Enterprise Products Partners L.P.

SEC Filings

ENTERPRISE PRODUCTS PARTNERS L P filed this Form S-1/A on 07/21/1998
Entire Document
                            BUSINESS AND PROPERTIES
  The Company is a leading integrated provider of processing and
transportation services to producers of NGLs and consumers of NGL products.
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. In 1997, on a pro forma basis, the Company had revenues, combined
EBITDA and EBITDA in unconsolidated affiliates and net income of $1.0 billion,
$119.4 million and $87.0 million, respectively.
  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 plant,
in which it owns a 33 1/3% economic 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 an 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.
  The Company's operating margins are derived from services provided to
tolling customers and from merchant activities. Over the past five years,
volumes from toll processing operations and merchant activities accounted for
an average of approximately 77% and 23% of the Company's total sales volumes,
respectively. In its toll processing operations, the Company does not take
title to the product and is simply paid a fee based on volumes processed. The
Company's profitability from toll processing operations depends primarily on
the volumes of NGLs and refinery-sourced propane/propylene mix processed and
transported and the level of associated fees charged to its customers. The
profitability of the Company's toll processing operations is largely
unaffected by short-term fluctuations in the prices for oil, natural gas or
NGLs. In its merchant activities, the Company takes title to feedstock
products and sells processed end products. The Company's profitability from
merchant activities is dependent on the prices of its feedstocks and end
products, which typically vary on a seasonal basis. In its merchant
activities, the Company generally seeks to reduce commodity price exposure by
matching the timing and price of its feedstock purchases with sales of end
  The Company has expanded rapidly since its inception in 1968, primarily
through internal growth and the formation of joint ventures. During the four
years ended December 31, 1997, the Company's EBITDA and its EBITDA in
unconsolidated affiliates increased on a combined basis at a compound annual
rate of 19.2%. This growth reflects the increased demand for NGL processing
due to increased domestic natural gas production and crude oil refining and
increased demand for processed NGLs in the petrochemical industry. Over the
last six years the Company has increased its NGL fractionation capacity by
approximately 27%, built a third isomerization unit that increased its
isobutane production capacity by approximately 60%, increased