Enterprise Products Partners L.P.(US:EPD)2025-08-08 14:53PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Enterprise Products Partners L.P. for the period ended June 30, 2025, including Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Equity, along with detailed notes Unaudited Condensed Consolidated Balance Sheets Total assets slightly increased to $77.44 billion as of June 30, 2025, from $77.17 billion at December 31, 2024, primarily driven by a rise in Property, Plant, and Equipment, net, while total liabilities and equity also saw minor increases Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $77,442 | $77,168 | | Total Current Assets | $14,160 | $15,133 | | Property, Plant and Equipment, net | $50,495 | $49,062 | | Total Liabilities | $47,473 | $47,529 | | Total Current Liabilities | $14,757 | $15,177 | | Long-term Debt | $31,110 | $30,746 | | Total Equity | $29,919 | $29,589 | Unaudited Condensed Statements of Consolidated Operations For Q2 2025, revenues decreased to $11.36 billion from $13.48 billion in Q2 2024 due to lower commodity prices, yet net income attributable to common unitholders increased to $1.435 billion, with diluted EPS rising to $0.66 Q2 Financial Performance (in millions, except per unit) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $11,363 | $13,483 | | Operating Income | $1,795 | $1,765 | | Net Income Attributable to Common Unitholders | $1,435 | $1,405 | | Diluted EPS | $0.66 | $0.64 | Six-Month Financial Performance (in millions, except per unit) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Revenues | $26,780 | $28,243 | | Operating Income | $3,556 | $3,587 | | Net Income Attributable to Common Unitholders | $2,828 | $2,861 | | Diluted EPS | $1.29 | $1.30 | Unaudited Condensed Statements of Consolidated Cash Flows Net cash flow from operating activities significantly increased to $4.38 billion for the six months ended June 30, 2025, while net cash used in financing activities rose to $1.80 billion due to higher common unit repurchases and distributions Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | $4,375 | $3,685 | | Net Cash Flow used in Investing Activities | $(2,321) | $(2,281) | | Net Cash Flow used in Financing Activities | $(1,796) | $(1,290) | | Net Change in Cash | $258 | $114 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail debt obligations totaling $33.1 billion, a $170 million common unit buyback, stable business segment performance, and a subsequent $580 million acquisition of natural gas gathering assets - Total consolidated debt obligations stood at $33.1 billion as of June 30, 2025, up from $32.2 billion at year-end 20245257 - The company repurchased and cancelled 5.4 million common units for $170 million in the first six months of 2025 under its buyback program74 - In July 2025, an affiliate agreed to acquire natural gas gathering pipelines in the Midland Basin from an Occidental Petroleum affiliate for $580 million in cash174 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses stable financial performance despite lower commodity prices, with total segment gross operating margin remaining flat at $4.9 billion for the six-month period, supported by strong liquidity of $5.1 billion and a 1.7x Distributable Cash Flow coverage for distributions Recent Developments In July 2025, the company announced a $580 million acquisition of Occidental Petroleum assets, the construction of a ninth natural gas processing train, and the commissioning of the first phase of the Neches River Ethane / Propane Export Facility and two new natural gas processing trains - Agreed to acquire an Occidental Petroleum affiliate for $580 million in cash, gaining ~200 miles of natural gas gathering pipelines and long-term service agreements in the Midland Basin191 - Announced construction of a ninth natural gas processing train ('Athena') in the Midland Basin, with a capacity of 300 MMcf/d, expected to be in service in Q4 2026192 - Placed several major projects into service in July 2025: the first phase of the Neches River Ethane / Propane Export Facility, the Mentone West 1 processing train, and the Orion processing train193194 Income Statement and Business Segment Highlights Operating income for Q2 2025 was $1.80 billion, with total segment gross operating margin stable at $2.47 billion for the quarter and $4.94 billion for the six-month period, driven by growth in Natural Gas Pipelines & Services and a decline in Petrochemical & Refined Products Services Gross Operating Margin by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | NGL Pipelines & Services | $1,297 | $1,325 | $2,715 | $2,665 | | Crude Oil Pipelines & Services | $403 | $417 | $777 | $828 | | Natural Gas Pipelines & Services | $417 | $293 | $774 | $605 | | Petrochemical & Refined Products Services | $354 | $392 | $669 | $836 | | Total Segment Gross Operating Margin | $2,471 | $2,427 | $4,935 | $4,934 | - The Natural Gas Pipelines & Services segment's gross operating margin increased by $124 million (42%) in Q2 2025 and $169 million (28%) in H1 2025, driven by higher contributions from natural gas marketing and the Texas Intrastate System272277 - The Petrochemical & Refined Products Services segment's gross operating margin decreased by $38 million in Q2 2025 and $167 million in H1 2025, primarily due to significantly lower margins from octane enhancement operations231289290 Liquidity and Capital Resources The company maintained a strong liquidity position of $5.1 billion as of June 30, 2025, with Distributable Cash Flow (DCF) for H1 2025 at $3.95 billion, providing 1.7x coverage for distributions and allowing $1.59 billion of retained DCF - Total consolidated liquidity was $5.1 billion at June 30, 2025, comprising $4.2 billion of available borrowing capacity and $870 million of unrestricted cash300 Distributable Cash Flow (DCF) Summary (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | DCF (non-GAAP) | $3,952 | $3,727 | | Cash Distributions Paid | $2,362 | $2,279 | | Total DCF Retained | $1,590 | $1,448 | | Distribution Coverage Ratio | 1.7x | 1.6x | - Declared a quarterly cash distribution of $0.545 per common unit for Q2 2025, payable in August 2025302 Capital Investments The company has approximately $6.0 billion in growth capital projects scheduled for completion by the end of 2026, with total organic capital investments for 2025 projected between $4.5 billion and $5.0 billion, and H1 2025 capital expenditures totaling $2.36 billion - Approximately $6.0 billion of growth capital projects are scheduled for completion by the end of 2026328 - Forecasts total organic capital investments for 2025 to be between $4.5 billion and $5.0 billion, including $4.0 to $4.5 billion for growth projects and $525 million for sustaining expenditures328 Capital Investments (in millions) | Type | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Growth Capital Projects | $2,138 | $1,937 | | Sustaining Capital Projects | $223 | $374 | | Total | $2,361 | $2,311 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from commodity prices and interest rates using derivative instruments, primarily for non-trading activities, with hedging strategies focused on future commodity purchases, sales, processing margins, inventory value, and power purchases, and no outstanding interest rate hedging instruments as of the filing date - The company uses derivative instruments like futures, forwards, and swaps to manage commodity price and interest rate risks348 - Predominant commodity hedging strategies include hedging future purchases/sales, natural gas processing margins, inventory fair value, and power purchases351 - As of the report filing date, the company had no outstanding interest rate hedging instruments359 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes identified in internal control over financial reporting during the second quarter of 2025 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025361362 - No material changes were identified in the company's internal control over financial reporting during the second quarter of 2025363 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in normal course legal proceedings and has received Notices of Violation from the EPA and Texas Commission on Environmental Quality regarding alleged environmental emission exceedances, but does not expect related expenditures to be material - The company has received Notices of Violation from the EPA and Texas Commission on Environmental Quality concerning alleged emission limit exceedances at facilities in Louisiana and Texas369 - The company does not expect any expenditures related to ongoing legal and environmental matters to be material to its consolidated financial statements369 Item 1A. Risk Factors Changes in U.S. trade policy, including tariffs, pose a key risk, potentially increasing construction and maintenance costs and adversely affecting investment returns and demand for services - A key risk factor is the potential adverse effect of changes in U.S. trade policy and tariffs on the company's business and results372 - Tariffs on imported steel could increase construction and maintenance costs, which may not be fully passed on to customers, thereby affecting investment returns373 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased 3.57 million common units for approximately $110 million under its 2019 Buyback Program, with additional units repurchased from employees for tax withholding, and no other unregistered equity sales occurred Q2 2025 Equity Repurchase Activity | Program | Units Purchased | Average Price Paid | | :--- | :--- | :--- | | 2019 Buyback Program | 3,566,979 | ~$30.95 | | Vesting of phantom units | 81,705 | ~$30.07 | - The remaining capacity under the 2019 Buyback Program was $692.3 million as of June 2025380