Enterprise Products Partners L.P.

SEC Filings

ENTERPRISE PRODUCTS PARTNERS L P filed this Form 424B3 on 02/01/2018
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activities decreased $3 million quarter-to-quarter primarily due to lower average sales margins and volumes experienced by our NGL marketing business, partially offset by higher average processing margins and insurance proceeds at our gas plants.

Gross operating margin from our Crude Oil Pipelines & Services segment increased to $296 million for the fourth quarter of 2017 from $221 million for the fourth quarter of 2016. This increase was attributable to the addition of our Midland-to-Sealy pipeline, which began commissioning and providing limited services in November 2017, increased pipeline volumes on our South Texas pipelines, higher fees from our EFS Midstream assets and increased loading volumes at our Houston Ship Channel and Beaumont terminals, partially offset by lower sales margins experienced by our crude oil marketing activities.

Gross operating margin from our Natural Gas Pipelines & Services segment was $179 million for the fourth quarter of 2017 compared to $201 million for the fourth quarter of 2016. The $22 million quarter-to-quarter decrease in gross operating margin is primarily due to lower revenues from our Texas Intrastate System, partially offset by higher volumes on our Haynesville and BTA gathering systems. Gross operating margin for the Texas Intrastate System for the fourth quarter of 2016 included the benefit of a $28 million lump sum payment associated with the termination of certain transportation contracts. We acquired the BTA gathering system as part of our acquisition of Azure Midstream Partners, LP in April 2017.

Gross operating margin for the Petrochemical & Refined Products Services segment was $172 million for the fourth quarter of 2017 compared to $149 million for the same quarter of 2016. The $23 million quarter-to-quarter increase is primarily due to downtime and costs at our isomerization facility during the fourth quarter of 2016, lower operating costs and higher sales volumes at our octane enhancement facility and higher transportation fees on our TE Products pipeline and related terminals. These quarter-to-quarter improvements were partially offset by higher operating costs incurred on our Houston and Beaumont terminals due to Hurricane Harvey and higher commissioning costs incurred at our PDH facility.

Non-GAAP Financial Measure. We evaluate segment performance based on our financial measure of gross operating margin. Gross operating margin is an important performance measure of the core profitability of our operations and forms the basis of our internal financial reporting. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.

The term “total gross operating margin” represents GAAP operating income exclusive of (i) depreciation, amortization and accretion expenses, (ii) impairment charges, (iii) gains and losses attributable to asset sales, and (iv) general and administrative costs. Total gross operating margin includes equity in the earnings of unconsolidated affiliates, but is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges. Total gross operating margin is presented on a 100 percent basis before any allocation of earnings to noncontrolling interests. The GAAP financial measure most directly comparable to total gross operating margin is operating income.