FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 1-14323
Enterprise Products Partners L.P.
(Exact name of Registrant as specified in its charter)
Delaware 76-0568219
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2727 North Loop West
Houston, Texas
77008-1037
(Address of principal executive offices) (Zip code)
(713) 880-6500
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
The registrant had 45,552,915 Common Units outstanding as of May 12, 1999.
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Enterprise Products Partners L.P. and Subsidiaries
TABLE OF CONTENTS
Page
No.
Part I. Financial Information
Item 1. Financial Statements
<S> <C>
Enterprise Products Partners L.P. Unaudited Consolidated Financial Statements:
Consolidated Balance Sheets, March 31, 1999 and December 31, 1998 1
Statements of Consolidated Operations
for the Three Months ended March 31, 1999 and 1998 2
Statements of Consolidated Cash Flows
for the Three Months ended March 31, 1999 and 1998 3
Notes to Unaudited Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 17-18
Signature Page 19
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PART 1. FINANCIAL INFORMATION.
Item 1. FINANCIAL STATEMENTS.
Enterprise Products Partners L.P.
Consolidated Balance Sheets
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1998 1999
----------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 24,103 $ 4,665
Accounts receivable - trade 57,288 54,584
Accounts receivable - affiliates 15,546 12,454
Inventories 17,574 17,773
Current maturities of participation in notes receivable from
unconsolidated affiliates 14,737 14,737
Prepaid and other current assets 8,445 10,386
----------------------------------
Total current assets 137,693 114,599
Property, Plant and Equipment, Net 499,793 496,769
Investments in and Advances to Unconsolidated Affiliates 91,121 119,045
Participation in Notes Receivable from Unconsolidated Affiliates 11,760 8,076
Other Assets 670 453
==================================
Total $ 741,037 $ 738,942
==================================
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
Accounts payable - trade $ 36,586 $ 35,069
Accrued gas payables 27,183 37,668
Accrued expenses 7,540 3,854
Other current liabilities 11,462 6,332
----------------------------------
Total current liabilities 82,771 82,923
Long-Term Debt 90,000 110,000
Minority Interest 5,730 5,553
Commitments and Contingencies
Partners' Equity
Common Units 433,082 416,671
Subordinated Units 123,829 118,343
General Partner 5,625 5,452
----------------------------------
Total Partners' Equity 562,536 540,466
==================================
Total $ 741,037 $ 738,942
==================================
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
1
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PART I. FINANCIAL INFORMATION. (continued)
Item 1. FINANCIAL STATEMENTS. (continued)
Enterprise Products Partners L.P.
Statements of Consolidated Operations
(Unaudited)
(Amounts in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
------------------------------
<S> <C> <C>
REVENUES $ 190,517 $ 147,314
COST AND EXPENSES
Operating costs and expenses 181,447 133,812
Selling, general and administrative 5,754 3,000
------------------------------
Total 187,201 136,812
------------------------------
OPERATING INCOME 3,316 10,502
------------------------------
OTHER INCOME (EXPENSE)
Interest expense (6,734) (2,046)
Equity income in unconsolidated affiliates 2,822 1,563
Interest income from unconsolidated affiliates - 397
Interest income - other 275 284
Other, net 2 (139)
------------------------------
Other income (expense) (3,635) 59
------------------------------
INCOME BEFORE MINORITY INTEREST (319) 10,561
MINORITY INTEREST 3 (106)
==============================
NET INCOME $ (316) $ 10,455
==============================
ALLOCATION OF NET INCOME TO:
Limited partners $ (313) $ 10,350
==============================
General partner $ (3) $ 105
==============================
NET INCOME PER UNIT $ (0.01) $ 0.16
==============================
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING 54,963 66,756
==============================
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
2
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PART 1. FINANCIAL INFORMATION. (continued)
Item 1. FINANCIAL STATEMENTS. (continued)
Enterprise Products Partners L.P.
Statements of Consolidated Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
--------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ (316) $ 10,455
Adjustments to reconcile net income to cash flows provided by
(used for) operating activities:
Depreciation and amortization 4,623 4,905
Equity in income of unconsolidated affiliates (2,822) (1,563)
Leases paid by EPCO - 2,639
Minority interest (3) 106
Gain on sale of assets - (3)
Net effect of changes in operating accounts (37,471) 3,808
--------------------------
Operating activities cash flows (35,989) 20,347
--------------------------
INVESTING ACTIVITIES
Capital expenditures (1,935) (1,672)
Proceeds from sale of assets - 11
Collection of notes receivable from unconsolidated affiliates - 3,684
Unconsolidated affiliates:
Investments in and advances to (2,958) (28,866)
Distributions received 1,245 2,505
--------------------------
Investing activities cash flows (3,648) (24,338)
--------------------------
FINANCING ACTIVITIES
Long-term debt borrowings - 40,000
Long-term debt repayments (2,874) (20,000)
Net decrease in restricted cash (5,360) -
Cash dividends paid to partners - (30,437)
Cash dividends paid to minority interest - (311)
Units acquired by consolidated trusts - (4,727)
Cash contributions from EPCO to minority interest - 28
--------------------------
Financing activities cash flows (8,234) (15,447)
--------------------------
CASH CONTRIBUTIONS FROM EPCO 31,316 -
NET CHANGE IN CASH AND CASH EQUIVALENTS (16,555) (19,438)
CASH AND CASH EQUIVALENTS, JANUARY 1 18,941 24,103
==========================
CASH AND CASH EQUIVALENTS, MARCH 31 $ 2,386 $ 4,665
==========================
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
3
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Enterprise Products Partners L.P.
Notes to Consolidated Financial Statements
(Unaudited)
1. GENERAL
In the opinion of Enterprise Products Partners L.P. (the "Company"), the
accompanying unaudited consolidated financial statements include all adjustments
consisting of normal recurring accruals necessary for a fair presentation of the
Company's consolidated financial position as of March 31, 1999 and its
consolidated results of operations and cash flows for the three month periods
ended March 31, 1999 and 1998. Although the Company believes the disclosures in
these financial statements are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. These unaudited financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 ("Form 10-K").
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year.
Dollar amounts presented in the tabulations within the notes to the consolidated
financial statements are stated in thousands of dollars, unless otherwise
indicated.
2. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
At March 31, 1999, the Company's significant unconsolidated affiliates accounted
for by the equity method included the following:
Belvieu Environmental Fuels ("BEF") - a 33-1/3% economic interest in a
Methyl Tertiary Butyl Ether ("MTBE") production facility.
Mont Belvieu Associates ("MBA") - a 49% economic interest in an entity
which owns a 50% interest in a NGL fractionation facility.
Entell NGL Services, LLC ("Entell") - a 50% economic interest in a NGL
transportation and distribution system located in Louisiana and southeast
Texas.
Baton Rouge Fractionators LLC ("BRF") - a 27.5% economic interest in a NGL
fractionation facility which is under construction and scheduled to begin
production during the second quarter of 1999.
EPIK Terminalling L.P. and EPIK Gas Liquids, LLC (collectively, "EPIK") - a
50% aggregate economic interest in a refrigerated NGL marine terminal
loading facility which is under construction and scheduled to become fully
operational in the fourth quarter of 1999.
Wilprise Pipeline Company, LLC ("Wilprise") - a 33-1/3% economic interest
in a NGL pipeline system that is scheduled to become operational in the
second quarter of 1999 in conjunction with the availability of product and
the startup of the BRF NGL fractionation facility.
4
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The Company's investments in and advances to unconsolidated affiliates also
includes Tri-States NGL Pipeline, LLC ("Tri-States"). The Tri-States investment
consists of a 16-2/3% economic interest in a NGL pipeline system which become
operational on March 26, 1999. This investment is accounted for using the cost
method in accordance with generally accepted accounting principles.
Other joint ventures included various entities in the formation stage at March
31, 1999.
Investments in and advances to unconsolidated affiliates at:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
---------------------------------
<S> <C> <C>
BEF................................ $ 50,079 $ 54,236
MBA................................ 12,551 10,020
BRF................................ 17,896 22,216
EPIK............................... 5,667 10,512
Wilprise........................... 4,873 6,894
Entell............................. - 288
Tri-States......................... 55 14,094
Other.............................. - 785
=================================
Total $ 91,121 $ 119,045
=================================
</TABLE>
Equity in income of unconsolidated affiliates for the:
<TABLE>
<CAPTION>
Three Months ended
March 31, March 31,
1998 1999
--------------------------------
<S> <C> <C>
BEF................................ $ 875 $ 301
MBA................................ 1,947 760
BRF................................ - (143)
EPIK............................... - 397
Entell............................. - 248
=================================
Total $ 2,822 $ 1,563
=================================
</TABLE>
3. SUPPLEMENTAL CASH FLOW DISCLOSURE
The net effect of changes in operating assets and liabilities is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
------------------------------
<S> <C> <C>
(Increase) decrease in:
Accounts receivable................... $ 6,799 $ 5,796
Inventories........................... (2,141) (199)
Prepaid and other current assets...... 348 (1,941)
Other assets.......................... (267) -
Increase (decrease) in:
Accounts payable - trade.............. (21,076) (1,517)
Accrued gas payable................... (7,363) 10,485
Accrued expenses...................... (3,954) (3,686)
Other current liabilities............. (9,817) (5,130)
==============================
Net effect of changes in operating accounts $ (37,471) $ 3,808
==============================
</TABLE>
5
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4. RECENTLY ISSUED ACCOUNTING STANDARDS
Recent Statements of Financial Accounting Standards ("SFAS") include (effective
for all fiscal quarters of fiscal years beginning after June 15, 1999) SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." Management
is currently studying this SFAS item for its possible impact on the consolidated
financial statements. On April 3, 1998, the American Institute of Certified
Public Accountants issued Statement of Position ("SOP") 98-5, "Reporting on the
Costs of Start-Up Activities." For years beginning after December 15, 1998, SOP
98-5 generally requires that all start-up costs of a business activity be
charged to expense as incurred and any start-up costs previously deferred should
be written off as a cumulative effect of a change in accounting principle.
Adoption of SOP 98-5 during 1999 did not have a material impact on the
consolidated financial statements except for a $4.5 million noncash write-off
that occurred on January 1, 1999 of the unamortized balance of deferred start-up
costs of BEF, in which the Company owns a 33-1/3% interest. This write-off
caused a $1.5 million reduction in the equity in income of unconsolidated
affiliates for 1999 and a corresponding reduction in the Company's investment in
unconsolidated affiliates.
5. CAPITAL STRUCTURE
At March 31, 1999, the Company had 33,552,915 Common Units outstanding held by
Enterprise Products Company (the Company's ultimate parent or "EPCO") and
12,000,000 Common Units outstanding held by third parties. During the first
quarter of 1999, the Company established a revocable grantor trust (the "Trust")
to fund future liabilities of a Long-Term Incentive Plan (the "Plan").
Provisions of the Plan were not finalized as of May 12, 1999. At March 31, 1999,
the Trust had purchased a total of 267,200 Common Units (the "Trust Units")
which are accounted for in a manner similar to treasury stock under the cost
method of accounting. The Trust Units are considered outstanding and will
receive distributions; however, they are excluded from the calculation of net
income per Unit in accordance with generally accepted accounting principles.
6. DISTRIBUTIONS
On January 12, 1999, the Company declared a quarterly distribution of $.45 per
Unit for the fourth quarter of 1998, which was paid on February 11, 1999 to all
Unitholders of record on January 29, 1999. The Company declared its distribution
for the first quarter of 1999 on April 16, 1999 in the amount of $.45 per Common
Unit. The first quarter 1999 distribution will be paid on May 12, 1999 to Common
Unitholders of record on April 30, 1999.
7. SUBSEQUENT EVENTS
On April 20, 1999, the Company and Tejas Energy, LLC ("Tejas"), an affiliate of
Shell Oil Company ("Shell"), announced that they had agreed to general terms for
a business combination encompassing the Company and a substantial portion of
Tejas' natural gas liquids ("NGL") business. The agreed upon terms contemplate
Tejas contributing certain NGL assets to the Company for which Tejas would
receive an equity interest in the Company and other consideration.
The completion of this transaction would form a strategic business combination
comprising a fully integrated Gulf Coast NGL processing, fractionation, storage,
and transportation business. It would also establish a strategic alliance
between the Company and Shell whereby the Company would have the rights to
process Shell's current and future Gulf of Mexico natural gas production and
market the NGLs recovered.
Any transaction resulting from the agreed upon terms would be subject to the
Company and Tejas successfully executing a definitive agreement; satisfactorily
completing their respective due diligence reviews; receiving requisite
regulatory approvals and receiving approvals from each company's board of
directors. The parties anticipate the closing of this transaction in mid-1999.
6
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
For the Interim Periods ended March 31, 1999 and 1998
The following discussion and analysis should be read in conjunction with
the unaudited consolidated financial statements and notes thereto of Enterprise
Products Partners L.P. ("Enterprise" or the "Company") included elsewhere
herein.
The Company
The Company is a leading integrated North American provider of processing
and transportation services to domestic and foreign producers of natural gas
liquids ("NGLs") and other liquid hydrocarbons and domestic and foreign
consumers of NGLs and liquid hydrocarbon products. The Company manages a fully
integrated and diversified portfolio of midstream energy assets and is engaged
in NGL processing and transportation through direct and indirect ownership and
operation of NGL fractionators. It also manages NGL processing facilities,
storage facilities, pipelines, and rail transportation facilities, and methyl
tertiary butyl ether ("MTBE") and propylene production and transportation
facilities in which it has a direct and indirect ownership.
The Company is a publicly traded master limited partnership (NYSE, symbol
"EPD") that conducts substantially all of its business through Enterprise
Products Operating L.P. (the "Operating Partnership"), the Operating
Partnership's subsidiaries, and a number of joint ventures with industry
partners. The Company was formed in April 1998 to acquire, own, and operate all
of the NGL processing and distribution assets of Enterprise Products Company
("EPCO").
The principal executive office of the Company is located at 2727 North Loop
West, Houston, Texas, 77008-1038, and the telephone number of that office is
713-880-6500. References to, or descriptions of, assets and operations of the
Company in this quarterly report include the assets and operations of the
Operating Partnership and its subsidiaries as well as the predecessors of the
Company.
General
The Company (i) fractionates for a processing fee mixed NGLs produced as
by-products of oil and natural gas production into their component products:
ethane, propane, isobutane, normal butane and natural gasoline; (ii) converts
normal butane to isobutane through the process of isomerization; (iii) produces
MTBE from isobutane and methanol; and (iv) transports NGL products to end users
by pipeline and railcar. The Company also separates high purity propylene from
refinery-sourced propane/propylene mix and transports high purity propylene to
plastics manufacturers by pipeline. Products processed by the Company generally
are used as feedstocks in petrochemical manufacturing, in the production of
motor gasoline and as fuel for residential and commercial heating.
The Company's processing operations are concentrated in Mont Belvieu,
Texas, which is the hub of the domestic NGL industry and is adjacent to the
largest concentration of refineries and petrochemical plants in the United
States. The facilities operated by the Company at Mont Belvieu include: (i) one
of the largest NGL fractionation facilities in the United States with an average
production capacity of 210,000 barrels per day; (ii) the largest butane
isomerization complex in the United States with an average isobutane production
capacity of 116,000 barrels per day; (iii) one of the largest MTBE production
facilities in the United States with an average production capacity of 14,800
barrels per day; and (iv) two propylene fractionation units with an average
combined production capacity of 30,000 barrels per day. The Company owns all of
the assets at its Mont Belvieu facility except for the NGL fractionation
facility, in which it owns an effective 37.0% economic interest; one of the
propylene fractionation units, in which it owns a 54.6% interest and controls
the remaining interest through a long-term lease; the MTBE production facility,
7
<PAGE>
in which it owns a 33-1/3% interest; and one of its three isomerization units
and one deisobutanizer which are held under long-term leases with purchase
options. The Company also owns and operates approximately 35 million barrels of
storage capacity at Mont Belvieu and elsewhere that are an integral part of its
processing operations, a network of approximately 500 miles of pipelines along
the Gulf Coast and a NGL fractionation facility in Petal, Mississippi with an
average production capacity of 7,000 barrels per day. The Company also leases
and operates one of only two commercial NGL import/export terminals on the Gulf
Coast.
Industry Environment
Because certain NGL products compete with other refined petroleum products
in the fuel and petrochemical feedstock markets, NGL product prices are set by
or in competition with refined petroleum products. Increased production and
importation of NGLs and NGL products in the United States may decrease NGL
product prices in relation to refined petroleum alternatives and thereby
increase consumption of NGL products as NGL products are substituted for other
more expensive refined petroleum products. Conversely, a decrease in the
production and importation of NGLs and NGL products could increase NGL product
prices in relation to refined petroleum product prices and thereby decrease
consumption of NGLs. However, because of the relationship of crude oil and
natural gas production to NGL production, the Company believes any imbalance in
the prices of NGLs and NGL products and alternative products would be temporary.
Historically, when the price of crude oil is a multiple of ten or more to
the price of natural gas (i.e., crude oil $20 per barrel and natural gas $2 per
thousand cubic feet ("MCF")), NGL pricing has been strong due to increased use
in manufacturing petrochemicals. In 1998, the industry experienced an annualized
multiple of approximately six (i.e., crude oil $12 per barrel and natural gas $2
per MCF), which caused petrochemical manufacturing demand to change from
reliance on NGLs to a preference for crude oil derivatives. This change resulted
in the lowering of both the production and pricing of NGLs. In the NGL industry,
revenues and cost of goods sold can fluctuate significantly up or down based on
current NGL prices. However, operating margins will generally remain constant
except for the effect of inventory price adjustments or increased operating
expenses.
NGL Fractionation
The profitability of this business unit depends on the volume of mixed NGLs
that the Company processes for its toll customers and the level of toll
processing fees charged to its customers. The most significant variable cost of
fractionation is the cost of energy required to operate the units and to heat
the mixed NGLs to effect separation of the NGL products. The Company is able to
reduce its energy costs by capturing excess heat and re-using it in its
operations. Additionally, the Company's NGL fractionation processing contracts
typically contain escalation provisions for cost increases resulting from
increased variable costs, including energy costs. The Company's interest in the
operations of its NGL fractionation facilities at Mont Belvieu consists of a
directly-owned 12.5% undivided interest and a 49.0% economic interest in MBA,
which in turn owns a 50.0% undivided interest in such facilities. The Company's
12.5% interest is recorded as part of revenues and expenses, and its effective
24.5% economic interest is recorded as an equity investment in an unconsolidated
subsidiary.
Isomerization
The profitability of this business unit depends on the volume of normal
butane that the Company isomerizes (i.e., converts) into isobutane for its toll
processing customers, the level of toll processing fees charged to its
customers, and the margins generated from selling isobutane to merchant
customers. The Company's toll processing customers pay the Company a fee for
isomerizing their normal butane into isobutane. In addition, the Company sells
isobutane that it obtains by isomerizing normal butane into isobutane,
fractionating mixed butane into isobutane and normal butane, or purchasing
isobutane in the spot market. The Company determines the optimal sources for
isobutane to meet sales obligations based on current and expected market prices
for isobutane and normal butane, volumes of mixed butane held in inventory, and
estimated costs of isomerization and mixed butane fractionation.
8
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The Company purchases most of its imported mixed butanes between the months
of February and October. During these months, the Company is able to purchase
imported mixed butanes at prices that are often at a discount to posted market
prices. Because of its storage capacity, the Company is able to store these
imports until the summer months when the spread between isobutane and normal
butane typically widens or until winter months when the prices of isobutane and
normal butane typically rise. As a result, inventory investment is generally at
its highest level at the end of the third quarter of the year. Should this
spread not materialize, or in the event absolute prices decline, margins
generated from selling isobutane to merchant customers may be negatively
affected.
Propylene Fractionation
The profitability of this business unit depends on the volumes of
refinery-sourced propane/propylene mix that the Company processes for its toll
customers, the level of toll processing fees charged to its customers and the
margins associated with buying refinery-sourced propane/propylene mix and
selling high purity propylene to meet sales contracts with non-tolling
customers.
Pipelines
The Company operates both interstate and intrastate NGL product and
propylene pipelines. The Company's interstate pipelines are common carriers and
must provide service to any shipper who requests transportation services at
rates regulated by the Federal Energy Regulatory Commission ("FERC"). One of the
Company's intrastate pipelines is a common carrier regulated by the State of
Louisiana. The profitability of this business unit is primarily dependent on
pipeline throughput volumes.
Unconsolidated Affiliates
In January 1999, the Company announced the formation of a new joint
venture, Entell NGL Services, LLC ("Entell"), for the development of a NGL
transportation and distribution system. Entell anticipates that the system will
be capable of distributing products from key NGL sources in southern Louisiana
directly to major NGL markets, including the lower Mississippi River corridor,
Dixie pipeline, Lake Charles, Louisiana and Mont Belvieu, Texas. Entell is
equally owned by the Company and Tejas (a Shell subsidiary). Entell leases a
portion of the Company's Sorrento pipeline system connecting several market
centers in Louisiana, including Breaux Bridge, Tebone, Riverside, Sorrento, and
Garyville. These assets have the capacity to move a total of 80,000 barrels per
day.
In addition to Entell, at March 31, 1999, the Company's other significant
unconsolidated affiliates were BEF, MBA, EPIK, BRF, Tri-States and Wilprise. BEF
owns the MTBE production facility operated by the Company at its Mont Belvieu
complex. MBA owns a 50% interest in a NGL fractionation facility at the
Company's Mont Belvieu complex. EPIK owns a refrigerated NGL marine terminal
loading facility located on the Houston ship channel. An expansion of EPIK's NGL
marine terminal loading facility is under way and is scheduled for completion in
the fourth quarter of 1999. BRF owns a NGL fractionation facility which is under
construction in Louisiana. This facility is expected to begin operations in the
second quarter of 1999. Tri-States owns a NGL pipeline in Louisiana,
Mississippi, and Alabama which became operational on March 26, 1999. Wilprise
owns a NGL pipeline in Louisiana. Management anticipates that the Wilprise
pipeline will become operational in the second quarter of 1999 in conjunction
with the availability of product and the startup of the BRF fractionation
facility.
9
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Results of Operations
The Company's operating margins by business unit for the three month
periods ended March 31, 1998 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
-----------------------------
<S> <C> <C>
Operating Margin:
NGL Fractionation......................... $ 841 $ 806
Isomerization............................. 2,654 5,637
Propylene Fractionation................... 2,012 5,086
Pipeline.................................. 3,275 2,094
Storage and Other Plants.................. 288 (121)
=============================
Total $ 9,070 $ 13,502
=============================
</TABLE>
The Company's plant production data (in thousands of barrels per day) for
the three month periods ended March 31, 1998 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
-----------------------------
<S> <C> <C>
Plant Production Data:
NGL Fractionation......................... 207 150
Isomerization............................. 62 67
MTBE...................................... 10 12
Propylene Fractionation................... 24 23
</TABLE>
The Company's equity in income of unconsolidated affiliates (in thousands)
for the three month periods ended March 31, 1998 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months ended
March 31,
1998 1999
-----------------------------
<S> <C> <C>
Equity in income of unconsolidated affiliates:
BEF....................................... $ 875 $ 301
MBA....................................... 1,947 760
BRF....................................... - (143)
EPIK...................................... - 397
Entell.................................... - 248
=============================
Total $ 2,822 $ 1,563
=============================
</TABLE>
First Quarter 1999 Compared with First Quarter 1998
Revenues; Costs and Expenses
The Company's revenues decreased by 23% to $147.3 million in 1999 compared
to $190.5 million in 1998. The Company's costs and expenses decreased by 26% to
$133.8 million in 1999 compared to $181.4 million in 1998. Both revenues and
cost of goods sold decreased from 1998 to 1999 due to sharp declines in average
NGL prices. For example, isobutane prices decreased from an average of 36.3
cents per gallon in 1998 to 29.2 cents per gallon in 1999. Operating margin
increased by 48% to $13.5 million in 1999 compared to $9.1 million in 1998.
10
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NGL Fractionation. The Company's operating margin for NGL fractionation was
$0.8 million for both 1999 and 1998. Excluding the positive effect of $0.6
million in overhead expenses and support facility cost reimbursements from joint
venture partners in 1999, the Company's NGL fractionation operating margin
decreased 75% to $0.2 million in 1999 from $0.8 million in 1998. Average daily
fractionation volumes decreased from 207 MBPD ("thousands of barrels per day")
in 1998 to 150 MBPD in 1999. During the first quarter of 1999, natural gas
prices remained higher than the energy unit equivalent of ethane; therefore,
upstream natural gas processing plants rejected ethane which reduced the volumes
delivered to Company facilities for fractionation services. The Company took
advantage of the reduced demand for its fractionation services during the first
quarter of 1999 to perform certain preventative maintenance procedures on one of
its fractionation facilities that are generally required every two to three
years.
Isomerization. The Company's operating margin for isomerization increased
107% to $5.6 million in 1999 compared to $2.7 million in 1998. Isobutane volumes
from tolling and merchant activities for the first quarter of 1999 averaged 96
MBPD as compared to 92 MBPD for the same period in 1998. The operating margin
for 1999 included a $0.7 million benefit from the amortization of the deferred
gain associated with the sale and leaseback of one of the Company's
isomerization units. Excluding this benefit, the operating margin for 1999 would
have been $4.9 million as compared to $2.7 million in 1998.
Average daily toll processing volumes were 56 MBPD in 1999, or 84% of total
volumes produced, compared to 54 MBPD in 1998, or 86% of total volumes produced.
Isobutane volumes related to merchant activities were 40 MBPD in 1999 compared
to 38 MBPD in 1998. Demand for isobutane is seasonal based on the demand for
motor gasoline and its additives which is generally at seasonal lows during the
first quarter of the year. In addition, demand for isobutane was lower during
both the first quarters of 1999 and 1998 due to the required annual maintenance
of the BEF facility.
Propylene Fractionation. The Company's operating margin increased 155% to
$5.1 million in 1999 from $2.0 million in 1998 despite slightly lower production
volumes. Propylene production averaged 23 MBPD in 1999 as compared to 24 MBPD in
1998. The earnings improvement was primarily attributable to the Company's
actions to minimize risk in the merchant portion of this business by matching
the volume, timing and price of feedstock purchases with sales of end products.
Pipeline. The Company's operating margin from pipeline operations was $2.1
million in 1999 compared to $3.3 million in 1998. Throughput for the first
quarter of 1999 averaged 170 MBPD as compared to 183 MBPD for the same period in
1998. The decrease in operating margin and throughput was primarily attributable
to a decrease in import volumes.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $2.8 million to $3.0
million in 1999 from $5.8 million in 1998. This decrease was primarily due to
the adoption of the EPCO Agreement in July 1998 in conjunction with the
Company's initial public offering ("IPO") which fixed reimbursable selling,
general, and administrative expenses at $1.0 million per month.
11
<PAGE>
Interest Expense
Interest expense was $2.0 million in 1999 and $6.7 million in 1998. This
decrease was principally due to the reduced level of average debt outstanding
during the first quarter of 1999 attributable to the retirement of debt in July
1998 using proceeds from the Company's IPO.
Equity Income in Unconsolidated Affiliates
Equity income in unconsolidated affiliates was $1.6 million in 1999
compared to $2.8 million in 1998. Equity income from BEF decreased 67% from $0.9
million in 1998 to $0.3 million in 1999. Equity income from BEF for both periods
was affected by required annual maintenance on the Company's MTBE facility that
generally takes the unit out of production for approximately three weeks. Equity
income from BEF during 1999 also includes a $1.5 million non-cash charge for the
cumulative effect of a change in accounting principal related to the write-off
of deferred start-up costs as prescribed by generally accepted accounting
principles. Equity income from MBA decreased 58% to $0.8 million in 1999 from
$1.9 million in 1998 due to decreased throughput caused by ethane rejection and
downtime associated with preventative maintenance activities. Among the
Company's new projects, equity income from EPIK was $0.4 million and Entell was
$0.3 million. BRF, which is still in the development stage, showed a slight loss
of $0.1 million.
Financial Condition and Liquidity
General
The Company's primary cash requirements, in addition to normal operating
expenses, are debt service, maintenance capital expenditures, expansion capital
expenditures, and quarterly distributions to the partners. The Company expects
to fund future cash distributions and maintenance capital expenditures with cash
flows from operating activities. Expansion capital expenditures for current
projects are expected to be funded with working capital and borrowings under the
revolving bank credit facility described below while capital expenditures for
future expansion activities are expected to be funded with cash flows from
operating activities and borrowings under the revolving bank credit facility.
Cash flows from operating activities were a $20.3 million inflow for the
first quarter of 1999 compared to a $36.0 million outflow for the comparable
period of 1998. Cash flows from operating activities primarily reflect the
effects of net income, depreciation and amortization, extraordinary items,
equity income of unconsolidated affiliates and changes in working capital.
Depreciation and amortization increased by $0.3 million in 1999 as a result of
additional capital expenditures. The net effect of changes in operating accounts
from year to year is generally the result of timing of NGL sales and purchases
near the end of the period.
Cash outflows from investing activities were $24.3 million in 1999 and $3.6
million for the comparable period of 1998. Cash outflows included capital
expenditures of $1.7 million for 1999 and $1.9 million for 1998. Included in the
capital expenditures amounts are maintenance capital expenditures of $0.3
million for 1999 and $0.5 million for 1998. Investing cash outflows in 1999 also
included $28.9 million in advances to and investments in unconsolidated
affiliates versus $3.0 million for the comparable period of 1998. The $25.9
million increase stems primarily from contributions made to the Wilprise,
Tri-States, and BRF joint ventures located in Louisiana. Also, the Company
received $3.7 million in payments on notes receivable from the BEF and MBA notes
purchased during 1998 with the proceeds of the Company's IPO.
Cash flows from financing activities were a $15.4 million outflow in 1999
versus a $8.2 million outflow for the comparable period of 1998. Cash flows from
financing activities are affected primarily by repayments of long-term debt,
borrowings under the long-term debt agreements and distributions to the
partners. Cash flows from financing activities for 1999 also reflected the
purchase of $4.7 million of Common Units by a consolidated trust.
12
<PAGE>
Future Capital Expenditures
The Company currently estimates that its share of remaining expenditures
for significant capital projects in fiscal 1999 will be approximately $10.6
million. These expenditures relate to the construction of joint venture projects
which will be recorded as additional investments in unconsolidated affiliates.
The Company expects to finance these expenditures out of operating cash flows,
remaining proceeds from its IPO and borrowings under its bank credit facility.
As of March 31, 1999, the Company had $7.1 million in outstanding purchase
commitments associated with its capital projects.
Distributions from Unconsolidated Affiliates; Loan Participations
Distributions to the Company from MBA were $1.1 million in 1999 and $1.2
million in 1998. Distributions from BEF in 1999 were $0.3 million. Prior to the
first quarter of 1998, BEF was prohibited under the terms of its bank
indebtedness from making distributions to its owners. The restrictions lapsed
during the first quarter of 1998 as a result of BEF having repaid 50% of the
principal on such indebtedness, with the Company receiving its first
distribution from BEF in April 1998. Distributions from EPIK in 1999 were $1.1
million. EPIK was formed in the second quarter of 1998 and had no distributions
until the third quarter of 1998.
In connection with the IPO in July 1998, the Company purchased
participation interests in a bank loan to MBA and a bank loan to BEF. The
Company acquired an approximate $7.7 million participation interest in the bank
debt of MBA, which bears interest at a floating rate per annum of LIBOR plus
0.75% and matures on December 31, 2001. The Company is receiving monthly
principal payments, aggregating approximately $1.7 million per year, plus
interest from MBA during the term of the loan. The Company will receive a final
payment of principal and interest of $1.8 million upon maturity. The Company
acquired an approximate $26.1 million participation interest in a bank loan to
BEF, which bears interest at a floating rate per annum at either the bank's
prime rate, CD rate, or the Eurodollar rate plus the applicable margin as
defined in the facility and matures on May 31, 2000. The Company is receiving
quarterly principal payments of approximately $3.3 million plus interest from
BEF during the term of the loan.
Bank Credit Facility
In July 1998, Enterprise Products Operating L.P. (the "Operating
Partnership") entered into a $200.0 million bank credit facility that includes a
$50.0 million working capital facility and a $150.0 million revolving term loan
facility. The $150.0 million revolving term loan facility includes a sublimit of
$30.0 million for letters of credit. As of March 31, 1999, the Company has
borrowed $110.0 million under the bank credit facility.
The Company's obligations under the bank credit facility are unsecured
general obligations and are non-recourse to the General Partner. Borrowings
under the bank credit facility will bear interest at either the bank's prime
rate or the Eurodollar rate plus the applicable margin as defined in the
facility. The bank credit facility will expire after two years and all amounts
borrowed thereunder shall be due and payable on such date. There must be no
amount outstanding under the working capital facility for at least 15
consecutive days during each fiscal year.
The credit agreement relating to the facility contains a prohibition on
distributions on, or purchases or redemptions of, Units if any event of default
is continuing. In addition, the bank credit facility contains various
affirmative and negative covenants applicable to the ability of the Company to,
among other things, (i) incur certain additional indebtedness, (ii) grant
certain liens, (iii) sell assets in excess of certain limitations, (iv) make
investments, (v) engage in transactions with affiliates and (vi) enter into a
merger, consolidation or sale of assets. The bank credit facility requires that
the Operating Partnership satisfy the following financial covenants at the end
of each fiscal quarter: (i) maintain Consolidated Tangible Net Worth (as defined
in the bank credit facility) of at least $257,000,000 plus 75% of the net cash
proceeds from the sale of equity securities of the Company that are contributed
to the Operating Partnership, (ii) maintain a ratio of EBITDA (as defined in the
bank credit facility) to Consolidated Interest Expense (as defined in the bank
credit facility) for the previous 12-month period of at least 3.50 to 1.0 and
iii) maintain a ratio of Total Indebtedness (as defined in the bank credit
facility) to EBITDA of no more than 2.25 to 1.0.
13
<PAGE>
A "Change of Control" constitutes an Event of Default under the bank credit
facility. A Change of Control includes any of the following events: (i) Dan L.
Duncan (and certain affiliates) cease to own (a) at least 51% (on a fully
converted, fully diluted basis) of the economic interest in the capital stock of
EPCO or (b) an aggregate number of shares of capital stock of EPCO sufficient to
elect a majority of the board of directors of EPCO; (ii) EPCO ceases to own,
through a wholly owned subsidiary, at least 95% of the outstanding membership
interest in the General Partner and at least 51% of the outstanding Common
Units; (iii) any person or group beneficially owns more than 20% of the
outstanding Common Units; (iv) the General Partner ceases to be the general
partner of the Company or the Operating Partnership; or (v) the Company ceases
to be the sole limited partner of the Operating Partnership.
MTBE Production
The Company owns a 33-1/3% economic interest in the BEF partnership that
owns the MTBE production facility located within the Company's Mont Belvieu
complex. The production of MTBE is driven by oxygenated fuels programs enacted
under the federal Clean Air Act Amendments of 1990 and other legislation. Any
changes to these programs that enable localities to opt out of these programs,
lessen the requirements for oxygenates or favor the use of non-isobutane based
oxygenated fuels reduce the demand for MTBE and could have an adverse effect on
the Company's results of operations. On March 25, 1999, the Governor of
California ordered the phase-out of MTBE in that state by the end of 2002 due to
allegations by several public advocacy and protest groups that MTBE contaminates
water supplies, causes health problems and has not been as beneficial in
reducing air pollution as originally contemplated. The order also seeks to
obtain a waiver of the oxygenate requirement from the federal Environmental
Protection Agency ("EPA") in order to facilitate the phase-out. In addition,
legislation to amend the federal Clean Air Act of 1990 has been introduced in
the U.S. House of Representatives to ban the use of MTBE as a fuel additive
within three years. Legislation introduced in the U.S. Senate would eliminate
the Clean Air Act's oxygenate requirement in order to assist the elimination of
MTBE in fuel. No assurance can be given as to whether this or similar federal
legislation ultimately will be adopted or whether Congress or the EPA might
takes steps to override the MTBE ban in California. The EPA has formed a Blue
Ribbon Panel (the "Panel") to review the use of oxygenates in gasoline, which
has held several public meetings. The EPA also plans to conduct studies of the
health effects of MTBE. The Panel is expected to issue a report to the EPA in
July 1999, but the health studies will not be completed for several years. It is
not possible to predict what recommendations the Panel will make or whether the
EPA will act on them or to predict the results of the health studies.
The Company is developing a contingency plan for use of the BEF MTBE
facility if MTBE were banned. Management is exploring a possible conversion of
the BEF facility from MTBE production to alkylate production. At present the
forecast cost of this conversion would be in the $15 million to $20 million
range. Management anticipates that if MTBE is banned alkylate demand will rise
as producers use it to replace MTBE as an octane enhancer. Alkylate production
would be expected to generate margins comparable to those of MTBE. Greater
alkylate production would be expected to increase isobutane consumption
nationwide and result in improved isomerization margins for the Company.
Year 2000 Readiness Disclosure
Pursuant to the EPCO Agreement, any selling, general and administrative
expenses related to Year 2000 compliance issues are covered by the annual
administrative services fee paid by the Company to EPCO. Consequently, only
those costs incurred in connection with Year 2000 compliance which relate to
operational information systems and hardware will be paid directly by the
Company.
Since 1997, EPCO has been assessing the impact of Year 2000 compliance
issues on the software and hardware used by the Company. A team is in the
process of reviewing and documenting the status of EPCO's and the Company's
systems for Year 2000 compliance. The key information systems still under review
14
<PAGE>
include the Company's pipeline Supervisory Control and Data Acquisition
("SCADA") system, plant, storage, and other pipeline operating systems. In
connection with each of these areas, consideration is being given to hardware,
operating systems, applications, data base management, system interfaces,
electronic transmission, and outside vendors. Work on these systems is in
varying degrees of completion. We are pleased to announce that work has been
completed on the financial and human resource systems of EPCO. Both of these
systems are now fully Year 2000 compliant.
As of March 31, 1999, EPCO had spent approximately $131,500 in connection
with Year 2000 compliance and has estimated the future costs to approximate
$207,000. This cost estimate does not include internal costs of EPCO's
previously existing resources and personnel that might be partially used for
Year 2000 compliance or cost of normal system upgrades which also included
various Year 2000 compliance features or fixes. Such internal costs have been
determined to be materially insignificant to the total estimated cost of Year
2000 compliance.
At this time, the Company believes its total cost for known or anticipated
remediation of its information systems to make them Year 2000 compliant will not
be material to its financial position or its ability to sustain operations. As
of March 31, 1999, the Company has incurred expenditures aggregating $60,000 in
connection with Year 2000 compliance. The Company expects future spending to
approximate $966,000 (principally for the SCADA system) to complete the project
and become fully compliant with all Year 2000 issues. This estimated cost does
not include the Company's internal costs related to previously existing
resources and personnel that might be partially used for remediation of Year
2000 compliance issues. Such internal costs have been determined to be
materially insignificant to the total estimated cost of Year 2000 compliance.
These amounts are current cost estimates and actual future costs could
potentially be higher or lower than the estimates. The Company relies on
third-party suppliers for certain systems, products and services, including
telecommunications. There can be no assurance that the systems of other
companies on which the Company's systems rely also will timely be compliant or
that any such failure to be compliant by another company would not have an
adverse effect on the Company's systems. The Company has received some
preliminary information concerning Year 2000 compliance status from a group of
critical suppliers and vendors, and anticipates receiving additional information
in the near future. This information will assist the Company in determining the
extent to which it may be vulnerable to those third parties' failure to address
their Year 2000 compliance issues.
Management believes it has a program to address the Year 2000 compliance
issue in a timely manner. Completion of the plan and testing of replacement or
modified systems is anticipated during the third quarter of 1999. Nevertheless,
since it is not possible to anticipate all possible future outcomes, especially
when third parties are involved, there could be circumstances in which the
Company would be unable to invoice customers or collect payments. The failure to
correct a material Year 2000 compliance problem could result in an interruption
in or failure of certain normal business activities or operations of the
Company. Such failures could have a material adverse effect on the Company. The
amount of potential liability and lost revenue has not been estimated.
The Company is continuing its work on contingency plans to address
unavoided or unavoidable risks associated with Year 2000 compliance issues.
Accounting Standards
Recent Statements of Financial Accounting Standards ("SFAS") include
(effective for all fiscal quarters of fiscal years beginning after June 15,
1999) SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." Management is currently studying this SFAS item for its possible
impact on the consolidated financial statements. On April 3, 1998, the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-5, "Reporting on the Costs of Start-Up Activities." For years beginning after
December 15, 1998, SOP 98-5 generally requires that all start-up costs of a
business activity be charged to expense as incurred and any start-up costs
previously deferred should be written off as a cumulative effect of a change in
accounting principle. Adoption of SOP 98-5 during 1999 did not have a material
impact on the consolidated financial statements except for a $4.5 million
15
<PAGE>
noncash write-off that occurred on January 1, 1999 of the unamortized balance of
deferred start-up costs of BEF, in which the Company owns a 33-1/3% interest.
This write-off caused a $1.5 million reduction in the equity in income of
unconsolidated affiliates for 1999 and a corresponding reduction in the
Company's investment in unconsolidated affiliates.
Uncertainty of Forward-Looking Statements and Information.
This quarterly report contains various forward-looking statements and
information that are based on the belief of the Company and the General Partner,
as well as assumptions made by and information currently available to the
Company and the General Partner. When used in this document, words such as
"anticipate," "estimate," "project," "expect," "plan," "forecast," "intend,"
"could," and "may," and similar expressions and statements regarding the plans
and objectives of the Company for future operations, are intended to identify
forward-looking statements. Although the Company and the General Partner believe
that the expectations reflected in such forward-looking statements are
reasonable, they can give no assurance that such expectations will prove to be
correct. Such statements are subject to certain risks, uncertainties, and
assumptions. If one or more of these risks or uncertainties materialize, or if
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated, projected, or expected. Among the key risk factors
that may have a direct bearing on the Company's results of operations and
financial condition are: (a) competitive practices in the industries in which
the Company competes, (b) fluctuations in oil, natural gas, and NGL product
prices and production, (c) operational and systems risks, (d) environmental
liabilities that are not covered by indemnity or insurance, (e) the impact of
current and future laws and governmental regulations (including environmental
regulations) affecting the NGL industry in general, and the Company's operations
in particular, (f) loss of a significant customer, and (g) failure to complete
one or more new projects on time or within budget.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to financial market risks, including changes in
interest rates with respect to its investments in financial instruments and
changes in commodity prices. The Company may, but generally does not, use
derivative financial instruments (i.e., futures, forwards, swaps, options, and
other financial instruments with similar characteristics) or derivative
commodity instruments (i.e., commodity futures, forwards, swaps, or options, and
other commodity instruments with similar characteristics that are permitted by
contract or business custom to be settled in cash or with another financial
instrument) to mitigate either of these risks. The return on the Company's
financial investments is generally not affected by foreign currency
fluctuations. The Company does not use derivative financial instruments for
speculative purposes. At March 31, 1999, the Company had no derivative
instruments in place to cover any potential interest rate, foreign currency or
other financial instrument risk.
At March 31, 1999, the Company had $4.7 million invested in cash and cash
equivalents. All cash equivalent investments other than cash are highly liquid,
have original maturities of less than three months, and are considered to have
insignificant interest rate risk. The Company's inventory of NGLs and NGL
products at March 31, 1999, was $17.8 million. Inventories are carried at the
lower of cost or market. A 10% adverse change in commodity prices would result
in an approximate $1.8 million decrease in the fair value of the Company's
inventory, based on a sensitivity analysis at March 31, 1999. Actual results may
differ materially. All the Company's long-term debt is at variable interest
rates; a 10% change in the base rate selected would have an approximate $0.6
million effect on the amount of interest expense for the year based upon amounts
outstanding at March 31, 1999.
16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*3.1 Form of Amended and Restated Agreement of Limited Partnership of
Enterprise Products Partners L.P. (Exhibit 3.1 to Registration
Statement on Form S-1, File No. 333-52537, filed on May 13,
1998).
*3.2 Form of Amended and Restated Agreement of Limited Partnership of
Enterprise Products Operating L.P. (Exhibit 3.2 to Registration
Statement on Form S-1/A, File No. 333-52537, filed on July 21,
1998).
*3.3 LLC Agreement of Enterprise Products GP (Exhibit 3.3 to
Registration Statement on Form S-1/A, File No. 333-52537, filed
on July 21, 1998).
*4.1 Form of Common Unit certificate (Exhibit 4.1 to Registration
Statement on Form S-1/A, File No. 333-52537, filed on July 21,
1998).
*4.2 Credit Agreement among Enterprise Products Operating L.P., the
Several Banks from Time to Time Parties Hereto, Den Norske Bank
ASA, and Bank of Tokyo-Mitsubishi, Ltd. , Houston Agency as
Co-Arrangers, The Bank of Nova Scotia, as Co-Arranger and as
Documentation Agent and The Chase Manhattan Bank as Co-Arranger
and as Agent dated as of July 27, 1998 as Amended and Restated as
of September 30, 1998. (Exhibit 4.2 on Form 10-K for year ended
December 31, 1998, filed March 17, 1999).
*10.1Articles of Merger of Enterprise Products Company, HSC Pipeline
Partnership, L.P., Chunchula Pipeline Company, LLC, Propylene
Pipeline Partnership, L.P., Cajun Pipeline Company, LLC and
Enterprise Products Texas Operating L.P. dated June 1, 1998
(Exhibit 10.1 to Registration Statement on Form S-1/A, File No:
333-52537, filed on July 8, 1998).
*10.2Form of EPCO Agreement between Enterprise Products Partners
L.P., Enterprise Products Operating L.P., Enterprise Products GP,
LLC and Enterprise Products Company (Exhibit 10.2 to Registration
Statement on Form S-1/A, File No. 333-52537, filed on July 21,
1998).
*10.3Transportation Contract between Enterprise Products Operating
L.P. and Enterprise Transportation Company dated June 1, 1998
(Exhibit 10.3 to Registration Statement on Form S-1/A, File No.
333-52537, filed on July 8, 1998).
*10.4Venture Participation Agreement between Sun Company, Inc. (R&M),
Liquid Energy Corporation and Enterprise Products Company dated
May 1, 1992 (Exhibit 10.4 to Registration Statement on Form S-1,
File No. 333-52537, filed on May 13, 1998).
*10.5Partnership Agreement between Sun BEF, Inc., Liquid Energy Fuels
Corporation and Enterprise Products Company dated May 1, 1992
(Exhibit 10.5 to Registration Statement on Form S-1, File No.
333-52537, filed on May 13, 1998).
17
<PAGE>
*10.6Amended and Restated MTBE Off-Take Agreement between Belvieu
Environmental Fuels and Sun Company, Inc. (R&M) dated August 16,
1995 (Exhibit 10.6 to Registration Statement on Form S-1, File
No. 333-52537, filed on May 13, 1998).
*10.7Articles of Partnership of Mont Belvieu Associates dated July
17, 1985 (Exhibit 10.7 to Registration Statement on Form S-1,
File No. 333-52537, filed on May 13, 1998).
*10.8First Amendment to Articles of Partnership of Mont Belvieu
Associates dated July 15, 1996 (Exhibit 10.8 to Registration
Statement on Form S-1, File No. 333-52537, filed on May 13,
1998).
*10.9Propylene Facility and Pipeline Agreement between Enterprise
Petrochemical Company and Hercules Incorporated dated December
13, 1978 (Exhibit 10.9 to Registration Statement on Form S-1,
File No. 333-52537, dated May 13, 1998).
*10.10 Restated Operating Agreement for the Mont Belvieu Fractionation
Facilities Chambers County, Texas between Enterprise Products
Company, Texaco Producing Inc., El Paso Hydrocarbons Company and
Champlin Petroleum Company dated July 17, 1985 (Exhibit 10.10 to
Registration Statement on Form S-1/A, File No. 333-52537, filed
on July 8, 1998).
*10.11 Ratification and Joinder Agreement relating to Mont Belvieu
Associates Facilities between Enterprise Products Company, Texaco
Producing Inc., El Paso Hydrocarbons Company, Champlin Petroleum
Company and Mont Belvieu Associates dated July 17, 1985 (Exhibit
10.11 to Registration Statement on Form S-1/A, File No.
333-52537, filed on July 8, 1998).
*10.12 Amendment to Propylene Facility and Pipeline Sales Agreement
between HIMONT U.S.A., Inc. and Enterprise Products Company dated
January 1, 1993 (Exhibit 10.12 to Registration Statement on Form
S-1/A, File No. 333-52537, filed on July 8, 1998).
*10.13 Amendment to Propylene Facility and Pipeline Agreement between
HIMONT U.S.A., Inc. and Enterprise Products Company dated January
1, 1995 (Exhibit 10.13 to Registration Statement on Form S-1/A,
File No. 333-52537, filed on July 8, 1998).
27.1 Financial Data Schedule
* Asterisk indicates exhibits incorporated by reference as indicated
(b) Reports on Form 8-K
None.
18
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Enterprise Products Partners L.P.
(A Delaware Limited Partnership)
By: Enterprise Products GP, LLC
as General Partner
Date: May 12, 1999 By: /s/ Gary L. Miller
---------------------------
Executive Vice President
Chief Financial Officer
and Treasurer
19
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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TO SUCH FINANCIAL STATEMENTS.
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