Enterprise Products Partners L.P.

Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. We ask that you limit your questions to one question plus a follow-up question. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Randy Burkhartler, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, Tina. Good morning, everyone, and welcome to the Enterprise Products Partners Conference call to discuss first quarter earnings for 2020. Our speakers today will be co-chief executive officers of our general partner, Jim Teague, and Randy Fowler. There are other members of our senior management team in attendance today for the call. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on the beliefs of the company as well as assumptions made by and information currently available to the enterprise's management team. Although management believes that these 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 that may be made during this call. With that, I'll turn the call over to Jim.

Thank you, Andy.

We had a record year in 2019, and our first quarter results show that last year's momentum carried into the first quarter. We reported net income of $1.4 billion, or 61 cents a unit, representing a 7% increase from the same quarter in 2019. Distributable cash flow totaled $1.6 billion and provided 1.6 times coverage, and we retained $574 million of DCF. Then in March, everyone's world turned upside down as we were invaded by an invisible enemy, coronavirus, officially COVID-19. This is not the first time in my lifetime that we've been invaded by an invisible enemy. I remember as a little boy the most feared disease of the 20th century, polio. It was a highly contagious virus. It struck without warning. It paralyzed and it killed. It put people in something called an iron lung to support their breathing. People who got polio were isolated from others, quarantined if you would. My mom, who was a registered nurse, caught polio. I remember standing outside the hospital with my little brothers and my dad so we could see her through a window. Mitigation steps were taken. Swimming pools and movie theaters were closed. We weren't allowed to go to public playgrounds. In effect, we practiced our own kind of social distancing. What I don't remember is shutting down the entire economy and 30 million people losing their jobs in one month. Just as polio was defeated, so will COVID-19. This too shall pass. It starts with changing our behavior as we've done. I've learned what social distancing is, and my hands have never been as clean as they are. As this pandemic spread, our primary objective was the safety of our people. Our secondary objective was the continuity of our business. 80% of our headquarters people are working remotely from home. Zoom meetings are being held routinely throughout the day and throughout the company. And as I understand it, there's been a lot of Zoom happy hours after work. So even though our folks are working remotely through technology, And alcohol at happy hours, teamwork continues to be a part of our culture, a part of our DNA. We immediately staffed half our pipeline control people at our backup location in San Antonio. So we're operating our pipelines out of two locations to make sure that we always have an eye on our pipe and our plants. Many of our larger facilities went to 7-on-7-off to allow for social distancing. Those of us that remained at our headquarters were disciplined in distancing and hygiene. Further, Purell has become a valuable commodity at Enterprise. I've been through many cycles in my life, but I have never seen anything like what we're going through now. Demand literally fell off a cliff in March. Seems like it was overnight. As demand cratered, our good buddies Russia and Saudi Arabia piled on by pumping an additional 4 million barrels a day of crude oil into the market, and the result was what no one would have ever guessed, negative price crude oil. At Enterprise, we immediately adjusted to this reality. Our operations people have gone into a managed cost mode. Our commercial groups have reduced CapEx from almost $4 billion in 2020 to $2.5 billion, a billion of which has already been spent. Six potential joint ventures are being negotiated, which could further reduce CapEx. In our businesses, our LPG exports continue to be virtually sold out. In fact, May, with a little luck, could be a record month. Three NGO wells at Montbellevue have been converted to refined products. Tanks have been converted to crude oil services. Our people have found places to store crude oil that two months ago we didn't even know existed. To enhance our financial flexibility, we did a billion-dollar credit facility to bring our liquidity to almost $8 billion. All of this and much more is being done to succeed in this environment. Chaos leads to inefficient markets, which leads to volatility. We don't fear volatility. We embrace it, and inefficient markets work to our strength. Some of our businesses are steady as a rock. Our NGO fractionators are full and will remain so, and our NGO pipelines overall haven't seen a downturn. Our Permian crude oil pipelines are fully contracted and Seaway is virtually full. Our petrochemical business is challenged as motor gasoline demand has fallen and refinery runs have been cut. Once refinery runs improve, so will our petrochemicals. Natural gas throughput on our Texas and Louisiana intrastate pipelines have been full. While our natural gas processing has suffered, This is a business that I believe has potential upside in the second half of the year. Opportunities around our assets are abundant. Our storage is worth its weight in gold, as there is contango on every hydrocarbon, and we've even seen some cases of backwardation, and there are location differentials around our pipelines. It's anyone's guess as to when the economy will open and things return to normal. During this time, our people are driven to continue to perform to deliver the results that create the value they've always delivered. I'll give a personal perspective. As a young naval officer in an attack helicopter squadron in the Mekong Delta of Vietnam, I took a great deal of pride that I was part of a special fraternity. It took a long time to have that feeling again. But I have that same kind of pride today, being a part of this fraternity. At Enterprise, everyone understands the mission and understands their role in accomplishing the mission. The mission, add value. How we add value may change, but we always add value. In closing, we want every member of the Enterprise family to know how much we appreciate all that you do. You are this company's greatest asset. You are what makes this a special fraternity. And with that, I'll turn the call over to Randy.

Thank you, Jim, and good morning, everyone. I'd like to remind you that our first quarter earning support slides are posted on our website for your reference. Starting with income statement items for the first quarter, as Jim mentioned, net income attributable to limited partners for the first quarter of 2020 was $1.4 billion or 61 cents per unit on a fully diluted basis. Net income for the first quarter included a $187 million or 8 cents per unit benefit in deferred tax expense associated with the settlement of the liquidity option on March 5th in subsequent accounting for a related deferred tax liability. Moving on to cash flows, cash flow from operations was $2 billion for the first quarter of 2020 compared to $1.2 billion for the first quarter of 2019. Excluding changes in working capital accounts, cash flow from operations for the first quarter of 2020 was 3% lower than the first quarter of last year. Free cash flow For the first quarter of 2020, which we define as cash flow from operations minus investing activities plus any contributions from non-controlling interests, was $916 million. Free cash flow was $3.4 billion. For the last 12 months ended March 2020, which was 78% higher than the $1.9 billion. billion reported for the last 12 months ending March 2019. We defined payout ratio as the sum of cash distributions and buybacks as a percent of cash flow from operations. Our payout ratio was approximately 56 percent for the first quarter of 2020 cash flow from operations. In January, we provided guidance that we expected to increase our distribution related to the first quarter of 2020 by a quarter of a cent to 44.75 cents per unit. Given the economic sudden stop and uncertainty related to coronavirus, we thought it was prudent to hold our distribution flat at 44.5 cents. It will be paid on May 12th. This distribution represents a 1.7% increase when compared to the same quarter of 2019. Given the current macroeconomic backdrop, we will be deliberate and our board will evaluate our distribution growth quarterly in 2020. With respect to buybacks, we purchased $140 million of common units during the first quarter of 2020, substantially all prior to the COVID-19 outbreak, which is $6.4 million unit reduction. Additionally, EPD's distribution reinvestment plan and the employee unit purchase plan purchased a total of 1.4 million EPD units in the open market in the first quarter and affiliates of our general partner purchased approximately 1.5 million units in the open market during the first quarter of 2020. Now, moving on to capital expenditures, as Jim mentioned, we effectively reduced 2020 capital expenditures by $1.1 billion in our initial review. We now anticipate spending between $2.5 and $3 billion in growth capital projects this year. We currently expect growth capital investments for 2021 and 2022 to be approximately $2.5 billion and $1.5 billion, respectively, based solely on sanctioned projects already approved. As Jim also mentioned, we are currently in negotiations on joint ventures, which could lead to a further reduction in growth capital expenditures for 2020, 2021, and 2022. We currently expect sustaining capital expenditures for 2020 to be approximately $300 million, which is a $100 million reduction from previous guidance. Total capital investments in the first quarter of 2020 were $1.1 billion, which includes $69 million of sustaining capital expenditures. Turning to capitalization, our total debt principal outstanding was approximately $30 billion as of March 31, 2020. Assuming the first call date of our hybrids and as well as the final maturity date, the average life of our debt portfolio is $16 billion. years and 20.2 years, respectively. Our average effective cost of debt is 4.5%. As mentioned on our last quarterly call, we completed our issuance of 10-year, 31-year, and 40-year notes in January 2020. The aggregate amount of that issuance was $3 billion. We're very appreciative for the continued strong support of from our term debt investors in this offering. Currently, we do not expect to have the need to return to the debt capital markets in 2020. Adjusted EBITDA for the trailing 12 months ended March 31, 2020, was $8.1 billion, and our net consolidated leverage ratio was 3.3 times after adjusting debt for partial equity credit in the hybrid debt securities. given by the rating agencies, and further reduced for unrestricted cash. Our consolidated liability was approximately $7 billion at March 31, 2020, including availability under our existing credit facilities and approximately $2 billion of unrestricted cash on hand. As of today, our liquidity is approximately $8 billion, with additional liquidity provided by the new 364-day facility entered into on April 3rd. We are grateful for the support and responsiveness of our bank group in providing us additional flexibility during this time. We anticipate elevated uses of working capital in the near term for contango opportunities. Regarding our cash balance, our only remaining debt maturity in 2020 is is a $1 billion maturity of 5.2% notes due in September. I'd like to thank our employees, many of who were challenged to work from home while maintaining their same level of productivity. I'd like to thank them for their efforts, not only in our business continuity, but also in the comprehensive SOX testing and our accounting controls and processes that attest the earnings we announced today and the 10-Q that will be filed on May 8th. I want to take a minute to speak to the durability of our business as we see it currently. Our top 200 customers represented 96% of 2019 revenues. 78% of the revenues from our top 200 customers were comprised of investment-grade customers or those backed by a letter of credit. This is based on published debt ratings through April 23, 2020. So it takes into consideration three of our formerly investment-grade customers that have become high-yield fallen angels in the past few weeks. Only 11% of the revenues from our top 200 customers represented independent P&P companies. Our earnings are typically 80% to 90% fee-based, depending on the commodity price and spread environment. When we break down the fee-based areas, we compartmentalize those into three broad categories. The first, take-or-pay or minimum volume commitments, which comprise 45 to 55 percent of our fee-based earnings. Second, durable fee earnings, which we think of as storage throughput and wholesale deliveries, wholesale residential deliveries, make up another 20% to 30%. Fee earnings with more volumetric exposure, such as wellhead dedication in certain demand-based volumes, make up the balance. Even within our volumetric-based earnings, we have a high degree of confidence in a lot of the earnings capture, given the many ways our commercial and operational teams have hustled to keep our assets full, such as repurposing storage and pipeline assets. Finally, I'd like to iterate our financial objectives as to defend and maintain our distribution, our strong balance sheet, and our debt rating, maintain ample liquidity, and continue to high-grade and invest in projects underwritten by high-credit quality customers, long-term fee-based contracts, and underpinned by solid long-term fundamentals. Before I turn the call over to Randy, we would like to thank our long-term investors, for their feedback, confidence, and support through these volatile times. To all of you and your families, stay safe.

Okay. Tina, this is Randy. We're ready to take questions from our listeners. But before we do, I'd like to remind them that, please, just limit your questions to one question and one follow-up. Okay, Tina, thank you.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. And please limit your questions to one question and one follow-up question. Thank you. And our first question comes from the line of Shannar Roshuni. Please go ahead.

Good morning, everyone. Good morning. Maybe to start off here, and do appreciate all the comments that you made in the prepared remarks, but I was wondering if you can talk about the current environment as, when I say current, I mean with respect to April versus, let's say, February, how things are going from a volumetric perspective on your traditional fee-based and POPs business, not specifically talking about the spread differential business, but How are things going with respect to that business, you know, as there's been accelerated rig declines and talks of shut-ins and so forth? How materially worse do you think volumes are going to be in the second quarter if they're consistent with where they are today, let's say?

Well, this is Jim. I think I said in my prepared remarks so far, for example, our LPG export facility is pretty full, Brent, and it has been. I think I said that our crude oil pipelines, if you look at our crude oil pipelines out of the Permian, do we expect some downturn in production? Yes. Those crude oil pipelines, I think we have a million and a half barrels a day of contracts. Brent, they're all take-or-pay contracts, and they all have associated dock deals, some of them storage deals, that are all take-or-pay, and as Randy said, they're all investment-grade. From an NGO perspective, we are seeing from the supply side, we're seeing some slight downturns, but on the demand side, we're seeing increases. Where I think we're probably most challenged right now is our petrochemicals as refinery runs have been cut. But I see upside on that as refinery runs increase. I think our petrochemicals will get business in the second half. We'll do a hell of a lot better than it's doing now. Brent, you got anything else?

No, I think you hit it. I mean, on the flow side, we'll have a record month for LPGs in April. We'll have close to a record in May, maybe a little bit less than April. And as we go out further, you know, you could see some effects on production declines. But in the end, our dock space is over 90% contracted for LPGs and crude oil for take or pay. So we haven't seen big drop-offs yet. I think maybe on the G&P side, we'll see some volume decline on that side. But in terms of the customers that we deal with, you know, if you look at the barrels that are going to be cut out, the barrel that's the highest cost to produce will be first. The second barrel that will probably get cut out is the highest cost to get to market. And then the third will be some sort of a quality issue. So if you look at our system and our customer base, I think we're – I don't want to say we'll be the last ones to see reduction in volume, but I think they're pretty well positioned in terms of our customer base to keep on producing it at some sort of level.

Well, that makes perfect sense. Really appreciate the color there. Maybe as a follow-up, in your prepared remarks you talked about, you know, an attempt to reduce expenses, and you also talked about keeping the distribution flat. Just kind of thinking about on a go-forward basis, are you able to handicap how sizable your O&M and G&A expense reductions could be on a go-forward basis? And does the commentary about keeping the distribution flat also remove the objective about a 2% buyback target from CFFO as well, too, or is that still in place?

Yes, on the buyback target, you know, the company bought back $140 million worth of units in the first quarter. And, you know, if we use last year's cash flow from operations as a guide, 2% of that number was about $130, $140 million. So I think we've pretty much addressed that. I think, you know... For a long time, the way we return capital to investors is consistent distribution growth. And again, this year we added the additional component of doing the buybacks. But I think right now there's just too much uncertainty at this point in time with this economic sudden stop and how long the effects of this coronavirus last on the broad economy and energy demand. So I think we'll take a look. quarterly as the board meets and see how the business performs.

And comments on the costs?

What did he say? On the costs. Our folks, you know, Graham Beckett in operations is focused on reducing OPEX and sustaining CAPEX. And I think... I mean, I don't know how to answer the fact that we are hyper-focused on cost and we're hyper-focused on CapEx. I don't know how to answer it other than that.

Perfect. Thank you very much, and remember to stay safe and stay sane.

Thank you. Thank you.

And your next question comes from Christine Cho with Barclays. Please go ahead.

Good morning. Thanks for all the color questions. If I could start with exports, can you just remind us how you're contracted on the export side for crude, LPG, ethane, and ethylene relative to the capacities? How much above the MVCs are the volumes currently? And I know you guys have also historically said that you pay a deficiency or the customers have to pay a deficiency charge if they don't pick up the volumes or they cancel. How much lower is that rate relative to if they were to pick up the volumes?

Christine, this is Brent Seacrest. So on a high level for LPGs, the contracts, and as you go out further in time, this percentage goes down slightly. But on the LPG side, over 90% are take or pay. If for some reason the vessel doesn't show up There's a payment that's made to Enterprise that is essentially an offset to what it would be for us to operate and recover our variable costs. So there's kind of a fixed reservation. There's a reservation component, and then if they do show up with a vessel, there's a variable component that offsets our variable costs. And that varies contract by contract and term by term. On the crude side... Again, the volume is over 90%. The duration on our crude contracts is actually longer than the LPG side, and that component is take or pay, and there is no sort of offset. It is take or pay. Whether the vessel shows up or does not show up, the fee is essentially the same. On the ethylene side, I'm looking at Christiana next to me. All those, I think it's almost 100%, 90% to 100%, Chris, that have been contracted as take-or-pay.

That's correct, yeah. 95% of our capacity has been contracted as take-or-pay, and it's set up similar to how NGLs where there's a fee and there's a component that is basically the variable cost. If they don't show up, the take-or-pay basically keeps us whole on the fee.

When it comes to exports, and I'll let Jim and Randy – correct me, but from a variability to our earnings as it relates to exports, it's essentially what you're talking about is some sort of, call it, walk-up opportunity we would have on volume. It's pretty much set in stone.

Okay. Thank you. That's really helpful. And maybe if I could just follow up to Schneer's question about the cost. How do we think about what sort of cost savings we could potentially see in the event of a prolonged return? You know, midstream assets seem to just generally be a high fixed cost business. And so the more notable cost savings seems to come from, you know, shutting down processing plants or non-Montbellview frac facilities or maybe a pump station on a pipeline. to better optimize the system, but is there anything else we should be thinking about just, you know, beyond the standard, you know, GNA cuts?

This is Graham. We look at all aspects of how we operate our systems in terms of overall cost reduction. As Jim said, we're hyper-focused on variable cost reduction, whether it be how much power we use for pump station operation if there's declining volumes from fixed Fixed costs, we have a number of strategies that we use to reduce and extend our maintenance costs. We have a strong focus on reliability and predictive maintenance, and we use those tools. All of the things we've got help us to really run our costs and manage those costs. We don't put... a lot of targets out there, but certainly I think from a standpoint of where we're looking, sustainable, we can go 10% or lower for some period of time.

Thank you.

And Christina, travel and entertainment expenses are down too.

And our next question comes from Tristan Richardson with SunTrust. Please go ahead.

Hey, good morning, guys. Just I'm curious, can you talk conceptually about the range of CapEx for 2021, seemingly kind of unchanged from where you talk about sort of general opportunity set in any given year? I mean, are the deferrals you saw in 20 or the deferrals you made in 20 sort of pushed into 2021 that's keeping that elevated, or is it just to say that the project outlook for 2021 is largely unchanged from where you see in any given normal year?

Why don't you start? I'll jump in. Yeah, Tristan, pretty much it was a combination of things because we had some projects that the capital expenditures were deferred. So, yes, some moved from 2020 into 2021, but we had some that were indefinitely deferred. So they dropped out of 2020 and 2021. So it was a little bit of a combination of both.

Helpful. Thank you. And then, I mean, maybe just conceptually at a high level, could you talk about a CapEx floor for enterprise where CapEx could be in any given year where only the most critical and essential projects go ahead or, you know, what that could look like in any given year?

Yeah, Tristan, you know, we're in a pretty unusual time right now. You know, I'd say if If we think about base level of opportunities, it seems like invariably we have opportunities to come in and de-bottleneck the system or do some opportunities to de-bottleneck the system or come in and reduce costs. And they can be $10 million, $25 million, $50 million a throw, and all of a sudden in a whole year it adds up to $250 million to $500 million. So We have those type opportunities. As we think of things right now, you know, on the horizon, we don't see a lot of opportunities facing from the upstream side of our customer base, but we could very well see some opportunities on the downstream side and on the demand pull side as well. So I think as you're thinking about it, probably something in the billion, billion and a half, 1.5 billion opportunity from a growth capex is a good base level.

Helpful. Thank you guys very much.

Your next question is from TJ Schultz with RBC Capital Markets. Please go ahead.

Hey, good morning. You talked about finding new storage capacity throughout your system. How much available crude storage capacity or what percent of your capacity is not contracted that's available for Contango?

More than I thought.

Brent, take it. Yeah, I don't. I mean, that's fairly sensitive in my opinion. So in terms of how we're going to contract this stuff is there's a chance for us to have some opportunities long-term with people, and it's probably not going to be a different approach than how we did some of our crude oil pipelines is there was some short-term opportunity. And if it made sense for us and it made sense for the customer, we did long-term deals on the pipeline side of the Permian. So what may have not looked so great early on looks pretty good now. In the case of storage, it's a balance, frankly, of us trying to secure long-term deals and then take advantage of the opportunity. But in terms of specific numbers, I'll just echo Jim. You take a hard look at your business and you get a lot of people involved and you find things that, frankly, you forgot about. And we've been pleasantly surprised with how much crude oil storage that we have access to. Refer back to my script notes.

We think our storage is worth its weight in gold.

And, TJ, I think one other thing. You know, we talked just three months ago. It feels like it was three years ago. when we had our fourth quarter earnings call, we talked about in 2019, we had what we would call outsized spread capture in 2019 that we thought that maybe $500 to $600 million of that would not repeat in 2020. We have the potential to come in and have that kind of number again in 2020. That's the answer.

Okay, good. Thanks for that. Just on the follow-up for the JVs, I think you mentioned six potential JVs are in discussion right now. Have those conversations, just given what's happened in the market, have those shifted, accelerated, slowed down at this point? And are you talking to more strategic or financial partners? Thanks.

Well, first of all, we're talking to strategic partners. And secondly, yes, we're in discussions with six. I'd say three of those are highly engaged.

Okay, thank you very much.

Our next question comes from Pierce Hammond with Simmons Energy. Please go ahead.

Good morning, and thanks for taking my questions. And, Jim, I appreciate your prepared remarks. That was really interesting. My first question pertains to force majeure. Are you experiencing any force majeure calls on take-or-pay contracts? And assuming we fill full oil storage and producers have no place to ship the crude, Could that be a reason that they call for a force majeure?

We would call that a price majeure, and that's not in our contracts. We've looked at all our contracts, and we feel pretty comfortable that we're not going to have any issue with force majeures that relates to price.

Okay, thank you for that. Then my follow-up is what is your outlook for U.S. oil and LPG exports over the next two years, and could you see a situation whereby some of your oil export capacity gets repurposed to LPG exports?

I'll take a shot, and then Brent and Tony might follow up. Yeah, I think our LPG export facility, I feel pretty good about that for this year. I don't know who the hell can answer you on crude oil. Fortunately, we've got a lot of... Most of our crude deals are take-or-pay at the dot, Brent. I think you said 90%. But it really boils down to when does this economy come back? Now, in terms of storage, I just fundamentally don't believe that you fill up storage. Something always happens that... that creates an outlet or stops production. I think, Brent, we have seen here recently, I mean, we were exporting, what, a million barrels a day of crude plus before this, and then all of a sudden everything stopped. But now I think we're getting calls and starting to do some deals on crude exports.

Yeah, I mean, if you look at first quarter, we're on pace to track exports. kind of the same numbers as second quarter. But, you know, if there's a case to be made, and I understand that production declines, then kind of by default I would say that crude exports are going to decline. I just think a lot of those crude exports are kind of walk-up opportunities for other terminals. I would think that if people have take-or-pay contracts with us, I don't think you'll see a big impact on volumes here. on our side, and certainly not going to see a big impact on dollars on our side. In the case of trying to reconvert crude LPG, I think that sounds much simpler than it is. It's essentially a dock is what you gain. If crude oil production declines, you've got to make the assumption that NGL production will go with it. You may see different basins return that aren't crude-centric. So I would think along those lines, there may be a resurgence in some of those basins that maybe value or have NGLs and gas. So I think there's some opportunity there for us.

Okay, thank you very much.

Your next question comes from Jean Ann Salisbury with Bernstein. Please go ahead.

Good morning. I just wanted to follow up on the major CapEx in 2021 and beyond. As someone noted before, it looks like a lot of it has been deferred, and I think that that's what the blue check marks mean. I'm just wondering if for some of the bigger ticket items, like PDH-2 and Midland to ECHO-4, we should think of it as still being cancelable if you choose to do so, or if there are just major penalties to doing that.

Yeah, both of those projects are underwritten with long-term contracts. Okay. So in our mind, not cancelable. Cancelable.

Okay. Fair enough. And then I think on May 5th, the Texas RRC will decide about whether the Texas cut. Would this impact take or pay contracts?

The answer to that is no, and I don't believe for a minute they're going to do anything in terms of pro-rationing production.

Okay. Very clear. That's all for me. Thank you.

Our next question comes from Keith Stanley with Wolf Research. Please go ahead. Keith Stanley, Wolf Research, Hi.

Good morning. Just a follow-up on the billion-dollar CapEx cut for this year. It seems like the major sort of capital projects are only delayed really slightly and the ISOM was canceled. So how much of the billion dollars is changes to kind of the major projects you guys lay out versus just the environment, less need for WellConnects and smaller things on the margin that you're able to pull out of the budget?

And I'm sorry, could you repeat your question one more time?

The billion-dollar CapEx cut, I'm just wondering how much of that is from the major projects you lay out in your slides, which are really only delayed slightly, versus other things just in the environment where you could have fewer WellConnex and just smaller projects that normally support producer growth?

Yeah, I would say a significant amount of it was attributable to the larger projects. There was, if you would, there was a bucket of other projects that, you know, it may have accounted for $200, $300 million. Okay.

That's helpful. The second question, just on the C-Corp question, I'm just curious how recent events have impacted your thought process with, obviously, the sector selling off very hard. closed-end fund issues, but then I guess on the other side you have federal deficits really kind of exploding here. Any updated thoughts on how you think about the C-Corp question given what's happened in the world over the past few months?

Yeah, I'll be honest. Really, that hasn't been our priority is to come in and evaluate MLP versus C-Corp here the last few weeks. It's really about executing on the business in these uncertain times and getting us positioned from a liquidity standpoint and to take advantage of funding some of these contango opportunities. I think you hit on some key things there. I mean, it seems like invariably you can have some investor turnover. I think MLPs had our fair share of it here the last six weeks. But if I come in and I think you hit on a key point, I think everybody's going to pay more in income taxes, including C-Corps going down the road, so we'll see what happens there. Somebody's got to pay the tab for all these trillion-dollar stimulus packages. But also, I think, frankly, what surprised me was some of the volatility in the C-Corp names. We saw some of those names just plummet But we've not gone into a deep dive or any kind of reevaluation.

I think what you just said is we've been too damn busy.

Makes sense. Thank you.

Our next question comes from Spiro Dunas with Credit Suisse. Please go ahead.

Good morning, everyone. I just want to start off on strategy. You all have been slightly more aggressive or taking a slightly more aggressive approach leading into this downturn. And we'll focus on capturing more market share. And, Jim, earlier you mentioned embracing volatility. So I'm curious, does anything really change or does anything change that approach? Do you actually see an ability here to accelerate market share capture in this environment, either organically or through M&A?

I guess it's hard to understand the question.

No, you guys, sorry, go ahead. No, go ahead, Randy. Okay.

If you could repeat your question one more time, maybe just a little bit louder.

No, no problem. So you guys have been fairly aggressive leading into this. It sounded like you were trying to capture market share, getting really competitive on pricing and some recontracting to attract more customers. Just curious, in this environment, you just sort of bolster everything up. Does that change at all? Jim, you mentioned embracing volatility here. So just curious, do you go out there with the same aggressive approach and try and capture more of that market share? And is there an organic path there, or do you see some opportunities here on the M&A side to actually pick up some assets?

Yeah, I don't think there's any M&A that we would look at right now. And, yeah, I think we talked about on our OBG export doc, if you're going to compete with us, you better be willing to get down and dirty, and we – We contracted that dock out. I think we kept a couple of spots a month. And then in terms of embracing volatility, you know, we've got a 20-year track record of creating value. And sometimes that comes in different forms. I'm not sure how much credit we get for it. But when we say embrace volatility, You know, we've benefited from crude falling on the floor, refined products, LPG. We have a footprint that lends itself to having opportunities that in normal circumstances aren't there, and that's been the case through hurricanes and financial meltdowns and now through coronavirus.

Understood. And just going back to the potential for future CapEx cuts as it relates to joint ventures, one may be specifically focused around Midlands Echo 3 and the connection area of Wink to Webster. Because my understanding there is that pipeline is some of the steel has been ordered already, some of it is actually in the ground, and I imagine that one falls into a largely underwritten asset that moves forward. I'm just curious what maybe options you have there around changing the scope or size. Are there options available to you? And then, obviously, you guys also have some idle pipelines or some pipeline optionality to move volumes there instead. Are those some of the things that are being discussed right now?

Well, we can reduce CapEx by entering into joint ventures on assets that are in virtually every one of our business's none of which touch the church house.

All right. Thank you, everyone.

Your next question is from Gabe Maureen with Mizuho. Please go ahead.

Hey, good morning, everyone. I just had a couple follow-up questions on the potential of joint ventures. One is... Really, I'm used to proceeds there. Is it fair to say that that's strictly going to deleveraging at this point, or could there be some other form of capital to return? And then also, depending on which JVs are able to get going, can you talk about whether or not some of the projects would go from, I guess, what's shaded in blue to actually, I mean, being accelerated, if you're potentially able to get something going commercially, depending on the terms?

Yeah, Gabe, on the first part, I think any use of proceeds that we had, whether it would be incremental, you know, areas where we may see additional room to reduce CapEx in 2020, or if there was any proceeds from any JV opportunities, it would really just come in and go to delevering. At this point in time, again, Any other return of capital, be it through distribution growth or be it through incremental buyback, really we need to get more visibility of what the macroeconomic backdrop looks like and what the demand for energy looks like before we make any other decisions on that. And, Gabe, what was the second part of your question?

Yeah, it was just on whether some of the JVs that you're negotiating are for some of those projects which you've shaded in blue, which you've deferred. So depending on how the JV works out, could those potentially be brought back?

Yeah, and Gabe on that one, that's where Jim said, you know, with these discussions, it's for assets across all four segments.

And then, Randy, I just had one follow-up on terms of the marketing opportunities you talked about and the working capital draw. I don't know if you care to talk about how large that working capital usage might be. I realize that's sort of a dynamic number. And then also, can you just talk about maybe the cadence of when you might recognize those marketing earnings in 2020? I assume it's about half type of the year recognition.

Yeah, I'll let Jim or Brent hit the timing of the earnings. I think the The one benefit from low commodity prices is it doesn't take a lot of working capital to execute on contango.

Yeah, I think we're going to see.

In the past, we've had some rather large contango opportunities. You know, at $16, $17 crude oil, the working capital is a hell of a lot less. And the way we're doing contango, by and large, is where do you get the biggest spread? I mean, I think it's probably going to be throughout the year, Brent.

Yeah, certain commodities we've targeted closer to the front, and other commodities, frankly, we've kind of spread it out based on liquidity and some other things. But I think for the balance of the year, you're going to see these numbers show up month by month. Got it. Thanks, guys.

And your next question is from Uzhwal Pradhan with Bank of America.

Good morning, everyone. This is Uzhwal. Thanks for taking my question. First one, just following up on your earlier comments around share repurchase, So maybe to ask the question a little differently, how do you view the appropriate distribution with your units in the current environment and how that informs your buyback program beyond the plan to repurchase 2% of 2020 cash flow from operations?

Yeah, you know, we've been public since, as far as the distribution growth question goes, we've been public since 1998 and we've provided distribution growth and every year since our IPO. So that's been one of our objectives over time is to provide consistent distribution growth. And, you know, so that's been important to us over time. But you may have asked the question a different way. I'm probably going to go back to the same answer. Given the uncertainty, again – This economic sudden stop that we've had on a global basis is historic. And just there's a lot of uncertainty of how the next three months, six months are going to progress. And I think we just need to have more visibility of how that's going to progress before we make any decisions about returning any additional capital above what we're doing now. to investors at this point. I think this is a point where you really come in and protect your balance sheet, protect your debt rating, come in and protect your liquidity, and we've got a lot of good opportunities that our assets set us up for, and right now we are in execution mode big time over the next three, six, nine months.

Thank you. Appreciate your thoughts there. And my second question is regarding your CEA reversal, the partial reversal plan. Can you discuss how that came about despite Cushing already filling up rapidly and what sort of uplift you expect from that reversal?

Yeah, this is Brent Seacrest. basically came about because, you know, you guys saw what was going on in the market, and there was a flight to storage. And that was the open access storage, and frankly, that was where people were buying crude oil, whether that was financially or what have you. We look at our customer base, and our Permian producers... And our Eagleford producers ultimately wanted access to market, and some of them approached us to figure out if that could still be reversed. Graham Bacon, his team figured out how to do it very cost efficiently and quickly. There was a lot of things still in place. So that was the thought behind that. And, you know, it just led to another optimization opportunity on our side and also a solution for our customers.

Tina, this is Randy Burkhalter. Given the fact we've got calls coming up after hours, and I apologize for anybody in the queue that couldn't get in, but we're going to take one more question before we end our call today.

Thank you. Your next question comes from Colton Bean with Tudor Pickering and Holtz. Please go ahead.

Thanks. I'll keep it brief here. So just to circle back to LPG exports, I think you all noted that May was shaping up to be a record month. Any detail in terms of where those cargoes are headed or preliminary discussions around June?

I think they're by and large going to Asia and South America. I doubt if anything's going to Europe that I know of.

It's mainly things that are geographically advantaged. I'd say the one big area of uptick that we saw was India and Indonesia. but certainly India had an increase on what they were bringing in.

Yeah, I'd appreciate that. And then, Brent, maybe just to follow up on some of your comments there around when and why we would see production curtailed. You know, as you look across your system, is it really South Texas and the Permian that you would expect to be most exposed, or are there any other maybe more nuanced regions that have rich gas exposure that you're keeping an eye on?

I would say Delaware. Delaware Basin Light, you know, you saw what differentials did out there. That became challenged for a little while. Eagleford Condensate, as certain buyers stepped away from the market. And then I see some, frankly, I see some opportunities that are going to offset that, and whether that's the Rockies or potentially Haynesville, some of those areas I think are going to have a resurgence.

I'll leave it there. Appreciate the time.

Okay. Tina, before we end the call, would you give our listeners the replay information? And then let me just say thank you again for joining us today. And from Enterprise, we're going to go ahead and get off the call. And then, again, if you could give the replay information. Thank you.