Enterprise Products Partners L.P. Q2 FY2025 earnings call

• Delivered adjusted EBITDA of $2.4 billion and distributable cash flow of $1.9 billion with 1.6x coverage in the second quarter.
• Set 5 volumetric records for the quarter.
• Nearly $6 billion worth of organic growth projects entering service over the next 18 months, including Permian gas processing plants and Neches River terminal expansions.
• Navigated tariffs and trade disruptions, particularly with LPG exports, but faced market shifts due to increased competition.
• Competitive advantage from existing export infrastructure allows brownfield expansions to meet customer needs.
• Appetite for U.S. ethane and ethylene remains strong in Asia and Europe; octane enhancement margins normalized but business remains healthy.

Adjusted EBITDA for the second quarter was $2.4 billion. Distributable cash flow was $1.9 billion, providing 1.6x coverage and retaining $740 million. The company set 5 volumetric records, processing 7.8 billion cubic feet of natural gas per day, moving 20 billion cubic feet per day through natural gas pipeline network, and transporting over 1 million barrels per day of refined products and petrochemicals. Nearly $6 billion worth of organic growth projects are entering service, including 3 gas processing plants in the Permian ramping up, with total Permian processing capacity expected to reach almost 5 Bcf a day. In the fourth quarter, the 600,000 barrel per day Bahia Y-grade pipeline and Frac 14 are expected to start up. LPG export volumes rose 5 million barrels quarter-to-quarter, but gross operating margin declined $37 million due to recontracting, market pricing, and spot rate drop.

• Expect to start up the 600,000 barrel per day Bahia Y-grade pipeline and Frac 14 in the fourth quarter.
• Growth capital expenditures expected to be $4 billion to $4.5 billion in 2025 and $2 billion to $2.5 billion in 2026.
• Consolidated leverage target remains at 3x plus or minus 0.25 turns.
• Consolidated liquidity was approximately $5.1 billion as of June 30, 2025.

• Challenges from tariffs and trade disruptions, including the risk of weaponizing U.S. energy exports.
• Growing competition in the LPG export market leading to lower spot fees and margin compression.
• Concerns about midstream companies entering the LPG export market, affecting market dynamics.

Q: About the ramp-up of $6 billion assets in the second half of 2025.

A: Frac 14 will come up completely full, processing plants will ramp quickly, and Bahia will come up around 50-60% in the first 12 months.

Q: On capital allocation and buybacks.

A: Opportunistic buybacks in 2025, with larger opportunities in 2026 as free cash flow increases.

Q: Regarding LPG export fees decline and market pressure.

A: 85-90% contracted through the end of the decade, using brownfield economics and continuing to sign term contracts.

Q: About Permian oil growth and gas-to-oil ratio.

A: Permian producers will drill gassier benches, oil naturally declines faster than gas, and the PDP base is large and growing.

Q: Lessons from the BIS ethane incident.

A: Disruptive to U.S. brand of reliable supply, with some non-Chinese customers shifting to naphtha.

Q: Outlook for PDH and spread-based businesses.

A: PDH operating rates improved but not meeting expectations, octane margins normalized but still healthy, with pressure from China.

Q: Impact of Haynesville Shale activity.

A: San Juan Basin activity is stable with slight growth if any.

Q: On LNG investments and capital allocation.

A: No immediate plans for passive equity investments in LNG, focusing on organic growth and returning capital.