Enterprise Products Partners L.P.

Thank you for standing by, and welcome to Enterprise Products Partners LP's first quarter 2026 earnings conference call. Currently, 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-1-1 on your telephone. To remove yourself from the queue, you'll need to press star-1-1 again. I would now like to hand the call over to Joe Theriak. Vice President of Finance and Investor Relations. Please go ahead.

Thanks, Lateef. Good morning and welcome to the Enterprise Products Partners conference call to discuss first quarter 2026 earnings. 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 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 and 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 Jim.

Thank you, Joe. We got off to a very strong start this year, and the business is performing well across the board. In the first quarter, we generated $2.7 billion of EBITDA in a short quarter, and this was up 10% over last year. We generated 1.8 times coverage of our distributable cash flow. By any measure, this was an exceptional quarter. The assets we brought online over the past year, including the Bahia NGL pipeline, Fractionator 14, and three Permian natural gas processing plants, continued to ramp throughout the quarter. In fact, Fract 14 was full on day one. The gas plants were essentially full by mid-quarter, And if you look at Bahia and Chinook as a system, they're running at 80% of a combined 1.2 million barrels a day of capacity. Operationally, the quarter was outstanding. We set multiple operating records across the system. With the addition of Midtown West 2 in the Delaware Basin during the first quarter, we set a new record for gas processing plant and inlet volumes. We processed 8.3 billion cubic feet per day of natural gas. That was up 7% from last year. We fractionated 1.9 million barrels per day of NGLs. That was up 16%. We loaded 2.3 million barrels per day of hydrocarbons at our docks, up 15%. We transported 14.2 million barrels of oil equivalent per day, up 7%. In total, we set 12 new volumetric records for the first quarter. Those results speak to both the scale of our system and the demand we're seeing across the markets we serve. On the market side, commodity prices were volatile throughout most of the quarter, and we tend to embrace volatility. In January, winter storm fine gave us a strong start to the year. Elevated demand for natural gas and propane created price dislocations across our asset network as producers faced widespread supply disruptions following the short drop in temperatures. Our trucks, pipelines, and storage facilities enabled us to continue meeting customer needs despite these challenges, while our marketing teams and asset flexibility allowed us to capture incremental value, and this was only the beginning of the volatility we experienced during the quarter. The ongoing conflict in the Middle East and restricted flows through the Strait have driven a substantial increase in demand for all forms of U.S. energy, petrochemicals, and refined products. The supply shock dramatically improved U.S. petrochemical margins, prompting our domestic petrochemical customers to run their units full out. One week before the start of the war in Iran, ethylene to ethylene cracking margins were about 7 cents a pound. Today, they're 23. The ethylene to polyethylene spread was 20 cents per pound. Now, it's over 45. It's no wonder why my former employer stock is up over 50% here today. International demand for U.S. feedstocks is as strong as we have seen in quite some time. The loss of Middle East hydrocarbon supply fractured this Asian supply chain. China's PDHs, we hear, are currently operating at less than 50% of capacity. As a result, Asian petrochemicals have been destocking inventories by consuming derivative inventories. The impact to hydrocarbon markets around the world has been significant, and we see this strong demand continue through the remainder of 26 and maybe into 27. The demand pool is showing up very clearly in our marine export business. Our crude oil terminals are benefiting from volumes being released from the U.S. Strategic Petroleum Reserve that are being directed to international markets. And our ethane and LPG customers continue to line up at our docks for U.S. NGO feedstocks. In the first quarter, we averaged around 70 million barrels per month across our dock, and we expect that strength to continue into the second quarter as we are scheduled to load more than 88 million barrels in April. On the upstream side, we continue to build on the momentum in our system. Producer activity remains constructive in the basins where we operate, and our assets are well positioned to capture volume growth. The combination of strong supply, growing export demand, and new projects ramping into service is creating real operating leverage across the business. We also saw strong contributions from the downstream stack. In addition to record product flows, strong margins across our assets, and high utilization at our PDH facilities, that supported solid earnings and cash flow for the quarter. Our new assets are ramping well. Volumes are at record levels. Demand remains strong, both domestically and internationally. And our system is performing the way it was built to perform. We entered 2026 expecting steady production growth and oversupplied markets, which we thought would lead to another year of relatively benign commodity prices. That has clearly not been the case. Today, we believe the financial markets are underestimating the potential global supply implications from a prolonged closure of the Strait of Hormuz. Depending on the industry expert you ask, anywhere from 12 to 15 million barrels a day of crude oil, refined products, LPG, and petrochemical supplies are constrained. That is almost half a billion barrels of hydrocarbon supplies off the market every month. Shipping and geopolitical commentators estimate that the earliest the strait could reopen for normal air operations, including vessel repositioning, is July. And that does not account for the time required to repair onshore production and refining facilities damaged in the war. Until global supplies and inventories return to normal, we believe there will continue to be strong international demand for U.S. energy and products. We are also seeing international consumers look to increase purchases of U.S. energy as an avenue to improve the U.S. trade balance and add greater resilience and security to their energy supply chains, given the current disruption of product flows in the Middle East. After the first quarter, we are encouraged by the momentum we are seeing across the business and increasingly confident in the outlook for the year. At the same time, we remain focused on what matters most, operating safely, serving our customers reliably, allocating capital with discipline, and creating long-term value for our investors.