Equity and Distributions

6 Months Ended

Jun. 30, 2019

Equity and Distributions [Abstract]

Equity and Distributions

Note 8.  Equity and Distributions

Limited Partner Common Units Outstanding

The following table summarizes changes in the number of EPD limited partner common units outstanding since December 31, 2018:

Common units outstanding at December 31, 2018	2,184,869,029
Common unit repurchases under 2019 Buyback Program	(1,852,392	)
Common units issued in connection with DRIP and EUPP	1,516,779
Common units issued in connection with employee compensation	1,626,041
Common units issued in connection with the vesting of phantom unit awards, net	2,379,620
Other	21,595
Common units outstanding at March 31, 2019	2,188,560,672
Common unit repurchases under 2019 Buyback Program	(1,056,736	)
Common units issued in connection with DRIP and EUPP	1,381,211
Common units issued in connection with the vesting of phantom unit awards, net	120,831
Common units outstanding at June 30, 2019	2,189,005,978

We have a universal shelf registration statement (the “2019 Shelf”) on file with the SEC which allows EPD and EPO (each on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively. The 2019 Shelf replaced our prior universal shelf registration statement, which expired in May 2019.

In addition, EPD has a registration statement on file with the SEC covering the issuance of up to $2.54 billion of its 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 its at-the-market (“ATM”) program.  During the six months ended June 30, 2019 and 2018, EPD did not issue any common units under its ATM program.  After taking into account the aggregate sales price of common units sold under the ATM program through June 30, 2019, EPD has the capacity to issue additional common units under its ATM program up to an aggregate sales price of $2.54 billion.

We may issue additional equity and debt securities to assist us in meeting our future liquidity requirements, including those related to capital investments.

Common unit repurchases under 2019 Buyback Program

In January 2019, we announced that the Board of Enterprise GP had approved a $2.0 billion multi-year unit buyback program (the “2019 Buyback Program”), which provides EPD with an additional method to return capital to investors. The 2019 Buyback Program authorizes EPD to repurchase its common units from time to time, including through open market purchases and negotiated transactions.  The timing and pace of buy backs under the program will be determined by a number of factors including (i) our financial performance and flexibility, (ii) organic growth and acquisition opportunities with higher potential returns on investment, (iii) EPD’s unit price and implied cash flow yield and (iv) maintaining targeted financial leverage with a debt-to-normalized adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, ratio in the 3.5 times area.  No time limit has been set for completion of the program, and it may be suspended or discontinued at any time.

EPD repurchased 2,909,128 common units under the 2019 Buyback Program through open market purchases during the six months ended June 30, 2019.  The total purchase price of these repurchases was $81.1 million, excluding commissions and fees. The repurchased units were cancelled immediately upon acquisition.  At June 30, 2019, the remaining available capacity under the 2019 Buyback Program was $1.92 billion.

Common units issued in connection with DRIP and EUPP

EPD has registration statements on file with the SEC in connection with its distribution reinvestment plan (“DRIP”) and employee unit purchase plan (“EUPP”).  EPD issued and delivered a total of 2,601,727 new common units under the DRIP during the six months ended June 30, 2019, which generated net cash proceeds of $73.7 million.  During the six months ended June 30, 2018, EPD issued and delivered 9,608,839 new common units under the DRIP, which generated net cash proceeds of $253.7 million.  After taking into account the number of common units delivered under the DRIP through June 30, 2019, EPD has the capacity to deliver an additional 58,798,632 common units under this plan.  The period-to-period decrease in net cash proceeds from the DRIP is primarily due to lower reinvestments by privately held affiliates of EPCO in 2019 and a reduction in the discount applicable to common unit purchases made under the DRIP from 2.5% to 0% beginning with the distribution paid in February 2019.

EPD issued and delivered 296,263 new common units under the EUPP during the six months ended June 30, 2019, which generated net cash proceeds of $8.5 million.  During the six months ended June 30, 2018, EPD issued and delivered 268,251 new common units under its EUPP, which generated net cash proceeds of $7.3 million.  After taking into account the number of common units delivered under the EUPP through June 30, 2019, EPD may deliver an additional 4,919,378 common units under this plan.

Net cash proceeds from the issuance of new common units under the DRIP and EUPP during the six months ended June 30, 2019 were used to temporarily reduce amounts outstanding under EPO’s commercial paper program and for general company purposes, including for growth capital expenditures.

In July 2019, EPD announced that, beginning with the quarterly distribution payment to be made in August 2019, it has elected to use common units purchased on the open market, rather than issuing new common units, to satisfy its delivery obligations under the DRIP and EUPP.  This election is subject to change in future quarters depending on the partnership’s need for equity capital.

Common Units Issued in Connection With Employee Compensation

In February 2019, 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 2019 bonus amount was applicable to the year ended December 31, 2018).  The net dollar value of the bonus amounts was remitted through the issuance of an equivalent value of newly issued EPD common units under EPCO’s 2008 Enterprise Products Long-Term Incentive Plan (Third Amendment and Restatement) (“2008 Plan”).  In February 2019, EPD issued 1,626,041 common units, which had a value of $45.6 million, in connection with the employee bonus awards.  The compensation expense associated with each bonus award was recognized during the year in which the work was performed.

Common Units Issued in Connection With the Vesting of Phantom Unit Awards

During the six months ended June 30, 2019, after taking into account tax withholding requirements, EPD issued a net 2,500,451 new common units to employees in connection with the vesting of phantom unit awards.  See Note 12 for information regarding our phantom unit awards.

Accumulated Other Comprehensive Income (Loss)

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

	Cash Flow Hedges
	Commodity Derivative Instruments			Interest Rate Derivative Instruments			Other			Total
Accumulated Other Comprehensive Income (Loss), December 31, 2018	$	152.7		$	(104.8	)	$	3.0		$	50.9
Other comprehensive income (loss) for period, before reclassifications		(13.7	)		(5.2	)		(0.6	)		(19.5	)
Reclassification of losses (gains) to net income during period		(60.5	)		18.4			–			(42.1	)
Total other comprehensive income (loss) for period		(74.2	)		13.2			(0.6	)		(61.6	)
Accumulated Other Comprehensive Income (Loss), June 30, 2019	$	78.5		$	(91.6	)	$	2.4		$	(10.7	)

	Cash Flow Hedges
	Commodity Derivative Instruments			Interest Rate Derivative Instruments			Other			Total
Accumulated Other Comprehensive Income (Loss), December 31, 2017	$	(10.1	)	$	(165.1	)	$	3.5		$	(171.7	)
Other comprehensive income (loss) for period, before reclassifications		(10.2	)		14.6			(0.5	)		3.9
Reclassification of losses (gains) to net income during period		24.7			19.9			–			44.6
Total other comprehensive income (loss) for period		14.5			34.5			(0.5	)		48.5
Accumulated Other Comprehensive Income (Loss), June 30, 2018	$	4.4		$	(130.6	)	$	3.0		$	(123.2	)

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

		For the Three Months Ended June 30,						For the Six Months Ended June 30,
Losses (gains) on cash flow hedges:	Location	2019			2018			2019			2018
Interest rate derivatives	Interest expense	$	9.2		$	9.4		$	18.4		$	19.9
Commodity derivatives	Revenue		(2.5	)		39.4			(67.8	)		25.4
Commodity derivatives	Operating costs and expenses		0.3			(0.2	)		7.3			(0.7	)
Total		$	7.0		$	48.6		$	(42.1	)	$	44.6

For information regarding our interest rate and commodity derivative instruments, see Note 13.

Noncontrolling Interests

In June 2019, an affiliate of American Midstream, LP acquired a noncontrolling 25% equity interest in our consolidated subsidiary that owns the Pascagoula natural gas processing plant for $36.0 million in cash.

Cash Distributions

In January 2019, management announced its plans to recommend to the Board an increase of $0.0025 per unit per quarter in EPD’s cash distribution rate with respect to 2019. The anticipated rate of increase would result in distributions for 2019 of $1.7650 per unit, which would be 2.3% higher than those paid by EPD 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.

On July 9, 2019, EPD announced that the Board declared a cash distribution of $0.4400 per common unit with respect to the second quarter of 2019, which represents a 2.3% increase over the $0.4300 per common unit EPD declared and paid with respect to the second quarter of 2018.  The distribution with respect to the second quarter of 2019 will be paid on August 13, 2019 to unitholders of record as of the close of business on July 31, 2019.