Participants

Libby Strait; Senior Director, Investor Relations; Enterprise Products Partners LP

A. Jim Teague; Co-chief Executive Office; Enterprise Products Partners LP

Natalie K. Gayden; Senior Vice President, Natural Gas Assests; Enterprise Products Partners LP

Presentation

Operator

Yes, thank you for standing by, and welcome to Enterprise Products Partners LP's Third Quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question-and-answer session to ask a question.
During this session, you will need to press *, 1, on your telephone. To remove yourself from the queue. You may press *, 1 again. I would now like to hand the call over to Luby's strait Senior Director of Investor Relations. Please go ahead.

Libby Strait

Good morning, and welcome to the Enterprise Products Partners conference call to discuss third quarter 2020 for earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise's general partner can key W. Randall Fowler. Other members of our senior management team are also in attendance for the call today.
During this call, we will make forward-looking statements within the meaning of Section 21E. Security exchange act 1934 based on the beliefs of the company as well as assumptions made by and information currently available to Enterprise's management team.
Although management 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 our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. With that, I'll turn it over to Jim.

A. Jim Teague

Thank you, very reported or adjusted EBITDA, of $ 2.4 billion for the third quarter compared to $ 2.3 billion for last year's third quarter. We generated $2 billion of distributable cash flow, providing 1.7 times coverage. In addition, we returned $880 million of DCF and DCF retained DCF totals EUR2.3 billion year to date. Operationally, we said Bob volumetric records, including 7.5 billion cubic feet per day of inlet natural gas processing volumes and 12.8 million barrels a day of crude oil equivalent pipeline volumes.
Benefited from contributions from the three new natural gas processing plants and what natural gas price spreads between what on other market hubs. We are on track to complete construction of two additional processing plants in the Permian, but your pipeline frac 14 Phase one of our Nature's river NGL export terminal and the last phase of our Morgan's Point terminal flex expansion in 2025. And we'll have one additional process plant coming online in the Delaware in 2026. These projects provide visibility to new sources of cash flow for our company and in hand and expand the NGL value chain at the core of our business.
We also announced yesterday that we completed the acquisition of opinion midstream. These assets are highly complementary to our Permian process and footprint, but providing treating services through a prolific area of the basin that generally is IT infrastructure limited to the lack of. So our natural gas treating an acid gas injection capacity, the opinion assets are also very strategic addition to our NGL value chain. It touches everything from the wellhead to the water.
I'd be remiss if we didn't recognize the tireless efforts of over 200 of our employees of Mont Bellevue, who rolled from our most comprehensive turnaround for the PDH. 1.0 right into a turnaround prior PDH to plan. Our employees completed these 24 seven turnarounds with extreme diligence and without any lost time accidents. We believe this time and investment will result in higher utilization rates and performance for both of these facilities going forward.
And we look forward to their contributions in 2025. We're excited about the number of inbounds that we're getting related to new natural gas demand in Texas from both data centers, new gas-fired power plants that would build rebuild under the under this excess energy funds. A lot of people talking about exposure to data centers seems that it's a very sexy thing to say. And everybody there's a piece of pipe and Texas is talking it up. Reality is there's a very small list of companies with pipeline and storage assets. Best position to do benefit from this build and build out an enterprise is one of them.
It is difficult to quantify the ultimate demand and timing at this point, not knowing which projects will go forward. That being said, it is one of the most promising signals we've seen in natural gas on a long time, and we're looking forward to serving this new influx of demand and enterprise. We take pride. In fact, our organization is not siloed. Everyone is important well pool in the same same direction every day, dedication, commitment and creativity of all our employees has always been key to our success. We always strive to get better. We operate and integrated value chain, providing a wide range of services from the wellhead to the water.
Our systems are higher the automated and provide us with billions of data points each link and that chain presents an opportunity to provide a service, earn a fee, enhanced profitability by enhancing our margins are reducing our costs. Over the last five years, we have developed a very talented, big data and data science team that works closely with all areas of our company.
We're now using big data for everything from predictive maintenance market market analytics to asset optimization. one of the many examples in our is our pipeline controllers now use real-time profit optimizer programs to help determine when and how they run compressors and pumps based on real-time power and fuel cost data. And the insights that can provide many respects is the new currency and our proprietary data will forever be an opportunity for enterprise.
We sit in the final quarter of 24 and head into 25. Work is not done each year, presents new opportunities, new headwinds. We built a network of assets and a culture that deliver strong results throughout business cycles. Administrations and market conditions.
Our company is built for the long run. As always, we have never been more excited for what the future will bring for our company. With that, Randy? Thank you,

Jeremy, and good morning. Starting with income statement items, net income attributable to common unitholders was $1.4 billion or $0.65 per unit for the first quarter of 2024. This was an 8% increase over the third quarter of 2023. Our adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital increased 4% to $2.1 billion for the third quarter of 2024 compared to $2 billion for the third quarter of last year.
We did a distribution of $0.525 percentage common unit for the third quarter of 2024, which is a 5% increase over the distribution declared for the third quarter of last year. Distribution will be paid November 14th common unit holders of record as of the business on October 31st. In the third quarter, the Partnership purchased approximately $2.6 million common units of the open market for $76 million. Total repurchases for the trailing 12 months were $252 million or approximately $9.1 million Enterprise common units, bringing total purchases under our buyback program to approximately $1.1 billion. In addition to Bob and employee unit purchase plan purchases, a combined $6.5 million common units from the open market for $181 million during the last 12 months, and this includes $1.6 million common units on the open market for $47 million during the third quarter 2024.
Of note, 48% of our employees participate in the unit purchase plan at Enterprise. We really do eat our own cooking for the 12 months ending September 30th, 2024, for enterprise paid out approximately $4.5 billion in distributions to limited Parker's. Combined with the $252 million of comp common unit repurchases over the same period, our total capital return was $4.8 billion, resulting in a payout ratio of adjusted cash flow from operations of 56%. We returned roughly $1 billion more than our growth. Capital expenditures were for the same period.
Total capital investments in the third quarter of 2024 for $1.2 billion, which included EUR1.1 billion for growth capital projects and $129 million of sustaining capital expenditure, our expected range of growth. Capital expenditures for 2020 full year remains unchanged $3.5 to $3.75 billion. We have received overwhelming interest from our producer customers following our recent acquisition opinion midstream.
As Jim noted, these assets not only and have enhanced our processing footprint but allow us to attract more acreage in the Delaware Basin. Additionally, yesterday, we announced a contract with Oxy to potentially build a CO2 pipeline that would serve the Houston industrial. Q1, we are updating our 2025 estimated growth capital expenditure range to $3.5 to $4 billion to encompass potential growth opportunities.
In connection with these announcements, sustaining capital expenditures are expected to be approximately $640 million in for 2024, which is higher than our original estimates, primarily due to costs associated with the turnaround of the two PDH facilities.
As of September 30th, 2024, for total debt principal outstanding was approximately $32.2 billion. Assuming the final maturity of our hybrids, the weighted average life of our portfolio was approximately 19 years. Our weighted average cost of bid is 47% and approximately 98% of our debt was fixed, right? Our consolidated liquidity was approximately $5.6 billion at the end of the quarter. This includes availability under our credit facilities and unrestricted cash flow. Adjusted EBITDA was EUR2.4 billion for the third quarter and EUR9.8 billion for the 12 months ended September 30th, 2024. Going forward. As of that date, our consolidated leverage ratio is 3.0 times on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand. Our leverage target remains some implant designed to brand names 2.75 to 3.25 and at 3.0 times, we're in the middle of that range. Political that we can open it up for questions. Thank you, Randy.

Libby Strait

Operator, we are ready to open the call for questions.

Question and Answer Session

Operator

(Operator Instructions)
Theresa Chen, Barclays.

Good morning. And I wanted to follow-up on Jim's comments about the data center and power demand in and just how do you see enterprise participating in this? And if you have any color or details on commercial discussions to date.

Natalie K. Gayden

I think that this is, Natalie. And we win.
As Dan said, we've been at undated with data set that demand infrastructure players that have likely exceeded the BCF a day of demand in the next several years. I think that's probably a couple of different ad for a couple of different areas and and some of them have shared with us that at no other bank powder data centers that a data center has done to power sources.
And as you know, we've got several pipelines in the Dallas Fort Worth area and then San Antonio and just a couple of years that said, I think I understand if you think about it, that there are data financial performance and power today that their second life plan, our and then San Antonio has even more impressive at 17th and power but night and most plan, Bala said anything about it that way. There are some regions that are held by losing market share at Santana and constantly finding a good spot. But what I said, those centers.

Thank you. And then related to the recent opinion at acquisition. And can you provide some details on how you plan to integrate it across our NGL assets, the ability you have to pull out treating services beyond the immediate in-between a creating long-term value creation speaking, these assets, please?

A. Jim Teague

Natalie is still up fast.

Natalie K. Gayden

I think you can think of it this way. The blockchain pinion any differently than our integrated G&P assets involving many trading go behind opinion that don't come at processing deals, defend the integrated value chain.

A. Jim Teague

So, it leads to more organic growth through processing.

Thank you.

Operator

(Operator Instructions)
Jean Ann Salisbury of BFA.

Good morning. And ethane storage is for there's no new demand until you and 80s export facilities come online next year. And can you kind of talk about how you see this resolving? Do you see a big step down in ethane recovery? Would that change your growth rate the next few quarters? And is there kind of a positive offset to that for enterprise in your portfolio?

Again, as a Hanley, um, gas flows of recoveries and rejection that will balance the market, um, regionally, there's other places other than the Permian Basin were again space. It doesn't make sense to recover necessarily refer the further to transport to market as far as opportunity set for us to lead to some positive storage opportunities on collecting contango.

Okay. That makes sense. And then my follow-up is about the TW product line. And is this the final phase of the TWIS. system? And I think you said in the release that it's 20,000 barrels a day of truck loading capacity and you touch and that can the pipe to more than that. If you add back loading capacity or should we think about this as being there? The inset this asset SG&A.

Has just and I know we have we have more capability to add truck lax. In fact, for we're doing that right now, our Permian kilometers of tunnels, full demand and demand further up system continues to lab will look for those de-bottlenecking opportunities to take advantage of that.

Okay. Great. Very clear, and I'll leave it there. Thanks.

Operator

(Operator Instructions)
Spiro Dounis of City Group Inc.

Thanks, operator, and everybody wants to make opinion really quickly and maybe just walk us through your decision to buy versus build there. Just curious if that was in any way reflective of some sort of bottleneck on the treaty side in the basin.

A. Jim Teague

I guess I'll start and Natalie, first of all, if we had to build greenfield looking at three years, I'm not mistaken. The weeds miss some opportunities because we didn't have this service, so leading to the platform and it was easy quickest way to get it up.

That answers the bid.
I appreciate that. The second question is just maybe sticking with New Mexico and just last week Edison news headlines surrounding new setback rule that could come into play. I noticed can pop up from time to time. And sounds like at least for now, there's not much to do around. I'm just curious maybe your view on how you think about the potential impact there is something like that comes into play.

A. Jim Teague

I don't I didn't hear the question, (Tony, Jackson and Mexico as setbacks in Mexico.)
I'll speak for myself and then I'll speak for myself from a fundamental standpoint, an anomaly address its. Um, I think the industry is very farm and has always said, tell us what the rules on and we'll know a little figure out how to adjust to them. Natalie, I haven't heard and maybe you have or have not anybody say that they're doing anything other than studying this rules that certainly from the meetings I've been in hasn't changed people's homes at this point.
I think the other thing to add to that is remember that when you drill horizontally collaterals, that maybe in oh three or four miles so, I'm confident from a fundamental standpoint that the industry is going to be able to adjust once they know what the rules or are you hearing anything

Natalie K. Gayden

different from the line of Esther to speculate on what impacts that we'll have enough in my commentary from some uptick in Mexico produces great. I appreciate the color there. I think.

Operator

(Operator Instructions)
Jeremy Tonet of JPMorgan.

Hi. Good morning.

Natalie K. Gayden

Morning.

Just wanted to touch base a Tony here on, I guess, more on the macro-outlook and I guess, producer customer conversations as well as what the macro tenancies as far as production trends at this point in time, given the volatility we've seen in our commodity prices.

Yes, this is Tony. I'll start with it. I think as long as we've been publishing forecast, this is maybe the second or third time that we actually we published midyear. And that's because of what we're seeing, both in traditional dentures and new targets to take gassier benches. Um, you know, up when you look at EI. numbers, I'll kind of going out and go there. I understand that's a very hard thing to set your watch to. That's not what we use. They're trying to get better at it, but it's a bit they're making slow progress up.
What we said in the Permian Basin, there's been a lot of noise also whether route relative whether in the Boston and in the Gulf of Mexico, well relative to allergies, Celeste, Photo watt stable. And what's the large thing that moves the number, and that's the Permian Basin. We said that over a three-year period, just looking at black oil, but we would have of about 1.5 million barrels a day of growth over that three-year period. For 2023, we were at about 750,000 barrels. We think that that number forward for 2024 will be 350 to 400,000 barrels. And from what we're seeing as far as timing line from our producers, it's likely that when it's all said and done, that number's going to be very, very heavily weighted towards the second half of the year.
So, it's not a lot long plug is not affected what we expect that we will scale. The plumbing will meet that goal of, call it a million- and-a-half barrels in 2020. On that said, you can look at our forecast. And the one thing that is changing unlikely to change the commitments of producers are making the gassier basins and Natalie article all that you take it from there.

Natalie K. Gayden

I agree. I think we often we see it our production and from our producers and the theory either PDP isn't coming off as expected or let's just say some of the declines are holding a little bit longer, but definitely gas here, even as the order of about 10%, sometimes a method that order of magnitude Analyst here at time and time, again, it not large numbers, but it's definitely something to keep up with.

Got it. That's helpful. Thank you for that. And maybe shifting gears a little bit here with by. Yes, I'll take the time line shipping a little bit there. So just wondering if you could update us on project development there. And also, just our current thoughts on Permian NGL pipeline egress, how you see that shift.

Jeremy, is that just in fighter, um, so just minor delays in our expected timing on permit to construct causing the delay from the first half of this into third quarter on the commercial develop. Other commercial development of thought I would say is as you as you saw in our latest and deck. Tony, Tony is updated NGL forecasts are paid a very different picture for overall industry utilization. So, I think by 2028, now the updated supply numbers have us upwards of 90% utilized as an industry.
So, we're still working the same playbook as we talked about in prior quarters around how we're developing commercial player. But it really just comes down to how that incremental supply gets contracted, whether that be a combination of additional G&P assets that Natalie alluded to earlier or or continuing to pursue third party NGLs.

Got it. That's helpful. Thank you.

Operator

(Operator Instructions)
Michael Blum, Wells Fargo.

Thanks. Good morning, everyone. I wanted to ask about the announcement yesterday that the CO2 pipeline project with Oxy, once you have just confirmed, this is new pay. If you're not repurposing and get a sense for us, how many miles of pipe or are we talking about and we do expect to get your kind of typical midstream contract structure and typical mission recurring on a project like this?

Good morning, Michael. This is D. Sanders of the contract with 1.5 is a fairly straightforward transportation agreements win 1.5 goes to FIDE. They will tell us what emitters to connect to. So, we know what the design for it is new pipe because it is actually 900 bip high-pressure. Pipeline system we saw in the first half of 2025. And at that point, we'll know what the capital is in the fee will be sad accordingly.

Great. Thanks for that. And then I just wanted to ask about LPG export dock power rate dynamics. I guess the rates have increased in recent months. Once you get a sense how full the docs in your data specifically from that perspective, are you able to capture any of these higher spot rates? Are you basically fully contracted yet as a tug of?

So, we've talked about it in the prior earnings call that we did a de-bottlenecking project, the ship channel. It's provided us higher higher capacity. So right now revenue between two to three spot cargoes per month. And we are cash flows, higher values, call it, mid $0.2 per gallon.

Great. Thank you.

Operator

(Operator Instructions)
Neal Dingmann of Truist.

Thanks for the time. My first question is on your Petro-Canada specifically. Are you all continue to expand the ethylene and pipeline system? And I'm just wondering you guys down, do you continue to believe more export capacity will be needed there?

It's Christine. If we assume we are continuing to grow, particularly our ethylene pipeline system. So if you remember that pipeline system didn't exist before before 2019, and we built a pretty a pretty substantial system, and we plan to continue to grow that. And then in terms of our exports, we have an expansion underway.
It's we had our Morgan's Point dock and that'll come online in the first phase of that will be online at the end of this year.

A. Jim Teague

Chris. Perfect after I can't talk about what you're seeing in Europe, which I think that creates for us.

Yes. I think one of the growth opportunities that we see for ethylene exports in particular is Europe with them. With the economics that those crackers have one there. They're quite a bit smaller so that they don't have the economies of scale that we have here in the US. And then secondly, just the overall feedstock, it's a whole ethane versus naphtha. There are natural gas versus crude kind of fundamentals there. We expect to see and we've heard from a lot of the chemical companies that they're doing, strategic reviews are there other European asset.
So, we expect to see some closures, and we expect that to lead to additional ethylene exports going that way.

Great details. Thanks, Frank. And then my second is just on marketing and specifically, it seems like wow continues to be quite volatile. So I'm just wondering, based on that, can we assume the marketing business continues to remain strong for you?

Yes, we are roughly 370 million a day open on that on West East while spreads. So do expect that to continue to contribute.

Great. Thank you.

Operator

(Operator Instructions)
Keith Stanley from Wolfe Research.

Hi, thank you. Good morning. I was just curious for an update on commercial conversations on the spot project. I think there was a quote a week or two ago from a conference of trying to get our first customer to sign up for that project. Just an update on any momentum you're having there?

A. Jim Teague

You want to tell you, J?

Keith, this is J. Bany. Yes, just related around commercial conversations, they're quite extensive and then various degrees of conversation anywhere ranging from we're working through definitive agreements, changing term sheets of sale. A large portion of our customer base are currently just evaluating the cost inefficiencies related to ship-to-ship transfers and how that affects their business mode there, call it net back as American producer expenses are ultimately delivered price for international customers. And so, we expect to hear some of that feedback here, call it the end of this quarter, early first quarter.

Thanks for that. Second question, admittedly, not sure it is a great answer to this necessarily, but that valuation gap between the C-Corp in this space and the MLPs, is that a record high above anything I can recall on. Are there any potential where is the Company could capitalize on that? I don't know if it's say selling assets at higher valuations are other ways to respond to the market. Seemingly valuing C-Corp much more highly than MLPs these days.

Keith, this is Randy idle. I don't think there's any quick solution-oriented surveyor out. I think coming in and trying to play the game of selling assets at a higher valuation is somewhat short sided, especially when you come in and you look at the depreciation, we capture that comes in gets pushed down to all your limited or no, all of the comes as a tax about for your limited partners. And I don't know what actually you've accomplished.
So, on we've seen two or three years ago, I think it was near these levels and then we call the to compress. But generally, when there's this big of a difference in asset classes, normally the market of solvent on one of the government.

Thank you.

Operator

(Operator Instructions)
John Mackay of Goldman Sachs.

So time, I just wanted to maybe do two quick clarifications. First one is great interest to you. I guess just on that last comment, is the up see IBM still out there is any reason you guys have kind of permanently put that to the side at this point?

A. Jim Teague

I appreciate the thoughts there. Again, I think that's another. So what was the devil's in the detail there? Number one, now you've got you would have to securities outstanding. You need to build liquidity up in that second security and oh, by the way than what you do would use the proceeds from saw? I think you know, and if I if I come in and look over time, there's not really been when there's been examples, whether it's the up sees or whether it's been the case, where does the arm the units that were done way back 20 years ago? And you really never solve that much differentiation, whether it was the Institute, the hygienist, the institutional class units of a partnership that was more institutional investor friendly or whether it was the Up-see and the underlying MLP.
So come to us that adds a lot of complex city and really you don't get that much bang for the bulk. That was clear.

Appreciate that. Second quick follow-up. Appreciate the comments and all the work done on the PTH is I just want to clarify our Arcos up and running fully now, as I said, a Q4 run rate going forward, as I said, first quarter of 25. And then maybe if you could just remind us maybe what those two assets an aggregate on going cashflow basis.

A. Jim Teague

That degree they're up and running both of them running at full rates, if not higher front. And Chris, I'd say it's in the neighborhood of $ 200 million extra.

Thanks. Congrats to you know, Dan, and thanks for your time.

Operator

(Operator Instructions)
A.J. O'Donnell of TPH.

Hey, good morning. Thanks for taking my questions. Just a quick one on Matterhorn. With that pipeline now running about one Bcf for over a Bcf a day. Curious if you guys have seen a jump in flush production from inner system in Q4 or if majority of the pipeline volumes are just flows shifting around the basin have redirected guests?

A. Jim Teague

I don't think we've seen a flush production at Penguin.

pickup. Maybe going back to the capital budget. Then just to understand on the increase in the 29 budget, I was hoping you could provide just a little bit of additional color on the types of the projects you're seeing with pinion. I'm just curious if there's any more of that potential be announced in the 25 budget or does that seem a little bit further off through?

A. Jim Teague

Thanks. You've got opinion projects next year?

Natalie K. Gayden

Yes, Java,

A. Jim Teague

Natalie says, yes. Okay. Thanks, guys.

Thank you.

Operator

(Operator Instructions)
Manav Gupta of UBS.

Hey, good morning to you. Guys did have a good job of explaining some of the things you're guiding 2025 growth projects, you know, help us understand the point pipeline is pretty strong placement on INVESTools needs as they look. How should we think about the key growth projects for 2026 at this stage?

Yes. Of minority rights for the question, I think I think we're still at a point where and we tried to point this out in our supplemental slides for earnings and you come in and you look at the projects that have been at F5 deed of, you know, I want to say that the run off in 2026, what we have remaining to spend on currently five these projects, there's probably about $1 billion, $1.2 billion. So, if you would, in 2026, we have run on, you know that we put in there that we think will probably be in the range to $2 billion. Maybe it's upwards of 3.5. But we have room for development of other grocery-oriented projects between now and beyond. And that's where we think 2024, 2025 is really a period of elevated Capex, will come back and more on our own long, longer-term basis, see that coming back down to around 2.5. But I think any as far as getting the esophagus, and again, I'll come back and I heard you sort of solve is to solve the same thing in 2018, 2019. And those years, we were about $4 billion in growth Capex. And again, those had some large projects and some step changes in capacity and then use our growth Capex moderate back down. And we think the same thing will happen once we get out to 2026.

Perfect. So, I think my quick follow-up is there was a little bit of a step-up in buybacks in 3Q versus 2Q and again, and I guess you're going to have this build-out. How should we think about shareholder return in 2024 and even2025?

In 2024 and 2025 Capex being at elevated levels of view, probably will probably continue to see buybacks in that $200, $300 million range. I think once we get out to 202 6 will need to reassess what the opportunities are at that time. And we'll go from there.

Thank you for answering my questions.

Operator

Thank you. I'd now like to turn the conference back to maybe straight for closing remarks. Madam.

Libby Strait

Thank you and thank you to our participants for joining us today. That concludes our remarks. Have a good day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect. Y