Enterprise Products Partners L.P.

Good day, and thank you for standing by. Welcome to the Q4 2022 Enterprise Products Partners LP 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, Randy Burkhalter.

Thank you, Andrew. Good morning, everyone, and welcome to the Enterprise Products Partners Conference call to discuss fourth quarter 22 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 were 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 and may cause actual results to differ materially from those in the four looking statements made during this call. And with that, I'll turn the call over to Jim Key.

Thank you, Randy. At our analyst meeting last year, we ended the meeting with all senior management, including Miranda, going to the front to take questions. Becca Poliwill, at the time with U.S. Capital Advisors, asked me, what I'd like to see in our future. My answer was I was tired of eights. I'd like to see a nine, meaning that I was tired of our adjusted EBITDA starting with an eight. I'd like to see it start with a nine. Some folks took that as guidance, which it wasn't, as at the time I didn't think it was possible. Once we returned to the office, I was visiting with Tug Hanley, kicking around the idea of creating a company-wide goal of a nine. Doug said, let's call it Project 9, so Doug was immediately appointed chairman of the Project 9 initiative. Doug was joined by 12 others to lead the effort, one of whom, Rick Rainey, implemented an internal communications campaign designed to maintain our focus on Project 9 throughout the year with a poster themed around the Starship Enterprise stating that we can boldly go where enterprise has never gone before. Tug Hanley, Yvette Langongier, Phu Phan, and Daniel Boss introduced the initiative via a company-wide webcast, and Starship Enterprise posters were sent to locations throughout the company. The prize was if we made $9 billion adjusted EBITDA, every employee up to and including senior directors would receive $3,000. And if we exceeded 9.3, they would receive 5,000. It was made clear that there would be no safety shortcuts. And very proud to report today that our core values for safety were reinforced in 22 with another year of our best year ever for safety performance with a 0.33 total recordable incident rate. Also, we had zero lost time injuries in our trucking division where they logged something around 20 million miles for the year. We also emphasized that to achieve Project 9, we would not defer maintenance, pipeline integrity, mechanical integrity, or anything we would ordinarily do. In other words, no smoke and mirrors. Our message was that no matter your job, you can always do it better. Through webcasts, town halls, and safety meetings, we encouraged our employees to come up with ideas that would help realize the success of Project 9. We asked them to share ideas and success stories. We received almost 200 success stories that resulted in something around $280 million toward Project 9's success. A couple of examples is we maximized MTBE production by blending isometylene alpha-pip into the ethermax, increasing MTB production by a couple of thousand barrels a day. Distribution, operations, commercial, and our big data group worked to find a way to adjust fractionation set points to increase throughput at our Mount Bellevue complex. Project 9 gave every enterprise employee a common goal, the goalie goal where enterprise has never gone before. For our folks that listen in on this call, and there's a number of you, through your hard work, creativity, finding ways to do your job better, and teamwork, we made $9.309 billion of adjusted EBITDA. So every employee up to and including senior director will be receiving $5,000. We had so much fun with this that we decided We're going to have Project 9.3 for 2023. Again, don't take it as guidance, because nothing is automatic, especially in this environment. As to numbers, we generated $7.8 billion of distributable cash flow in 2022, compared to $6.6 billion in 2021, providing 1.9 times coverage. We retained $3.6 billion in DCF, which compares to 2.6 billion in 2021. We set 13 financial records and 10 operating records in 22. Our operating results included records in NGL pipeline transportation, ethane exports, total NGL marine terminal volumes, fee-based natural gas processing, and natural gas pipeline transportation. In our petrochemical sector, we set operating records in propylene production, DIB processing, and octane enhancement. In barrels of oil equivalent per day, Enterprise transported a record 11.2 million barrels a day of oil equivalent in 2022. Major growth capital in 23, in addition to our second PDH, we have four gas processing plants under construction in the Permian. We're constructing our 12th fractionator in Chambers County. and we have expansions in both ethane and ethylene export facilities. 2022 was another volatile year with crude trading as high as 120 and as low as 70. Nimex natural gas traded between $9.50 and $3.50. Natural gas liquids also was no stranger to volatility. Ethane traded between 70 cents a gallon and 25 cents a gallon. and propane traded between $1.60 and $0.60. For 2023, we are constructive on crude oil, but much less so on natural gas. Wide gas to crude spread should lead to U.S. petrochemicals having a very large cost advantage globally. On the supply side, start with the fact that volumes from the Strategic Petroleum Reserve provided a whopping 240 million barrels slug of supplies into global markets, most of it from the U.S. Those barrels are not going to be here until 2023. China seems to be open. The IEA estimates Chinese demand will be up by 1 million barrels a day to 16 million by June. This accounts for one-half of expected global oil demand growth. The IEA also expects demand to hit a record of nearly 102 million barrels a day this year, three-fourths of the growth in non-OECD countries, which is just fine with us, as we do have a nice real estate position on the water. One thing we believe, there will be continued volatility in 2023, but our experience is volatility leads to opportunities.