Mon, 1 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
Okay our next presenting company is Enterprise Products Partners and with us today is since he could to companies headquartered in Houston is a leading North American provider. Midstream energy services. Good morning. You'll excuse me. The fact that I need to put -- my glasses and adjust my hearing -- speaks to the experience level we have been in a press. I truly appreciate the opportunity to -- Really give -- the enterprise story. A story started in 1968. When a fellow named -- Duncan. Started enterprise -- if you believe that two LPG trucks. Make up roughly. And then started run and a fleet of LPG trucks. We went public in nineteen in 1998. With an asset base of 700 million dollars. Today ten years later it's eighteen billion dollars. We've grown in a very disciplined manner. Anything we acquire. And anything we build. Has to do two things. It has it has to have an acceptable return in and of itself. But it also has to do something for what we already -- out. When you see our company system what you will see. Is that we're not a collector of assets were a builder of systems. Key words in our company our value chain. And integration. -- one of the largest publicly traded partnerships in terms of market cap and enterprise value. We've established revenue it -- gross margin and net income records in 2006. We suppress surpass them in 2007. And through nine months of this year we're ahead of the pace we had last year. We at high quality assets. We -- management that's aligned with the investors. Our senior management team owns 34% of the outstanding -- unions. Let's be fair about this one on pails in comparison. To what Dan Duncan homes. We have 27 years of average experience. We look at things on the long term crisis -- not necessarily worried about what something does force next quarter. Well look you know what it does -- -- recourse for years we all think we're immortal we fully expect to be here and -- -- -- years. We are very jealous of our investment grade writing. We have kept our past slips of the GP at 25%. So that we have a lower cost of capital than most and all parties. And we've had consistent increases and our distributions. And this just -- repeat management owns 34%. Really if you think about it man owns about a 150 million units of enterprise. A 108 million units of the GP. That's ownership of approximately insider ownership of approximately six and I have billion dollars. In addition. -- code has purchased 525. Million dollars of equity since our IP. Included in that are 62 million dollars recently through our dividend reinvestment program by by Africa. And then he split that he kept a kept the high -- in 2000 and to reduce them from 50% to 25%. For no consideration. And contributed 50% of gulf -- us. -- split to enterprise. For no consideration. Something close to a 500 million dollar value. Think the bottom line is. -- the management team -- enterprise. Is totally aligned. With the investors and enterprise. This is a map of our system. My father rove -- -- man. This is a map of our system. The key point we're not a collector of assets. Were a builder of businesses. If you look at that system. A couple of things should become apparent. There are no stranded assets. We believe in the value -- We believe in con activity. We believe that one part of our system should feed the other part of our system. We have 35000. Miles of pipe. We have processing plants about 26 album. With a capacity of ten million cubic to it and -- We've got a 150 million barrels of storage salt dome for a liquids petrochemicals and -- -- We have thirteen for action -- -- plants with a capacity north of 600000 barrels a day. We have the only full of -- oh world class fully refrigerated. Import export facility for real Fiji's. There are others none with a throughput capacity that we have. We -- 92%. Of natural gas production in the lower forty -- And we're connected to 8888%. Of the proved reserves. It's -- value -- We pay ourself in each step of the value to. We know by third parties. Let me give you an example. This is our energy prices are natural gas liquids system what I've done -- -- pulled out a natural gas system. We firmly believe that hydrocarbons. Is to supply driven business. And this is a supply rich system. In that it serves all the large producing basins in the lower 48. Be at the green river basin in Wyoming. The appearance in Colorado the UN to -- -- new top San Juan. Permian Barnett. Again look at the -- activity. If we produce a barrel of the NGOs in the Rockies. It goes to market through our pipeline. It's fraction knighted in our fraction haters. It's stored and -- -- storage. And it's distributed to in consumer. And are -- we -- ourselves. We don't play -- one else. In addition it's -- highly dynamic system capable of swing and supplies to the highest value markets. Went to hurricanes. Plowed through the Louisiana producing area. The refining and petrochemical industries in Louisiana. Came back on ran prior to the local supply. We swung supplies currently text pipeline at the rate of almost 70000 -- that. Ever since those plants that don't have those storms -- important to -- the requirements of those refineries in those petrochemical plants. Some pretty attractive cities. In addition. To having their supply rich system. We have a market rich system. We are tied to a larger concentration. Up. Refineries. By pipeline. Than any other company in the U us. And that is cost prohibitive. To duplicate its one of the things that truly sets in -- -- apart. For many of its competitors. In addition 54%. Of gas liquids. Are used by the petrochemical industry. Enterprises pipeline connected. To every ethylene plant in the United States. With the exception of a small ethylene west like ethylene plant in Kentucky. That incidentally a sister company -- -- connected to it. Again. Duplicating that system would be cost prohibitive. The point being. We tech product from the port from the place and to the market. And own to that in consumer. Through our own network of assets. That's what we mean when we say value chain approach. -- in every step of the value chain. Geographically. Integrated so that we serve ourselves as well as others. Our natural gas system. We bought this we acquired most of this when we acquired gulf terra in 2004. You'll -- it doesn't have the same level of -- activity. About a year ago. We completely restructured our commercial. Our commercial groups. And we took all of our natural gas assets that we placed them under one individual who shared the vision that enterprise class. And we made a commitment that we're gonna put the same business model over these natural gas assets. When we took a step back. And we were managing these as if they were individual little entities. When we took a step back week it but it dawned on us. That through our gathering and transmission pipelines. We're handling ten billion cubic foot -- -- of natural gas. Or over 15%. Of what the US uses. It became apparent to us we -- a small player and natural gas. We decided to act. The size that we are. We've brought in new management that shares our vision and our objective in this system is we're going to create the same kind of connected today. And our natural gas system as we have in our natural gas liquids system and were already making progress on that. By virtue of the fact that we've started tying our San Juan facilities. In two -- -- -- facilities are wa facilities and -- north Texas facilities. And worked as driving some manners like capacity that ties. Our supply rich. Texas system. To our market reach Louisiana system. Our diversified business mix allows us to weather. Not the storm but two storms. And still report pretty strong and outstanding results in the third quarter. Our diversified mix of businesses gives provides us with multiple earning streams that don't happen don't. Don't make -- depend on one business on one commodity. Are around one business region and I mentioned to -- how we reacted. To the hurricane. Our gross margin for the twelve months ending September 30 was two billion dollars that compares to a billion and a half and 2007. We've really benefited this year numbering and -- a lot of projects that we started in 2007. And 2008. We realize the cash flows does. And you'll see in a minute. We've got more to combat because we've got a number of projects -- -- -- Toward the end of this year in the first of next year that will support what we want to accomplish in 2000. That diversification. Of the business mix. Was variant and pages wants to -- major hurricanes plowed through Louisiana. In spite of that. We -- our objectives in the third quarter. And in addition to that we hustle like crazy to get our plants back on -- and to serve our customers. And to bring more value in enterprise. Independence is a huge project we have in the gulf of Macs -- It's a hub with a pipeline within 48 hours of hurricane night combing through. That pipeline and that -- was back on stream today it's more -- -- 900 million and we reposition generators key locations prior to the storms -- -- -- so that we had the capacity. To bring up critical pipelines and critical storage locations. That our customers were depending. Imam -- are complex are fraction editor and numbers letters were down just under a week. We were back up and operating within a week and running that production -- 220000. Girls. Running those -- pull out and our storage caverns were down totaled 36 hours so that not a single guest producer. It depends on Ngo tackling in the enterprise system -- -- could hurt all. A single molecule acts. Our import facility was down wouldn't -- when -- on the Houston Ship Channel. Was down one week. One week after the storm. We had a 550000. Barrel shipped from somewhere alikes on -- track unloading at that terminal. Our how our gas processing facilities in Louisiana within two within two -- weeks with one exception. Who's ready detect gas that one exception was north -- -- had a lot of water we'll have it back on the first part of December. Our panel on offshore prison pipeline had a had a separate -- had -- was -- effort that pipeline will be back in operation the first part of December. Everything in south Texas continue to operate. And didn't have a hiccup. Walk you through a few of the projects. That. That we've brought on that's helped us this year and we will expect to help us next year. This is just a list of the four billion dollars of projects that we've put it that we started in 2008. 20072008. What's been completed and you can see what will be completed. Over the next year one of the largest initiatives. That we had was what we call our western franchise initiative. Three years ago. In the northern Rockies are we had was -- mid America pipeline. Evacuating NGOs from other people's points. We did happen San Juan -- our acquisition of golf -- a gathering system gathered just over a BC up today. And -- 600 million -- processing. Today. We are gathering. Right at three BC up today in the northern Rockies. About -- and I think it's two point seven in addition to the BC. That we're gathering in San Juan. And today we have over two -- epidemic processing capacity including news and want. And by the first quarter will be pushing three BC up a processing capacity. And four -- -- -- day gathering. Within three years -- created not just a footprint but a franchise. In the piceance basin. And in the Green River bison to go along with what we have in San -- to support that we expanded Latin America pipeline system. About 500000 barrels or -- And then to support that we had to -- fraction nation. Traditionally -- nation would have been built Atmel will be the NGL market -- where we have all of our other acts. We opted to build this -- and Hobbs New Mexico for a very simple reason. We love the idea of going to the highest value markets from Hobbs we have choices. We can either move the product in the Mexico. We can move it to the midwest. Are who we can move it to the Gulf Coast through our systems. That's what we mean when -- and I. We have pretty dynamic systems weakens -- our production. To where we make the most money. The Barnett is another area like the pee -- like Jonah -- -- that's growing enormously. Today. You can say for to have BCF for production. Was 97 producing 9700 producing. Wells and a lot of people -- over six by 2011. I kind of snicker when I saw the gas price to -- that runs our natural are unregulated natural gas business reminded me. That there's 350. Completed wells and the Barnett says there are not producing. Waiting for -- away. To take advantage of that growth. And a need for take away were working on two pipeline projects. -- Sherman extension is a one point one BCF and I 170 mile pipeline. That will extend our Texas in -- system which runs full. To run interconnect -- board walks -- gulf crossing pipeline near Sherman Texas. That pipelines anchored by -- -- producers. And almost sold out. Additionally we're building -- lateral about forty miles -- to the trinity river basin to feed that pipeline. At collateral is anchored by a major producer with a lot of activity in the area. And is and will be completed. -- I don't know. Third quarter of next year. I or we have -- -- portfolio of offshore assets platforms. And pipelines. Natural gas and crude global what I will highlight. Is our most recent in our largest project was our independence. And independence trail projects. We had some mechanical issues in the second quarters we didn't flow what we really want -- and then we had hurricane issues of course. But that pipelines minimum 900 million and a -- capacity. And if it moves -- 900 million -- -- for a complete year which we always expect. It'll generate about 200 million dollars and gross operating -- And then finally recently along with Pepco and all tanking. We've announced the taxes oil port off of -- off the coast of Texas. This will facilitate. Crude oil deliveries into the refinery system on the US Gulf Coast. At about one point eight million barrels a day off -- right. And allow for those refineries. To use. Very large crude -- carriers. Rather than -- in the product into their -- kind -- It is supported and anchored by a long term contracts with Exxon and with motif up. And you can trust me we have one heck of a commercial initiative. Dealing with every other refinery on the Gulf Coast to ensure that when that thing comes on line it is -- This is a picture of what it looks like. It's got a pipeline. Eighty -- mile pipeline. From not the offshore port into the Texas City area. It has well over five million barrels of storage. And then another pipeline. Over -- report -- and maltego refinery. With the capability to expand it. And to extended and -- like -- if required. We measure our -- financial performance in terms of cash flow -- In gross operating margin. -- -- continues to recruit increase is reflecting on this slide for the last four quarters including the third quarter of 08. After adjusting for the impact of hurricanes. You can see that our our debt in the -- has improved. Front and -- since the end of 07 our objective is to keep -- -- -- neighborhood of four. On the top in yellow we put what we would have died had it not been for the impacts of the hurricanes are distributable cash flow. As. Maintain north of one well not the one and in spite of the hurricanes. And -- -- in speaks to our ability and our diverse -- and business mix in spite of those hurricanes in the third quarter. We had one point two times coverage what we actually night. Our growth and it in the non distributable cash flow is and I -- -- partnership. By maintaining. And while maintaining a strong balance sheet. Unlike a lot of them all these we retain a lot of cash. In fact since our IP -- we've retained. 850 million dollars or about 50%. Of cash generated. That's more than we've -- our general partner in the same time for. When you look at the amount of equity mission issued -- MO -- over the last two years in the chart on the right. There's one company missing on that and that's enterprise. We've been able to find those capital projects through our retained earnings. The last equity offering we did Randy was September of 06. And then finally. We've we've established a track record of growing our portfolio of assets. Generating -- -- significant cash flow. And expanding our businesses. While exercising. Financial discipline. And strategic. Discipline. The chart on the top left shows are assets that have grown from 700 million dollars when we -- Ten years ago. To eighteen billion dollars today. An average of 38% a year. We've consistently increased our -- distributions. We've increased from 26 times since our -- We've increased them for seventeen consecutive quarters. And we've outperform -- Larry and index and the SS and -- mile wide margin. -- almost six or almost a total return of 600%. We are not a collector of assets. Were -- builders but we're builder of systems. A value chains. With connectivity. And the dynamics to allow us. To serve the producers. To serve the consumers. And do it in a manner. There are products go to the highest value markets that again appreciate very much. The opportunity to -- story.