Enterprise Reports Record Results for Fourth Quarter 2007; Generates $1 Billion of Distributable Cash Flow in 2007

Business Wire, Jan 28, 2008

Review of Segment Performance for the Fourth Quarter of 2007

NGL Pipelines & Services - Gross operating margin for the NGL Pipeline and Services segment was $223 million for the fourth quarter of 2007 compared to $203 million for the same quarter of 2006. The fourth quarter of 2007 included $9 million of proceeds from business interruption insurance claims compared to no recoveries in the fourth quarter of 2006.

Excluding these insurance recoveries, Enterprise's natural gas processing business recorded gross operating margin of $106 million for the fourth quarter of 2007 versus $91 million in the fourth quarter of 2006. Enterprise's Chaco, South Louisiana and South Texas processing facilities reported a combined $36 million improvement in gross operating margin, primarily due to higher realized prices for equity NGL production.

This increase was partially offset by expenses associated with the delays in the start-up of both the Meeker and Pioneer plants due to the need to replace defective high pressure valves and address third-party engineering design problems. Earlier this year in anticipation of these plants being in operation during the fourth quarter, the partnership entered into transactions to economically hedge a percentage of the expected NGL production at these plants in order to capture near record natural gas processing margins. These transactions entailed the physical forward sales of NGLs and the purchase of natural gas. The unexpected downtime at Meeker and the delayed start-up of Pioneer resulted in actual NGL production and natural gas consumption for the fourth quarter of 2007 being lower than the volume the partnership hedged. The cost to replace the defective valves and the expense resulting from the non-cash, mark-to-market charge on the short, or over hedged, NGL balance and the liquidation of the long natural gas position totaled approximately $29 million, or $0.07 per unit. The gross operating margin generated by Meeker from actual production was offset by a decrease in gross operating margin from the NGL marketing business.

"The start-up problems associated with the Meeker and Pioneer facilities are atypical for Enterprise, do not meet our engineering and operating standards, and are not consistent with our 40-year history of developing midstream projects," stated Creel. "We are actively engaged in efforts to obtain recovery for certain of our losses and to ensure that we do not experience these types of problems on our future projects."

Equity NGL production, the NGLs that Enterprise earns and takes title to as a result of providing processing services, increased 33 percent to 85 thousand barrels per day ("MBPD") for the fourth quarter of 2007 from 64 MBPD for the same quarter in 2006. This increase is primarily due to equity NGL production associated with the Meeker plant which was in service for part of the fourth quarter of 2007. Natural gas volumes processed under fee-based contracts increased to approximately 2.4 billion cubic feet per day ("Bcfd") this quarter from 2.2 Bcfd in the fourth quarter of 2006.