Good morning. My name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to the Enterprise Products Partners Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Please limit yourself to one question and one follow up. Thank you.Randy Burkhalter, VP of Investor Relations, you may begin your call.

Thank you, Jason. Good morning and welcome everyone to the Enterprise Products Partners conference call to discuss earnings for the second quarter. Our speakers today will be Jim Teague, Chief Executive Officer; and Randy Fowler, President and Chief Financial Officer of Enterprise’s general partner. Other members of our senior management team are also in attendance for the call today.During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on the beliefs of the company as well as assumptions made by and information currently available Enterprises’ management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations were proved to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those and the forward-looking statements made during this call.And with that, I'll turn the call over to Jim.

Thank you, Randy. Before I get into the script, I wanted to acknowledge a person sitting directly to my left, Bill Ordemann, will be retiring later in August. So this will be his last earnings call. And I fully intend to direct almost all questions to Bill. Last quarter, we talked about what should drive investors back into energy stocks. And the conclusion was, show me the cash which we did.We continued to show the cash with a record $1.7 billion of DCF in the second quarter, which provided a record 1.8 times coverage, giving us 3.4 billion of DCF for the first six months of 2019. After increasing distributions for the 60th consecutive quarter, we retained $753 million of distributable cash in the second quarter and a total of $1.4 billion for the first half.Adjusted EBITDA for the second quarter was 2.1 billion, that’s up 18% from the same quarter a year ago, or a total adjusted EBITDA of 4.1 billion for the first six months, which is up 17% compared to the first six months of last year. Our results continue to provide us healthy excess cash and the flexibility to fund our projects and maintain a solid balance sheet without having to issue equity.Continuing the trend of previous quarters, Enterprise again reported a number of records during the quarter. In total, we reported 16 operational and financial records, including record volumes in our liquid pipelines at 6.6 million barrels a day; marine terminals of 2 million barrels per day, gross NGL fractionation volumes of 1.2 million barrels a day; and natural gas pipeline volumes at 14 BCF a day, and our petrochemical segment, our PDH plant exceeded design for the quarter.Yesterday, we announced that we had signed Transport and Terminaling service agreements with Chevron for a crude…

Okay, thank you, Jim and good morning, everyone. I’d like to start off with the income statement for the quarter. Net income attributable to limited partners for the second quarter of 2019 was $1.2 billion or $0.55 per unit on a fully diluted basis, which included $13 million or less than $0.01 per unit in non-cash mark-to-market hedging losses. This represents a 22% increase in earnings per unit, excluding these non-cash mark-to-market hedging activities versus the second quarter of 2018.Cash flow from operations was $2 billion for the second quarter of 2019, a 38% increase when compared to the second quarter of 2018. In the second quarter of ’19, cash flow from operations included $228 million of benefits from changes in operating accounts. In terms of cash flow from operations, our cash distribution payout ratio was approximately 47% for the second quarter of ‘19 and 58% with respect to the trailing 12 months, ended June 30, 2019.And looking at the trailing 12 months, it would - is a way to come in and remove the noise of cash uses and provided by seasonal working capital uses. Free cash flow was $2.3 billion for the trailing 12 months of June 30, 2019, which represents a 96% increase when compared to the 12 months ending June 30, 2018. In terms of capital investments, and to follow what Jim said regarding capital investments, we have a total of approximately $6 billion of major capital projects under construction and this includes the $3.2 billion which he mentioned is expected to be placed in service by the end of this year.Our capital investments in the second quarter were $1.1 billion, including $80 million is sustaining CapEx. We still expect growth capital investments for 2019 to be approximately $4 billion and $350 million for sustaining CapEx.…

Thank you, Randy. Jason, we're ready now to take questions from our listeners. And I’d just remind everyone that to please limit your questions to one question and one follow-up. Go ahead, Jason.[18:40]

Certainly. [Operator Instructions] Your first question comes from the line of Shneur Gershuni from UBS. Your line is open.

Hi, good morning, everyone. Maybe we can start off with a big picture question here. There's been a lot of volatility in NGL prices over the past couple of months. I was wondering if there are multiple opportunities for Enterprise to benefit from the situation via storage and frac later. In that context, can we also talk about the propane export expansions that you're bringing online, does that close the international spreads or are there going to be more opportunities there? And if we can even talk about ethane as well also given how low ethane is? Are there opportunities to take advantage of that? Or are there things that you're noodling and thinking about that weren't discussed at the Analyst Day?

Justin, you want to take that?

Yeah. I mean, let's start with the export arb, I mean, I think with our expansions that we've announced, the one coming on this year and the expansions announced between us and the rest of the folks in the market over the next 12 months, I mean, I do expect that arb will start normalizing again. I think if it doesn't, that just supports further expansions that Jim's alluded to in the form of projects along the channel.I do think that the NGL price dynamics today are supporting a lot of the various optimization opportunities that we have within our system, when it comes to storage and regional arbs. So I think on a holistic basis, that this NGL price environment benefits us and our assets in many different ways.

I'll just -- this is Brad, and I’ll just add that the question about storage. I think regardless of the hydrocarbons, storage by the water matters, you're about to see things in different markets where storage does matter. So I think a lot of opportunities from crude oil and petrochemicals and NGLS to capitalize on that.

Yeah, and Shneur, this is Randy. One thing I would also add, just if you go back and look over time, it seemed like anytime we've seen processing margins get abnormally weak, if you would, there's a natural hedge out there with Contango opportunities and we're sort of seeing that again this time too.

Okay, that makes great sense. Thank you, guys. And just one follow-up question with the projects that you just recently announced, how much will you be expanding capacity from Midland-to-Echo? And are there any thoughts in bringing a partner into the VLCC loader facility or do you want to own that 100%?

Depends on how many contracts we get as to whether I want to own it 100%. But yes, I guess we'd always entertain joint venture partners. We got to get this thing permitted first. And that's a good year plus.

Yeah. I'd say, we probably have the permit in its final stages by the end of first quarter next year with approval in the second quarter.

And just with respect to the Midland-to-Echo site, how much capacity were you planning to add there?

Stay tuned.

I think that's a stay tuned.

Your next question comes from the line of Jeremy Tonet from JPMorgan. Your line is open.

Hi, good morning. Maybe just picking up on the last point here with the new agreements that you talked about with Chevron for supporting the expansion of your crude oil system, do you envision kind of new pipeline like a third Midland-to-Echo or is this expanding existing capacity? Or is there any other kind of details that you could provide as far as what expansion you’re envisioning here?

I think the only detail we're prepared to provide is, we're building a pipeline.

A new pipeline, okay. That's helpful, thanks. And it seems like, you guys keep setting new records financially and you have quite a strong position here and just wondering if you could update us as far as your thoughts with regards to excess capital be it supporting on new growth CapEx or maybe accelerating repurchase program or maybe kicking up distribution growth a little bit higher towards where some of the peers are, just wondering how you think about the interplay of those three at this point?

Yeah, Jeremy this is Randy. I think where we are is, again, we've got a number of growth capital expenditure opportunities that we like to get a little bit better visibility on those that are -- if you would, that are still under development. We think we’ll get better visibility between now and the end of the year. And if you would, sort of 2019 was also the second year of a transition period. So I think the guidance that we provided for distribution growth in January, we're looking to stick to that.And we're -- we'll take a look at it at the end of the year, beginning of next year and sort of provided an update – a guidance at that point. The buyback, we're still thinking about it in terms of opportunistic and so we'll see what the market gives us on that front. While and -- here, what you say, on a number of our peers, increasing their distribution slightly, but also some of those guys, I think were on that list that cut them pretty dramatically here a couple of years ago. So we're staying our course and we're looking to return capital back to our partners, we've done that for growing distributions for 21 years, so look to continue.

Your next question comes from the line of Michael Blum from Wells Fargo. Your line is open.

Thanks there. Good morning, everybody. First question, just there has been, I guess there's been some market conversations around a lot of, I guess, new entrants or participants trying to get into the LPG export market. And I'm just wondering if you could just kind of walk us through your view of the competitive landscape as you see it here today?

Hi Michael, this is Jim. I don't look at it that we have to compete with anyone. I look at it that they got to compete with us and they’d better be prepared to compete with a very aggressive [indiscernible] program from Enterprise.

Got it. Okay, thanks. And then second question. The press release talks about particularly with your Mont Belvieu fractionators. So you saw higher volumes, but the press release mentioned lower fees, and I just was hoping you could just talk a little bit about the dynamics there. I would have thought with the frac market pretty tight that the fees would be pretty high as well. So I'm just want to understand a little better what's going on there? Thank you.

Yeah, Michael, this is Randy. I think some of that could be lower margins from blending opportunities that we may have seen during the quarter.

Okay, but in terms of just the trends and fees for fractionation, would you say that that's steady, rising, falling?

This is Zach. So I think some of that was some one-time events, we did have a turnaround in South Texas. But as far as fees, no, I think short-term fees are still elevated. They're above new build there. When I say that, I mean, short-term deals, I think long-term deals are still around seasonally there's a new build economics, I think that there's still an appetite from the producing community for more fractionation space.

Great, thank you.

Your next question comes from the line of Tristan Richardson from SunTrust. Your line is open.

Hey, good morning guys. Just go back to the Midland-to-Echo site, you have talked in the past about your optionality you have with Midland-to-Echo 2 and the potential to return the NGL service longer-term. With the commercial agreements announced last night and third-party crude capacity currently in line fill, can you talk about that optionality and potentially the timing there particularly once Shin Oak goes into full service?

We always have the option - we think it’s a pretty valuable option that we have with Shin Oak, secret seems to think we're going to flip it in and out every other month, but we're not, but it is a valuable option that we have as Shin Oak fills up, it gives us an opportunity to either put that back in NGL service and add capacity to our crude pipelines and there's really no timing other than what opportunity present itself.

Helpful. And then just last one, with the large slate of projects coming online this year. Can you talk about just normalized levels of capital deployment and just given the projects and the portfolio slated for 2020 and beyond, could we see capital deployment over the next couple of years closely resemble to the levels here as we are expecting here in 2019?

Yeah, Tristan when we come in based on the projects currently sanctioned. And, if you would, just for clarity, that doesn't – at this point, does not include spot, because it's still pending government approval. So if you would, just on the projects that have been sanctioned, we're looking at growth CapEx next year, call it in the $2 billion to $2.5 billion range.

Helpful. Thank you guys very much.

Your next question comes from the line of Jean Ann Salisbury from Bernstein. Your line is open.

Good morning, congratulations on the idea of the FID of your terminal. Assuming that that goes forward, I think we can assume that some of your existing crude export docks could be converted to NGL exports. Could we get a sense of how much of a time and cost advantage it is to convert rather than start from scratch? My understanding is that, it's not a huge advantage, because most of the cost is refrigeration. But I am happy to be to be corrected.

Graham, you go and give thoughts on that.

I’m not sure fully understand the question.

What’s the cost advantage of expanding versus building new, and Jean Ann seems to think that there's not a great advantage to it and you take a shot now –

If you take crude oil off the dock, convert it to an NGL services is relatively quick and inexpensive to do that. That's not a big undertaking –

What about and but she's referring to refrigeration.

Refrigeration, we – one of the things that we have at the docks and allows us to expand refrigeration pretty readily is all of the other infrastructure, the piping, the insulated - some of the things that we do for a refrigerated loading are already there. So expansions to the facilities are relatively inexpensive.

Thank you. That's helpful. And just as a follow-up. The original LPG exports that you signed a few years ago at the good rates. Can you remind us of the cadence of how those roll up over the next few years?

Well I didn't get the question.

LPG export for role off contracts we're talking –

Let me take that one, because I think we get so focused on, oh, do you have that particular part of your value chain fully contracted LPG – our fractionators are fully, fully, fully contracted. If I believe that every incremental barrels get crude oil across the export dock, and as far as I'm concerned from a value chain perspective, I'm fully contracted whether I have 10-year contracts specific to the dock or not.So you heard us say it and to Michael's question earlier, is, we're looking at the total value chain and we’re going to compete to the extent we have to on our LPG export, because it's supporting so much other stuff that we have. So if you're going to compete with us on the LPG exports, you better be able to do it with something like a five to six handle, otherwise, you're not going to be there. Does that help you Jean Ann?

That does, yes, thank you very much. That's all for me.

Your next question comes from the line of Christine Cho from Barclays. Your line is open.

Morning, everyone. I wanted to start on the NGL business. In the Permian, we've seen maximum ethane extraction there, because no one wants to reject gas in a negative Waha pricing environment. With the upcoming in service of Gulf Coast express that local pricing should improve and maybe rejection now makes sense. Am I thinking about that correctly? Should we expect that to impact NGL volumes out of your Permian Pipes and the services downstream of that?

Good morning, this is Brad. In the short-term, you're going to see some frac compression on that ethane, but, again, going towards our value chain, if we give our producers the ability to reduce their ethane recovery. But our value chain allows us to continue to produce that ethane. So as far as we look at it in the short-term, I think we're probably not going to see a lot of swing in our NGL production out of the Permian.

Okay. And then, Randy, you mentioned that there's good growth opportunities and you're waiting for a clarity before looking at what you want to do with excess cash flow. How do you think about M&A, just given that your balance sheet is one of the strongest in the space and there are various parties looking to exit their Midstream position?

Hey, Christine that I mean, we – I would say, continually get shown quote unquote, M&A opportunities. And we're – we keep coming back is, our organic growth projects that bolt-on to our existing system give us better returns on capital. And I’d dare say, when we come in and look at some of the M&A opportunities that are provided, the capital intensity to drive DCF per unit growth is much less with organic growth projects than it is with M&A opportunities. So that continues to be our focus, we’ll continue to come in and look at opportunities. But really we – we’re more focused on the growth CapEx and just develop it organically.

Very helpful. Thank you.

Your next question comes from the line of Justin Jenkins from Raymond James. Your line is open.

Morning, everyone. I guess maybe just to start real quick as a follow-up on Midland-to-Echo 2 to the extra materials noted, it did about 209,000 barrels a day of throughput in the quarter. Is that pretty close to max capacity? Or can you squeeze a little more of that?

We could probably squeeze a little more out of it, but it'd be at a high cost.

Fair enough. And I got a second question here more on the octane market seems like that's been an area of strength here recently. And based on what we're seeing that a refining land looks like that's going to continue for some time. And now we got iBDH later this year, but anything else in the cards in terms of capitalizing on maybe the more octane enhancement opportunities into 2020 and beyond?

And not really, I mean, we're realizing some nice earnings from our big plant and we – you have quite a bit of demand for the isobutyl and mix that will not – that we have available to.

Fair enough. Thanks guys.

Your next question comes from the line of Pearce Hammond from Simmons Energy. Your line is open.

Good morning and thank you for taking my questions. My first pertains to the spot terminal, it was very helpful color you provided on your expectation on when permitting will occur. But how long would it take you to build the actual terminal?

Graham?

We’re looking at and we’re basically looking at a couple of years.

And that would be a couple of years from when you get all the permits in place, or would that be happening ahead of the permits?

Some of that would be happening ahead of the permits.

Perfect. And then the follow-up question. In your prepared remarks, you talked a little bit about the Houston Ship Channel and its importance to the nation and to the energy industry writ large. If you can elaborate a little bit more, you seeking to get more support in Washington to do anything specific within the Ship Channel, whether it would be dredging or any kind of other economic support? Or is it just more to shine a light on the importance of the asset?

I think there's an initiative that industry is working with the port at Houston on to widen the Ship Channel from 530 feet to 700 feet up to Morgan’s Point and then to do some dredging, making it deeper at the upper end of the Ship Channel. What that does for us is, it gives us more daylight hours, in particular, for LPG. So if we get three or four daylight hours each day, that's pretty dramatic for brass and others. Bob, you want to add to that?

Yes, sir, as the port has been working with the Army Corps of Engineers for four years on a on a plan to widen the Ship Channel, that plan should come out early spring next year to get voted on by the Federal government to approve the project. So that we can move forward to widening it to 700 feet and industry is working with the port on trying to accelerate the construction of that project –

Through local funding

Through local funding.

Great, thank you very much.

Your next question comes from the line of Colton Bean from Tudor Pickering Holt. Your line is open.

Good morning. So just to start off on the propylene side of things, it looks like you had a pretty good quarter of plans there. I think you noted that the PDH unit was running at a 120% of the nameplate. So just how do you view the sustainability of that rate? And does it impact what you need to underwrite to feel comfortable with the potential PDH unit addition there?

I don't think we – if we said 120%, I missed it. Did we? We ran it a 120%?

I think it’s accounting on the byproducts or not. I think the actual propylene production were like a 106% of a nameplate.

Okay, okay.

And I think we would expect that to be at those levels going forward.

And then just in terms of – in terms of the second part of your question, we're still commercializing and having negotiations with our customers on PDH too.

Got it, okay. And so not necessarily a read through from these results into any sort of changing goalposts around that? And then just on the Nat gas side of things, it looks like the marketing margin was even in context of a nearly 250 [ph] spread for Waha, it looks like Nat gas margin was pretty impressive there. Did you guys realize any incremental spot volumes on a quarter-over-quarter basis?

Well yeah, part of it is. The expansion that we did to be able to come in and transport more natural gas from Waha to the Gulf Coast and the Carthage area, that really didn't go into effect really until like third quarter of last year. So, yes, we had more opportunities in the second quarter of not I think we did in the ‘18.

Yeah, okay, but not necessarily any change here to-date?

No.

I appreciate that.

Your next question comes from the line of Spiro Dounis from Credit Suisse. Your line is open.

Hey, good morning, everyone. I'm certainly upon crude exports. Yeah and very encouraging to hear your outlook there on 8 million barrels a day of exports in the next few years. But I guess in the near-term here, I think we continue to hear maybe concerns from the investor community just around all the crude that's going to be ending up on the Gulf Coast pretty soon as all these Permian takeaway pipes come online, specifically, kind of South of Houston. Just curious how you think about how the industry solves for that without sort of a big price dislocation In the meantime?

This is Tony, I'll start it out and then see if Brent wants to add anything to it. Clearly, we're piped to bring crude oil to the Gulf Coast. I think really Brent has already covered it, once you get it to the Gulf Coast, it has to be – it has to hit a terminal and then it has to hit the dock. And that's kind of the end of story and so terminal capacity and dock capacity is critical to the US production. It's that simple. It's going to go.

Brent, speak to your flexibility to load at our other terminals.

Yeah, I mean something like how Enterprise runs its crude docks. It's not a whole lot of different than when Zach talks about how we optimize the amount of fractionations. So we have other terminals that we do flex on. So the goal is to load everything at the Enterprise 100% on Houston Ship Channel. Then we kind of optimize around that based on other facilities.So we have a 50:50 JV with Enbridge at Freeport and Texas City, and then ultimately will flex down to Texas City, when we get backed up when things happen and things always happen, we're about to see that in different markets that there's more supply comes online.In terms of the demand, we're still seeing a healthy appetite for crude oil, the ARB, the water has probably decreased slightly over the last month or so for it. But and we've said this before on NGLs is, these barrels will price to clear. And there maybe some lumps along the way that may take some time to invest capital and make things happen. But if you spend any time in China, and you spend any time in India, you are seeing the demand happening and the amount of money that these guys are investing to take what we produce, that is real. It will take time, but it is real.

Okay, so just to clarify, it sounds like you're saying then in the near-term here in terms of our ability to export, it's pretty balanced with all the new pipeline capacity and supply that's coming online. Is that fair?

I think it's fair. But I mean, we've been public on this. I mean, pipeline capacity is one thing. Dock capacity is another thing. Storage is another thing and to think that all these things are going to harm at max capacity, I think is a false thought.

Yeah, that's fair. Second question just on the Permian, Delaware, maybe specifically peers out this morning with a pretty severe cut to the outlook, pointed to things like well timing, power issues, weather issues. Just curious if you guys had seen any of that in your acreage?

The answer is no. This is Brad. I would say most of our customers are large integrated producers have done a real good job of laying the groundwork for production whereas as of right now, our volume curve is kind of where we thought it was going to be, haven’t seen a lot of slow down.

Great. Appreciate the color. Thanks, everyone.

Your next question comes from the line of Keith Stanley from Wolfe Research. Your line is open.

Hi, good morning. Just on the capital backlog in the slides 2020 and beyond is up, it's about $1.3 billion. So I'm assuming some of that's the Midland-to-Echo expansion, but just any more detail breakdown on where that $1.3 billion increases coming from?

Yeah. Some of it was also – Keith this is Randy. Some of it was also on the LPG and crude and propylene export expansion projects that we mentioned. We also have – we also announced during the quarter, some new propylene and ethylene pipelines as well as an expansion of wages [ph].

Okay. Thank you very much.

And your math was right at $1.3 billion.

Your next question comes from the line of Michael Lapides from Goldman Sachs. Your line is open.

Hey, guys. Just thinking about the spot for a second. Can you talk about kind of a range of how capital intensive or kind of a CapEx expected if you get to go ahead from Uncle Sam to move forward?

It's not cheap.

Is there just kind of a back of the envelope or a rule of thumb to think about it in terms of size and scale? And also trying to think about the EBITDA impact kind of how impactful relative to the size and scale of Enterprise?

Yeah, I don't think it's impactful relative size and scale of Enterprise. And I'm not very narrow, but I'll give you an answer more than one, less than two.

Got it. Thanks, guys. Much appreciated.

There are no further questions at this time. I turn the call back to Randy Burkhalter.

Thank you, Jason. And with that, we're ready to conclude our call today. I'd like to thank everybody for participating. And Jason, if you would, could you give our listeners, the replay information and then after that, we'll conclude the call. Thank you.

Absolutely, a digitalized replay of the discussion will be available beginning today, July 31st 2019 at 1 PM Eastern and will end on Wednesday, August 7th 2019 at 11:59 PM, Eastern Time. To access the digitalized replay, please dial 855-859-2056 or 404-537-3406. That concludes today’s conference call. You may now disconnect.

Thank you.