Enterprise Reports Results for Third Quarter 2007

Business Wire, Oct 25, 2007

HOUSTON -- Enterprise Products Partners L.P. (NYSE:EPD) today announced its financial results for the three and nine months ended September 30, 2007. The partnership reported net income of $118 million, or $0.20 per unit on a fully diluted basis, for the third quarter of 2007 compared to net income of $208 million, or $0.43 per unit on a fully diluted basis, for the third quarter of 2006. The $90 million decrease in net income between the two periods is primarily attributable to a $48 million decrease in proceeds from business interruption insurance claims, a $21 million increase in depreciation expense on newly constructed and acquired assets and a $22 million increase in interest expense due largely from an increase in debt to fund the partnership's capital expenditure program. In addition, net income for the third quarter of 2007 was adversely impacted by approximately $21 million, or $0.05 per unit, due to certain factors, including lower natural gas liquid ("NGL") import volumes, costs associated with start-up delays at certain newly constructed facilities and the write-off of conversion costs associated with an NGL storage cavern. The third quarter of last year included charges to income of $14 million, or $0.03 per unit, for the non-cash impairment of certain offshore assets and replacement of cushion gas at the Wilson natural gas storage facility.

Distributable cash flow was $223 million in the third quarter of 2007 compared to $302 million in the third quarter of 2006. Distributable cash flow for the third quarter of 2006 included $50 million of cash proceeds from business interruption insurance claims. On October 16, 2007, the board of directors of Enterprise's general partner approved an increase in the partnership's quarterly cash distribution rate to $0.49 per unit with respect to the third quarter of 2007. This represents a 6.5 percent increase over the $0.46 per unit rate that was paid with respect to the third quarter of 2006. Distributable cash flow for the third quarter of 2007 provided 0.9 times coverage of the cash distribution to be paid to the limited partners. For the nine months ended September 30, 2007, distributable cash flow was $739 million compared to $738 million for the same period of 2006. Distributable cash flow for the first nine months of 2007 provided 1.0 times coverage of cash distributions paid with respect to this period. Distributable cash flow is a non-generally accepted accounting principle (or "non-GAAP") financial measure that is defined and reconciled later in this press release to its most directly comparable GAAP financial measure, net cash flows provided by operating activities.

"Enterprise recorded another solid operational performance in the third quarter of 2007," said Michael A. Creel, president and chief executive officer of Enterprise. "Each of our segments posted strong operating results driven by a resilient economy and the demand for energy. Our integrated network of midstream energy assets transported approximately 1.8 million barrels per day of natural gas liquids, petrochemicals and crude oil and a record 7.9 trillion Btus per day of natural gas.

"The third quarter was a transitional quarter for Enterprise as we were in the late stages of completing construction and beginning operations for $2.1 billion of new assets in five states and the deepwater Gulf of Mexico that should provide substantial new sources of cash flow for our partnership. During the quarter, we commenced operations at the Independence Hub and Trail, Mont Belvieu propylene fractionator, Hobbs NGL fractionator, Mid-America's Rocky Mountain NGL pipeline expansion and Jonah natural gas gathering expansion.

"Our financial performance for the quarter however was impacted by depreciation and interest expense associated with our investments in newly constructed assets that are operational, but not fully ramped up in terms of volume and generating cash flow. We also incurred start up expenses associated with several of our new facilities, including delays in starting our Hobbs NGL fractionator and Meeker natural gas processing plant. Taking these factors and the difference in recoveries from business interruption insurance into account, the third quarter of 2007 compares quite favorably with the third quarter of 2006, which continues to be the record quarter for Enterprise for most of our financial and operational measures," stated Creel.

"The pace of producers in connecting their anchor fields and ramping up production into the Independence Hub platform and Trail pipeline is exceeding our expectations. Current natural gas volumes are approximately 640 million cubic feet per day with producers expecting throughput to reach or be near the maximum capacity of 1 billion cubic feet per day by year end. Our confidence in this project was further confirmed after the October MMS lease sale when producers invested over $360 million to acquire exploration rights to 80 offshore blocks that are within a 50-mile radius of the Independence Hub and Trail," added Creel.