10-KPeriod: FY2008

ENTERPRISE PRODUCTS PARTNERS L.P. Annual Report, Year Ended Dec 31, 2008

Filed March 2, 2009For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported robust performance in its 2008 10-K filing, despite a challenging economic environment marked by significant commodity price volatility. The company operates an integrated midstream energy asset network, providing services for natural gas, NGLs, crude oil, and petrochemicals across North America. EPD's business strategy focuses on capitalizing on expected increases in production and demand, expanding its asset base through growth projects and acquisitions, and increasing fee-based cash flows. The company demonstrated resilience, with revenues increasing significantly due to higher volumes and prices, alongside strategic investments in infrastructure. However, the company also noted the impact of Hurricanes Gustav and Ike on its Gulf Coast operations, resulting in temporary disruptions and increased repair expenses. Looking ahead, EPD anticipates navigating the economic downturn by focusing on higher-return projects and maintaining financial flexibility.

Financial Highlights

37 data points
Beta

Revenue

$35.47B

Net Income

$164.00M

0.5% Net Margin

EPS (Diluted)

$0.45

Total Assets

$24.21B

Cash & Equivalents

$56.80M

Free Cash Flow

-$973.20M

Financial Statements
Beta
Revenue$35.47B
Operating Expenses$33.76B
Operating Income$1.77B
Interest Expense-$608.30M
Net Income$164.00M
EPS (Basic)$0.45
EPS (Diluted)$0.45

Key Highlights

  • 1EPD experienced substantial revenue growth in 2008, driven by increased volumes and higher energy commodity prices across its NGL, natural gas, and petrochemical marketing activities.
  • 2The company's natural gas processing and marketing business saw significant improvements, partly due to new facilities like Meeker and Pioneer coming online.
  • 3NGL transportation volumes and fractionation throughput increased year-over-year, supported by strong demand in the petrochemical sector.
  • 4Despite a challenging economic climate, EPD maintained its investment-grade credit ratings and demonstrated access to capital markets for refinancing and growth initiatives.
  • 5The company experienced negative impacts from Hurricanes Gustav and Ike, leading to operational disruptions and significant repair expenses, particularly affecting its Gulf Coast assets.
  • 6EPD continued its strategic growth through capital projects, including expansions and new pipeline developments, positioning itself for future production increases.
  • 7The company highlighted its focus on fee-based revenues to mitigate commodity price volatility, a strategy reinforced by hedging activities for its NGL production margins.

Frequently Asked Questions

EPD's revenue growth in 2008 was primarily driven by higher energy commodity sales volumes and prices, particularly in its NGL, natural gas, and petrochemical marketing activities. The contribution of new facilities like the Meeker and Pioneer natural gas processing plants also played a significant role.

Hurricanes Gustav and Ike impacted EPD's onshore and offshore facilities along the Gulf Coast, causing temporary disruptions in production and leading to decreased volumes for some pipeline systems, processing plants, and platforms. The company incurred significant repair expenses, estimating a reduction in gross operating margin of $77.0 million due to storm-related impacts.

EPD employs a strategy to mitigate commodity price volatility by focusing on increasing fee-based cash flows and investing in fee-based businesses. Additionally, the company uses commodity financial instruments to hedge a portion of its exposure, particularly for NGL production margins, aiming to partially insulate its margins from lower commodity prices.

EPD funds its capital spending and growth strategy through a combination of operating cash flows, borrowings under its credit facilities, and the issuance of debt and equity securities. The company demonstrated its ability to access capital markets during a period of financial volatility to support its ongoing projects and strategic initiatives.