10-KPeriod: FY2016

ENTERPRISE PRODUCTS PARTNERS L.P. Annual Report, Year Ended Dec 31, 2016

Filed February 24, 2017For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported its fiscal year 2016 results, showcasing resilience in a challenging commodity price environment. The company's integrated midstream infrastructure, spanning natural gas, NGLs, crude oil, and petrochemicals, demonstrated its ability to generate stable fee-based revenues. EPD's strategic focus on expanding its asset base through growth capital projects and accretive acquisitions, particularly in key supply basins like the Permian and Delaware Basins, positions it well for future demand growth, especially in exports. Despite lower commodity prices impacting marketing revenues, the partnership maintained strong operational performance and a robust liquidity position. For investors, EPD's performance highlights its stable business model, driven by fee-based services, and its ongoing commitment to growth and unitholder returns. The company's extensive network of pipelines, storage, and processing facilities allows it to effectively connect producers with consumers, both domestically and internationally. Key developments in 2016 included the start-up of export terminals and processing plants, underscoring EPD's strategic investments in high-growth areas. The company's financial health, supported by strong liquidity and prudent debt management, provides a solid foundation for continued operations and potential future distributions.

Financial Highlights

44 data points
Beta

Revenue

$23.02B

31.8% Gross Margin

Net Income

$2.51B

10.9% Net Margin

Total Assets

$52.19B

Cash & Equivalents

$63.10M

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$23.02B
Cost of Revenue$15.71B
Gross Profit$7.31B
Operating Expenses$19.80B
Operating Income$3.58B
Interest Expense$982.60M
Net Income$2.51B
Shares Outstanding (Diluted)2.09B

Key Highlights

  • 1EPD operates a vast midstream energy infrastructure network across North America, covering natural gas, NGLs, crude oil, petrochemicals, and refined products.
  • 2The company's business strategy focuses on leveraging its integrated asset network to capitalize on expected demand growth, including exports, and maintaining a diversified portfolio of fee-based assets.
  • 3In 2016, EPD completed and placed into service key projects, including the Morgan’s Point Ethane Export Terminal and new natural gas processing plants in the Delaware Basin (South Eddy and Waha).
  • 4The company's NGL fractionation facilities operated at high utilization rates (over 90%) in 2016, indicating strong demand for its services.
  • 5EPD's Crude Oil Pipelines & Services segment saw growth in terminaling services, benefiting from expansions and increased demand, while also navigating lower crude oil marketing margins.
  • 6Natural Gas Pipelines & Services segment performance was impacted by reduced drilling activity in regions like the Eagle Ford Shale, but EPD's extensive pipeline network provided a stable base.
  • 7EPD maintained a strong liquidity position at year-end 2016 with $3.78 billion in consolidated liquidity, consisting of available borrowing capacity and unrestricted cash.

Frequently Asked Questions

In 2016, EPD reported total revenues of $23.02 billion, a decrease from $27.03 billion in 2015, primarily due to lower commodity prices impacting marketing revenues, particularly for crude oil and natural gas. However, midstream services revenues increased by $134.6 million due to asset expansions and acquisitions. Operating income was $3.58 billion, a slight increase from $3.54 billion in 2015. Net income attributable to limited partners was $2.51 billion.

EPD made significant strides in its growth strategy in 2016. Key developments included the commercial start-up of the Morgan’s Point Ethane Export Terminal, the largest of its kind globally, and the Waha and South Eddy natural gas processing plants in the Delaware Basin. The company also announced plans for the Orla natural gas processing plant and continued to expand its crude oil terminal capacity.

EPD's marketing businesses, especially crude oil and natural gas, were significantly impacted by lower commodity prices throughout 2016. This led to reduced revenues from these segments. However, the partnership's substantial midstream infrastructure, which generates fee-based revenues, provided a buffer against this volatility, and the company's hedging activities helped mitigate some of the price risks.

EPD anticipated increased producer investment and drilling activity in key basins like the Permian and Eagle Ford in 2017, driven by stabilizing commodity prices and improved producer sentiment. The company expected its assets to be well-positioned to supply services for this renewed activity. EPD also projected continued growth in demand for NGLs, crude oil, and natural gas, supported by exports and domestic consumption.