Enterprise Products Partners L.P.

SEC Filings

ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
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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% basis before any allocation of earnings to noncontrolling interests.

Segment gross operating margin for NGL Pipelines & Services and Crude Oil Pipelines & Services reflect adjustments for shipper make-up rights that are included in management’s evaluation of segment results.  However, these adjustments are excluded from non-GAAP total gross operating margin.

The GAAP financial measure most directly comparable to total gross operating margin is operating income.  For a discussion of operating income and its components, see the previous section titled “Consolidated Income Statement Highlights” within this Item 7.  The following table presents a reconciliation of operating income to total gross operating margin for the periods indicated (dollars in millions):

For the Year Ended December 31,
Operating income (GAAP)
Adjustments to reconcile operating income to total gross operating margin:
   Add depreciation, amortization and accretion expense
   Add asset impairment and related charges in operating costs and expenses
   Add net losses or subtract net gains attributable to asset sales
   Add general and administrative costs
Total gross operating margin (non-GAAP)

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 the partnership.  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.

The following information highlights significant changes in our year-to-year segment results (i.e., our segment gross operating margin) and the primary drivers of such changes.  The volume statistics presented in the tabular information for each segment are reported on a net basis, taking into account our ownership interests in certain joint ventures, and reflect the periods in which we owned an interest in such operations.  These statistics reflect volumes for newly constructed assets from the dates such assets were placed into service.

Estimated Impact of Hurricane Harvey on Results for 2017

In late August and early September 2017, the Gulf Coast region of Texas, including its critical energy infrastructure, was impacted by the cumulative effects of Hurricane Harvey.  Impacts on the energy industry included, but were not limited to, severe flooding and limited access to facilities, disruptions to energy demand from area refineries and petrochemical facilities and the closure of all ports on the Texas Gulf Coast, which limited access to export markets.  Although operating at reduced rates, many of our plant, pipeline and storage assets along the Texas Gulf Coast remained operational during the storm.

We estimate that Hurricane Harvey reduced our gross operating margin for the third and fourth quarters of 2017 by approximately $35 million and $11 million, respectively.  Of this amount, approximately $30 million represents the combined net impact of lower-than-anticipated volumes and lost business opportunities.  The remaining $16 million represents expenses we incurred in connection with hurricane-related repair and recovery costs.