Enterprise Products Partners L.P.

and welcome to the Enterprise Products Partners third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you may please press star 1 on your touchtone telephone. It is my pleasure to introduce your host for today's call, Randy Burkhalter, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Julianne. Good morning and welcome, everyone, to the Enterprise Products Partners conference call to discuss third quarter earnings. Sorry and apologize for the delay, but we're ready to go now. 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 and Exchange Act of 1934, based on the beliefs of the company, as well as assumptions made by and information currently available in the 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 it over to you, Jim. Thank you, Randy.

Our businesses continue to perform extremely well during the third quarter. We reported $2 billion of EBITDA, even though we were impacted by $30 million of headwinds due to Hurricane Ida. Cash flow from operations was a record $2.4 billion, which more than fully funded both our capital expenditures and our distributions. Year-to-date cash Distributable cash flows, almost $5 billion, which has provided coverage of 1.7 times and $2 billion in retained cash year-to-date. As we head into the final quarter of the year, while we don't take anything for granted, it looks like our businesses are going to finish with another strong year in 2021. Our results reflect the ongoing recovery in demand for crude, NGLs, primary petrochemicals, and refined products, as the global economy continues to recover. For 2022, most experts agree on continued strong demand and economic growth worldwide. We believe that economic backdrop, plus the need to restart virtually everything, will continue to provide strong demand growth for oil and gas, natural gas liquids, and plastics. In addition to the record cash flow from operations, we had record profits from our propylene business, which contributed to the record gross operating income for our petrochemical and refined products services sector. Our PDH and splitters complement one another in our value chain, and we were able to take advantage of strong propylene spreads. Long-term, petrochemical fundamentals are very strong, and U.S. petrochemicals have multiple competitive advantages compared to almost all of their global peers. Likewise, Enterprise remains strongly positioned to provide the petrochemicals midstream services, including feedstock, storage, distribution, and exports. It's a footprint that's not easily copied. Our liquids pipelines have substantially recovered to near pre-pandemic levels, at 6.3 million barrels a day with gas processing volumes benefiting from higher prices for NGLs. Enterprise's natural gas pipeline transportation for the third quarter exceeded pre-pandemic 2019 levels at a record 14.6 BCF a day. In total, our crude oil equivalent pipeline transportation volumes were 10.1 million barrels a day for the quarter. NGL fractionation volumes remained supported at 1.3 million barrels a day. Our propylene production for the third quarter of 2021 was 96,000 barrels a day. Liquid volumes handled by our marine terminals for the third quarter were 1.5 million barrels a day. We completed construction of approximately 480 million of organic growth projects. These projects are in varying stages of startup. The major projects include a natural gasoline hydrotreater, which reduces sulfur content in blend stocks used for motor gasoline, and several petrochemical pipelines and natural gas pipelines that expand those integrated systems. We expect to complete the Acadian, Hainesville, and Gillis lateral natural gas pipeline expansions in the fourth quarter of 2021. Our Acadian-Hainesville gas pipelines are strategically located to move growing Hainesville and Cotton Valley natural gas supplies to growing and higher valued industrial and LNG markets. We have developed an impactful project to utilize hydrogen as a fuel at our PDH2 plant. This project will provide significant environmental benefits as well as upgrade the coproduct value of produced hydrogen. The change involves adding the capability to utilize hydrogen produced by the facility as fuel rather than relying on natural gas. By modifying the design of the heaters for PDH-2, we will reduce the plant's absolute carbon equivalent emissions by almost 90%. construction of PDH-2 remains on schedule and on budget, with completion expected in the second quarter of 2023. We became very bullish on hydrocarbon prices on April 20, 2020, and at $80 a barrel, crude oil has increased in excess of $30 since the beginning of the year, and propane and natural gas prices have doubled since the first of the year. U.S. oil and gas industry is now in the hands of highly disciplined parties. We like to believe they prefer doing business with large and similarly responsible companies like us. But now crude oil pricing remains on a path that is dictated by OPEC+, who need to receive higher prices for their products in order to balance their budgets and improve their economy. Clearly, they don't seem to be interested in any more price wars. OPEC's also signaling that they believe the world is going to need every barrel we can get our hands on in the future, including U.S. shales. We believe natural gas now has a sustained price of $3 plus in order to encourage non-associated production in places like the Hainesville and the Lane-Eagleford. Likewise, we believe that all signs point to some level of staying power for the stronger price to WPTI ratios we're seeing for propane and butane. Over the last 10 years, we've seen significant growth in global demand for U.S. liquids because of their price transparency, environmental attributes, and transportability. We're very proud of what has evolved into a hydrocarbon franchise that has a strong domestic presence and a global reach. And with that, Randy, it's yours.