Enterprise Products Partners - $EPD.US

What is Enterprise Products Partners’ History?

Enterprise Products Partners, L.P. provides processing and transportation services to producers and consumers of natural gas liquids. The Company generally processes products that are ultimately used as feedstocks in petrochemical manufacturing in the production of motor gasoline, and as fuel for residential and commercial heating.

What Enterprise Products Partners is doing in more details?

Doing business through wholly owned subsidiary Enterprise Products Operating LLC (EPO), Enterprise Products Partners is one of the leading players in the North American midstream market.

EPO connects producers of natural gas, natural gas liquids (NGL), crude oil in major North American supply basins with domestic and international consumers.

Operations include natural gas processing, NGL fractionation, propylene production, petrochemical services, crude oil transportation, and marine transportation. The company derives nearly all its sales from the US.

Where Enterprise Products Partners is Operating?

Enterprise Products operates through four business segments: NGL (natural gas liquids) Pipelines and Services, Crude Oil Pipelines and Services, Petrochemical and Refined Products Services, and Natural Gas Pipelines and Services.

The NGL Pipelines and Services segment generates more than 40% of sales and comprises the activities of more than 20 natural gas processing plants, nearly 20,000 miles of pipelines, and more than 15 NGL fractionators.

The plants collect and purify natural gas for end-use. It also includes EPO’s NGL import and LPG export terminal operations, in addition to marketing activities comprising a fleet of about 850 railcars that serve customers throughout the US and Canada.

The Crude Oil Pipelines & Services segment brings in nearly 25% of revenue. It includes about 5,900 miles of crude oil pipelines and related operations, crude oil storage and marine terminals, and crude oil marketing activities.

Perhaps its most important pipeline is the Seaway pipeline that connects the Cushing, Oklahoma crude oil hub with markets in Southeast Texas.

The Petrochemical and Refined Products Services segment engages in petrochemical and refined products transportation and services. It fractionates propylene to create the building blocks of carpet fibers, molded plastic parts for appliances, cars, and medical products, and packaging film.

It accounts for almost 25% of revenue.

Natural Gas Pipelines and Services segment includes almost 20,000 miles of pipeline used to gather and transport natural gas from shale plays Eagle Ford, Haynesville, Permian and others. It leases underground salt dome natural gas storage facilities and conducts to natural gas marketing activities.

It accounts for approximately 10% of revenue.

Overall, Enterprise Products generates almost all of its sales from third parties.

Where is the geographical reach of Enterprise Products Partners?

Houston, TX-based Enterprise Products operates the vast majority of its facilities in Texas, along the Gulf Coast, with particular emphasis in the Mont Belvieu refinery and transport complex.

Key locations from which it gathers natural gas and crude oil include Colorado, Louisiana, Mississippi, New Mexico, Texas, and Wyoming. It has a presence in shale plays: Eagle Ford, Haynesville, Barnett, Permian, Piceance, San Juan and Greater Green River supply basins.

Its NGL pipelines extend throughout the US Midwest, Rocky Mountains, Southeastern, and Gulf Coast, including states such as Georgia, New York, Oklahoma, and Minnesota.

What is Enterprise Products Partners’ Sales and Marketing Strategy?

Enterprise Products sells product and services to refineries, industrial companies, commercial customers, and regional natural gas processing plants. NGL marketing transacts with these customers using long-term sales contracts with take-or-pay provisions and/or exchange agreements.

The company’s customer base is diversified, with largest customer Vitol accounting for more than 10% of annual revenue.

What is Enterprise Products Partners’ Sales and Marketing Strategy?

Enterprise Products’ sales started to decline in 2019 to 2020 after an increase in 2018 from the previous years. Growth is 18% in 2020 compared to 2016. The company’s net income follows the same trend within the same five-year period.

In 2020, the company’s sales dipped 17% to $27.2 billion, primarily due to a net $5.15 billion decrease in marketing revenues.

Revenues from the marketing of crude oil and natural gas decreased $4.14 billion year-to-year primarily due to lower average sales prices, which accounted for a $3.27 billion decrease, and lower sales volumes, which accounted for an additional $867.8 million decrease.

Revenues from the marketing of NGLs decreased a net $1.96 billion year-to-year primarily due to lower average sales prices, which accounted for a $3.16 billion decrease, partially offset by the effects of higher sales volumes, which resulted in a $1.2 billion increase.

Net income grew 18% to $3.8 billion. The increase was due to lower costs and expenses.

Enterprise Products’ cash and equivalents at the end of 2020 was $1.2 billion. Operations generated $5.9 billion, partially offset by the $3.1 billion used in investing activities and the $2.0 billion used in financing. Enterprise Products’ main cash uses were capital expenditures and repayments of debts.

What is Enterprise Products Partners Future Strategy?

Enterprise Products’ integrated midstream energy asset network links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the US, Canada and Gulf of Mexico with domestic consumers and international markets.

Its business strategy seeks to leverage this network to: capitalize on expected demand growth, including exports, for natural gas, NGLs, crude oil and petrochemical and refined products; maintain a diversified portfolio of midstream energy assets and expand this asset base through growth capital projects and accretive acquisitions of complementary midstream energy assets; enhance the stability of cash flows by investing in pipelines and other fee-based businesses; and share capital costs and risks through business ventures or alliances with strategic partners, including those that provide processing, throughput or feedstock volumes for growth capital projects or the purchase of such projects’ end products.

What are Enterprise Products Partners’ Mergers and Acquisitions?

In 2017, Enterprise Products purchased the midstream business and assets of bankrupt Azure Midstream, which has operations in East Texas and Northern Louisiana. Enterprise gained nearly 1,000 miles of natural gas gathering pipelines and three natural gas processing facilities.

What is Enterprise Products Partners’ Background?

Enterprise Products was founded in April 1998 and conducted its IPO in July 1998. The company is investing heavily in serving shale plays, especially the Eagle Ford in South Texas, and is building midstream facilities to serve the surge in natural gas production.

In a major expansion move, in 2009 the company acquired rival TEPPCO Partners L.P. in a $26 billion all-stock deal, which boosted its pipelines and oil, refined products, and NGL storage capacity.

The TEPPCO Partners purchase made the company the largest publicly traded energy partnership in the US. The expanded company’s assets include 60 liquid storage terminals, 25 natural gas storage facilities, 17 fractionation facilities, and six offshore hub platforms.

That year the company acquired Enterprise GP Holdings, which controlled the general partner of Enterprise. The $8 billion deal was aimed at reducing long-term capital costs and simplifying the business structure of Enterprise Products Partners.

In 2010, in a move to increase its footprint in the lucrative Haynesville/Bossier Shale play, Enterprise acquired two natural gas gathering and treating systems in northwest Louisiana and East Texas from M2 Midstream LLC for $1.2 billion.

In 2012 it opened a fifth NGL fractionator at its Mont Belvieu facility to process Eagle Ford hydrocarbons, and a fifth in 2012.

That year Enterprise joined Enbridge Energy Partners and Anadarko Petroleum in advancing development of the Texas Express Pipeline by the companies’ joint venture.

The 20-inch diameter pipeline will extend about 580 miles, from Skellytown, Texas, to the Mont Belvieu NGL fractionation complex. The pipeline also provides access to other producers in several regions: West Texas, the Rocky Mountains, southern Oklahoma, and the Mid-continent area.

The family of Chairman Dan Duncan controls more than 30% stake in Enterprise.

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