Enterprise Reports Record Results for the Fourth Quarter and Full Year 2011

Enterprise Products Partners L.P. announced its financial results for the three months and year ended December 31, 2011. For 2011, Enterprise reported record net income of $2.1 billion; record earnings per unit of $2.38 per unit on a fully diluted basis; record gross operating margin of $3.9 billion; and record distributable cash flow of $3.7 billion, which included $1.0 billion of cash proceeds from sales of assets.

“Enterprise had another record year in 2011,” stated Michael A. Creel, president and CEO of Enterprise. We benefited from production growth in the Rocky Mountains, Haynesville and Eagle Ford shale plays, and from increased demand for NGLs by the U.S. petrochemical industry and international customers. Our integrated system handled record or near record volumes of liquids and natural gas, leading to another year of record financial performance.”

“We generated $3.7 billion of distributable cash flow and increased our cash distributions with respect to 2011 by 5.2 percent to $2.435 per unit. In terms of consistent distribution growth, Enterprise has increased its cash distribution rate for the last 30 consecutive quarters, the longest period for any of the large cap partnerships, and in excess of 5 percent for each of the last seven years, including during the 2008/2009 financial crisis. We accomplished this distribution growth over the past seven years while retaining over $3.0 billion in distributable cash flow to provide financial flexibility and reinvest in the partnership to support future distribution growth. In 2011 alone, we retained approximately $1.7 billion of distributable cash flow to reinvest in our growth capital expenditures and reduce the need to issue additional equity. This retained distributable cash flow included $1.0 billion of cash proceeds from the sales of non-core assets that were earning lower rates of return on capital. We are reinvesting these proceeds in organic growth projects that should generate higher returns on capital and incremental distributable cash flow without growing our balance sheet,” said Creel.

“Enterprise has the flexibility to create additional value for our partners in part due to the way we manage our cash distribution coverage and the fact that our general partner no longer has any incentive distribution rights. It is noteworthy that in 2011 we invested approximately $3.6 billion in growth capital expenditures and improved our credit ratios while only issuing $543 million of equity. We believe this model results in a lower cost of equity capital, reduces equity dilution, and supports long-term distribution growth,” continued Creel.

“During the fourth quarter of 2011, we completed two large projects: our fifth NGL fractionator at Mont Belvieu, Texas in October 2011 and the $1.5 billion Haynesville Extension of our Acadian natural gas pipeline system in November 2011. These projects began contributing new sources of gross operating margin and distributable cash flow in the fourth quarter of 2011 and we will see the full benefit of these assets in 2012,” continued Creel.

“Our commercial, engineering and operations teams are doing a great job in developing growth opportunities and executing on new projects to meet the needs of our energy producing and consuming customers. We have approximately $6.5 billion of announced projects under construction that are scheduled to begin commercial operations from 2012 to 2014, of which we currently expect $3.5 billion will be spent in 2012. Approximately 50 percent of this investment in 2012 will be related to our Eagle Ford shale projects, with the largest of those projects scheduled to begin operations in the second half of 2012,” stated Creel.

“Based on this level of capital investment and current business conditions, we do not currently anticipate a need to issue Enterprise equity in 2012 while still maintaining solid investment grade credit metrics. We will use proceeds from the sale of Energy Transfer Equity, L.P. common units we own, retained distributable cash flow and borrowings. Once our major Eagle Ford projects are completed and begin generating cash flow later this year, we will conduct our usual assessment of business conditions, distribution coverage and forecasted capital expenditures, which may support an increase in our distribution growth rate that is still complementary with our debt ratings,” said Creel.

“Finally, we want to thank our debt and equity investors again for their support in 2011. Our activities are creating U.S. jobs and building infrastructure to support the development of North American energy resources that will reduce our nation’s reliance on imports while building long-term value for our partners,” concluded Creel.

Fourth Quarter 2011 Highlights

• Enterprise reported record gross operating margin of $1.1 billion, record adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $1.2 billion, record net income of $726 million and record earnings per unit of $0.82 per unit on a fully diluted basis. This compares to gross operating margin of $829 million, Adjusted EBITDA of $803 million, net income of $289 million and earnings per unit of $0.33 on a fully diluted basis for the fourth quarter of 2010. Adjusted EBITDA and net income for the fourth quarter of 2011 include $130 million, or $0.15 per unit on a fully diluted basis, of gains from sales of assets.

⁽¹⁾ Net income for the three months and year ended December 31, 2011 includes gains from asset sales of $130 million, or $0.15 per unit on a fully diluted basis, and $156 million, or $0.18 per unit on a fully diluted basis, respectively.

⁽²⁾ Earnings per unit amounts for the three months and year ended December 31, 2010 have been adjusted as described under “Basis of Financial Statement Presentation” later in this press release.

• Enterprise increased its cash distribution with respect to the fourth quarter of 2011 to $0.62 per unit, or $2.48 per unit on an annualized basis, which represents a 5.1 percent increase from the distribution rate paid with respect to the fourth quarter of 2010. This is the 30th consecutive quarterly increase and the 39th increase since the partnership’s initial public offering in 1998. The distribution with respect to the fourth quarter of 2011 will be paid on February 9, 2012 to unitholders of record as of the close of business on January 31, 2012;
• Enterprise reported record distributable cash flow of $1.4 billion for the fourth quarter of 2011, which provided 2.7 times coverage of the $0.62 per unit cash distribution that will be paid to common unitholders. Enterprise retained approximately $879 million of distributable cash flow for the fourth quarter of 2011. Distributable cash flow for the fourth quarter of 2011 included $593 million of net proceeds from sales of assets including Enterprise’s natural gas storage business in Mississippi and 1.1 million common units of Energy Transfer Equity, L.P. (“Energy Transfer,” NYSE:ETE). Excluding proceeds from sales of assets, distributable cash flow for the fourth quarter of 2011 was a record $816 million and provided 1.5 times coverage of the cash distribution declared with respect to the quarter;
• Enterprise’s NGL, crude oil, refined products and petrochemical pipeline volumes for the fourth quarter of 2011 were 4.0 million barrels per day (“BPD”), which were 8 percent less than volumes in the fourth quarter of 2010. Total natural gas pipeline volumes increased 13 percent to a record 14.2 trillion British thermal units per day (“TBtud”) for the fourth quarter of 2011. NGL fractionation volumes for the fourth quarter of 2011 increased 17 percent to a record 617 thousand barrels per day (“MBPD”). Equity NGL production for the fourth quarter of 2011 decreased 4 percent to 112 MBPD, while fee-based natural gas processing volumes for the fourth quarter of 2011 increased 22 percent to a record 4.1 billion cubic feet per day (“Bcfd”);
• Enterprise made capital investments of approximately $1.1 billion during the fourth quarter of 2011, including $79 million of sustaining capital expenditures; and
• Enterprise had consolidated liquidity (defined as unrestricted cash on hand and available borrowing capacity under its revolving credit facility) at December 31, 2011 of approximately $3.4 billion. Our consolidated liquidity at December 31, 2011 does not include the $825 million of proceeds that Enterprise received from the sale of approximately 22.8 million Energy Transfer common units on January 18, 2012.

Review of Fourth Quarter 2011 Results

Net income for the fourth quarter of 2011 was a record $726 million versus $289 million for the fourth quarter of 2010. Net income attributable to partners for the fourth quarter of 2011 was $0.82 per unit on a fully diluted basis compared to $0.33 per unit on a fully diluted basis for the fourth quarter of 2010. Net income for the fourth quarter of 2011 includes $130 million, or $0.15 per unit on a fully diluted basis, of gains from sales of assets.

On January 17, 2012, the Board of Directors of Enterprise’s general partner approved an increase in the partnership’s quarterly cash distribution rate with respect to the fourth quarter of 2011 to $0.62 per unit, representing a 5.1 percent increase over the $0.59 per unit rate that was paid with respect to the fourth quarter of 2010. Enterprise generated record distributable cash flow of $1.4 billion for the fourth quarter of 2011 compared to $571 million for the fourth quarter of 2010. Distributable cash flow for the fourth quarter of 2011 included $593 million of net proceeds from sales of assets including Enterprise’s natural gas storage business in Mississippi and approximately 1.1 million common units of Energy Transfer.

Enterprise’s distributable cash flow for the fourth quarter of 2011 provided 2.7 times coverage of the cash distributions that will be paid on February 9, 2012 to unitholders of record on January 31, 2012. Excluding proceeds from the sale of assets, distributable cash flow for the fourth quarter of 2011 was a record $816 million and provided 1.5 times coverage of the cash distributions declared with respect to the quarter. The partnership retained approximately $879 million of distributable cash flow for the fourth quarter of 2011, which is available to reinvest in growth capital projects, reduce debt, and decrease the need to issue additional equity. For 2011, Enterprise generated approximately $3.7 billion of distributable cash flow, which included $1.0 billion of cash proceeds from sales of assets, and retained $1.7 billion of distributable cash flow. Distributable cash flow is a non-generally accepted accounting principle (“non-GAAP”) financial measure that is defined and reconciled later in this press release to its most directly comparable U.S. GAAP financial measure, net cash flows provided by operating activities.

Certain of Enterprise’s revenues and operating costs and expenses can fluctuate significantly based on the prices of natural gas, NGLs and crude oil without necessarily affecting gross operating margin and operating income to the same degree. Revenues for the fourth quarter of 2011 increased to $11.6 billion from $9.6 billion in the same quarter of 2010 primarily attributable to higher commodity prices and volumes. Operating income was a record $909 million for the fourth quarter of 2011 versus $505 million for the same quarter of 2010. Adjusted EBITDA for the fourth quarter of 2011 was a record $1.2 billion compared to $803 million for the fourth quarter of 2010. Operating income and Adjusted EBITDA for the fourth quarter of 2011 included $130 million of gains from sales of assets.