Enterprise Reports Record 2022 Results
HOUSTON–(BUSINESS WIRE)–Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD) today announced its financial results for the three months and year ended December 31, 2022.
Year Ended 2022 Results
Enterprise reported net income attributable to common unitholders of $5.5 billion, or $2.50 per unit on a fully diluted basis for 2022, compared to $4.6 billion, or $2.10 per unit on a fully diluted basis for 2021. Net income for 2022 and 2021 was reduced by non-cash, asset impairment charges of approximately $53 million, or $0.02 per fully diluted unit, and $233 million, or $0.11 per fully diluted unit, respectively.
Distributable Cash Flow (“DCF”) increased 17 percent to $7.8 billion for 2022 compared to $6.6 billion for 2021. DCF provided 1.9 times coverage of the distributions declared with respect to 2022. Enterprise retained $3.6 billion of DCF in 2022 to reinvest in the partnership, repurchase partnership units, and reduce debt. Distributions declared with regard to 2022 increased 5 percent to $1.905 per common unit, compared to distributions declared for 2021, marking the partnership’s 24th consecutive year of distribution growth.
Adjusted cash flow provided by operating activities (“Adjusted CFFO”), increased 13 percent to $8.1 billion for 2022 compared to $7.1 billion for 2021. Enterprise’s payout ratio of distributions to common unitholders and partnership unit buybacks was 54 percent of Adjusted CFFO in 2022. Adjusted Free Cash Flow (“Adjusted FCF”) was $3.0 billion for 2022. Excluding $3.2 billion used for the acquisition of Navitas Midstream Partners, LLC (“Navitas Midstream”) in February 2022, the partnership’s payout ratio of Adjusted FCF was 71 percent for 2022.
“We are extremely proud and grateful for the teamwork and contribution of our 7,200 employees to Enterprise’s record performance in 2022,” said A. J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner. “We established 25 safety, operating and financial records in 2022.”
“The partnership’s performance was generated by record volumes across many of our assets, higher margins in our natural gas processing and octane enhancement businesses, and contributions from our acquisition of Navitas Midstream. This acquisition was immediately accretive to Enterprise’s cash flow per unit and has exceeded our expectations. We also increased the value of our partnership in 2022 by investing $1.6 billion in organic growth projects and asset purchases and strengthened our balance sheet by repurchasing $250 million of our common units on the open market while reducing the principal amount of our debt by $1.3 billion,” continued Teague.
Fourth Quarter and Full Year 2022 Financial Highlights
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|
|
Three Months Ended December 31, |
Year Ended December 31, |
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|
($ in millions, except per unit amounts) |
|
2022 |
2021 |
2022 |
2021 |
|||||||
|
Operating income |
|
$ |
1,765 |
$ |
1,403 |
$ |
6,907 |
$ |
6,103 |
|||
|
Net income (1) |
|
$ |
1,452 |
$ |
1,064 |
$ |
5,615 |
$ |
4,755 |
|||
|
Fully diluted earnings per common unit (1) |
|
$ |
0.65 |
$ |
0.47 |
$ |
2.50 |
$ |
2.10 |
|||
|
Total gross operating margin (2) |
|
$ |
2,368 |
$ |
2,087 |
$ |
9,309 |
$ |
8,561 |
|||
|
Adjusted EBITDA (2) |
|
$ |
2,376 |
$ |
2,112 |
$ |
9,309 |
$ |
8,381 |
|||
|
Adjusted CFFO (2) |
|
$ |
2,097 |
$ |
1,807 |
$ |
8,093 |
$ |
7,147 |
|||
|
Adjusted FCF (2) |
|
$ |
1,407 |
$ |
1,403 |
$ |
2,983 |
$ |
4,930 |
|||
|
DCF (2) |
|
$ |
2,028 |
$ |
1,659 |
$ |
7,751 |
$ |
6,608 |
|||
|
(1) |
Net income and fully diluted earnings per common unit for the fourth quarters of 2022 and 2021 include non-cash asset impairment charges of approximately $5 million, or less than $0.01 per fully diluted unit, and $120 million, or $0.05 per unit, respectively. For the years ended December 31, 2022 and 2021, net income and fully diluted earnings per common unit include non-cash asset impairment charges of $53 million, or $0.02 per unit, and $233 million, or $0.11 per unit, respectively. |
|
(2) |
Total gross operating margin, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted CFFO, Adjusted FCF and DCF are non-generally accepted accounting principle (“non-GAAP”) financial measures that are defined and reconciled later in this press release. |
- Enterprise increased its cash distribution 5.4 percent to $0.49 per common unit with respect to the fourth quarter of 2022 compared to the distribution declared with respect to the fourth quarter of 2021. The distribution will be paid on February 14, 2023, to common unitholders of record as of the close of business on January 31, 2023.
- DCF for the fourth quarter of 2022 was $2.0 billion, which provided 1.9 times coverage of the $0.49 per common unit cash distribution. Enterprise retained $956 million of DCF in the fourth quarter of 2022.
- Adjusted CFFO for the fourth quarter of 2022 was a record $2.1 billion compared to $1.8 billion for the same quarter in 2021. Adjusted FCF was $1.4 billion for both the fourth quarters of 2022 and 2021.
- Capital investments in the fourth quarter of 2022 were $763 million, which included $160 million for purchases of approximately 580 miles of pipelines and related assets and $138 million of sustaining capital expenditures. Total capital investments for 2022 were $5.2 billion, including $3.2 billion for the acquisition of Navitas Midstream, $1.4 billion of investments in growth capital projects, $160 million for purchases of pipelines and related assets and $372 million of sustaining capital expenditures.
- During the fourth quarter of 2022, Enterprise purchased $120 million of its common units in the open market, bringing the total amount of common unit buybacks during 2022 to $250 million. Including these purchases in 2022, the partnership has utilized 37 percent of its authorized $2.0 billion unit buyback program. In addition, the partnership’s distribution reinvestment and employee unit purchase plans purchased $41 million and $164 million of Enterprise common units on the open market during the fourth quarter and the full year 2022, respectively.
Fourth Quarter and Full Year 2022 Volume Highlights
|
|
Three Months Ended December 31, |
Year Ended December 31, |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
NGL, crude oil, refined products & petrochemical pipeline volumes (million BPD) |
6.9 |
6.5 |
6.7 |
6.4 |
|
Marine terminal volumes (million BPD) |
1.7 |
1.5 |
1.7 |
1.5 |
|
Natural gas pipeline volumes (TBtus/d) |
17.6 |
14.6 |
17.1 |
14.2 |
|
NGL fractionation volumes (MBPD) |
1,336 |
1,327 |
1,339 |
1,253 |
|
Propylene plant production volumes (MBPD) |
89 |
105 |
101 |
99 |
|
Fee-based natural gas processing volumes (Bcf/d) |
5.4 |
4.0 |
5.2 |
4.1 |
|
Equity NGL-equivalent production volumes (MBPD) |
173 |
158 |
182 |
167 |
|
As used in this press release, “NGL” means natural gas liquids, “LNG” means liquefied natural gas, “LPG” means liquefied petroleum gas, “BPD” means barrels per day, “MBPD” means thousand barrels per day, “MMcf/d” means million cubic feet per day, “Bcf/d” means billion cubic feet per day, “BBtus/d” means billion British thermal units per day and “TBtus/d” means trillion British thermal units per day. |
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“Enterprise finished 2022 with a solid fourth quarter, reporting record total gross operating margin. Our quarterly results were driven by record total pipeline transportation volumes of 11.5 million BPD, on a barrel equivalent basis, higher NGL and natural gas pipeline transportation volumes, higher natural gas processing margins and increased fee-based gas processing volumes. Our Midland Basin gathering and processing assets we acquired in February 2022 continued to produce solid results this quarter,” stated Teague.
“During the quarter, we opportunistically purchased approximately 580 miles of pipeline and related assets that enables us to cost effectively optimize and expand our NGL and petrochemical pipeline systems on the Texas Gulf Coast. The partnership has $3.6 billion of assets under construction that are scheduled to be completed and begin commercial operations in 2023. These major projects include our second facility to convert propane into polymer grade propylene (PDH 2), two natural gas processing plants in the Permian basin and a twelfth NGL fractionator at our Chambers County complex. These projects are underwritten by long-term agreements and will provide new sources of cash flow for the partnership,” said Teague.
“We began 2023 by successfully issuing a total of $1.75 billion of 3-year and 10-year notes, which effectively refinances $1.25 billion of debt maturities and should satisfy our remaining long-term funding needs for the year. We thank our debt investors for their consistent support over the years. We also increased our fourth quarter distribution that will be paid later this month by 5.4 percent compared to the distribution paid a year ago. In July, Enterprise will celebrate the 25th anniversary of our initial public offering. The partnership is on track to accomplish another significant financial milestone in 2023: 25 consecutive years of distribution growth,” continued Teague.
“We embark on this new year with one of the strongest balance sheets in our history. This provides Enterprise the financial flexibility to invest in new growth opportunities and to help weather unforeseen macro-economic challenges. Since our initial public offering, our financial goals have remained the same: to responsibly invest in the growth of the partnership to provide our partners with a growing and resilient stream of cash distributions and increase the long-term value of the partnership. With the support of our employees, customers, suppliers and investors, we look forward to the year ahead,” concluded Teague.
Review of Fourth Quarter 2022 Segment Performance
Enterprise reported record total gross operating margin of $2.4 billion for the fourth quarter of 2022, a 13 percent increase over $2.1 billion of total gross operating margin reported for the fourth quarter of 2021. Gross operating margin for the fourth quarter of 2022 included net non-cash, mark-to-market (“MTM”) losses of $32 million, compared to net non-cash MTM losses of $59 million reported for the fourth quarter of 2021. Below is a summary review of each business segment’s performance.
NGL Pipelines & Services – Gross operating margin for the NGL Pipelines & Services segment increased 17 percent to $1.3 billion for the fourth quarter of 2022 compared to $1.1 billion for the fourth quarter of 2021.
Enterprise’s natural gas processing and related NGL marketing business reported gross operating margin of $459 million for the fourth quarter of 2022, a 58 percent increase over gross operating margin of $291 million for the fourth quarter of 2021. Gross operating margin for the fourth quarters of 2022 and 2021 included non-cash, MTM losses of $40 million and $50 million, respectively. Total fee-based natural gas processing volumes increased to a record 5.4 Bcf/d in the fourth quarter of 2022 compared to 4.0 Bcf/d for the fourth quarter of 2021. Equity NGL-equivalent production volumes increased to 173 MBPD this quarter from 158 MBPD for the same quarter of 2021.
The partnership’s Midland Basin natural gas processing facility, acquired in February 2022, contributed $76 million of gross operating margin in the fourth quarter of 2022 on 977 MMcf/d of fee-based natural gas processing volumes and 53 MBPD of equity NGL-equivalent production volumes. The partnership’s Delaware Basin natural gas processing facilities generated $76 million of gross operating margin this quarter compared to $71 million for the same quarter of 2021. The $5 million net increase was primarily due to higher average processing margins, including the impact of hedging activities, higher average processing fees, and a 208 MMcf/d increase in fee-based natural gas processing volumes, partially offset by an 18 MBPD decrease in equity NGL-equivalent volumes and higher operating costs.
Gross operating margin from Enterprise’s South Texas natural gas processing facilities increased $14 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average processing margins, including the impact of hedging activities. Fee-based natural gas processing volumes at these facilities increased 208 MMcf/d for the fourth quarter of 2022 compared to the fourth quarter of 2021.
Gross operating margin from Enterprise’s natural gas processing facilities in Louisiana and Mississippi decreased $18 million this quarter compared to the same quarter last year, primarily due to lower average processing margins. Total fee-based natural gas processing volumes at these facilities increased by 52 MMcf/d for the fourth quarter of 2022 compared to the fourth quarter of 2021. The weighted-average indicative NGL price for the fourth quarter of 2022 was $0.69 per gallon compared to $0.89 per gallon for the fourth quarter of 2021.
Gross operating margin from NGL marketing activities increased $84 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average sales margins and higher non-cash, MTM earnings, partially offset by lower sales volumes.
Gross operating margin from the partnership’s NGL pipelines and storage business increased to $646 million for the fourth quarter of 2022 from $572 million for the fourth quarter of 2021. NGL pipeline transportation volumes increased to 3.9 million BPD this quarter from 3.5 million BPD for the same quarter in 2021. NGL marine terminal volumes increased to 751 MBPD for the fourth quarter of 2022 compared to 651 MBPD for the same quarter of 2021.
Gross operating margin from the partnership’s Eastern ethane pipelines, which include its ATEX and Aegis pipelines, increased a combined $34 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to a 22 MBPD increase in transportation volumes on the ATEX Pipeline and higher average transportation fees.
A number of Enterprise’s NGL pipelines, including the Mid-America and Seminole NGL Pipeline Systems, Chaparral NGL Pipeline, and Shin Oak NGL Pipeline, serve the Permian Basin and Rocky Mountain regions. On a combined basis, gross operating margin from these pipelines increased a net $9 million, primarily due to an 84 MBPD, net to our interest, increase in aggregate transportation volumes, partially offset by higher utility and other operating costs.
The partnership’s Dixie NGL pipeline contributed $7 million to the quarterly increase in gross operating margin, primarily due to a 33 MBPD increase in transportation volumes for the fourth quarter of 2022 versus the same quarter in 2021. The partnership’s Morgan’s Point Ethane Export Terminal reported a $10 million increase in gross operating margin this quarter compared to the same quarter last year, primarily due to higher average loading fees.
Enterprise’s NGL fractionation business reported gross operating margin of $189 million for the fourth quarter of 2022 compared to $246 million for the fourth quarter of 2021. Total NGL fractionation volumes were 1.3 million BPD for both the fourth quarters of 2022 and 2021.
Gross operating margin from Enterprise’s NGL fractionation complex in Chambers County, Texas decreased $55 million for the fourth quarter of 2022 compared to the same quarter in 2021, primarily due to lower average fractionation fees, lower ancillary service revenues and a 20 MBPD, net to our interest, decrease in fractionation volumes.
Crude Oil Pipelines & Services – Gross operating margin from the Crude Oil Pipelines & Services segment was $418 million for the fourth quarter of 2022 versus $438 million for the fourth quarter of 2021. Included in gross operating margin are non-cash, MTM gains of $8 million in the fourth quarter of 2022 compared to non-cash, MTM losses of $3 million in the fourth quarter of 2021. Total crude oil pipeline transportation volumes were 2.3 million BPD for both the fourth quarters of 2022 and 2021. Total crude oil marine terminal volumes increased 16 percent to 756 MBPD for the fourth quarter of 2022 from 649 MBPD for the fourth quarter of 2021.
Gross operating margin from Enterprise’s EFS Midstream System decreased $70 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to lower deficiency fees as a result of the expiration of minimum volume commitments associated with certain long-term gathering agreements entered into at the time Enterprise acquired the system in July 2015. The EFS Midstream System will continue to transport volumes produced from dedicated acreage through the remaining term of these agreements.
Enterprise’s share of gross operating margin from the Seaway Pipeline decreased $18 million for the fourth quarter of 2022 compared to the same quarter in 2021, primarily due to lower transportation revenues and higher utility and other operating costs.
Gross operating margin from the partnership’s West Texas Pipeline System increased $31 million this quarter compared to the same quarter in 2021, primarily due to higher ancillary service and other revenues. Transportation volumes decreased 7 MBPD for the fourth quarter of 2022 compared to the fourth quarter of 2021 on this pipeline system.
Gross operating margin from crude oil activities at the Enterprise Houston Terminal (“EHT”) and the partnership’s Beaumont Marine West Terminal increased a combined $13 million for the fourth quarter of 2022, compared to the fourth quarter of 2021, primarily due to higher storage and other fee revenues. Loading and unloading volumes increased a combined 96 MBPD for the fourth quarter of 2022 compared to the fourth quarter of 2021.
Gross operating margin from crude oil marketing activities, excluding Midland-to-ECHO activities, increased $32 million, primarily due to higher average sales margins and higher non-cash, MTM earnings.
Natural Gas Pipelines & Services – Gross operating margin for the Natural Gas Pipelines & Services segment increased to $315 million for the fourth quarter of 2022 compared to $195 million for the fourth quarter of 2021. Total natural gas transportation volumes were a record 17.6 TBtus/d for the fourth quarter of 2022 compared to 14.6 TBtus/d for the same quarter in 2021.
Gross operating margin from the partnership’s Texas Intrastate System increased $34 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average transportation fees. Transportation volumes for the Texas Intrastate System increased 407 BBtus/d to 5.6 TBtus/d for the fourth quarter of 2022.
Enterprise’s Permian Basin natural gas gathering systems reported a combined $20 million increase in gross operating margin for the fourth quarter of 2022 compared to the same quarter in 2021. The Midland Basin Gathering System, acquired in February 2022, generated $15 million of gross operating margin in the fourth quarter of 2022 on gathering volumes of 1.3 TBtus/d. Increased earnings from condensate sales contributed to a $5 million increase in gross operating margin from the Delaware Basin Gathering System for the fourth quarter of 2022 versus the fourth quarter of 2021.
On a combined basis, gross operating margin from the partnership’s Jonah Gathering System, Piceance Basin Gathering System, and San Juan Gathering System in the Rocky Mountains increased $9 million for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average gathering fees. Gathering volumes on these systems decreased a combined 94 BBtus/d for the fourth quarter of 2022 compared to the same quarter of 2021.
Gross operating margin from Enterprise’s natural gas marketing business increased $60 million during the fourth quarter of 2022 versus the same quarter in 2021, primarily due to higher average sales margins.
Petrochemical & Refined Products Services – Gross operating margin for the Petrochemical & Refined Products Services segment was $339 million for the fourth quarter of 2022 compared to $338 million for the fourth quarter of 2021. Total segment pipeline transportation volumes were 740 MBPD for the fourth quarter of 2022 compared to 704 MBPD for the fourth quarter of 2021. Marine terminal volumes were 215 MBPD for the fourth quarter of 2022 versus 207 MBPD for the same quarter in 2021.
The partnership’s propylene production and related activities reported a $99 million decrease in gross operating margin to $90 million for the fourth quarter of 2022. Total propylene production volumes were 89 MBPD in the fourth quarter of 2022 compared to 105 MBPD in the fourth quarter of 2021. Gross operating margin from Enterprise’s Chambers County propylene production facilities decreased $95 million, primarily due to lower average propylene sales margins and volumes, and lower average processing fees. Propylene and associated by-product production volumes at these facilities decreased 17 MBPD this quarter versus the fourth quarter of 2021. The partnership’s PDH 1 facility was down for approximately 44 days during the fourth quarter of 2022 for planned and unplanned maintenance.
Enterprise’s octane enhancement and related businesses reported a $58 million net increase in gross operating margin for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average sales margins and volumes, partially offset by higher utility and other operating costs.
Enterprise’s refined products pipelines and related activities reported a $23 million net increase in gross operating margin for the fourth quarter of 2022 compared to the fourth quarter of 2021, primarily due to higher average sales margins from refined products marketing activities and higher transportation revenues on a 37 MBPD increase in transportation volumes, partially offset by higher operating costs from our refined products pipelines and product terminals.
Gross operating margin for the marine transportation and other services business increased $10 million for the fourth quarter of 2022, compared to the fourth quarter of 2021, primarily due to higher average fees and fleet utilization rates.
Capitalization
Total debt principal outstanding at December 31, 2022 was $28.6 billion, including $2.3 billion of junior subordinated notes, to which the debt rating agencies ascribe partial equity content. At December 31, 2022, Enterprise had consolidated liquidity of approximately $4.1 billion, comprised of available borrowing capacity under its revolving credit facilities and unrestricted cash on hand.
Capital Investments
Total capital investments in the fourth quarter of 2022 were $763 million, which included $465 million for growth capital projects, $160 million for purchases of 580 miles of pipelines and related assets and $138 million of sustaining capital expenditures. Total capital investments in 2022 were $5.2 billion, which included $3.4 billion for the acquisition of Navitas Midstream and purchases of assets, $1.4 billion for investments in growth capital projects and $372 million of sustaining capital expenditures.
For 2023, we expect growth capital investments to be approximately $2.3 billion to $2.5 billion and sustaining capital expenditures to be approximately $400 million.
2022 K-1 Tax Packages
The Enterprise K-1 tax packages are expected to be made available online through our website at www.enterpriseproducts.com on or before February 28, 2023. The mailing of the tax packages is currently expected to be completed by March 7, 2023.
Conference Call to Discuss Fourth Quarter 2022 Earnings
Enterprise will host a conference call today to discuss fourth quarter 2022 earnings. The call will be broadcast live over the Internet beginning at 9:00 a.m. (CT) and may be accessed by visiting the partnership’s website at www.enterpriseproducts.com.
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-GAAP financial measures of total gross operating margin, Adjusted CFFO, FCF, Adjusted FCF, DCF and Adjusted EBITDA.
Contacts
Randy Burkhalter, Vice President, Investor Relations, (713) 381-6812
Rick Rainey, Vice President, Media Relations, (713) 381-3635
