Enterprise Products Partners Q4 2024 Earnings Call Transcript

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February 4, 2025
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Operator

Thank you for standing by and welcome to Enterprise Products Partners LP's Fourth Quarter twenty twenty four 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. I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please go ahead.

Libby Strait
Libby Strait
Senior Director - IR at Enterprise Products Partners

Good morning, and welcome to the Enterprise Products Partners conference call to discuss earnings. Our speakers today will be Co Chief Executive Officers of Enterprise's General Partner, Jim Teague and Randy 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 of the Securities Exchange Act of 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.

Libby Strait
Libby Strait
Senior Director - IR at Enterprise Products Partners

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.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Thank you, Libby. I want to just go through some bullet points to highlight some of the things we achieved in 2024 and a few of the things we expect to do this year. First of all, 2024 EBITDA of $990,000,000,0.0 Randy, it reminds me of a line in a Frankie Valley song, So Close, So Close and Yet So Far. We had $780,000,000,0.0 of DCF. We had 1.7 times coverage, dollars 320,000,000,0.0 of retained DCF.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Chris, I thought that was a record, but it's not, but it's close. 12 financial records, 16 operational records. During 2024, we moved 12900000.0 barrels of oil equivalent a day. In the we moved 13600000.0 barrels of oil equivalent per day. In the we loaded out on for export 2100000.0 barrels a day of liquid hydrocarbons against our commitments of 2500000.0 barrels a day.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

During 2024 and we completed two processing plants in the Permian. We We purchased Pinion, acquired the JP interest in our Midland Echo one crude oil pipeline and the JP interest in our seventh and eighth fractionators. For 2025, we'll add two gas processing plants in the Permian. We'll add the Bahia NGL pipeline, Frac 14, the first phase of our NGL export on the Natchez River and expansions of our ethane and ethylene terminal at Morgans Point. After that list almost needs to pause and take a breath.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We get a lot of questions on spot. I want to give you a status report of where we are with spot. I believe that spot should be the poster child for the need for permit reform. By law, the record of decisions should be issued in three fifty six days and you can have clock stoppages on top of that. Frankly, I thought three fifty six was a typo, but it wasn't.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Alto took over five years to get the spot license, including almost four years to get the record of decision and a year and a half to get the license to construct. Our initial application was 13000 pages. I thought that was ridiculous, but by the time we completed the process, our final submission was over 30000 pages. We addressed over 80000 comments over two comment periods, predominantly from NGOs. One NGO's comment was 60 pages long.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We had to answer a ton of questions. One of my favorites was from a lady from Murad asking how we planned to mow the right of way. She was concerned that fuel mice be protected from hawks. The process we went through due to federal bureaucracy pushed us beyond the drop dead date that allowed our anchor customer to opt out of their contract, which they did. Granted, a lot has changed since we entered our spot application in January 2019.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

When we started that application, it was assumed that the majority of crude exports would go to Asia on VLCCs. A lot of forecasters were predicting by 2024, would be exporting between 15000000 barrels a day. Instead, we're exporting around 4000000 barrels a day. All of that with Russia invading Ukraine, which has resulted in the amount of crude oil export out of The U. S.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

To Europe to have doubled over 2000000 barrels a day and that will grow more. That move to Europe can be done on an Aframax or Suezmax. Today, we have not gotten enough traction in commercializing spot, though we continue to promote spot as we are the only company with a license to construct. We did a lot of research around cost, and our data shows that the cost to load on our spot track and project are always much lower than multi reverse lighter VLCs and have a lower all in cost than 50% of single reverse lighter VLCCs and are competitive with the best 50% single reverse laddered BLCCs. However, in order to build spot, we know what we need in volumes, fees and terms.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We're not going to establish a drop dead day, but if we can achieve these within a reasonable amount of time, we will move on. This is not a build it and make it come project. Regardless, Enterprise remains laser focused on growing our exports. As I said earlier, we currently have expansion projects on the Natchez River in Beaumont, at Morgans Point on the Ship Channel and at our main terminal on the Ship Channel. We exported over 70000000 barrels of hydrocarbons in Dec.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

0, everything from ethylene to crude oil. And our goal is that we will export over 100000000 barrels of hydrocarbons a month by 2027. We recently contracted with yet another offtake ethane offtake customer in Asia, This one with a plant in Vietnam. And we were working with numerous other customers around the world on hydrocarbon supply agreements. In the last twenty four months, we visited over 25 cities to sell U.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

S. Hydrocarbons, some we visited multiple times. I know I've been in Mumbai at least four times. Someone from enterprise is almost always in Asia or Europe, and no one even comes close to having the history and experience that we have. Think about it, we built our first LPG import terminal in 1983 and our first export terminal in 1999.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We've been active in the international market for over forty years. On a personal note, while I was at Dow, the first cargo of imported propane that I ever purchased went through the Enterprise Terminal. And our total and in total, our term commitments at our docks today exceed 2500000.0 barrels a day, and that's hydrocarbons ethylene to crude oil. We three forced the way to reach our goal of 100000000 barrels a month. And with that, I'll turn it over to Randy.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Okay. Thank you, Jim, and good morning to everyone on the call. Starting with income segment items, net income attributable to common unitholders for the was $160,000,000,0.0 or $0,.74 per common unit on a fully diluted basis. This is a 3% increase compared to $160,000,000,0.0 or $0,.72 per unit for the same quarter in 2023. Adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital, increased 4% to 2300000000.0 for the This compares to $220,000,000,0.0 for the We declared a distribution of $0.,535 per common unit for the which is a 4% increase over the distribution declared for the The distribution will be paid Feb.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

4 to common unitholders of record as of the close of business on Jan. 31. In the the Partnership purchased approximately 2100000.0 common units off the open market for $63,000,000 Total purchases for 2024 were $2.19,000,000 dollars or approximately 7600000.0 enterprise common units, bringing total purchases under our buyback program to approximately $110,000,000,0.0 In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6500000.0 common units on the open market for $188,000,000 in 2024. This includes 1600000.0 common units for $48,000,000 during the Of note, almost half of our employees participate in the employee unit purchase plan. For 2024, paid out approximately $460,000,000,0.0 in cash distributions to limited partners.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Combined with the $2.19,000,000 dollars of common unit repurchases over the same period, Enterprise's total capital return of $480,000,000,0.0 resulted in a payout ratio of 55%. Since our IPO in 1998, we have returned approximately $56,000,000,000 to unitholders in the form of distributions and buybacks, while building one of the largest energy infrastructure networks in North America. Total capital investments in the were $2,000,000,000 which includes $9.46,000,000 dollars for growth capital projects, dollars $9.49,000,000 for the acquisition of Pinion Midstream and $113,000,000 of sustaining capital expenditures. Capital investments for the full year of 2024 were $550,000,000,0.0 which includes $390,000,000,0.0 for organic growth capital projects, the $9.45,000,000 dollars for Pinyon and $6.67,000,000 dollars for sustained capital expenditures. As mentioned in last quarter's earnings call, we have received noteworthy support from our producer customers following the Pinion acquisition.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

And for that reason, we are fine tuning our 2025 estimated growth capital expenditures range to $4,000,000,000 to $450,000,000,0.0 to include new opportunities in sour gas gathering and treating projects as well as additional natural gas gathering and compression projects in the Delaware Basin. Our expected range of growth capital expenditures for 2026 remains unchanged at $2,000,000,000 to $250,000,000,0.0 We expect 2025 sustaining capital expenditures will be approximately $5.25,000,000 dollars which includes a planned turnaround at our Octane enhancement plant. Moving to capitalization, our total debt principal outstanding was approximately $3,220,000,000,0.0 as of Dec. 31, 2024. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio was approximately eighteen years.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Our weighted average cost of debt was 4.7% and approximately 98% of our debt was fixed rate. Our consolidated liquidity was approximately $480,000,000,0.0 at the end of the year, including availability under our credit facilities and unrestricted cash on hand. Our adjusted EBITDA was $260,000,000,0.0 for the and as Jim mentioned $990,000,000,0.0 for 2024. We ended the year with a consolidated ratio leverage ratio of 3.1 times on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reduced by the Partnership's unrestricted cash on hand. Our leverage target remains three times plus or minus a quarter, so in the range of 2.75 to 3.25.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

And with that, Libby, I think we can open up for questions.

Libby Strait
Libby Strait
Senior Director - IR at Enterprise Products Partners

Thank you, Randy. Operator, we are ready to open up the call for questions.

Operator

Thank Thank you. Our first question comes from the line of Spiro Dounis of Citi. Your question please, Spiro.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Thanks, operator. Good morning, everybody. First question, maybe just go to the outlook for 2025. I know you guys don't provide guidance, but we just get results the way you close the year, it seemed like it was pretty strong. So just curious, two part question here, any reason that that's not a good baseline to sort of run rate as we think about 2025?

Spiro Dounis
Spiro Dounis
Director at Citigroup

And then if you could, maybe just outline some of the bigger drivers of growth this year?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Yes. Spiro, I'll go back to what we said on our Investor Day call a year ago that really we think near term, we've got the potential for, call it, mid single digit cash flow growth over the near to intermediate term. And I think that's sort of our view going into 2025. Mentioned the number of projects that we have coming on. Most of them, the larger ones for sure come on later in the year.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

So we'll see some of that growth on the second half of the year. But 2025 is setting up a strong year, especially when you come in and just look at just industry fundamentals.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Great. That's helpful. Thanks, Randy. Second question, just to go back to spot. So I know you're not providing a drop dead date to get that facility FID'd, but two parts here once again.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Does it seem less likely or unlikely at this point that a 2025 FID is possible? And you also mentioned being the only one licensed. Just curious, can you just talk about license expiration timing, what that looks like and what it would take to renew it if you don't FID, let's call it within two years?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Yes. I think we've renewed one permit, Bob.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Yes. We renewed the air permit, right, Graham, to 2028?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We're not that worried about renewing permits if we need to.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Okay. And does it seem like a '25 FID based on customer feedback at this point maybe less likely?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

I'm not going to admit to that.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Okay. I tried to get you. All good. I appreciate the color here. I'll leave it there.

Spiro Dounis
Spiro Dounis
Director at Citigroup

Thank you guys.

Operator

Thank you. Our next question comes from the line of Theresa Chen of Barclays. Please go ahead, Theresa.

Theresa Chen
Theresa Chen
Senior Analyst at Barclays

Thank you for taking my questions. Follow-up to the cadence of earnings growth in 2025. Can you help us think about the path to recovery for the Petchem segment? What are the puts and takes there? And as far as operations and utilization goes for the larger the newer projects, how is that going at this point?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

We've got to run the PDHs. That's one thing from our perspective and we will. From a petrochemical market perspective, I don't think Chris is here, but there he is. But it looks pretty bad right now, doesn't it, Chris?

Christopher Anna
Christopher Anna
SVP - Petrochemicals at Enterprise Products Partners

Yes. I think what we're hearing from most of our customers domestically is they're seeing moderate improvement from last year and they're not expecting anything much bigger. Globally, the market is oversupplied. So that's the headwind there.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Who was that, Theresa? Yes, Theresa, this is Jim. What I see is we are signing we just signed recently within the last two or three weeks Tug a contract with the Southeast Asian petrochemical company for a sizable ethane contract. I think we'll be back in Southeast Asia for another one. The other thing that I wouldn't be surprised at is ethane feedstock to crackers in other parts of the world is advantage to naphtha.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

It wouldn't surprise me and help me, Chris, to see crackers shut down in other parts of the world and ethylene exports beginning to build that void.

Christopher Anna
Christopher Anna
SVP - Petrochemicals at Enterprise Products Partners

Yes, I mean, we're already seeing some of that. And that helps not only our ethylene, but it also helps the propylene markets because those naphtha crackers in the rest of the world also do make a total amount of propylene. So that will help rationalization.

Theresa Chen
Theresa Chen
Senior Analyst at Barclays

Interesting. Thank you so much. And then on the LPG side, following a competitor announcement of a new export project in Galveston Bay today, how do you think about the potential change to export economics to competitive economics within the region?

Brent Secrest
Brent Secrest
EVP and Chief Commercial Officer at Enterprise Products Partners

Trish, this is Brent. If you see capacity come online and there's industry capacity come online this year, we'll have some in the back half of this year as well, and then a larger expansion for next year. But right now, the dock FOB values are pretty healthy. Obviously, as this capacity comes online, this will start to become eroded. When you look at our capital for expansion, it's less than a third of what a greenfield expansion is.

Brent Secrest
Brent Secrest
EVP and Chief Commercial Officer at Enterprise Products Partners

So we'll see I didn't listen to the call, but that's in terms of when we run the numbers, that's a little bit of a challenging project.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Theresa, this is Jim. We're not going to give up our LPG export franchise. We'll do fees more favorable to our customers than anyone.

Theresa Chen
Theresa Chen
Senior Analyst at Barclays

Understood. Nor would I expect you to give anything up, Jim. Thank you.

Operator

Thank you. Our next question comes from the line of Jean Ann Salisbury of BofA. Your question please Jean Ann.

Jean Ann Salisbury
Jean Ann Salisbury
Managing Director at Bank of America

Hi, good morning. Can you talk about how you see the size of the eventual prize for being able to handle sour gas in the Permian? Do you expect sour gas to grow much faster as a share or is it mainly a strategy to be able to have a broader customer offering and get more customers?

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

Hey, Jean Anne, this

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

is Natalie. I don't think anything is going to be fast. However, we are permitting a third AGI well or we're in the front of it. We're also expanding the two AGI wells there. We'll build our fourth train and then we have our eyes on the fifth train.

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

So I don't know how quickly, but I think we'll it does give us a new asset base to be able to expand the integrated value chain to the upstream side.

Jean Ann Salisbury
Jean Ann Salisbury
Managing Director at Bank of America

Okay. That makes sense. And then as a follow-up, can you just kind of talk about how you expect your flex NGL exports to ramp as they come online? Roughly how much in ethane versus propane service to start?

Michael Hanley
Michael Hanley
SVP of Pipelines & Terminals at Enterprise Products Partners

Hi, Gian. This is Doug Hamlet here. On the ethane side, so we're fully contracted on our base capacity of 540000 barrels a day. We're in the process. We've identified low cost expansion debottlenecking projects and we're well into contracting that additional capacity.

Michael Hanley
Michael Hanley
SVP of Pipelines & Terminals at Enterprise Products Partners

So if you think about how that's going to play out, we're waiting on the DLECs, the ships to get delivered. As those ships continue to get delivered and ramp our ethane exports at our Natchez River terminal, That timing coincides with our ship channel expansion around 300000 barrels a day. So long term, we expect it to be ethane at Natchez and we'll have our ship channel expansion to pack fill that. And we're continuing to see robust demand on ethane exports. And as Brent alluded to, we have a great brownfield expansion opportunities across all three of our export terminals.

Michael Hanley
Michael Hanley
SVP of Pipelines & Terminals at Enterprise Products Partners

And then when our expansion comes on for LPGs, we're 85% contracted 85% contracted on LPGs.

Jean Ann Salisbury
Jean Ann Salisbury
Managing Director at Bank of America

Well, great. That's great color. I'll leave it there. Thank you.

Operator

Thank you. Our next question comes from the line of Michael Blum of Wells Fargo. Your question please, Michael.

Michael Blum
Michael Blum
Managing Director at Wells Fargo Securities

Thank you. Good morning, everyone. So appreciate the slide and the comments on capital allocation. I wanted to ask you about buybacks specifically. Just if you're thinking about buybacks any differently as a component of capital return, should we expect the cadence we've seen in the last couple of years should be consistent going forward or any change there?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Yes, Michael, good morning. Yes, if we sort of come in and carry that thing as far as the potential for cash flow growth to be mid single digits. Jim mentioned earlier that we had $320,000,000,0.0 of excess distributable cash flow in 2024. And if you take that forward a couple of years to 2026, that probably puts you in the neighborhood of $350,000,000,0.0 3 point 6 billion dollars of excess DCF. And then if we're up at the upper end of our growth CapEx range of $250,000,000,0.0 that leaves you about $1,000,000,000 1 billion dollars of excess DCF after fully funding your growth CapEx with excess DCF that's left over for buybacks and debt retirement.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Our leverage target again is the range 2.75% to 3.25%. Our midpoint is 3%. That's about where our leverage is today. And so I think we'll have a lot more flexibility to do buybacks and maybe a little bit of debt retirement once we get out to 2026.

Michael Blum
Michael Blum
Managing Director at Wells Fargo Securities

Thanks for that, Randy. Appreciate it. And then just wanted to ask about as we head here into 2025, the M and A landscape, how active what's out there for you and do you expect this

Michael Blum
Michael Blum
Managing Director at Wells Fargo Securities

to be an active year for Enterprise? Thanks.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Yes. 2024 was a pretty active year and we've looked at virtually every asset package that came across. And again, Pinyon was the most attractive to us and we executed on that. We do see some additional asset packages or we think we'll see some later in the year and we'll take a hard look at those and see what fits well in our system. Public company M and A, a little bit harder to do, especially if your goal is to drive cash flow per share, cash flow per unit growth.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Public M and A can be a little on the problematic side. We don't see as much value as we do with asset purchases, but we'll take a look at both.

Operator

Thank you. Thank you. Our next question comes from the line of Neil Dingmann of Truist Securities. Your question please Neil.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Good morning. Thanks for the time. My first question guys just on GOM. I'm just wondering, looks like that the processing spread and others have stayed, well, I guess they were pretty stable for the remainder of last year. Are you expecting more of that this year or maybe just talk about the activity there?

Brent Secrest
Brent Secrest
EVP and Chief Commercial Officer at Enterprise Products Partners

I

Brent Secrest
Brent Secrest
EVP and Chief Commercial Officer at Enterprise Products Partners

mean, I think in terms of the forward curve, Neil, I think we think that spread is going to be there. It's probably more when you look at Waha, it's a function of Waha gas price. I would probably think ethane is fairly stable for this year. It's probably going to escalate a little bit, but in terms of the processing spread in our system and the recovery of that thing, it's probably more of a function of the wild gas price.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Got it. Okay. And then just one forward, love to hear just on prospects of now where we sit on the macro side. I'm just wondering based on how you are looking at it.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

You've talked about M

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

and A now today. Is that predicated on what you're thinking on the macro on both the oil and the gas side? I just wanted to hear kind of what you're thinking for the remainder of the year

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

on the macro commodity side?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Hey, Neil, would you mind repeating that?

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Yes. Randy, you laid out kind of I know you guys are active on the M and A side. I'm just wondering, is this predicated? I'd love to hear you guys always give a pretty good forecast on what you're thinking commodity wise, both gas I'd say gas NGLs and oil. And just wondering, are you expecting a bit of a ramp commodity wise for remainder of the year?

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

And I guess I'm asking is M and A predicated on this?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

I don't know if M and A is predicated on it, but you're talking about ramping price or ramping production?

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Price, Jim. Just trying to figure out what you all are thinking for price in the remainder of the year.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

For price, if we start with oil, it's been range bound, not at really bad prices quite frankly, it's really been quite range bound. And not just for the last year, but even longer than that. Our belief is that OPEC plus continues to be very focused on that. They don't want prices too high and they don't want them too low. I don't know what changes that landscape.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Right now, there's a lot of discussion about will we move into a, for lack of a better term, drill baby drill scenario. And all signs are that we will not, that it will be, call it slow and steady from very large numbers already. That said, we continue to see that rich natural gas production just sticking to the Permian continues to exceed our expectations. And we will be reforecasting and publishing a new forecast probably sometime in the We're working on it now. And I'll say, Neil, I wouldn't be surprised if our natural gas liquids forecast in the Permian specifically is not up again from the prior one, but give us some time

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

to work through it.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

That's what I was asking.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

And then Brent's pointed to the natural gas equation, it's somewhat weather related. Waha is very much what pipes can you count on running related. That matters a lot to us. So there you have that.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Perfect. Thank you. That's the calculation.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Last but not least, we're pretty constructive on natural gas long term just because of what we see on from the demand standpoint for LNG and for power.

Neal Dingmann
Neal Dingmann
Managing Director - Energy Research at Truist Securities

Okay.

Operator

Thank you. Our next question comes from the line of Jeremy Tonet of JPMorgan Securities. Please go ahead, Jeremy.

Jeremy Tonet
Jeremy Tonet
ED - Equity Research Analyst at JPMorgan Chase

Hi, good morning.

Libby Strait
Libby Strait
Senior Director - IR at Enterprise Products Partners

Good morning.

Jeremy Tonet
Jeremy Tonet
ED - Equity Research Analyst at JPMorgan Chase

Just wanted to start off, I guess, any updated thoughts out of D. C? Just wondering, in the Trump administration, imagine permitting might be easier, also talking about energy emergency and how that could impact permitting overall. Just wondering what you hear coming out of D. C, anything different and could that impact, I guess, your growth strategy going forward?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

For me, reform would be nice, but I got to see it to believe it, frankly.

Jeremy Tonet
Jeremy Tonet
ED - Equity Research Analyst at JPMorgan Chase

Got it. Anything else out of DC on your radar right now or just kind of business as usual?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Jeremy, again on the permit reform, it just seems like that's going to take some time and pretty involved. The other thing is just what the administration is looking to do as far as from a tax packages and tax package and extend some of these provisions at sunset at the to get extended. So thus far really no surprises from where we were frankly right after the election. It seems like the administration and Congress are following through with what they were talking about during the election cycle and right after the election.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Jeremy, the lack of permit reform seems to make what we have in the ground a heck of a lot more valuable.

Jeremy Tonet
Jeremy Tonet
ED - Equity Research Analyst at JPMorgan Chase

Got it. Yes. No, absolutely. And just want to touch base real quick on the PDH facilities one and two. Where are the current, I guess, operating run rates and where do you see them going over the course of 2025 and kind of hitting a normalized level?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

You want to hit it, Graham?

Graham Bacon
Graham Bacon
Executive VP & COO at Enterprise Products Partners

Yes, Jim. This is Graham. Right now, we're looking to increase the run rates of the PDHs. Obviously, they haven't met our expectations. Currently, we're working through a mechanical issue on PDH1, but that's coming out of our turnaround last year, it really ran pretty well.

Graham Bacon
Graham Bacon
Executive VP & COO at Enterprise Products Partners

We had a minor blip we're working through right now, but expect get a sustained run rate there. PDH2, we're working through a design issue with our licensor that has the rates currently limited. We expect to get that resolved and long term target is to have those operating in the upper 90% of utilization.

Jeremy Tonet
Jeremy Tonet
ED - Equity Research Analyst at JPMorgan Chase

Okay, got it. Thank you.

Operator

Thank you. Our next question comes from the line of John MacKay of Goldman Sachs. Please go ahead, John.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

Hey, good morning. Thanks for the time. I want to stay on some of the policy stuff. We've obviously seen a lot of different headlines on the tariff front, but we had some kind of retaliatory tariffs from China overnight, I guess. So far from China, they're not on the NGL front, but I guess I'd just be curious to hear your takes overall on any of these energy tariffs, how you think about that in the context of your export footprint?

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

Thank you.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

China imports, we don't have I think we have one contract with one Chinese company on propane. Is that right, Ted?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

That's right.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

But a lot of propane out of The U. S.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

Goes to China for their PDH plants, Doug. They've got a lot of PDH plants and they don't have any propane. So I don't see it affecting that. We have ethane contracts with one well, two customers and those crackers can only use ethane type. So they don't have any ethane.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

So from an NGL perspective, I'm not worried. Now that's most of what we have on LPG that goes to China goes through trading companies. We're getting interest in places like Southeast Asia, where we're going to have two contracts before it's all said and done. And we're expanding another contract in Asia by 40000 barrels a day. And then we have a huge contract in Europe.

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

So Doug is a little modest when he says $540,000 I think where we will end up on ethane is $600,000 and he's pointing higher. And then I think on I think 85% LPG, I think we'll contract that out for its offset and done.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

I appreciate all that. Thank you. Maybe just a follow-up. I wanted to ask about the NGL pipeline side volume and if we're just looking year over year, I know there's always a little bit of noise, but volumes were up a lot. Margin itself wasn't up a ton.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

You guys called out some higher costs. I'd just be curious your take on kind of NGL pipe margins going from here. How to think about those that extra OpEx side? And then maybe comment on this in the context of broader NGL pipe competition? Thanks.

Justin Kleiderer
Justin Kleiderer
SVP, Pipelines and Terminals at Enterprise Products Partners

Yes, it's Justin. A few things going on on the volume side, so let's cover that. Significant walk up volume, which incorporates a lot of our purity movements along with the trajectory that we see on just overall Y Grade growth. So you're seeing some a big quarterly step up as a function of some of those month to month movements on the purity side. But we are continuing to see that nice ramp of Y grade volumes turning in the right direction.

Justin Kleiderer
Justin Kleiderer
SVP, Pipelines and Terminals at Enterprise Products Partners

On the when you look at the GOM side, it's one thing to note that while Permian Y Grade rates stay in the reinvestment economic range, As we build out Bahia, a lot of what changes associated to Rockies flows and those Rockies tariffs are significantly higher. And so sometimes that can when you look at this volume and GOM perspective can make the fee may otherwise skew the fee. So changes in our Rockies flows can sometimes make the per unit GOM otherwise more skewed than what you'd anticipate. So all in all, the growth that we're seeing in the Permian continues to support reinvestment economics on the wide rate side.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

Sorry, just on the context of kind of competition from new pipes coming in, how are you feeling about that?

Justin Kleiderer
Justin Kleiderer
SVP, Pipelines and Terminals at Enterprise Products Partners

Yes. We

Justin Kleiderer
Justin Kleiderer
SVP, Pipelines and Terminals at Enterprise Products Partners

still like our platform. We're still growing our GMP footprint. I'd say, when you look at in service of Bahia in the We're quickly right behind that going to convert Seminole back to crude service. We've guided to that in prior calls. And so when you take that into account, going into 2026, we'd expect the EIA to be 60% full with more coming behind it as we continue to ramp.

Justin Kleiderer
Justin Kleiderer
SVP, Pipelines and Terminals at Enterprise Products Partners

So we still feel like our platform gives us a pathway to being full over the coming years.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

All right.

John Mackay
John Mackay
VP - Equity Research at Goldman Sachs

That's clear. Appreciate the time. Thanks so much.

Operator

Thank you. Our next question comes from the line of A. J. O'Donnell of TPH. Your question please, A.

Operator

J.

AJ O’Donnell
Director - Equity Research at TPH&Co

Yes, thanks. Good morning, everyone. I was just hoping maybe we could start on NGL marketing. There were some notable strength there quarter over quarter. I was just wondering if you could expand a little bit on the prospects for 2025 in light of commodity price movements and maybe the potential to offset any lower margins from natural gas marketing as a result of higher Waha spreads?

Brent Secrest
Brent Secrest
EVP and Chief Commercial Officer at Enterprise Products Partners

Yes, I mean, it's a function we had some higher FOB values across our dock and the LPG side, but the bottom line is, as volatility presents itself and the market will be there to monetize it and we continue to do that and those opportunities continue to present themselves.

AJ O’Donnell
Director - Equity Research at TPH&Co

Okay. Thanks for that. Maybe one more on data centers. We saw the Stargate announcement and I'm just curious, I know you guys have some intrastate lines in the area. Is there any capacity on your Texas intrastate system to be able to feed that project?

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

We've pulled out the capacity on both of our it just depends on where the project is. Just to give you some perspective of how much data center demand is out there, we've got probably 20 data center projects in the queue on the Texas side. We placed over two Bcf a day of demand. We believe only probably 15% of those projects are showing signs of progress. On the power plant side, which may see data centers, if you believe it's just power from those, we're looking at probably 15 potential projects around 1.2 Bcf a day and maybe 50% of those are real.

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

So where it depends on where the data center project is and it stems all the way from Dallas to San Antonio. So if our lines are closed, we're going to take the opportunity to serve the data center for it makes sense.

AJ O’Donnell
Director - Equity Research at TPH&Co

Okay, great. Thank you.

Operator

Thank you. Our next question comes from the line of Brandon Bingham of Scotiabank. Your question please, Brandon.

Brandon Bingham
Associate Director - Equity Research at Scotiabank

Hi. Thanks for taking the questions. If we could go back to the volumes side and the volumes outperformance this quarter, just wondering how sticky those volumes are and kind of how you see that progressing throughout 2025?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Yes. Brandon, I think if you come in, I mean, that's really just the growth at the wellhead, especially the growth at the Permian and really the benefit of a value chain. So it's flowing into our gas processing plants. Those liquids out of the processing plants flow into our downstream pipelines through our fractionators all the way to the dock. So what is that thing?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

Wellhead to water. I think that's pretty much what you're seeing across our system.

Brandon Bingham
Associate Director - Equity Research at Scotiabank

Awesome. Thank you. And then if we could just quickly go back to the petchem side, and on the margin front, you guys had previously discussed the PDH plants contributing, I think it was roughly $200,000,000 a year in EBITDA whenever they're running as they should. Could you just talk about what margins were baked into that $200,000,000 number and how those compare to what you're currently seeing?

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

The margins haven't changed because it's a formulaic price, isn't that right, Chris?

Christopher Anna
Christopher Anna
SVP - Petrochemicals at Enterprise Products Partners

Yes. The way our PDH contracts are set up, they're all toll based, so it's cost plus. So it's really just a function of utilization rates.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

And really what we were talking about was, I think, when we looked at where earnings were in 2024, we see the potential for the PDHs to contribute an incremental $200,000,000 in 2025.

Brandon Bingham
Associate Director - Equity Research at Scotiabank

Got it. Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Manav Gupta of UBS. Please go ahead, Manav.

Manav Gupta
Manav Gupta
Executive Director at UBS Group

Good morning. My quick question here is any update on the Morgan Point Flex expansion that you can provide?

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

As far as an update on where we are with the Morgans Point Flex Trane?

Manav Gupta
Manav Gupta
Executive Director at UBS Group

Yes.

Christopher Anna
Christopher Anna
SVP - Petrochemicals at Enterprise Products Partners

Yes. This is Chris, Dana. We finished the construction at the December,, so it's in service and ready to serve. Today, it's mostly being filled for ethane because there's a lot of both planned and unplanned outages on the cracker side that's limiting the ARB for ethylene, but the and the ethane opportunities are there.

Manav Gupta
Manav Gupta
Executive Director at UBS Group

Perfect. And the second one is more on the Haynesville side. Do you still see that as a growth basin? And are you looking at growth opportunities coming out of the Haynesville basin?

Natalie Gayden
Natalie Gayden
Senior Vice President of Natural Gas at Enterprise Products Partners

Haynesville has it's a growing basin, although it's rig counts wouldn't show that to be true. We have seen some growth in our portfolio, and this is from new acreage developments that producers are hitting. However, I don't know that the Haynesville has truly grown over the last year. I would say the opposite. Over the next year, I think we do see some growth potential, but again gas price drives that story.

Manav Gupta
Manav Gupta
Executive Director at UBS Group

Thank you so much.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

We'll be updating our Haynesville forecast at least for its potential when we update our forecast in the

James Teague
James Teague
Co-Chief Executive Officer at Enterprise Products Partners

It's what it's doing and what its potential is, is key.

Randall Fowler
Randall Fowler
Co-CEO at Enterprise Products Partners

That's why I use the word potential.

Manav Gupta
Manav Gupta
Executive Director at UBS Group

Thank you.

Operator

Thank you. I would now like to turn the conference back to Libby Strait for closing remarks. Madam?

Libby Strait
Libby Strait
Senior Director - IR at Enterprise Products Partners

Thank you, Trump Distance, 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.

Executives
    • Libby Strait
      Libby Strait
      Senior Director - IR
    • James Teague
      James Teague
      Co-Chief Executive Officer
    • Randall Fowler
      Randall Fowler
      Co-CEO
    • Christopher Anna
      Christopher Anna
      SVP - Petrochemicals
    • Brent Secrest
      Brent Secrest
      EVP and Chief Commercial Officer
    • Natalie Gayden
      Natalie Gayden
      Senior Vice President of Natural Gas
    • Michael Hanley
      Michael Hanley
      SVP of Pipelines & Terminals
    • Graham Bacon
      Graham Bacon
      Executive VP & COO
    • Justin Kleiderer
      Justin Kleiderer
      SVP, Pipelines and Terminals
Analysts
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Earnings Conference Call
Enterprise Products Partners Q4 2024
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