Note 8. Equity and Distributions

Partners Equity

Partners’ equity reflects the various classes of limited partner interests (i.e., common units, including restricted common units) outstanding. The following table summarizes changes in the number of our outstanding units since January 1, 2016:

	Common Units (Unrestricted)			Restricted Common Units			Total Common Units
Number of units outstanding at January 1, 2016		2,010,592,504			1,960,520			2,012,553,024
Common units issued in connection with ATM program		87,867,037			--			87,867,037
Common units issued in connection with DRIP and EUPP		16,316,534			--			16,316,534
Common units issued in connection with the vesting of phantom unit awards		1,761,455			--			1,761,455
Common units issued in connection with the vesting of restricted common unit awards		1,234,502			(1,234,502	)		--
Forfeiture of restricted common unit awards		--			(43,724	)		(43,724	)
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(1,000,619	)		--			(1,000,619	)
Other		134,707			--			134,707
Number of units outstanding at December 31, 2016		2,116,906,120			682,294			2,117,588,414
Common units issued in connection with ATM program		21,807,726			--			21,807,726
Common units issued in connection with DRIP and EUPP		19,046,019			--			19,046,019
Common units issued in connection with the vesting of phantom unit awards		2,485,580			--			2,485,580
Common units issued in connection with the vesting of restricted common unit awards		681,044			(681,044	)		--
Forfeiture of restricted common unit awards		--			(1,250	)		(1,250	)
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(1,027,798	)		--			(1,027,798	)
Common units issued in connection with employee compensation		1,176,103			--			1,176,103
Other		14,685			--			14,685
Number of units outstanding at December 31, 2017		2,161,089,479			--			2,161,089,479
Common units issued in connection with DRIP and EUPP		19,861,951			--			19,861,951
Common units issued in connection with the vesting of phantom unit awards		3,479,958			--			3,479,958
Cancellation of treasury units acquired in connection with the vesting of equity-based awards		(1,037,522	)		--			(1,037,522	)
Common units issued in connection with employee compensation		1,443,586			--			1,443,586
Common units issued in connection with land acquisition (see Note 4)		1,223,242			--			1,223,242
Cancellation of treasury units acquired in connection with buyback program		(1,236,800	)		--			(1,236,800	)
Other		45,135			--			45,135
Number of units outstanding at December 31, 2018		2,184,869,029			--			2,184,869,029

Our common units represent limited partner interests, which give the holders thereof the right to participate in distributions and to exercise the other rights or privileges available to them under our Sixth Amended and Restated Agreement of Limited Partnership (as amended from time to time, the “Partnership Agreement”). We are managed by our general partner, Enterprise GP.

In accordance with our Partnership Agreement, capital accounts are maintained for our limited partners. The capital account provisions of our Partnership Agreement incorporate principles established for U.S. federal income tax purposes and are not comparable to the equity amounts presented in our consolidated financial statements prepared in accordance with GAAP. Earnings and cash distributions are allocated to holders of our common units in accordance with their respective percentage interests.

The net cash proceeds we received from the issuance of common units during the year ended December 31, 2018 were used to temporarily reduce amounts outstanding under EPO’s commercial paper program and revolving credit facilities and for general partnership purposes.

Universal shelf registration statement

We have a universal shelf registration statement (the “2016 Shelf”) on file with the SEC which allows Enterprise Products Partners L.P. and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively. EPO issued $5.7 billion aggregate principal amount of senior notes and junior subordinated notes using the 2016 Shelf during the year ended December 31, 2018 (see Note 7). In addition, EPO issued (i) $1.7 billion of junior subordinated notes using the 2016 Shelf during the year ended December 31, 2017 and (ii) $1.25 billion of senior notes using a similar prior universal shelf registration statement during the year ended December 31, 2016. The 2016 Shelf will expire in May 2019, and we expect to file a replacement universal shelf registration statement at or before such time. We may issue additional equity and debt securities in the future to assist us in meeting our funding and liquidity requirements, including those related to capital investments.

At-the-Market (“ATM”) Program

In November 2017, we filed an amended registration statement with the SEC covering the issuance of up to $2.54 billion of our common units in amounts, at prices and on terms to be determined by market conditions and other factors at the time of such offerings in connection with our ATM program. Pursuant to this program, we may sell common units under an equity distribution agreement between Enterprise Products Partners L.P. and certain broker-dealers from time-to-time by means of ordinary brokers’ transactions through the NYSE at market prices, in block transactions or as otherwise agreed to with the broker-dealer parties to the agreement.

We did not issue any common units under the ATM program in 2018. During 2017, we issued 21,807,726 common units under the ATM program for aggregate gross cash proceeds of $603.1 million, resulting in total net cash proceeds of $597.0 million. During 2016, we issued 87,867,037 common units under the ATM program for aggregate gross cash proceeds of $2.17 billion, resulting in total net cash proceeds of $2.16 billion. This includes 3,830,256 common units sold in January 2016 to privately held affiliates of EPCO, which generated gross proceeds of $100 million.

After taking into account the aggregate sales price of common units sold under the ATM program through December 31, 2018, we have the capacity to issue additional common units under the ATM program up to an aggregate sales price of $2.54 billion.

Distribution reinvestment plan

We have a registration statement on file with the SEC in connection with our distribution reinvestment plan (“DRIP”). The DRIP provides unitholders of record and beneficial owners of our common units a voluntary means by which they can increase the number of our common units they own by reinvesting the quarterly cash distributions they receive from us into the purchase of additional common units at a discount ranging from 0% to 5%. Beginning with the distribution declared with respect to the fourth quarter of 2017 and paid in February 2018, the discount was reduced from 5% to 2.5%. Likewise, beginning with the distribution declared with respect to the fourth quarter of 2018 and paid in February 2019, the discount was reduced from 2.5% to 0%. We have the sole discretion to determine whether common units purchased under the DRIP will come from our authorized but unissued common units or from common units purchased on the open market by the DRIP administrator.

Activity under our DRIP for the last three years was as follows: 19,316,781 new common units issued during 2018, which generated net cash proceeds of $523.3 million; 18,541,355 new common units issued during 2017, which generated net cash proceeds of $462.9 million; and 15,809,503 new common units issued during 2016, which generated net cash proceeds of $374.0 million. Privately held affiliates of EPCO reinvested $213 million, $100 million and $100 million through the DRIP in each of the years ended December 31, 2018, 2017 and 2016, respectively (this amount being a component of the net cash proceeds presented for each period).

After taking into account the number of common units issued under the DRIP through December 31, 2018, we have the capacity to deliver an additional 61,400,359 common units under this plan.

Employee unit purchase plan

In addition to the DRIP, we have registration statements on file with the SEC in connection with our employee unit purchase plan (“EUPP”). Activity under our EUPP for the last three years was as follows: 545,170 new common units issued during 2018, which generated net cash proceeds of $15.1 million; 504,664 new common units issued during 2017, which generated net cash proceeds of $13.5 million; and 507,031 new common units issued during 2016, which generated net cash proceeds of $12.7 million.

After taking into account the number of common units issued under the EUPP through December 31, 2018, we have the capacity to deliver an additional 5,215,641 common units under this plan.

Registration Rights Agreement with Oiltanking Holding Americas, Inc. (“OTA”)

In October 2014, we acquired approximately 65.9% of the limited partner interests of Oiltanking Partners, L.P. (“Oiltanking”), all of the member interests of OTLP GP, LLC, the general partner of Oiltanking (“Oiltanking GP”), and the incentive distribution rights (“IDRs”) held by Oiltanking GP from OTA, a U.S. corporation, as the first step of a two-step acquisition of Oiltanking. In February 2015, we completed the second step of this transaction consisting of the acquisition of the noncontrolling interests in Oiltanking.

In order to fund the equity consideration paid in Step 1 of the Oiltanking acquisition, we issued 54,807,352 common units to OTA on October 1, 2014 in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and we granted OTA registration rights with respect to these common units under a Registration Rights Agreement between us and OTA (the “Registration Rights Agreement”). The Registration Rights Agreement provides that, subject to the terms and conditions set forth therein, OTA may request that we prepare and file a registration statement to permit and otherwise facilitate the public resale of all or a portion of the 54,807,352 Enterprise common units that OTA owns. Our obligation to OTA to effect such transactions is limited to five registration statements and underwritten offerings.

Common units issued in connection with employee compensation

In February 2018 and 2017, certain employees of EPCO received discretionary bonus payments, less any retirement plan deductions and applicable withholding taxes, for work performed on our behalf during the prior fiscal year (e.g., the February 2018 bonus amount was with respect to the year ended December 31, 2017). The net dollar value of the bonus amounts was remitted to employees through the issuance of an equivalent value of newly issued Enterprise common units under EPCO’s 2008 Enterprise Products Long-Term Incentive Plan (Third Amendment and Restatement) (“2008 Plan”). In February 2018, we issued 1,443,586 common units, which had a value of $39.1 million, in connection with the employee bonus awards. In February 2017, we issued 1,176,103 common units, which had a value of $33.7 million. The compensation expense associated with each bonus award was recognized during the year in which the work was performed. See Note 13 for additional information regarding the 2008 Plan.

Treasury Units

In December 1998, we announced a common unit buyback, or repurchase, program whereby we, together with certain affiliates, could repurchase up to 4,000,000 of our common units on the open market. We purchased the remaining authorized amount of 1,236,800 common units in late December 2018 for $30.8 million at an average price of $24.92 per unit.

During the year ended December 31, 2018, a total of 3,479,958 phantom units vested and 1,037,522 units were sold back to us by employees to cover withholding tax requirements related to the vesting of phantom unit awards. The total cost of these treasury unit purchases was $27.3 million. We cancelled such treasury units immediately upon acquisition. See Note 13 for additional information regarding our equity-based awards.

See Note 22 for subsequent event information regarding the establishment of a $2.0 billion unit buyback program in January 2019.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) primarily reflects cumulative gain or loss on derivative instruments designated and qualified as cash flow hedges from inception less gains or losses previously reclassified from accumulated other comprehensive income (loss) into earnings. Gain or loss amounts related to cash flow hedges recorded in accumulated other comprehensive income (loss) are reclassified to earnings in the same period(s) in which the underlying hedged forecasted transactions affect earnings. If it becomes probable that a forecasted transaction will not occur, the related net gain or loss in accumulated other comprehensive income (loss) is immediately reclassified into earnings.

The following tables present the components of accumulated other comprehensive income (loss) as reported on our Consolidated Balance Sheets at the dates indicated:

	Cash Flow Hedges
	Commodity Derivative Instruments			Interest Rate Derivative Instruments			Other			Total
Accumulated Other Comprehensive Income (Loss), January 1, 2017	$	(83.8	)	$	(199.8	)	$	3.6		$	(280.0	)
Other comprehensive income (loss) for period, before reclassifications		(38.5	)		(5.7	)		(0.1	)		(44.3	)
Reclassification of losses (gains) to net income during period		112.2			40.4			--			152.6
Total other comprehensive income (loss) for period		73.7			34.7			(0.1	)		108.3
Accumulated Other Comprehensive Income (Loss), December 31, 2017		(10.1	)		(165.1	)		3.5			(171.7	)
Other comprehensive income (loss) for period, before reclassifications		293.2			22.2			(0.5	)		314.9
Reclassification of losses (gains) to net income during period		(130.4	)		38.1			--			(92.3	)
Total other comprehensive income (loss) for period		162.8			60.3			(0.5	)		222.6
Accumulated Other Comprehensive Income (Loss), December 31, 2018	$	152.7		$	(104.8	)	$	3.0		$	50.9

The following table presents reclassifications of (income) loss out of accumulated other comprehensive income (loss) into net income during the years indicated:

		For the Year Ended December 31,
	Location	2018			2017
Losses (gains) on cash flow hedges:
Interest rate derivatives	Interest expense	$	38.1		$	40.4
Commodity derivatives	Revenue		(131.7	)		111.6
Commodity derivatives	Operating costs and expenses		1.3			0.6
Total		$	(92.3	)	$	152.6

Noncontrolling Interests

Noncontrolling interests represent third party ownership interests in our consolidated subsidiaries.

Enterprise Navigator Ethylene Terminal LLC

In January 2018, we formed a new business venture with Navigator Ethylene Terminals LLC (“Navigator”) to construct and own an ethylene export terminal, which is located at Morgan’s Point on the Houston Ship Channel. Navigator holds a noncontrolling 50% equity interest in Enterprise Navigator Ethylene Terminal LLC, which owns the export facility.

Whitethorn Pipeline Company LLC

In June 2018, an affiliate of Western Gas Partners, LP (“Western”) acquired a noncontrolling 20% equity interest in our subsidiary, Whitethorn Pipeline Company LLC (“Whitethorn”), for $189.6 million in cash. This amount is a component of contributions from noncontrolling interests as presented on our Statement of Consolidated Cash Flows for the year ended December 31, 2018. Whitethorn owns the majority of our Midland-to-ECHO 1 Pipeline System.

Cash Distributions

The following table presents Enterprise’s declared quarterly cash distribution rates per common unit with respect to the quarter indicated. Actual cash distributions are paid by Enterprise within 45 days after the end of each fiscal quarter.

	Distribution Per Common Unit		Record Date	Payment Date
2016:
1st Quarter	$	0.3950	4/29/2016	5/6/2016
2nd Quarter	$	0.4000	7/29/2016	8/5/2016
3rd Quarter	$	0.4050	10/31/2016	11/7/2016
4th Quarter	$	0.4100	1/31/2017	2/7/2017
2017:
1st Quarter	$	0.4150	4/28/2017	5/8/2017
2nd Quarter	$	0.4200	7/31/2017	8/7/2017
3rd Quarter	$	0.4225	10/31/2017	11/7/2017
4th Quarter	$	0.4250	1/31/2018	2/7/2018
2018:
1st Quarter	$	0.4275	4/30/2018	5/8/2018
2nd Quarter	$	0.4300	7/31/2018	8/8/2018
3rd Quarter	$	0.4325	10/31/2018	11/8/2018
4th Quarter	$	0.4350	1/31/2019	2/8/2019

In January 2019, based on current expectations, management announced its plans to continue to recommend to the Board an increase of $0.0025 per unit per quarter to our cash distribution rate with respect to 2019. The anticipated rate of increase would result in distributions for 2019 (of $1.7650 per unit) being 2.3% higher than those paid for 2018 (of $1.7250 per unit). The payment of any quarterly cash distribution is subject to Board approval and management’s evaluation of our financial condition, results of operations and cash flows in connection with such payment.

Shin Oak NGL Pipeline Option

In May 2018, we granted Apache Corporation (“Apache”) an option to acquire up to a 33% equity interest in our subsidiary that owns the Shin Oak NGL Pipeline, which entered limited commercial service in February 2019. In November 2018, Apache contributed the Shin Oak option to Altus Midstream Company (“Altus”), which is majority-owned by Apache. The option is exercisable within sixty days after certain completion milestones are met (as defined in the underlying agreements), which we expect to occur in the second quarter of 2019.