Enterprise Products Partners L.P.

Good morning. My name is Dexter, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Enterprise Products Partners Fourth Quarter 2020 Earnings Hall. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. As a reminder, this conference is being recorded. Mr. Randy Burkhalter, Vice President of Investor Relations, will begin your conference. Please go ahead, sir.

Thank you, Dexter. And good morning, everyone, and welcome to the Enterprise Products Partners Conference call to discuss fourth 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 the call. With that, I'll turn it over to Jim.

Thank you, Randy. As we said in this morning's press release, our businesses continue to perform well throughout 2020. We reported net income attributable to common unit holders for 2020 of $3.8 billion, or $1.71 per unit, compared to $4.6 billion, or $2.09 per unit, on a fully diluted basis for 2019. Net income for 2020 was reduced by non-cash asset impairment charges of approximately $891 million, which Randy's going to address. Distributive cash flow was $6.4 billion for 2020, compared to $6.6 for 2019. DCF provided 1.6 times coverage, and we retained $2.5 billion of DCF in 2020 to reinvest in the partnership. We completed 2020 with significant financial flexibility and a strong balance sheet. We really are proud of Enterprise's employees for their dedication and perseverance in responding to the challenges during 2020 caused by the coronavirus pandemic. The diversification of our businesses across multiple commodities, the magnitude of our transportation and storage assets, The depth of our marketing activities and our cost control efforts enabled us to generate distributable cash flow just 3% shy of the record DCF we earned in 2019. We were able to self-fund over 75% of our $3 billion of growth capital for the year. This performance supported our 22nd consecutive year of distribution growth. There's a lot to be proud of from all our folks. We are proud of how they consistently use good judgment in both their work and personal lives as Enterprise was one of the first work from work companies in the energy space. There is no way our results would have been what they were in 2020 without the power of teamwork that takes place when we're all in our offices on the same schedule and pulling in the same direction. We don't believe you can zoom your way to prosperity. We're optimistic that the combination of the vaccine and more stimulus will lead to the world emerging from this economic sudden stop in 2021. We're encouraged by the signs of a rebound in the global economy that we see through strong domestic and international demand for NGLs ethylene and propylene and the continuing recovery in the demand for refined products. There are still uncertainties and headwinds as we begin this year. We've been very outspoken about the potential for significant price appreciation as soon as the second half of this year, and we're not alone in that analysis, with most energy banks and consultants seeing the same thing. Long term, the world with its growing population of 8 billion people, including billions living in energy poverty, is evolving and we will continue to evolve with it. We have a successful track record of using technology to become more efficient and expanding and repurposing our assets to adapt to changes in energy market fundamentals. We believe we are in a position of financial strength to continue to prosper through this period. Our objectives today are consistent with those when we went public in 1998, building a company that has staying power for the long term by protecting a strong balance sheet, investing in growth projects with attractive returns, and responsibly returning capital to our limited partners, including through distributions that have never been cut. We placed $2.4 billion of major growth projects into service in 2000. We have $3.6 billion of projects under construction that will come into service over the next two years. We put into service in 2020 include two fractionators at Montbellevue, our Midland to ECHO III pipeline, and petrochemical projects related to ethylene and propylene logistics, storage, and export capabilities. We developed the capability to co-load ethane and ethylene on the same ship at Morgan's Point and propane and propylene on a VLGC at our ship channel facilities. I don't know of anyone that has those capabilities. Projects coming in service in 2021 include a C5 hydrotreater at Mount Bellevue and our Acadian Gillis lateral, which will move approximately 1 BCF a day of natural gas. into growing LNG markets in Louisiana. In our petrochemical sector, our PDH-2 facility remains on schedule and on budget to come online in the second quarter of 2023, and we have several other pet chem projects expected to be placed in service next year. We continue to focus on cost control. In total, we have reduced our planned growth capital expenditures for 2020 and 2021 by over $1.5 billion in response to changing industry conditions. We want to give a special shout-out to operations for substantially managing our costs. For 2020, enterprises' overall operating costs were down approximately $400 million versus budget and are sustaining CapEx for 2022. We're approximately $100 million lower than budget. All this without sacrificing safety or reliability. Finally, I want to take a moment to address the change in administrations. Reading the news, one might think that the sun is setting on oil and gas. Enterprise has been around since 1968, and we have successfully grown our business through many administrations. Obviously, policy proposals from this new administration have been supportive of renewables. A cleaner energy future does not mean a world without fossil fuels. The reality is nothing could be further from the truth. While the notion of energy transition, and I hate the word transition, but regardless, with the notion of energy transition often implies shifting away from traditional hydrocarbons We still believe an all-above approach will be required to meet the world's growing energy needs. A more prosperous and sustainable future for all people will require traditional sources of oil and gas that the U.S. provides and numerous forms of renewables. To deny the world's poor nations access to the abundant, low-cost energy that we have, frankly, is to tell them, You can't have what I have, and you can't afford what I have. U.S. oil and gas and petrochemicals are making a difference, not just in the U.S., but around the world. There is nothing to replace these products. Without plentiful, reliable, and low-cost fossil fuels, the world would be a very different place. It would be one that is less advanced, much less prosperous, has much shorter life expectancies, and, frankly, would be more polluted. Consider India, where 100 million homes have been converted from burning wood, dung, and coal to LPG, or power that is being generated from natural gas exported from the U.S. versus the alternative of coal. Talk to these people and you'll really understand what U.S. hydrocarbon production has done for them. The more politicians try to limit production, the more price bullish I get. I'm sure someone on this call will ask how the cancellation of Keystone Pipeline will affect our seaway throughput. And it may have a positive effect, but it doesn't make that stroke of the pen right. Energy security is a North American issue, and limiting supply only makes Russia, OPEC, and Iran richer and more powerful. And it is saying to the three billion people on this planet that live in energy poverty, that U.S. politicians don't care about their quality of life. Stepping off my soapbox, as shown through our results for 2020, our asset base and our people have demonstrated that our business model can sustain cycles, even one as severe as this pandemic. We are committed that enterprise will be here in 100 years, prospering through whatever hurdles there might be. And with that, I'll turn the call over to Randy Fowler.