Enterprise Products Partners L.P. 2026 Q3 Earnings Call

Good morning and welcome to the Enterprise Products Partners conference call to discuss third quarter 2026 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise's general partner, Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on the beliefs of the company as well as assumptions made by and information currently available to Enterprise's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call.

With that, I'll turn it over to Jim.

Thank you, Joe. As some of you may or may not know, this marks my final quarterly earnings call as Co-CEO of Enterprise. Looking out across this room and reflecting on nearly three decades, it's impossible not to feel a profound sense of gratitude for the journey we have shared. When I joined Enterprise in 1999, the company had an enterprise value of less than $2 billion. Today, it approaches $120 billion. The true measure of Enterprise has never been just a number on a balance sheet. It has always been defined by a philosophy that was handed down by Dan: Do the best you can every day. Those simple, yet profound words became the foundation of the Enterprise culture. They define both our personal and collective mission. Achieve extraordinary results through hard work, perseverance, and teamwork. Before joining Enterprise, I spent more than two decades at Dow Chemical.

I was an Enterprise customer. My time on the other side of the negotiating table gave me a unique perspective of the midstream industry. It taught me to view our assets from the customer's point of view. That customer-first mindset is woven directly into our culture, driving our team to ask the hard questions. How do we solve our customers' problems? How do we eliminate downtime? How do we keep products moving? That mindset, combined with an extraordinary team willing to ask why and why not, allowed us to move quickly when the shale revolution transformed our industry. We spent the last 20 years connecting supply basins from the Permian, Eagle Ford, Haynesville, and Marcellus to our customers along the Gulf Coast. When domestic production exceeded U.S. demand, we built and expanded our collection of export terminals to deliver product all over the world.

When I look at our network of pipelines, plants, and docks, I don't just see physical assets. I see the people who run them. Our assets thrive because the people operating them care about one another. Enterprise success has never been driven by individual heroes. It's driven by teamwork. We operate as one. One team and one book, the Enterprise book. Every decision is made based on the overall benefit to the company. For a long time, we've measured things in Dan dollars. Today, we measure them in Randa dollars. Our strength comes from checking our egos at the door and staying laser-focused on the details. To all the men and women across our entire system, thank you. You are the true engine of Enterprise. You've braved freezing rain, brutal heat, hurricanes, and a pandemic. When times get tough, you work around the clock to keep production flowing.

Serving alongside you has been the greatest privilege of my professional life. To Randa, thank you for your unwavering support, and thank you for your dedication for preserving our company's values. To my partner, Randy, we have shared an incredible working partnership for nearly 30 years. Your financial discipline, sound business judgment, and dedication to our core values represent everything the Enterprise culture stands for. As Randy assumes the sole CEO role in January, I step aside knowing with certainty this company is absolutely in the best hands. Finally, to our investors in the analyst community, thank you for the engagement, the sharp questions, and the trust you've placed in our company over the years. With that, you got the ball, buddy boy.

All right. Jim, as always, you're a hard act to follow. Thank you for your leadership and mentorship over the past 28 years. You have been a pacesetter and driver of value creation for our customers and our partnership. Whether it was developing NGL markets both domestically and internationally to absorb all the prolific amount of NGLs produced from the shale plays, or developing transparent and liquid pricing hubs for ethylene and polymer-grade propylene that benefited our petrochemical customers, or leading the efforts to improve the Houston Ship Channel through assuring two-way traffic and securing the Project 11 deepening and widening expansion project, you have been one of the leading change agents in our industry. We congratulate you on an extraordinary career and wish you and Tube the absolute best in the next chapters of your remarkable life. Now, with that, let's turn to the quarter.

Enterprise reported another strong performance for the third quarter. These results were primarily driven by increased natural gas and NGL production growth in the Permian that was reflected across our entire natural gas and NGL value chain businesses. Also, from continuing strong demand for U.S. energy and petrochemical products, including the motor gasoline additives we produce. Also, higher natural gas pipeline volumes in the Haynesville Basin, as well as earnings and cash flow from new assets placed in service over the past 12 months. For the quarter, we generated $2.8 billion of adjusted EBITDA, a 16% increase over the third quarter last year. Distributable cash flow from operations increased 27% year-over-year to $2.3 billion, providing 1.9 times coverage and generating $1.1 billion of retained cash flow that we've reinvested back in the partnership.

Our integrated pipeline system moved a record 14.8 million barrels per day equivalent, and our marine terminals exported 2.5 million barrels per day of liquid hydrocarbons. In our natural gas processing business, total inlet volumes reached a record 8.5 Bcf a day. In the Permian Basin, plant inlet volumes increased by 12% compared to the third quarter of last year, hitting a record 4.6 Bcf per day. Our three-year CAGR on Permian plant inlet volumes is 19%. That production growth feeds our integrated NGL value chain, supporting higher pipeline fractionation, storage, and export utilization. Our system provides our producer customers flow reliability and access to multiple markets while providing our consumer customers supply diversification.

Assets that began operations during the past 12 months include our 11th natural gas processing plant in the Delaware Basin, the Bahia NGL pipeline, Frac 14 in Mont Belvieu, and the second phase of our Neches River NGL Export Terminal. Global energy supply disruptions and volatility continue to support strong international demand for U.S. hydrocarbons, particularly NGLs, petrochemicals, and refined products. In this environment, our reliability, flexibility, and most of all, price transparency remain increasingly valuable for our international customers. Looking ahead, our next major projects scheduled for completion in the fourth quarter are a 300,000 barrels a day LPG export expansion at our Houston Ship Channel export marine terminal and a new 300 million cubic feet per day natural gas processing plant in the Midland Basin. The LPG marine terminal expansion will increase our total LPG loading capacity at the ship channel to approximately 1.1 million barrels per day.

Athena, our 20th natural gas processing plant in the Permian Basin, will increase our total processing capacity in the basin to nearly five Bcf per day. We have recently updated our Permian production growth forecast through 2030. While our 2025 to 2030 forecast of crude oil production changed modestly, the growth changed modestly, only 100,000 barrels per day by 2030. Our forecast of wet natural gas and NGL production during this time period increases to 34% due to higher gas-to-oil ratios in the Permian. This compares to 23% growth for this time period that we forecasted last April. I'd refer you to page nine of our third quarter earnings supplemental slide deck for this updated forecast. Corey can address this further during our Q&A. We have a confident outlook.

Continued production growth in the Permian Basin and robust domestic and international demand are providing attractive organic growth opportunities for the partnership. We are remaining disciplined in our capital allocation. Rather than pursuing acquisitions at top-of-the-cycle M&A multiples, we have been opting for targeted organic growth that historically provided us higher and more consistent returns on capital with fewer surprises. We have $6.3 billion of organic growth projects that have been sanctioned and are under construction. We believe with these opportunities and solid execution, our team can continue to deliver cash flow per unit growth that will increase the value of our partnership over time. During the quarter, we declared a distribution of $0.56 per common unit for the third quarter, which is a 2.8% increase over the distribution that we declared for the third quarter of 2025.

The distribution will be paid on November 30th to common unit holders of record as of the close of business on October 30th. The partnership purchased $112 million of its common units during the third quarter. Total year-to-date repurchases for 2026 are $387 million, bringing the cumulative utilization of our $5 billion buyback program to 36%. In addition to buybacks, purchases under our distribution reinvestment plan and employee unit purchase plan totaled approximately one million common units. For the 12 months ended September 30th, 2026, Enterprise paid out approximately $4.8 billion in distributions to limited partners, combined with $437 million of buybacks over the same period. Enterprise's total capital return was $5.3 billion, resulting in a payout ratio of adjusted cash flow from operations of 54%.