UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

(Exact name of Registrant as Specified in Its Charter)

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Securities to be registered pursuant to Section 12(g) of the Act:  None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ☑   No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes ☐   No ☑

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 ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☑Accelerated filer ☐    Non-accelerated filer   ☐    Smaller reporting company  ☐    Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐    No ☑

The aggregate market value of our common units held by non-affiliates at June 30, 2020 (the last business day of the registrant’s most recently completed second fiscal quarter) was $26.96 billion based on a closing price on that date of $18.17 per common unit on the New York Stock Exchange Composite ticker tape.  There were 2,181,599,142 common units outstanding at January 31, 2021.

ENTERPRISE PRODUCTS PARTNERS L.P.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This annual report on Form 10-K for the year ended December 31, 2020 (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.  When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “scheduled,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements.  Although we and our general partner believe that our expectations reflected in such forward-looking statements (including any forward-looking statements/expectations of third parties referenced in this annual report) are reasonable, neither we nor our general partner can give any assurances that such expectations will prove to be correct.  

Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of this annual report.  If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.  You should not put undue reliance on any forward-looking statements.  The forward-looking statements in this annual report speak only as of the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

KEY REFERENCES USED IN THIS REPORT

Unless the context requires otherwise, references to “we,” “us” or “our” within this annual report are intended to mean the business and operations of Enterprise Products Partners L.P. and its consolidated subsidiaries.  

References to the “Partnership” mean Enterprise Products Partners L.P. on a standalone basis.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of the Partnership, and its consolidated subsidiaries, through which the Partnership conducts its business.  We are managed by our general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

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. 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.

References to “EPCO” mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.  The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are:  (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO; and (iii) Mr. Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as directors of EPCO.

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 32.2% of the Partnership’s common units outstanding and 30.2% of its Series A Cumulative Convertible Preferred Units (“preferred units”) outstanding at December 31, 2020.

As generally used in the energy industry and in this annual report, the acronyms below have the following meanings:

ITEMS 1 AND 2.  BUSINESS AND PROPERTIES

General

We are a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.”  Our preferred units are not publicly traded.  We were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products.  We are owned by our limited partners (preferred and common unitholders) from an economic perspective. Enterprise GP, which owns a non-economic general partner interest in us, manages our Partnership.  We conduct substantially all of our business operations through EPO and its consolidated subsidiaries.

Our fully integrated, midstream energy asset network (or “value chain”) links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States (“U.S.”), Canada and the Gulf of Mexico with domestic consumers and international markets.  Our midstream energy operations include:

Our business strategy seeks to leverage these operations to:

Our financial position, results of operations and cash flows are contingent on the supply of, and demand for the energy commodities we handle across our integrated midstream energy asset network.  See “Current Outlook” included under Part II, Item 7 of this annual report for management’s views on key midstream energy supply and demand fundamentals in 2021.

Business Segments

The following sections provide an overview of our business segments, including information regarding principal products produced and/or services rendered and properties owned.  Our operations are reported under four business segments:  NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services and  Petrochemical & Refined Products Services.

Each of our business segments benefits from the supporting role of our marketing activities.  The main purpose of our marketing activities is to support the utilization and expansion of assets across our midstream energy asset network by increasing the volumes handled by such assets, which results in additional fee-based earnings for each business segment.  In performing these support roles, our marketing activities also seek to participate in supply and demand opportunities as a supplemental source of gross operating margin for us.  The financial results of our marketing efforts fluctuate due to changes in volumes handled and overall market conditions, which are influenced by current and forward market prices for the products bought and sold.

Our financial position, results of operations and cash flows are subject to certain risks. For information regarding such risks, see “Risk Factors” included under Part I, Item 1A of this annual report.  In addition, our business activities are subject to various federal, state and local laws and regulations governing a wide variety of topics, including commercial, operational, environmental, safety and other matters.  For a discussion of the principal effects of such laws and regulations on our business activities, see “Regulatory Matters” within this Part I, Items 1 and 2 discussion.

For management’s discussion and analysis of our results of operations, liquidity and capital resources and capital investment program, see Part II, Item 7 of this annual report.

For detailed financial information regarding our business segments, including major customer information, see Note 10 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.

NGL Pipelines & Services

This business segment includes our natural gas processing and related NGL marketing activities, NGL pipelines, NGL fractionation facilities, NGL and related product storage facilities, and NGL marine terminals.

At the core of our natural gas processing business are 21 processing facilities located in Colorado, Louisiana, Mississippi, New Mexico, Texas and Wyoming.

In its raw form, natural gas produced at the wellhead (especially in association with crude oil production) contains varying amounts of NGLs such as ethane and propane.  Natural gas streams containing NGLs and other impurities are usually not acceptable for transportation in downstream natural gas transmission pipelines or for commercial use as fuel; therefore, the unprocessed natural gas stream must be transported to a natural gas processing facility to remove the NGLs and other impurities. Once the natural gas is processed and the NGLs and impurities are removed, the residue natural gas meets downstream natural gas pipeline and commercial quality specifications.

In general, on an energy-equivalent basis, NGLs have greater economic value as feedstock for petrochemical and motor gasoline production than as components of a natural gas stream. Typical uses of NGLs include the following:

The results of operations from natural gas processing are primarily dependent on the difference between the revenues we earn from extracting NGLs (in terms of cash processing fees and/or the value of any retained NGLs) and the cost of natural gas and other operating costs incurred in connection with such extraction activities.

Natural gas processing utilizes service contracts that are either fee-based, commodity-based or a combination of the two. Our commodity-based contracts include keepwhole, margin-band, percent-of-liquids, percent-of-proceeds and contracts featuring a combination of commodity and fee-based terms.  To the extent we retain all or a portion of the extracted NGLs as consideration for our processing services, we refer to such volumes as our “equity NGL production.”

If the operating costs of a natural gas processing facility are higher than the incremental value of the NGLs that would be extracted, then recovery levels of certain NGLs, primarily ethane, may be purposefully reduced. This scenario is typically referred to as “ethane rejection” and results in a reduction in NGL volumes available to us for subsequent transportation, fractionation, storage and marketing.

Our NGL marketing activities entail spot and term sales of NGLs that we take title to through our natural gas processing activities (i.e., our equity NGL production) and open market and contract purchases. The results of operations for NGL marketing are primarily dependent on the difference between NGL sales prices and the associated purchase and other costs, including those costs attributable to the use of our other assets by the marketing group.  Market prices for NGLs are subject to fluctuations in response to changes in supply and demand and a variety of additional factors that are beyond our control.  We attempt to mitigate these price risks through the use of commodity derivative instruments.  For a discussion of our commodity hedging program, see Part II, Item 7A of this annual report.

The following table presents selected information regarding our natural gas processing facilities at February 1, 2021: