Enterprise Products Partners L.P.

Ladies and gentlemen, thank you for standing by. I would like to introduce to your speaker today, Mr. Randy Burke-Halter, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Buena. Good morning and welcome, everyone, to the Enterprise Products Partners Conference Call to discuss third quarter 2020 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprises 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 and 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. 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. And with that, I'll turn the call over to Jim. Thank you, Randy.

For the third quarter, we reported adjusted EBITDA $2.1 billion compared to $2 billion for the same quarter last year. Our DCF totaled $1.6 billion and provided a solid 1.7 times coverage. We retained... around $669 million in the quarter, now totaling $1.8 billion for the first nine months. Our businesses continue to form well, even as the U.S. and the world are still dealing with the COVID pandemic, the oil price crash, and the ensuing oil inventory overhang. In addition to our integrated business model, our profits continue to be protected by a strong base of of firm customer obligations coupled with our activities around our marketing and storage systems. The petrochemical industry is reporting strong demand for our products, especially ethylene, driven in part by individual serving type products as the world deals with the pandemic. Propylene also has strong demand to manufacture badly needed PPE. Bob Patel, the CEO of Blindale, probably said it best on their second quarter earnings call when he said, the pandemic has generated a renewed appreciation for the value of our chemical and polymer products for society. Total capital investments were $705 million in the third quarter and $2.7 billion for the first nine months of the year. During the third quarter, our commercial team responded to customer requests and changing industry conditions to amend agreements that enabled us to increase volume commitments over the long term by utilizing existing pipeline capacity, and we were able to cancel the Midland Echo 4 crude oil pipeline. In total, we've reduced our planned growth CapEx for 2020 and 2021 around $1.5 billion. We've also focused on cost control. For the first nine months of this year, enterprises operating costs were $260 million below budget, and our sustaining capital expenditures for the year are expected to be $100 million lower than our original budget. We're turning over every rock in order to manage costs, but we're doing so without sacrificing safety or reliability. Discussing our performance and capital reductions, I think it also goes without saying that our people matter. We're extremely proud of the way our folks have responded in the face of the pandemic and all the other chaos we have had this year. Early on in the pandemic, we went to a skeleton staff in our headquarters consisting of management, our marketing desk, and a few of our operations folks with everyone else working from home. We made adjustments to be able to open back up and protect our employees, including things like social distancing guidelines in common areas and installing plexiglass around the building. The biggest change we made was requiring face coverings at all times. We also had a steady stream of employee communications, including several that emphasized that none of these measures work unless each of us also take personal responsibility and the decisions we make when we are away from work, and I have to say our employees responded. Since the second half of June, I think that's right, Randy, we have been pretty much fully staffed in our offices, and our case count has been minimal thanks to the safety measures put in place and our people accepting personal responsibility. We don't believe that our performance would come close to matching today's announcements, without the kind of collaboration that comes from actually being together, especially during times of chaos, which create their own opportunities. I'm hard-pressed to find a law firm or bank back in the office. Among downtown companies, someone recently told me we were somewhat of an anomaly. I think that's synonymous with competitive advantage. Then came the storms. Luckily for most of you, the 2020 active hurricane system was nightly news, but for us, there were five major storms on the Gulf Coast. Three were hurricanes, one a Category 4, and now we've got another one on the way. All of these impacted our people, our operations, and the operations of many of our customers. Loss of power in 2020 was a major event for people and businesses, especially refiners and petrochemicals along the upper Gulf Coast. So why are we talking about special charges or big earnings hits related to what has been a historical Gulf hurricane season? Well, again, it's because of our people. Some power outages in Louisiana lasted well over a month, and we are appreciative to our engineering and operations personnel who planned for and quickly responded to these events. Time and again, we have people... who regardless of being impacted in their personal lives are still going to the extra mile to keep the assets they look after up and running. Spend a few minutes discussing our views of the global energy environment. Near term, the global economy is reopening from a self-imposed sudden stop due to COVID-19. The pace of the recovery varies, but with the exception of air travel, much of Asia has returned to near normal. while U.S. and European energy demand still lags a little. Air traffic, particularly international travel, continues to lag worldwide, and several industries, refineries, airlines, hotels, restaurants, need for business to get back to normal in order to really get economies moving again. Apparently, the development of vaccines is progressing rapidly. Meanwhile, treatment for the virus continues to take a giant leap. Even though the pace of the pandemic and the recovery is somewhat uncertain, the economic recovery thus far has led to a remarkable rebound in the demand for energy and energy products from the lows of the second quarter. We think it's pretty clear we're not going to shut the world down again and that not one but several vaccines will soon be available. We've also been very outspoken that we believe a price signal for crude oil is coming. Given the combination of recovering demand worldwide and the face of record retrenchment in drilling and completion activities by U.S. producers with steep decline curves and the lack of oil and gas investment worldwide, we believe a price signal for higher crude oil prices could occur as early as the second half of next year. While forward curves remain muted, we're really not alone in looking for a rebound. Finally, I'd like to cover our initiatives in sustainability and lower carbon energy. Jackie Rekert and Libby Strait, with the help from a lot of Enterprise folks, are responsible for our sustainability report that we published in July. And I think that we put on our website today, Jackie, Also, we recently put on our website today an investor deck dedicated to our thoughts and actions on this topic. It's probably worth your time to take a look at it. I struggle with the term that I hear a lot, energy transition. In my mind, energy evolution is more appropriate in that we are gradually moving to a world where renewables will complement but not replace oil and gas. We also understand that access to affordable, reliable energy available at scale right now is what is going to continue to advance a higher quality of life worldwide. And energy evolution is underway, and light hydrocarbons from the U.S. are already playing a key role in this evolution. With the world still adding a billion people every 12 years, that's on top of the population today of close to 8 billion, In populations in developing countries wanting access to more convenient sources of energy, we believe demand for reliable U.S. energy, petrochemicals, and related products will continue to grow. Without the U.S. shale light oil, NGOs, natural gas, and our energy markets, the world is left relying on countries like Russia and Saudi Arabia, and they would again control the price of oil, leading to a lesser quality of life. for people in underdeveloped countries. It's clear from what's been going on at our docks that even in the middle of a pandemic, the world wants U.S. oil and gas. In addition to being what we believe is one of the global leaders in providing the world with new, lighter liquid hydrocarbons, our businesses are making a substantial environmental contribution. For us, these aren't calculations in a model that make hypothetical future projections. And I think this comes out of the slide deck, some of these points, Jackie. We believe U.S. LPG exports could eliminate up to 20 million metric tons of CO2 emissions when compared to using coal, wood, and animal waste for heating and cooking. We've made strong commitment to reducing the greenhouse gas emissions intensity of our operations with a 19% improvement in CO2 emissions per barrel of oil equivalent since 2011. We have over 16,000 microsolar installations along our pipelines, and approximately 17% of our purchase power comes from renewables. Last but not least, we're easily the largest midstream player in generating, consuming, and marketing hydrogen from processes in our petrochemical plants, specifically IBDH and PDH. We estimate that with the completion of our second PDH facility in 2023, we will produce about 150 million cubic feet of hydrogen, something over 100 million of pure hydrogen. We use all of the hydrogen we can in our plants, and we sell the rest into the industrial gas market. We're really proud of this quarter. Last quarter, one of the sell-side analysts wrote that Enterprise had a great quarter and no one cared. Well, we know our investors care. And even if the market doesn't care, I can assure you at Enterprise, we care. The Enterprise culture, we live by a motto that Dan's grandmother taught him. And it's a simple motto. But it's what drives us. Do the best you can every day, and that's what we're doing. And with that, I'll turn it over to Randy.