments in
and advances to
(from)
unconsolidated
affiliates $4,583 $(733) $119,865 $2,307
Total Debt principal
outstanding at end
of period $854,000 $454,000 $854,000 $454,000
Enterprise Products Partners L.P.
Operating Data - UNAUDITED
For the Nine Months Ended September 30, 2001 and 2000
For the three months For the nine months
ended September 30, ended September 30,
------------------- ----------------------
2001 2000 2001 2000
--------- ------- --------- --------
Gross Operating
Margin by Segment
($000s):
Fractionation $35,189 $32,510 $93,660 $96,432
Pipeline 22,415 10,292 65,234 39,119
Processing 52,026 29,083 148,536 87,123
Octane Enhancement 909 2,190 6,311 13,002
Other 310 429 1,256 1,855
------------------- ----------------------
Total Gross
Operating
Margin $110,849 $74,504 $314,997 $237,531
------------------- ----------------------
Depreciation
and amortization 13,071 9,029 34,893 25,907
Retained lease
expense, net 2,660 2,660 7,980 7,984
Loss (gain) on sale
of assets (4) (27) (391) 2,276
Selling, general and
administrative
expenses 7,716 6,978 21,621 20,020
------------------- ----------------------
Operating Income $87,406 $55,864 $250,894 $181,344
=================== ======================
Selected Volumetric
Operating Data:
MBPD, Net
Equity NGL Production 62 73 57 72
NGL Fractionation 224 214 198 216
Isomerization 81 84 82 77
Propylene
Fractionation 34 34 31 34
Octane Enhancement 5 6 4 5
Major NGL and
Petrochemical
Pipelines 479 289 452 334
MMBtu/D, Net
Natural Gas
Pipelines 1,426,463 -- 1,342,104 --
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