What changed in ENTERPRISE PRODUCTS PARTNERS L.P.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of ENTERPRISE PRODUCTS PARTNERS L.P.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+237 added−231 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)
Top changes in ENTERPRISE PRODUCTS PARTNERS L.P.'s 2023 10-K
237 paragraphs added · 231 removed · 162 edited across 4 sections
- Item 7. Management's Discussion & Analysis+222 / −217 · 149 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+8 / −7 · 7 edited
- Item 5. Market for Registrant's Common Equity+6 / −6 · 5 edited
- Item 3. Legal Proceedings+1 / −1 · 1 edited
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed6 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed6 unchanged
2022 filing
2023 filing
Biggest changeEnvironmental Protection Agency (“EPA”) in connection with regulatory requirements applicable to facilities that we operate in Baton Rouge, Louisiana. • In July 2021, we received a civil penalty demand from the U.S.
Biggest changeEnvironmental Protection Agency (“EPA”) in connection with regulatory requirements applicable to facilities that we operate near Baton Rouge, Louisiana. • In July 2021, we received a civil penalty demand from the U.S.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−1 removed4 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−1 removed4 unchanged
2022 filing
2023 filing
Biggest changeIssuer Purchases of Equity Securities The following table summarizes our equity repurchase activity during the fourth quarter of 2022: Period Total Number of Units Purchased Average Price Paid per Unit Total Number Of Units Purchased as Part of 2019 Buyback Program Remaining Dollar Amount of Units That May Be Purchased Under the 2019 Buyback Program ($ thousands) 2019 Buyback Program: (1) October 2022 943,980 $ 23.81 943,980 $ 1,389,378 November 2022 3,030,757 $ 24.77 3,030,757 $ 1,314,319 December 2022 1,858,223 $ 24.31 1,858,223 $ 1,269,154 Vesting of phantom unit awards: October 2022 (2) 190 $ 24.91 n/a n/a November 2022 (3) 63,999 $ 25.10 n/a n/a (1) In January 2019, we announced the 2019 Buyback Program, which authorized the repurchase of up to $2.0 billion of our common units.
Biggest changeIssuer Purchases of Equity Securities The following table summarizes our equity repurchase activity during the fourth quarter of 2023: Period Total Number of Units Purchased Average Price Paid per Unit Total Number Of Units Purchased as Part of 2019 Buyback Program Remaining Dollar Amount of Units That May Be Purchased Under the 2019 Buyback Program ($ thousands) 2019 Buyback Program: (1) October 2023 – $ – – $ 1,177,244 November 2023 2,867,527 $ 26.14 2,867,527 $ 1,102,297 December 2023 784,303 $ 26.28 784,303 $ 1,081,686 Vesting of phantom unit awards: November 2023 (2) 6,197 $ 25.98 n/a n/a (1) In January 2019, we announced the 2019 Buyback Program, which authorized the repurchase of up to $2 billion of EPD’s common units.
The issuances of preferred units as PIK distributions during the year ended December 31, 2022 were undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. Other than as described above, there were no sales of unregistered equity securities during the fourth quarter of 2022.
The issuances of preferred units as PIK distributions during the year ended December 31, 2023 were undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. Other than as described above, there were no sales of unregistered equity securities during the fourth quarter of 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common units are listed on the NYSE under the ticker symbol EPD. As of January 31, 2023, there were approximately 1,896 unitholders of record of our common units.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common units are listed on the NYSE under the ticker symbol EPD. As of January 31, 2024, there were approximately 1,802 unitholders of record of our common units.
Common units repurchased under this program were cancelled immediately upon acquisition. (2) Of the 8,100 phantom unit awards that vested in October 2022 and converted to common units, 190 units were sold back to us by employees to cover related withholding tax requirements. These repurchases are not part of any announced program. We cancelled these units immediately upon acquisition.
Units repurchased under this program are cancelled immediately upon acquisition. (2) Of the 24,262 phantom unit awards that vested in November 2023 and converted to common units, 6,197 units were sold back to us by employees to cover related withholding tax requirements. These repurchases are not part of any announced program.
The Partnership made quarterly PIK distributions of 16,823, 17,128, 17,438 and 17,754 preferred units to OTA Holdings, Inc. (“OTA”), an indirect, wholly owned subsidiary of the Partnership, in the first, second, third and fourth quarters of 2022, respectively. The preferred units held by OTA are accounted for as treasury units in consolidation.
The Partnership made quarterly PIK distributions of 18,076, 18,404, 18,737 and 19,077 preferred units to OTA Holdings, Inc. (“OTA”), an indirect, wholly owned subsidiary of the Partnership, in the first, second, third and fourth quarters of 2023, respectively. The preferred units held by OTA are accounted for as treasury units in consolidation.
Removed
(3) Of the 189,636 phantom unit awards that vested in November 2022 and converted to common units, 63,999 units were sold back to us by employees to cover related withholding tax requirements. These repurchases are not part of any announced program. We cancelled these units immediately upon acquisition. 56 Table of Contents ITEM 6. RESERVED.
Added
We cancelled these units immediately upon acquisition. 59 Table of Contents ITEM 6. RESERVED.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
149 edited+73 added−68 removed110 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
149 edited+73 added−68 removed110 unchanged
2022 filing
2023 filing
Biggest changeThe following table presents a reconciliation of net cash flows provided by operating activities to DCF for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Net cash flows provided by operating activities (GAAP) $ 8,039 $ 8,513 Adjustments to reconcile net cash flows provided by operating activities to DCF (addition or subtraction indicated by sign): Net effect of changes in operating accounts 54 (1,366 ) Sustaining capital expenditures (372 ) (430 ) Distributions received from unconsolidated affiliates attributable to the return of capital 98 46 Proceeds from asset sales and other matters 122 64 Net income attributable to noncontrolling interests (125 ) (117 ) Monetization of interest rate derivative instruments accounted for as cash flow hedges – 75 Other, net (65 ) (177 ) DCF (non-GAAP) $ 7,751 $ 6,608 78 Table of Contents Capital Investments We have approximately $ 5.8 billion of growth capital projects scheduled to be completed by the end of 2025 including the following projects (including their respective scheduled completion dates): • natural gas gathering expansion projects in the Delaware and Midland Basins (2023); • our PDH 2 facility (second quarter of 2023); • a 400 MMcf/d expansion of our Acadian Gas System (second quarter of 2023); • our Poseidon natural gas processing plant in the Midland Basin (third quarter of 2023); • a twelfth NGL fractionator (“Frac XII”) in Chambers County, Texas (third quarter of 2023); • our Mentone II natural gas processing plant in the Delaware Basin (fourth quarter of 2023); • our Texas Western Products System, created by repurposing a portion of our Mid-America Pipeline System’s Rocky Mountain segment and adding westbound service to our Chaparral Pipeline business to transport refined products from the U.S.
Biggest changeThe following table presents a reconciliation of net cash flows provided by operating activities to DCF and Operational DCF for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Net cash flows provided by operating activities (GAAP) $ 7,569 $ 8,039 Adjustments to reconcile net cash flows provided by operating activities to DCF and Operational DCF (addition or subtraction indicated by sign): Net effect of changes in operating accounts 555 54 Sustaining capital expenditures (413 ) (372 ) Distributions received from unconsolidated affiliates attributable to the return of capital 42 98 Net income attributable to noncontrolling interests (125 ) (125 ) Other, net (90 ) (65 ) Operational DCF (non-GAAP) $ 7,538 $ 7,629 Proceeds from asset sales and other matters 42 122 Monetization of interest rate derivative instruments accounted for as cash flow hedges 21 – DCF (non-GAAP) $ 7,601 $ 7,751 80 Table of Contents Capital Investments During 2023, we placed $3.5 billion of growth capital projects into service, including the 400 MMcf/d expansion of our Acadian Gas System, PDH 2 facility, Frac 12, our sixth Midland Basin natural gas processing train at Poseidon and our second natural gas processing train at Mentone in the Delaware Basin.
The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors (the “Board”) of Enterprise GP; (ii) Richard H.
The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors of Enterprise GP (the “Board”); (ii) Richard H.
Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP. Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.
Bachmann, who is also a director and Vice Chairman of the Board; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP. Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.
A number of our pipelines, including the Mid-America Pipeline System, Seminole NGL Pipeline, Chaparral NGL Pipeline, and Shin Oak NGL Pipeline, serve Permian Basin and/or Rocky Mountain producers.
A number of our pipelines, including the Mid-America Pipeline System, Seminole NGL Pipeline, Chaparral Pipeline, and Shin Oak NGL Pipeline, serve Permian Basin and/or Rocky Mountain producers.
Senior Notes FFF were issued at 99.893% of their principal amount and have a fixed-rate interest rate of 5.05% per year. Senior Notes GGG were issued at 99.803% of their principal amount and have a fixed-rate interest rate of 5.35% per year.
Senior Notes FFF were issued at 99.893% of their principal amount and have a fixed interest rate of 5.05% per year. Senior Notes GGG were issued at 99.803% of their principal amount and have a fixed interest rate of 5.35% per year.
U.S. energy and feedstock advantages position our assets well to compete globally for incremental production and processing volumes. To the extent a rising operating cost environment impacts our results, there are typically offsetting benefits either inherent in our business or that result from other steps we take proactively to reduce the impact of inflation on our operating results.
U.S. energy and feedstock advantages position our assets well to compete globally for incremental production and processing volumes. To the extent a rising operating cost environment impacts our results, there are typically offsetting benefits either inherent in our business or that result from other steps we take proactively to reduce the impact of inflation on our net operating results.
Total gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges. Total gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.
Gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges. Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.
Our use of DCF for the limited purposes described above and in this report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure to DCF.
Our use of DCF and Operational DCF for the limited purposes described above and in this report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure to DCF.
Based on our most recent goodwill impairment test at December 31, 2022, the estimated fair value of each of our reporting units was substantially in excess of its carrying value (i.e., by at least 10%). For information regarding our goodwill, see Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
Based on our most recent goodwill impairment test at December 31, 2023, the estimated fair value of each of our reporting units was substantially in excess of its carrying value (i.e., by at least 10%). For information regarding our goodwill, see Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
For information regarding our income taxes, see Note 16 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. 67 Table of Contents Business Segment Highlights Our operations are reported under four business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) Petrochemical & Refined Products Services.
For information regarding our income taxes, see Note 16 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. 70 Table of Contents Business Segment Highlights Our operations are reported under four business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) Petrochemical & Refined Products Services.
The estimated cash payments assume that (i) the junior subordinated notes are not repaid prior to their respective maturity dates and (ii) the amount of interest paid on the junior subordinated notes is based on either (a) the current fixed interest rate charged or (b) the weighted-average variable rate paid in 2022, as applicable, for each note through the respective maturity date.
The estimated cash payments assume that (i) the junior subordinated notes are not repaid prior to their respective maturity dates and (ii) the amount of interest paid on the junior subordinated notes is based on either (a) the current fixed interest rate charged or (b) the weighted-average variable rate paid in 2023, as applicable, for each note through the respective maturity date.
In addition, fair value estimates also include the usage of probabilities when there is a range of possible outcomes. 83 Table of Contents We evaluate our equity method investments for impairment when there are events or changes in circumstances that indicate there is a potential loss in value of the investment attributable to an other-than-temporary decline.
In addition, fair value estimates also include the usage of probabilities when there is a range of possible outcomes. 85 Table of Contents We evaluate our equity method investments for impairment when there are events or changes in circumstances that indicate there is a potential loss in value of the investment attributable to an other-than-temporary decline.
For the Years Ended December 31, 2022, 2021 and 2020 The following discussion and analysis of our financial condition, results of operations and related information for the years ended December 31, 2022 and 2021, including applicable year-to-year comparisons, should be read in conjunction with our Consolidated Financial Statements and accompanying notes included under Part II, Item 8 of this annual report.
For the Years Ended December 31, 2023, 2022 and 2021 The following discussion and analysis of our financial condition, results of operations and related information for the years ended December 31, 2023 and 2022, including applicable year-to-year comparisons, should be read in conjunction with our Consolidated Financial Statements and accompanying notes included under Part II, Item 8 of this annual report.
Discussion and analysis of matters pertaining to the year ended December 31, 2020 and year-to-year comparisons between the years ended December 31, 2021 and 2020 are not included in this Form 10-K, but can be found under Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021 that was filed on February 28, 2022.
Discussion and analysis of matters pertaining to the year ended December 31, 2021 and year-to-year comparisons between the years ended December 31, 2022 and 2021 are not included in this Form 10-K, but can be found under Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2022 that was filed on February 28, 2023.
However, these adjustments are excluded from non-GAAP total gross operating margin. 68 Table of Contents The GAAP financial measure most directly comparable to total gross operating margin is operating income. For a discussion of operating income and its components, see the previous section titled “ Income Statement Highlights ” within this Part II, Item 7.
However, these adjustments are excluded from non-GAAP total gross operating margin. 71 Table of Contents The GAAP financial measure most directly comparable to total gross operating margin is operating income. For a discussion of operating income and its components, see the previous section titled “ Income Statement Highlights ” within this Part II, Item 7.
As generally used in the energy industry and in this annual report, the acronyms below have the following meanings: /d = per day MMBPD = million barrels per day BBtus = billion British thermal units MMBtus = million British thermal units Bcf = billion cubic feet MMcf = million cubic feet BPD = barrels per day MWac = megawatts, alternating current MBPD = thousand barrels per day MWdc = megawatts, direct current MMBbls = million barrels TBtus = trillion British thermal units 57 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This annual report on Form 10-K for the year ended December 31, 2022 (our “annual report”) contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us.
As generally used in the energy industry and in this annual report, the acronyms below have the following meanings: /d = per day MMBPD = million barrels per day BBtus = billion British thermal units MMBtus = million British thermal units Bcf = billion cubic feet MMcf = million cubic feet BPD = barrels per day MWac = megawatts, alternating current MBPD = thousand barrels per day MWdc = megawatts, direct current MMBbls = million barrels TBtus = trillion British thermal units 60 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This annual report on Form 10-K for the year ended December 31, 2023 (our “annual report”) contains various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by us and information currently available to us.
The prices that we are obligated to pay under these contracts approximate market prices at the time we take delivery of the volumes. The preceding table presents our estimated future payment obligations under these contracts based on the contractual price in each agreement at December 31, 2022 applied to all future volume commitments.
The prices that we are obligated to pay under these contracts approximate market prices at the time we take delivery of the volumes. The preceding table presents our estimated future payment obligations under these contracts based on the contractual price in each agreement at December 31, 2023 applied to all future volume commitments.
However, due to uncertainties in the estimation process and volatility in the supply and demand for hydrocarbons and similar risk factors, actual results could differ significantly from our estimates. We did not record any goodwill impairment charges during the year ended December 31, 2022.
However, due to uncertainties in the estimation process and volatility in the supply and demand for hydrocarbons and similar risk factors, actual results could differ significantly from our estimates. We did not record any goodwill impairment charges during the year ended December 31, 2023.
We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees. EPCO, together with its privately held affiliates, owned approximately 32.4% of the Partnership’s common units outstanding at December 31, 2022.
We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees. EPCO, together with its privately held affiliates, owned approximately 32.4% of the Partnership’s common units outstanding at December 31, 2023.
For additional information, see “ Regulatory Matters - Environmental, Safety and Conservation ” within Part I, Items 1 and 2 of this annual report. 58 Table of Contents Like many publicly traded partnerships, we have no employees.
For additional information, see “ Regulatory Matters - Environmental, Safety and Conservation ” within Part I, Items 1 and 2 of this annual report. 61 Table of Contents Like many publicly traded partnerships, we have no employees.
Non-GAAP Cash Flow Measures Distributable Cash Flow Our partnership agreement requires us to make quarterly distributions to our common unitholders of all available cash, after any cash reserves established by Enterprise GP in its sole discretion.
Non-GAAP Cash Flow Measures Distributable Cash Flow and Operational Distributable Cash Flow Our partnership agreement requires us to make quarterly distributions to our common unitholders of all available cash, after any cash reserves established by Enterprise GP in its sole discretion.
(7) Cash retained by the Partnership may be used for capital investments, debt service, working capital, operating expenses, common unit repurchases, commitments and contingencies and other amounts. The retention of cash reduces our reliance on the capital markets.
(5) Cash retained by the Partnership may be used for capital investments, debt service, working capital, operating expenses, common unit repurchases, commitments and contingencies and other amounts. The retention of cash reduces our reliance on the capital markets.
(2) Midland and Houston crude oil prices are based on commercial index prices as reported by Argus. (3) Light Louisiana Sweet (“LLS”) prices are based on commercial index prices as reported by Platts. 63 Table of Contents Fluctuations in our consolidated revenues and cost of sales amounts are explained in large part by changes in energy commodity prices.
(2) Midland and Houston crude oil prices are based on commercial index prices as reported by Argus. (3) Light Louisiana Sweet (“LLS”) prices are based on commercial index prices as reported by Platts. Fluctuations in our consolidated revenues and cost of sales amounts are explained in large part by changes in energy commodity prices.
We have a universal shelf registration statement (the “2021 Shelf”) on file with the SEC that allows the Partnership and EPO to issue an unlimited amount of equity and debt securities, respectively. 75 Table of Contents Cash Flow Statement Highlights The following table summarizes our consolidated cash flows from operating, investing and financing activities for the years indicated (dollars in millions).
We have a universal shelf registration statement on file with the SEC that allows the Partnership and EPO to issue an unlimited amount of equity and debt securities, respectively. 77 Table of Contents Cash Flow Statement Highlights The following table summarizes our consolidated cash flows from operating, investing and financing activities for the years indicated (dollars in millions).
(8) Distribution coverage ratio is determined by dividing DCF by total cash distributions paid to common unitholders and in connection with distribution equivalent rights with respect to the period.
(6) Distribution coverage ratio is determined by dividing DCF by total cash distributions paid to common unitholders and in connection with distribution equivalent rights with respect to the period.
Lastly, revenues from our crude oil pipeline assets decreased $122 million year-to-year primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term gathering agreements on our EFS Midstream System.
Revenues from our crude oil pipeline assets decreased $63 million year-to-year primarily due to lower deficiency revenues as a result of the expiration of minimum volume commitments under certain long-term gathering agreements on our EFS Midstream System.
We recorded $177 million and $ 151 million of amortization expense attributable to intangible assets during the years ended December 31, 2022 and 2021, respectively. For information regarding our intangible assets, see Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
We recorded $201 million and $ 177 million of amortization expense attributable to intangible assets during the years ended December 31, 2023 and 2022, respectively. For information regarding our intangible assets, see Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
This segment also includes our natural gas marketing activities. • Our Petrochemical & Refined Products Services business segment includes our (i) propylene production facilities, which include propylene fractionation units and a PDH facility, and related pipelines and marketing activities, (ii) butane isomerization complex and related deisobutanizer (“DIB”) operations, (iii) octane enhancement, iBDH and HPIB production facilities, (iv) refined products pipelines, terminals and related marketing activities, (v) an ethylene export terminal and related operations; and (vi) marine transportation business.
This segment also includes our natural gas marketing activities. • Our Petrochemical & Refined Products Services business segment includes our (i) propylene production facilities, which include propylene fractionation units and PDH facilities, and related pipelines and marketing activities, (ii) butane isomerization complex and related DIB operations, (iii) octane enhancement, iBDH and HPIB production facilities, (iv) refined products pipelines, terminals and related marketing activities, (v) an ethylene export terminal and related operations; and (vi) marine transportation business.
Insurance For information regarding insurance matters, see Note 18 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. 87 Table of Contents
Insurance For information regarding insurance matters, see Note 18 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
Based on current conditions, we believe that we will have sufficient liquidity and/or access to debt capital markets to fund our operations, capital investments and the remaining principal amount of senior notes maturing through 2023 and beyond.
Based on current conditions, we believe that we will have sufficient liquidity and/or access to debt capital markets to fund our operations, capital investments and the remaining principal amount of senior notes maturing in 2024 and beyond.
We believe that these coming additions to petroleum production and consumption levels, along with favorable pricing trends, will create additional opportunities to provide midstream services to our customers while leveraging the strengths of our portfolio, which include: • Our Assets – Our people find innovative ways to optimize our large, integrated and diversified asset base to provide incremental services to customers and to respond to market opportunities.
We believe that these anticipated additions to petroleum production and consumption levels, along with favorable pricing trends, will create additional opportunities for us to provide midstream services to our customers while leveraging the strengths of our portfolio, which include: • Our Assets – Our employees find innovative ways to optimize our large, integrated and diversified asset base to provide incremental services to customers and to respond to market opportunities.
(collectively, the “Guaranteed Debt”). If EPO were to default on any of its Guaranteed Debt, the Partnership would be responsible for full and unconditional repayment of such obligations.
If EPO were to default on any of its Guaranteed Debt, the Partnership would be responsible for full and unconditional repayment of such obligations.
We believe our access to capital resources is sufficient to meet the demands of our current and future growth needs and, although we currently expect to make the forecast capital investments noted above, we may revise our plans in response to changes in economic and capital market conditions. 79 Table of Contents The following table summarizes our capital investments for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Capital investments for property, plant and equipment: (1) Growth capital projects (2) $ 1,606 $ 1,807 Sustaining capital projects (3) 358 416 Total $ 1,964 $ 2,223 Cash used for business combinations, net (4) $ 3,204 $ – Investments in unconsolidated affiliates $ 1 $ 2 (1) Growth and sustaining capital amounts presented in the table above are presented on a cash basis.
We believe our access to capital resources is sufficient to meet the demands of our current and future growth needs, and although we currently expect to make the forecast capital investments noted above, we may revise our plans in response to changes in economic and capital market conditions. 81 Table of Contents The following table summarizes our capital investments for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Capital investments for property, plant and equipment: (1) Growth capital projects (2) $ 2,844 $ 1,606 Sustaining capital projects (3) 422 358 Total $ 3,266 $ 1,964 Cash used for business combinations, net (4) $ – $ 3,204 Investments in unconsolidated affiliates $ 2 $ 1 (1) Growth and sustaining capital amounts presented in the table above are presented on a cash basis.
Net proceeds from this offering will be used by EPO for general company purposes, including for growth capital investments, and the repayment of debt (including the repayment of all or a portion of our $1.25 billion principal amount of 3.35% Senior Notes HH at their maturity in March 2023 and amounts outstanding under our commercial paper program).
Net proceeds from this offering were used by EPO for general company purposes, including for growth capital investments, and the repayment of debt (including the repayment of all of our $1.25 billion principal amount of 3.35% Senior Notes HH at their maturity in March 2023 and amounts outstanding under our commercial paper program).
The following information highlights significant year-to-year fluctuations in our consolidated cash flow amounts: Operating activities Net cash flows provided by operating activities for the year ended December 31, 2022 decreased a net $474 million when compared to the year ended December 31, 2021 primarily due to: • a $1.4 billion year-to-year decrease from changes in operating accounts primarily due to the use of working capital employed in our marketing activities, which includes the impact of (i) fluctuations in commodity prices, (ii) timing of our inventory purchase and sale strategies, and (iii) changes in margin deposit requirements associated with our commodity derivative instruments; partially offset by • a $1.0 billion year-to-year increase resulting from higher partnership earnings (determined by adjusting our $860 million year-to-year increase in net income for changes in the non-cash items identified on our Statements of Consolidated Cash Flows).
The following information highlights significant year-to-year fluctuations in our consolidated cash flow amounts: Operating activities Net cash flows provided by operating activities for the year ended December 31, 2023 decreased a net $470 million when compared to the year ended December 31, 2022 primarily due to: • a $501 million year-to-year decrease from changes in operating accounts primarily due to the use of working capital employed in our marketing activities, which includes the impact of (i) fluctuations in commodity prices, (ii) timing of our inventory purchase and sale strategies, and (iii) changes in margin deposit requirements associated with our commodity derivative instruments; partially offset by • a $31 million year-to-year increase resulting from higher partnership earnings (determined by adjusting our $42 million year-to-year increase in net income for changes in the non-cash items identified on our Statements of Consolidated Cash Flows).
Methods We Employ to Measure the Fair Value of Goodwill and Related Assets Our goodwill balance was $5.6 billion and $5.4 billion at December 31, 2022 and 2021, respectively.
Methods We Employ to Measure the Fair Value of Goodwill and Related Assets Our goodwill balance was $5.6 billion at December 31, 2023 and 2022.
The following table presents gross operating margin by segment and total gross operating margin, a non-generally accepted accounting principle (“non-GAAP”) financial measure, for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Gross operating margin by segment: NGL Pipelines & Services $ 5,142 $ 4,316 Crude Oil Pipelines & Services 1,655 1,680 Natural Gas Pipelines & Services 1,042 1,155 Petrochemical & Refined Products Services 1,517 1,357 Total segment gross operating margin (1) 9,356 8,508 Net adjustment for shipper make-up rights (47 ) 53 Total gross operating margin (non-GAAP) $ 9,309 $ 8,561 (1) Within the context of this table, total segment gross operating margin represents a subtotal and corresponds to measures similarly titled within our business segment disclosures found under Note 10 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
The following table presents gross operating margin by segment and total gross operating margin, a non-generally accepted accounting principle (“non-GAAP”) financial measure, for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Gross operating margin by segment: NGL Pipelines & Services $ 4,898 $ 5,142 Crude Oil Pipelines & Services 1,707 1,655 Natural Gas Pipelines & Services 1,077 1,042 Petrochemical & Refined Products Services 1,694 1,517 Total segment gross operating margin (1) 9,376 9,356 Net adjustment for shipper make-up rights 19 (47 ) Total gross operating margin (non-GAAP) $ 9,395 $ 9,309 (1) Within the context of this table, total segment gross operating margin represents a subtotal and corresponds to measures similarly titled within our business segment disclosures found under Note 10 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.
Changes in the estimated useful life of an intangible asset would impact operating costs and expenses prospectively from the date of change. At December 31, 2022 and 2021, the carrying value of our customer relationship and contract-based intangible asset portfolio was $4.0 billion and $ 3.2 billion, respectively.
Changes in the estimated useful life of an intangible asset would impact operating costs and expenses prospectively from the date of change. 86 Table of Contents At December 31, 2023 and 2022, the carrying value of our customer relationship and contract-based intangible asset portfolio was $3.8 billion and $ 4.0 billion, respectively.
For additional information regarding our consolidated debt obligations, see Note 7 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. Credit Ratings As of February 28, 2023, the investment-grade credit ratings of EPO’s long-term senior unsecured debt securities were BBB+ from Standard and Poor’s, Baa1 from Moody’s and BBB+ from Fitch Ratings.
For additional information regarding our consolidated debt obligations, see Note 7 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. 83 Table of Contents Credit Ratings As of February 28, 2024, the investment-grade credit ratings of EPO’s long-term senior unsecured debt securities were A- from Standard and Poor’s, A3 from Moody’s and A- from Fitch Ratings.
The quarterly distribution was paid on February 14 , 2023 to unitholders of record as of the close of business on January 31 , 2023 . The total amount paid was $1.07 billion, which includes $9 million for distribution equivalent rights on phantom unit awards.
The quarterly distribution was paid on February 14, 2024 to unitholders of record as of the close of business on January 31 , 2024 . The total amount paid was $1.13 billion, which includes $10 million for distribution equivalent rights on phantom unit awards.
No time limit has been set for completion of the 2019 Buyback Program, and it may be suspended or discontinued at any time. The Partnership repurchased an aggregate 10,166,923 common units under the 2019 Buyback Program through open market purchases during the year ended December 31, 2022. The total cost of these repurchases, including commissions and fees, was $250 million.
No time limit has been set for completion of the 2019 Buyback Program, and it may be suspended or discontinued at any time. The Partnership repurchased an aggregate 7,244,540 common units under the 2019 Buyback Program through open market purchases during the year ended December 31, 2023. The total cost of these repurchases, including commissions and fees, was $188 million.
At December 31, 2022 and 2021, the net carrying value of our property, plant and equipment was $44.4 billion and $ 42.1 billion, respectively. We recorded $1.8 billion and $ 1.7 billion of depreciation expense during the years ended December 31, 2022 and 2021, respectively.
At December 31, 2023 and 2022, the net carrying value of our property, plant and equipment was $45.8 billion and $ 44.4 billion, respectively. We recorded $1.9 billion and $ 1.8 billion of depreciation expense during the years ended December 31, 2023 and 2022, respectively.
For additional information regarding our revenues, see Note 9 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. Operating costs and expenses Total operating costs and expenses for 2022 increased $16.4 billion when compared to 2021. Cost of sales Cost of sales for 2022 increased $15.9 billion when compared to 2021.
For additional information regarding our revenues, see Note 9 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. Operating costs and expenses Total operating costs and expenses for 2023 decreased $8.5 billion when compared to 2022. Cost of sales Cost of sales for 2023 decreased $8.8 billion when compared to 2022.
NGL fractionation Gross operating margin from NGL fractionation during the year ended December 31, 2022 decreased $23 million when compared to the year ended December 31, 2021.
NGL fractionation Gross operating margin from NGL fractionation during the year ended December 31, 2023 decreased $7 million when compared to the year ended December 31, 2022.
Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $53 million year-to-year primarily due to higher average loading fees, which accounted for a $ 44 million increase, and an 11 MBPD increase in export volumes, which accounted for an additional $ 11 million increase.
Gross operating margin at our Morgan’s Point Ethane Export Terminal increased $49 million year-to-year primarily due to a 30 MBPD increase in export volumes, which accounted for a $33 million increase, and higher average loading fees, which accounted for an additional $14 million increase.
The following table presents a reconciliation of operating income to total gross operating margin for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Operating income $ 6,907 $ 6,103 Adjustments to reconcile operating income to total gross operating margin (addition or subtraction indicated by sign): Depreciation, amortization and accretion expense in operating costs and expenses (1) 2,107 2,011 Asset impairment charges in operating costs and expenses 53 233 Net losses attributable to asset sales and related matters in operating costs and expenses 1 5 General and administrative costs 241 209 Total gross operating margin (non-GAAP) $ 9,309 $ 8,561 (1) Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin.
The following table presents a reconciliation of operating income to total gross operating margin for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Operating income $ 6,929 $ 6,907 Adjustments to reconcile operating income to total gross operating margin (addition or subtraction indicated by sign): Depreciation, amortization and accretion expense in operating costs and expenses (1) 2,215 2,107 Asset impairment charges in operating costs and expenses 30 53 Net losses (gains) attributable to asset sales and related matters in operating costs and expenses (10 ) 1 General and administrative costs 231 241 Total gross operating margin (non-GAAP) $ 9,395 $ 9,309 (1) Excludes amortization of major maintenance costs for reaction-based plants, which are a component of gross operating margin.
Based on current market conditions, we believe that we have sufficient consolidated liquidity as of December 31, 2022, which was comprised of $4.0 billion of available borrowing capacity under EPO’s revolving credit facilities and $76 million of unrestricted cash on hand.
Based on current market conditions, we believe that we have sufficient consolidated liquidity as of December 31, 2023, which was comprised of $3.75 billion of available borrowing capacity under EPO’s revolving credit facilities and $180 million of unrestricted cash on hand.
Additionally, less than 4% of our top 200 customer revenues were attributable to sub-investment grade or non-rated upstream producers. • Our Balance Sheet and Liquidity – We currently maintain investment grade credit ratings on EPO’s long-term senior unsecured debt of BBB+, Baa1 and BBB+ from Standard and Poor’s, Moody’s and Fitch, respectively.
Additionally, less than 3% of our top 200 customers were attributable to sub-investment grade companies or non-rated upstream producers. • Our Balance Sheet and Liquidity – We currently maintain investment grade credit ratings on EPO’s long-term senior unsecured debt of A-, A3 and A- from Standard and Poor’s, Moody’s and Fitch Ratings, respectively.
Natural gas processing and related NGL marketing activities Gross operating margin from natural gas processing and related NGL marketing activities for the year ended December 31, 2022 increased $811 million when compared to the year ended December 31, 2021.
Natural gas processing and related NGL marketing activities Gross operating margin from natural gas processing and related NGL marketing activities for the year ended December 31, 2023 decreased $646 million when compared to the year ended December 31, 2022.
Interest expense The following table presents the components of our consolidated interest expense for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Interest charged on debt principal outstanding (1) $ 1,288 $ 1,299 Impact of interest rate hedging program, including related amortization 19 38 Interest costs capitalized in connection with construction projects (2) (90 ) (80 ) Other (3) 27 26 Total $ 1,244 $ 1,283 (1) The weighted-average interest rates on debt principal outstanding were 4.33% and 4.35% during the years ended December 31, 2022 and 2021, respectively.
Interest expense The following table presents the components of our consolidated interest expense for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Interest charged on debt principal outstanding (1) $ 1,355 $ 1,288 Impact of interest rate hedging program, including related amortization (5 ) 19 Interest costs capitalized in connection with construction projects (2) (106 ) (90 ) Other 25 27 Total $ 1,269 $ 1,244 (1) The weighted-average interest rates on debt principal outstanding were 4.56% and 4.33% during the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, approximately 96.2% of our debt portfolio is fixed rate debt at a weighted average cost of 4.5% and weighted-average maturity of 20 years. • Our Access to Capital Markets – EPO successfully issued $1.75 billion in principal amount of senior notes in January 2023.
As of December 31, 2023, approximately 96.4% of our debt portfolio is fixed-rate debt at a weighted-average cost of 4.6% and weighted-average maturity of 19 years. • Our Access to Capital Markets – EPO successfully issued $2.0 billion in aggregate principal amount of senior notes in January 2024.
For information regarding these charges, see Note 4 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. General and administrative costs General and administrative costs for 2022 increased $32 million when compared to 2021 primarily due to higher employee compensation and professional services costs.
For information regarding these charges, see Note 4 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report. General and administrative costs General and administrative costs for 2023 decreased $10 million when compared to 2022 primarily due to lower professional services costs.
Global production of petroleum and liquid fuels is expected to reach an average of 102.6 MMBPD in 2024, up from 100.0 MMBPD in 2022, driven mostly by growth in U.S. and other non-OPEC production.
Global production of petroleum and liquid fuels is expected to reach an average of 102.3 MMBPD in 2024, up from 101.7 MMBPD in 2023, driven mostly by growth in U.S. and other non-OPEC production.
Equity NGL-equivalent production volumes at these facilities decreased 27 MBPD year-to-year. Gross operating margin from our South Texas natural gas processing facilities increased $ 86 million year-to-year primarily due to higher average processing margins (including the impact of hedging activities). Fee-based natural gas processing volumes increased 96 MMcf/d and equity NGL-equivalent production volumes decreased 1 MBPD year-to-year.
Gross operating margin from our Delaware Basin natural gas processing facilities decreased $ 86 million year-to-year primarily due to lower average processing margins (including the impact of hedging activities). Fee-based natural gas processing volumes at these facilities increased 105 MMcf/d and equity NGL-equivalent production volumes decreased 4 MBPD year-to-year .
Enterprise Declares Cash Distribution for Fourth Quarter of 2022 On January 5 , 2023, we announced that the Board declared a quarterly cash distribution of $0.49 per common unit, or $1.96 per common unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the fourth quarter of 2022.
Enterprise Declares Cash Distribution for Fourth Quarter of 2023 On January 8 , 2024, we announced that the Board declared a quarterly cash distribution of $0.515 per common unit, or $2.06 per common unit on an annualized basis, to be paid to the Partnership’s common unitholders with respect to the fourth quarter of 2023.
(2) NGL prices for ethane, propane, normal butane, isobutane and natural gasoline are based on Mont Belvieu, Texas Non-TET commercial index prices as reported by Oil Price Information Service, which is a division of Dow Jones . (3) Polymer grade propylene prices represent average contract pricing for such product as reported by IHS.
(2) NGL prices for ethane, propane, normal butane, isobutane and natural gasoline are based on Mont Belvieu, Texas Non-TET commercial index prices as reported by Oil Price Information Service, which is a division of Dow Jones .
For a discussion of net cash flows provided by operating activities, see “ Cash Flow Statement Highlights ” within this Part II, Item 7. 77 Table of Contents The following table summarizes our calculation of DCF for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Net income attributable to common unitholders (GAAP) (1) $ 5,487 $ 4,634 Adjustments to net income attributable to common unitholders to derive DCF (addition or subtraction indicated by sign): Depreciation, amortization and accretion expenses 2,245 2,140 Cash distributions received from unconsolidated affiliates (2) 544 590 Equity in income of unconsolidated affiliates (464 ) (583 ) Asset impairment charges 53 233 Change in fair market value of derivative instruments 78 (27 ) Deferred income tax expense 60 40 Sustaining capital expenditures (3) (372 ) (430 ) Other, net (4) (2 ) (128 ) Operational DCF (5) $ 7,629 $ 6,469 Proceeds from asset sales and other matters 122 64 Monetization of interest rate derivative instruments accounted for as cash flow hedges – 75 DCF (non-GAAP) $ 7,751 $ 6,608 Cash distributions paid to common unitholders with respect to period, including distribution equivalent rights on phantom unit awards $ 4,181 $ 3,992 Cash distribution per common unit declared by Enterprise GP with respect to period (6) $ 1.9050 $ 1.8150 Total DCF retained by the Partnership with respect to period (7) $ 3,570 $ 2,616 Distribution coverage ratio (8) 1.85 x 1.66 x (1) For a discussion of the primary drivers of changes in our comparative income statement amounts, see “ Income Statement Highlights ” within this Part II, Item 7.
For a discussion of net cash flows provided by operating activities, see “ Cash Flow Statement Highlights ” within this Part II, Item 7. 79 Table of Contents The following table summarizes our calculation of DCF and Operational DCF for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Net income attributable to common unitholders (GAAP) (1) $ 5,529 $ 5,487 Adjustments to net income attributable to common unitholders to derive DCF and Operational DCF (addition or subtraction indicated by sign): Depreciation, amortization and accretion expenses 2,343 2,245 Cash distributions received from unconsolidated affiliates (2) 488 544 Equity in income of unconsolidated affiliates (462 ) (464 ) Asset impairment charges 32 53 Change in fair market value of derivative instruments 33 78 Deferred income tax expense 12 60 Sustaining capital expenditures (3) (413 ) (372 ) Other, net (24 ) (2 ) Operational DCF (non-GAAP) $ 7,538 $ 7,629 Proceeds from asset sales and other matters 42 122 Monetization of interest rate derivative instruments accounted for as cash flow hedges 21 – DCF (non-GAAP) $ 7,601 $ 7,751 Cash distributions paid to common unitholders with respect to period, including distribution equivalent rights on phantom unit awards $ 4,393 $ 4,182 Cash distribution per common unit declared by Enterprise GP with respect to period (4) $ 2.0050 $ 1.9050 Total DCF retained by the Partnership with respect to period (5) $ 3,208 $ 3,569 Distribution coverage ratio (6) 1.73 x 1.85 x (1) For a discussion of the primary drivers of changes in our comparative income statement amounts, see “ Income Statement Highlights ” within this Part II, Item 7.
Investing activities Cash used in investing activities for the year ended December 31, 2022 increased a net $2.8 billion when compared to the year ended December 31, 2021 primarily due to: • a net $ 3.2 billion cash outflow in February 2022 in connection with the acquisition of Navitas Midstream; partially offset by • a $259 million year-to-year decrease in investments for property, plant and equipment (see “ Capital Investments ” within this Part II, Item 7 for additional information). 76 Table of Contents Financing activities Cash used in financing activities for the year ended December 31, 2022 increased $1.3 billion when compared to the year ended December 31, 2021 primarily due to: • a net cash outflow of $1.3 billion related to debt transactions that occurred during the year ended December 31, 2022 compared to a net cash outflow of $273 million related to debt transactions that occurred during the year ended December 31, 2021.
Investing activities Cash used in investing activities for the year ended December 31, 2023 decreased a net $1.8 billion when compared to the year ended December 31, 2022 primarily due to: • a net $ 3.2 billion cash outflow in February 2022 in connection with the acquisition of our Midland Basin System; partially offset by • a $1.3 billion year-to-year increase in investments for property, plant and equipment (see “ Capital Investments ” within this Part II, Item 7 for additional information). 78 Table of Contents Financing activities Cash used in financing activities for the year ended December 31, 2023 decreased a net $1.6 billion when compared to the year ended December 31, 2022 primarily due to: • a net cash inflow of $456 million related to debt transactions that occurred during the year ended December 31, 2023 compared to a net cash outflow of $1.3 billion related to debt transactions that occurred during the year ended December 31, 2022.
These steps include revenue rate escalations based on inflation factors, fuel and electricity surcharges and additional volumetric throughputs often achieved during periods of higher prices. 60 Table of Contents • Our Customers – We have contracted with a large number of quality customers in order to achieve revenue diversification.
These benefits include revenue rate escalations based on inflation factors, fuel and electricity rebills or surcharges, and increased volumetric throughput often achieved during periods of higher commodity prices. • Our Quality Customers – We have contracted with a large number of quality customers in order to achieve revenue diversification.
Revenues from our natural gas processing facilities increased $343 million year-to-year primarily due to higher market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.
R evenues from our natural gas processing facilities decreased $84 million year-to-year primarily due to lower market values for the equity NGL-equivalent production volumes we receive as non-cash consideration for processing services.
For the Year Ended December 31, 2022 2021 Net cash flows provided by operating activities $ 8,039 $ 8,513 Cash used in investing activities 4,954 2,135 Cash used in financing activities 5,844 4,571 Net cash flows provided by operating activities are largely dependent on earnings from our consolidated business activities.
For the Year Ended December 31, 2023 2022 Net cash flows provided by operating activities $ 7,569 $ 8,039 Cash used in investing activities 3,197 4,954 Cash used in financing activities 4,258 5,844 Net cash flows provided by operating activities are largely dependent on earnings from our consolidated business activities.
Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment In general, depreciation is the systematic and rational allocation of an asset’s cost, less its residual value (if any), to the periods it benefits.
The following sections discuss the use of estimates within our critical accounting policies: Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment In general, depreciation is the systematic and rational allocation of an asset’s cost, less its residual value (if any), to the periods it benefits.
In addition, it reflects assumptions made by us and information currently available to us, which includes forecast information published by third parties. See “Cautionary Statement Regarding Forward-Looking Information” within this Part II, Item 7 and “Risk Factors” in Part I, Item 1A, for additional information. The following information presents our current views on key midstream energy supply and demand fundamentals.
In addition, it reflects assumptions made by us and information currently available to us, which includes forecast information published by third parties. See “Cautionary Statement Regarding Forward-Looking Information” within this Part II, Item 7 and “Risk Factors” in Part I, Item 1A, for additional information.
Our estimates of the economic life of contract-based intangible assets are based on a number of factors, including (i) the expected useful life of the related tangible assets (e.g., a marine terminal, pipeline or other asset), (ii) any legal or regulatory developments that would impact such contractual rights and (iii) any contractual provisions that enable us to renew or extend such arrangements. 84 Table of Contents If our assumptions regarding the estimated economic life of an intangible asset were to change, then the amortization period for such asset would be adjusted accordingly.
Our estimates of the economic life of contract-based intangible assets are based on a number of factors, including (i) the expected useful life of the related tangible assets (e.g., a marine terminal, pipeline or other asset), (ii) any legal or regulatory developments that would impact such contractual rights and (iii) any contractual provisions that enable us to renew or extend such arrangements.
At December 31, 2022, we had $4.1 billion of consolidated liquidity. This amount was comprised of $4.0 billion of available borrowing capacity under EPO’s revolving credit facilities, which is the net of $4.5 billion of total borrowing capacity under EPO’s revolving credit facilities and $495 million outstanding under EPO’s commercial paper program, and $76 million of unrestricted cash on hand.
At December 31, 2023, we had $3.9 billion of consolidated liquidity. This amount was comprised of $3.75 billion of available borrowing capacity under EPO’s revolving credit facilities, which is the net of $4.2 billion of total borrowing capacity under EPO’s revolving credit facilities and $450 million outstanding under EPO’s commercial paper program, and $180 million of unrestricted cash on hand.
In 2022, our top 200 largest customers represented 95.3% of consolidated revenues. Based on their respective year-end 2022 debt ratings, 89.6% of revenues from our top 200 customers were either investment grade rated or backed by letters of credit.
In 2023, our top 200 largest customers represented 95.9% of our consolidated revenues. Based on their respective year-end 2023 debt ratings, 88.9% of the revenues from our top 200 customers came from companies who were either investment grade rated or backed by letters of credit.
A credit rating can be revised upward or downward or withdrawn at any time by a rating agency, if it determines that circumstances warrant such a change.
A credit rating can be revised upward or downward or withdrawn at any time by a rating agency, if it determines that circumstances warrant such a change. A credit rating from one rating agency should be evaluated independently of credit ratings from other rating agencies.
Based on information currently available, we expect our total capital investments for 2023, net of contributions from noncontrolling interests, to approximate $2.7 billion to $2.9 billion, which reflects growth capital investments of $2.3 billion to $2.5 billion and sustaining capital expenditures of $400 million.
Based on information currently available, we expect our total capital investments for 2024, net of contributions from noncontrolling interests, to approximate $3.8 billion to $4.3 billion, which reflects growth capital investments of $3.25 billion to $3.75 billion and sustaining capital expenditures of $550 million.
The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $47.5 billion at December 31, 2022. The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the year ended December 31, 2022 was $5.9 billion.
The total carrying value of the Obligor Group’s investments in the Non-Obligor Subsidiaries was $46.8 billion at December 31, 2023. The Obligor Group’s equity in the earnings of the Non-Obligor Subsidiaries for the year ended December 31, 2023 was $6.0 billion.
See Note 12 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report for additional information regarding this acquisition. 62 Table of Contents Selected Energy Commodity Price Data The following table presents selected average index prices for natural gas and selected NGL and petrochemical products for the periods indicated: Polymer Refinery Indicative Gas Natural Normal Natural Grade Grade Processing Gas, Ethane, Propane, Butane, Isobutane, Gasoline, Propylene, Propylene, Gross Spread $/MMBtu $/gallon $/gallon $/gallon $/gallon $/gallon $/pound $/pound $/gallon (1) (2) (2) (2) (2) (2) (3) (3) (4) 2021 by quarter: 1st Quarter $2.71 $0.24 $0.89 $0.94 $0.93 $1.33 $0.73 $0.44 $0.38 2nd Quarter $2.83 $0.26 $0.87 $0.97 $0.98 $1.46 $0.67 $0.27 $0.41 3rd Quarter $4.02 $0.35 $1.16 $1.34 $1.34 $1.62 $0.82 $0.36 $0.51 4th Quarter $5.84 $0.39 $1.24 $1.46 $1.46 $1.82 $0.66 $0.33 $0.41 2021 Averages $3.85 $0.31 $1.04 $1.18 $1.18 $1.56 $0.72 $0.35 $0.43 2022 by quarter: 1st Quarter $4.96 $0.40 $1.30 $1.59 $1.60 $2.21 $0.63 $0.39 $0.55 2nd Quarter $7.17 $0.59 $1.24 $1.50 $1.68 $2.17 $0.61 $0.40 $0.46 3rd Quarter $8.20 $0.55 $1.08 $1.19 $1.44 $1.72 $0.47 $0.28 $0.26 4th Quarter $6.26 $0.39 $0.79 $0.97 $1.03 $1.54 $0.32 $0.18 $0.17 2022 Averages $6.65 $0.48 $1.10 $1.31 $1.44 $1.91 $0.51 $0.31 $0.36 (1) Natural gas prices are based on Henry-Hub Inside FERC commercial index prices as reported by Platts , which is a division of S&P Global, Inc.
Selected Energy Commodity Price Data The following table presents selected average index prices for natural gas and selected NGL and petrochemical products for the periods indicated: Polymer Refinery Indicative Gas Natural Normal Natural Grade Grade Processing Gas, Ethane, Propane, Butane, Isobutane, Gasoline, Propylene, Propylene, Gross Spread $/MMBtu $/gallon $/gallon $/gallon $/gallon $/gallon $/pound $/pound $/gallon (1) (2) (2) (2) (2) (2) (3) (3) (4) 2022 by quarter: 1st Quarter $4.96 $0.40 $1.30 $1.59 $1.60 $2.21 $0.63 $0.39 $0.55 2nd Quarter $7.17 $0.59 $1.24 $1.50 $1.68 $2.17 $0.61 $0.40 $0.46 3rd Quarter $8.20 $0.55 $1.08 $1.19 $1.44 $1.72 $0.47 $0.28 $0.26 4th Quarter $6.26 $0.39 $0.79 $0.97 $1.03 $1.54 $0.32 $0.18 $0.17 2022 Averages $6.65 $0.48 $1.10 $1.31 $1.44 $1.91 $0.51 $0.31 $0.36 2023 by quarter: 1st Quarter $3.44 $0.25 $0.82 $1.11 $1.16 $1.62 $0.50 $0.22 $0.37 2nd Quarter $2.09 $0.21 $0.67 $0.78 $0.84 $1.44 $0.40 $0.21 $0.37 3rd Quarter $2.54 $0.30 $0.68 $0.83 $0.94 $1.55 $0.36 $0.15 $0.40 4th Quarter $2.88 $0.23 $0.67 $0.91 $1.07 $1.48 $0.46 $0.17 $0.33 2023 Averages $2.74 $0.25 $0.71 $0.91 $1.00 $1.52 $0.43 $0.19 $0.37 (1) Natural gas prices are based on Henry-Hub Inside FERC commercial index prices as reported by Platts , which is a division of S&P Global, Inc.
The year-to-year increase in transportation volumes is primarily due to the Gillis Lateral pipeline, which was placed into service in December 2021. 73 Table of Contents Petrochemical & Refined Products Services The following table presents segment gross operating margin and selected volumetric data for the Petrochemical & Refined Products Services segment for the years indicated (dollars in millions, volumes as noted): For the Year Ended December 31, 2022 2021 Segment gross operating margin: Propylene production and related activities $ 564 $ 798 Butane isomerization and related operations 114 75 Octane enhancement and related plant operations 394 107 Refined products pipelines and related activities 277 290 Ethylene exports and related activities 123 73 Marine transportation and other services 45 14 Total $ 1,517 $ 1,357 Selected volumetric data: Propylene production volumes (MBPD) 101 99 Butane isomerization volumes (MBPD) 108 85 Standalone DIB processing volumes (MBPD) 159 154 Octane enhancement and related plant sales volumes (MBPD) (1) 39 33 Pipeline transportation volumes, primarily refined products and petrochemicals (MBPD) 747 890 Marine terminal volumes, primarily refined products and petrochemicals (MBPD) 202 234 (1) Reflects aggregate sales volumes for our octane enhancement and iBDH facilities located at our Chambers County complex and our HPIB facility located adjacent to the Houston Ship Channel.
Gross operating margin from our natural gas marketing activities decreased $15 million year-to-year primarily due to lower average sales margins attributable to price differentials. 75 Table of Contents Petrochemical & Refined Products Services The following table presents segment gross operating margin and selected volumetric data for the Petrochemical & Refined Products Services segment for the years indicated (dollars in millions, volumes as noted): For the Year Ended December 31, 2023 2022 Segment gross operating margin: Propylene production and related activities $ 583 $ 564 Butane isomerization and related operations 124 114 Octane enhancement and related plant operations 442 394 Refined products pipelines and related activities 357 277 Ethylene exports and related activities 123 123 Marine transportation and other services 65 45 Total $ 1,694 $ 1,517 Selected volumetric data: Propylene production volumes (MBPD) 101 101 Butane isomerization volumes (MBPD) 112 108 Standalone DIB processing volumes (MBPD) 176 159 Octane enhancement and related plant sales volumes (MBPD) (1) 36 39 Pipeline transportation volumes, primarily refined products and petrochemicals (MBPD) 836 747 Marine terminal volumes, primarily refined products and petrochemicals (MBPD) 320 202 (1) Reflects aggregate sales volumes for our octane enhancement and iBDH facilities located at our Chambers County complex and our HPIB facility located adjacent to the Houston Ship Channel.
Gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) increased a net $86 million year-to-year primarily due to higher average processing margins (including the impact of hedging activities), which accounted for a $ 71 million increase, and higher average processing fees, which accounted for an additional $ 20 million increase, partially offset by an 8 MBPD combined decrease in equity NGL-equivalent production volumes, which accounted for a $10 million decrease .
On a combined basis, gross operating margin from our Rockies natural gas processing facilities (Meeker, Pioneer and Chaco) decreased $ 29 million year-to-year primarily due to a lower average processing margins (including the impact of hedging activities), which accounted for a $17 million decrease, and 5 MBPD decrease in equity NGL-equivalent production volumes, which accounted for an additional $7 million decrease.
(4) Amount for the year ended December 31, 2022 represents net cash used for the acquisition of Navitas Midstream, which closed on February 17, 2022.
(4) Amount for the year ended December 31, 2022 represents net cash used for the acquisition of our Midland Basin System, which closed in February 2022.
In certain instances, the acquisition of these intangible assets provides us with access to customers in a defined resource basin and is analogous to having a franchise in a particular area.
Customer relationship intangible assets represent the estimated economic value assigned to commercial relationships acquired in connection with business combinations. In certain instances, the acquisition of these intangible assets provides us with access to customers in a defined resource basin and is analogous to having a franchise in a particular area.
We continue to believe that the consolidated financial statements of the Partnership presented under Item 8 of this annual report provide a more appropriate view of our credit standing.
We continue to believe that the consolidated financial statements of the Partnership presented under Item 8 of this annual report provide a more appropriate view of our credit standing. Our investment grade credit ratings are based on the Partnership’s consolidated financial statements and not the Obligor Group’s financial information presented below.
The remaining $5 million represents expenses, net of property damage insurance reimbursements, which we incurred during the year in connection with hurricane-related repair and recovery costs. 69 Table of Contents NGL Pipelines & Services The following table presents segment gross operating margin and selected volumetric data for the NGL Pipelines & Services segment for the years indicated (dollars in millions, volumes as noted): For the Year Ended December 31, 2022 2021 Segment gross operating margin: Natural gas processing and related NGL marketing activities $ 1,946 $ 1,135 NGL pipelines, storage and terminals 2,362 2,324 NGL fractionation 834 857 Total $ 5,142 $ 4,316 Selected volumetric data: NGL pipeline transportation volumes (MBPD) 3,703 3,412 NGL marine terminal volumes (MBPD) 723 658 NGL fractionation volumes (MBPD) 1,339 1,253 Equity NGL-equivalent production volumes (MBPD) (1) 182 167 Fee-based natural gas processing volumes (MMcf/d) (2, 3) 5,182 4,057 (1) Primarily represents the NGL and condensate volumes we earn and take title to in connection with our processing activities.
NGL Pipelines & Services The following table presents segment gross operating margin and selected volumetric data for the NGL Pipelines & Services segment for the years indicated (dollars in millions, volumes as noted): For the Year Ended December 31, 2023 2022 Segment gross operating margin: Natural gas processing and related NGL marketing activities $ 1,300 $ 1,946 NGL pipelines, storage and terminals 2,771 2,362 NGL fractionation 827 834 Total $ 4,898 $ 5,142 Selected volumetric data: NGL pipeline transportation volumes (MBPD) 4,040 3,703 NGL marine terminal volumes (MBPD) 821 723 NGL fractionation volumes (MBPD) 1,556 1,339 Equity NGL-equivalent production volumes (MBPD) (1) 175 182 Fee-based natural gas processing volumes (MMcf/d) (2, 3) 5,848 5,182 (1) Primarily represents the NGL and condensate volumes we earn and take title to in connection with our processing activities.
Equity in income of unconsolidated affiliates Equity income from our unconsolidated affiliates for 2022 decreased $119 million when compared to 2021 primarily due to lower earnings from investments in crude oil pipelines. 66 Table of Contents Operating income Operating income for the year ended December 31, 2022 increased $804 million when compared to the year ended December 31, 2021 due to the previously described year-to-year changes in revenues, operating costs and expenses, general and administrative costs and equity in income of unconsolidated affiliates.
Equity in income of unconsolidated affiliates Equity income from our unconsolidated affiliates for 2023 decreased a net $2 million when compared to 2022 primarily due to lower earnings from investments in NGL pipelines, which accounted for a $16 million decrease, partially offset by higher earnings from investments in crude oil pipelines, which accounted for a $12 million increase. 69 Table of Contents Operating income Operating income for the year ended December 31, 2023 increased $22 million when compared to the year ended December 31, 2022 due to the previously described year-to-year changes in revenues, operating costs and expenses, general and administrative costs and equity in income of unconsolidated affiliates.
Additionally, see Part I, Item 1A “ Risk Factors - Changes in price levels could negatively impact our revenue, our expenses, or both, which could adversely affect our business. ” 64 Table of Contents Income Statement Highlights The following table summarizes the key components of our consolidated results of operations for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 Revenues $ 58,186 $ 40,807 Costs and expenses: Operating costs and expenses: Cost of sales 45,836 29,887 Other operating costs and expenses 3,454 2,915 Depreciation, amortization and accretion expenses 2,158 2,038 Asset impairment charges 53 233 Net losses attributable to asset sales and related matters 1 5 Total operating costs and expenses 51,502 35,078 General and administrative costs 241 209 Total costs and expenses 51,743 35,287 Equity in income of unconsolidated affiliates 464 583 Operating income 6,907 6,103 Other income (expense): Interest expense (1,244 ) (1,283 ) Other, net 34 5 Total other expense, net (1,210 ) (1,278 ) Income before income taxes 5,697 4,825 Provision for income taxes (82 ) (70 ) Net income 5,615 4,755 Net income attributable to noncontrolling interests (125 ) (117 ) Net income attributable to preferred units (3 ) (4 ) Net income attributable to common unitholders $ 5,487 $ 4,634 Revenues The following table presents each business segment’s contribution to consolidated revenues for the years indicated (dollars in millions): For the Year Ended December 31, 2022 2021 NGL Pipelines & Services: Sales of NGLs and related products $ 21,307 $ 13,716 Midstream services 2,952 2,586 Total 24,259 16,302 Crude Oil Pipelines & Services: Sales of crude oil 17,301 9,519 Midstream services 1,260 1,383 Total 18,561 10,902 Natural Gas Pipelines & Services: Sales of natural gas 5,019 3,413 Midstream services 1,241 987 Total 6,260 4,400 Petrochemical & Refined Products Services: Sales of petrochemicals and refined products 8,003 8,196 Midstream services 1,103 1,007 Total 9,106 9,203 Total consolidated revenues $ 58,186 $ 40,807 65 Table of Contents Total revenues for 2022 increased $17.4 billion when compared to 2021 primarily due to a $16.8 billion increase in marketing revenues.
Additionally, see Part I, Item 1A “ Risk Factors - Changes in price levels could negatively impact our revenue, our expenses, or both, which could adversely affect our business. ” 67 Table of Contents Income Statement Highlights The following table summarizes the key components of our consolidated results of operations for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 Revenues $ 49,715 $ 58,186 Costs and expenses: Operating costs and expenses: Cost of sales 37,023 45,836 Other operating costs and expenses 3,695 3,454 Depreciation, amortization and accretion expenses 2,279 2,158 Asset impairment charges 30 53 Net losses (gains) attributable to asset sales and related matters (10 ) 1 Total operating costs and expenses 43,017 51,502 General and administrative costs 231 241 Total costs and expenses 43,248 51,743 Equity in income of unconsolidated affiliates 462 464 Operating income 6,929 6,907 Other income (expense): Interest expense (1,269 ) (1,244 ) Other, net 41 34 Total other expense, net (1,228 ) (1,210 ) Income before income taxes 5,701 5,697 Provision for income taxes (44 ) (82 ) Net income 5,657 5,615 Net income attributable to noncontrolling interests (125 ) (125 ) Net income attributable to preferred units (3 ) (3 ) Net income attributable to common unitholders $ 5,529 $ 5,487 Revenues The following table presents each business segment’s contribution to consolidated revenues for the years indicated (dollars in millions): For the Year Ended December 31, 2023 2022 NGL Pipelines & Services: Sales of NGLs and related products $ 14,846 $ 21,307 Midstream services 2,799 2,952 Total 17,645 24,259 Crude Oil Pipelines & Services: Sales of crude oil 18,185 17,301 Midstream services 1,151 1,260 Total 19,336 18,561 Natural Gas Pipelines & Services: Sales of natural gas 2,373 5,019 Midstream services 1,403 1,241 Total 3,776 6,260 Petrochemical & Refined Products Services: Sales of petrochemicals and refined products 7,689 8,003 Midstream services 1,269 1,103 Total 8,958 9,106 Total consolidated revenues $ 49,715 $ 58,186 68 Table of Contents Total revenues for 2023 decreased a net $8.5 billion when compared to 2022 primarily due to lower marketing revenues.
Gross operating margin from our West Texas Pipeline System increased a net $87 million year-to-year primarily due to higher ancillary service and other revenues, which accounted for a $86 million increase, and a 47 MBPD increase in transportation volumes, which accounted for an additional $14 million increase, partially offset by lower average transportation fees, which accounted for a $9 million decrease.
Gross operating margin from our Texas Intrastate System increased a net $18 million year-to-year primarily due to a 592 BBtus/d increase in transportation volumes, which accounted for a $25 million increase, and higher average transportation fees, which accounted for an additional $10 million increase, partially offset by higher operating costs, which accounted for an $11 million decrease, and lower ancillary and other revenues, which accounted for an additional $6 million decrease.
In 2021, we repaid $1.33 billion aggregate principal amount of senior notes, partially offset by the issuance of $1.0 billion principal amount of senior notes; and • a $165 million year-to-year increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit.
In 2022 we repaid $1.75 billion aggregate principal amount of senior and junior subordinated notes, partially offset by net issuances of $495 million under EPO’s commercial paper program; partially offset by • a $206 million year-to-year increase in cash distributions paid to common unitholders primarily attributable to increases in the quarterly cash distribution rate per unit.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
7 edited+1 added−0 removed9 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
7 edited+1 added−0 removed9 unchanged
2022 filing
2023 filing
Biggest changeNatural gas marketing portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2021 December 31, 2022 January 31, 2023 Fair value assuming no change in underlying commodity prices Asset (Liability) $ 9 $ 90 $ 24 Fair value assuming 10% increase in underlying commodity prices Asset (Liability) 9 97 26 Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 9 83 22 NGL and refined products marketing, natural gas processing and octane enhancement portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2021 December 31, 2022 January 31, 2023 Fair value assuming no change in underlying commodity prices Asset (Liability) $ 84 $ 18 $ (79 ) Fair value assuming 10% increase in underlying commodity prices Asset (Liability) 77 (29 ) (125 ) Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 91 64 (32 ) Crude oil marketing portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2021 December 31, 2022 January 31, 2023 Fair value assuming no change in underlying commodity prices Asset (Liability) $ (55 ) $ 53 $ 41 Fair value assuming 10% increase in underlying commodity prices Asset (Liability) (120 ) 24 18 Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 11 81 63 Interest Rate Hedging Activities We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), treasury locks and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements.
Biggest changeNatural gas marketing portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2022 December 31, 2023 January 31, 2024 Fair value assuming no change in underlying commodity prices Asset (Liability) $ 90 $ 7 $ 10 Fair value assuming 10% increase in underlying commodity prices Asset (Liability) 97 6 9 Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 83 8 11 NGL and refined products marketing, natural gas processing and octane enhancement portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2022 December 31, 2023 January 31, 2024 Fair value assuming no change in underlying commodity prices Asset (Liability) $ 18 $ 39 $ (31 ) Fair value assuming 10% increase in underlying commodity prices Asset (Liability) (29 ) 9 (64 ) Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 64 69 2 Crude oil marketing portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2022 December 31, 2023 January 31, 2024 Fair value assuming no change in underlying commodity prices Asset (Liability) $ 53 $ 66 $ 8 Fair value assuming 10% increase in underlying commodity prices Asset (Liability) 24 (61 ) (97 ) Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) 81 193 113 Commercial energy derivative portfolio Portfolio Fair Value at Scenario Resulting Classification December 31, 2022 December 31, 2023 January 31, 2024 Fair value assuming no change in underlying commodity prices Asset (Liability) $ (38 ) $ (9 ) $ (10 ) Fair value assuming 10% increase in underlying commodity prices Asset (Liability) (10 ) 9 7 Fair value assuming 10% decrease in underlying commodity prices Asset (Liability) (63 ) (27 ) (27 ) 90 Table of Contents Interest Rate Hedging Activities We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), treasury locks and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements.
This strategy may be used in controlling our overall cost of capital associated with such borrowings. As of the filing date of this annual report, we do not have any interest rate hedging derivative instruments outstanding. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Our audited consolidated financial statements begin on page F-1 of this annual report.
This strategy may be used in controlling our overall cost of capital associated with such borrowings. As of the filing date of this annual report, we do not have any interest rate hedging derivative instruments outstanding. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Our audited consolidated financial statements begin on page F-1 of this annual report. ITEM 9.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. General In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices.
ITEM 7A. QUAN TITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. General In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices.
At December 31, 2022, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging the fair value of commodity products held in inventory and (iii) hedging natural gas processing margins.
At December 31, 2023, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging natural gas processing margins, (iii) hedging the fair value of commodity products held in inventory and (iv) hedging anticipated future purchases of power for certain operations in Southeast Texas.
See Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report for additional information regarding our derivative instruments and hedging activities.
For a summary of our portfolio of commodity derivative instruments outstanding, see Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report .
Commodity Hedging Activities The price of energy commodities such as natural gas, NGLs, crude oil, petrochemicals and refined products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control.
See Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report for additional information regarding our derivative instruments and hedging activities. 89 Table of Contents Commodity Hedging Activities The price of energy commodities such as natural gas, NGLs, crude oil, petrochemicals and refined products and power are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control.
For a summary of our portfolio of commodity derivative instruments outstanding, see Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report . 88 Table of Contents Sensitivity Analysis The following tables show the effect of hypothetical price movements on the estimated fair values of our principal commodity derivative instrument portfolios at the dates indicated (dollars in millions).
Sensitivity Analysis The following tables show the effect of hypothetical price movements on the estimated fair values of our principal commodity derivative instrument portfolios at the dates indicated (dollars in millions).
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CHANGE S IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.