Business Combinations

12 Months Ended

Dec. 31, 2011

Business Combinations [Abstract]

Business Combinations

Note 10. Business Combinations

The following table presents our cash used for business combinations by segment for the periods presented:

	For Year Ended December 31,
	2010		2009
NGL Pipelines & Services	$	105.6	$	33.3
Onshore Natural Gas Pipelines & Services		1,111.1		0.8
Onshore Crude Oil Pipelines & Services		10.2		--
Petrochemical & Refined Products Services		87.0		73.2
Total cash used for business combinations	$	1,313.9	$	107.3

The following table depicts the fair value allocation of assets acquired and liabilities assumed for our business combinations for the periods presented:

	For Year Ended December 31,
	2010			2009
Assets acquired in business combination:
Current assets	$	3.3		$	1.4
Property, plant and equipment, net		421.4			115.9
Intangible assets		907.6			0.3
Other assets		--			(0.3	)
Total assets acquired		1,332.3			117.3
Liabilities assumed in business combination:
Current liabilities		(0.4	)		0.3
Long-term debt		(1.3	)		--
Other long-term liabilities		(0.9	)		--
Total liabilities assumed		(2.6	)		0.3
Total assets acquired plus liabilities assumed		1,329.7			117.6
Noncontrolling interests acquired		--			10.3
Fair value of 2,329,639 of our units		99.7			--
Total cash used for business combinations		1,313.9			107.3
Goodwill (1)	$	83.9		$	--
(1)   See Note 11 for additional information regarding goodwill.

Aside from the State Line and Fairplay natural gas gathering systems acquisition in May 2010, on a pro forma consolidated basis, our revenues, costs and expenses, operating income, net income attributable to partners and earnings per unit amounts would not have differed materially from those we actually reported for 2010 and 2009 due to the immaterial nature of our business combination transactions for those respective periods.

2010 Transactions

State Line and Fairplay Natural Gas Gathering Systems.In May 2010, we acquired 100% ownership of the State Line and Fairplay natural gas gathering systems and related assets from M2 Midstream LLC for approximately $1.2 billion in cash.  These systems are located in northwest Louisiana and East Texas and gather and treat natural gas produced from the Haynesville/Bossier Shales and the Cotton Valley and Taylor Sand formations.  We used a portion of the net proceeds from our April 2010 equity offering, together with borrowings under EPO's $1.75 Billion Multi-Year Revolving Credit Facility, to fund this acquisition.

On a combined basis, our revenues and net income from the State Line and Fairplay systems were $119.8 million and $14.4 million, respectively, for the eight months we owned these assets during 2010.

Pro Forma Financial Information.  Since the effective date of the State Line and Fairplay acquisitions was May 1, 2010, our Statements of Consolidated Operations do not include earnings from these businesses prior to this date.  The following table presents selected unaudited pro forma earnings information for the periods presented as if the acquisitions had been completed on January 1 of each year presented.  This pro forma information was prepared using historical financial data for the State Line and Fairplay systems and reflects certain estimates and assumptions made by our management.  Our unaudited pro forma financial information is not necessarily indicative of what our consolidated financial results would have been had we actually acquired the State Line and Fairplay systems on January 1 of each year presented.

	For Year Ended December 31,
	2010		2009
Pro forma earnings data:
Revenues	$	33,804.7	$	25,643.2
Costs and expenses		31,713.4		23,879.2
Operating income		2,153.3		1,856.3
Net income		1,388.2		1,135.7
Net income attributable to partners		321.0		203.9
Basic earnings per unit:
As reported basic units outstanding		274.5		206.7
Pro forma basic units outstanding		274.5		206.7
As reported basic earnings per unit	$	1.17	$	0.99
Pro forma basic earnings per unit	$	1.17	$	0.99
Diluted earnings per unit:
As reported diluted units outstanding		278.5		206.7
Pro forma diluted units outstanding		278.5		206.7
As reported diluted earnings per unit	$	1.15	$	0.99
Pro forma diluted earnings per unit	$	1.15	$	0.99

Cenac Acquisition.  In November 2010, we acquired certain assets from Cenac Towing Co., L.L.C., Cenac Offshore, L.L.C., CTCO Marine Services, LLC, and CTCO Shipyard of Louisiana, LLC relating to their shipyard operations in Louisiana and certain membership interests in CTCO of Texas, L.L.C. and Channelview Fleeting Services, LLC relating to shipyard operations in Texas.  Since entering into the marine transportation business in 2008, we paid the above entities for services to support our marine transportation business, including construction, repairs and maintenance, drydock and provisioning services.  We expect these acquired assets will result in significant future cost savings for our marine fleet.

This transaction was valued at $141.9 million and the consideration consists of $42.2 million in cash and $99.7 million of our common units (represented by approximately 2.3 million common units).  This business is part of our Petrochemical & Refined Products Services business segment.

Bigler Acquisition.  In November 2010, we acquired a facility located on the Houston Ship Channel for $38.5 million in cash that produces high-purity isobutylene and provides terminal services for refined products and petrochemicals.  This business is part of our Petrochemical & Refined Products Services business segment.

Other Transactions.In June 2010, we acquired a marine transportation business located in south Louisiana for $12.0 million in cash.  This business is engaged in crude oil gathering and included three tug boats and five barges that are part of our Petrochemical & Refined Products Services business segment.  In August 2010, we acquired a crude oil trucking business located in North Dakota for $4.0 million.  This business is part of our Onshore Crude Oil Pipelines & Services business segment.

See Note 15 for information regarding a September 2010 drop down transaction whereby we acquired ownership interests in EPCO's trucking business.

2009 Transactions

Our business combinations during 2009 primarily consisted of:

§   the acquisition of certain rail and truck terminal facilities located in Mont Belvieu, Texas from Martin Midstream Partners LP for $23.7 million in cash;

§   the acquisition of tow boats and tank barges primarily based in Miami, Florida, with additional assets located in Mobile, Alabama and Houston, Texas from TransMontaigne Product Services Inc. for $50.0 million in cash; and

§   the acquisition of a majority interest in the Rio Grande Pipeline Company (“Rio Grande”) purchased from HEP Navajo Southern L.P. for $32.8 million in cash.  Rio Grande owns an NGL pipeline system in Texas.