Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Enterprise Products Partners L.P. (NYSE:EPD)

Q1 2014 Earnings Conference Call

May 1, 2014 10:00 AM ET

Executives

Randy Burkhalter – Vice President-Investor Relations

Michael A. Creel – Chief Executive Officer

A. J. Teague – Chief Operating Officer

W. Randall Fowler – Executive Vice President and Chief Financial Officer

Analysts

Darren C. Horowitz – Raymond James & Associates, Inc.

Brian Joshua Zarahn – Barclays Capital, Inc.

Ross Payne – Wells Fargo Securities LLC

John D. Edwards – Credit Suisse Securities LLC

Michael J. Blum – Wells Fargo Securities LLC

Operator

Good morning. My name is Tom and I will be your conference operator today. At this time I’d like to welcome everyone to the Enterprise Products Partners Q1 2014 Earnings Conference 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)

Thank you. Mr. Burkhalter. You may begin your conference.

Randy Burkhalter

Okay, thank you Tom. Good morning everyone and welcome to the Enterprise Products Partners conference call to discuss results for the first quarter of 2014. The speakers today will be Mike Creel, CEO of Enterprise’s General Partner; followed by Jim Teague, Chief Operating Officer; and Randy Fowler, CFO. Other members of our senior management team are also in attendance today.

During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by, and information currently available to Enterprise’s management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove 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 in the forward-looking statements made during this call.

And so with that, I’ll turn the call over to Mike.

Michael A. Creel

Thanks Randy. We are off to a strong start in 2014 with first quarter results that included record gross operating margin of $1.3 billion and record adjusted EBITDA of $1.4 billion. We benefited from cash flow and volume growth associated with $4.8 billion of new assets that began operations since the beginning of 2013. These strong results led to distributable cash flow of $1.1 billion for the first quarter of 2014 compared to $897 million for the first quarter of 2013.

Included in distributable cash flow were proceeds from asset sales and insurance recoveries of $96 million this quarter and $131 million in the first quarter of 2013. After adjusting for these items distributable cash flow was $972 million for the quarter. In April, we declared a $0.71 per unit cash distribution with respect to the first quarter of 2014. This distribution is 6% higher than the $0.67 per unit paid with respect to the first quarter of last year.

This is the 48th distribution increase since Enterprise’s initial public offering in July of 1998 and the 39th consecutive quarterly increase. Excluding proceeds from asset sales insurance recoveries, distributable cash flow provided 1.5 times coverage of the distribution declared.

We retained $418 million of distributable cash flow to reinvest in the growth of the partnership and to reduce our reliance on the capital markets. The NGL Pipelines & Services segment reported gross operating margin of $780 million for the first quarter of 2014. That was a record and is 32% more than the $593 million for the first quarter of 2013.

Our natural gas processing and related NGL marketing business reported $79 million increase in gross operating margins primarily due to higher sales margins and volumes from NGL marketing partly related to the expansion of our LPG export terminal on the Houston Ship Channel which was completed in March of last year.

In January 2014, we announced another expansion of our LPG export facility and is supported by 50 year service agreement with Oiltanking for additional dock space and related services. When this expansion is completed, which is expected to occur by the end of 2015, we will have an aggregate loading capacity in excess of 16 million barrels per month of low ethane, propane and/or butane twice the capacity that we have today.

This segment also benefited from higher natural gas processing volumes, equity NGL production and fees from our South Texas plants. We continue to benefit from the NGL risk production and Eagle Ford Shale. Enterprise’s natural gas processing plants had record fee-based processing volumes of $4.7 billion cubic feet per day in the first quarter of 2014, 4% higher than the first quarter of the prior year.

Equity NGL production was 137,000 barrels per day this quarter, a 12% increase over the first quarter of 2013. Most of the increase in fee-based processing volumes came from our South Texas processing plants, while the increase in equity NGL production was from our Meeker and our South Texas plants.

Gross operating margin from our NGL pipelines and storage business increased $58 million or 25%, to $290 million this quarter. Our ATEX ethane pipeline which began commercial service in January this year generated $31 million of gross operating margin this quarter.

ATEX averaged 30,000 barrels per day in the first quarter, which was below the 68,000 barrels per day of committed volumes as certain NGL fractionation facilities in the Marcellus had unplanned outages, upstream infrastructure issues, but we’re still under construction and in the process of connecting to the ATEX. These outages reduced ethane available for ATEX as well as propane supplies available for the TE product’s pipeline.

The South Texas NGL pipeline system benefited from increased Eagle Ford Shale reporting a $12 million increase in gross operating margin on 137,000 barrel per day increase in transportation volumes.

Our Mid-America and Seminole pipeline systems reported $11 million increase in gross operating margins primarily due to higher revenues from ship or pay agreements associated with the expansion of the Rocky Mountain pipeline that began service in January this year. Our NGL fractionation business reported gross operating margins of $141 million this quarter, a 55% increase of the $91 million reported for the same quarter in 2013.

Our NGL fractionators in Mont Belvieu generated $45 million of this increase as fractionators 7 and 8 began commercial operations during the fourth quarter of last year. Total fractionation volumes increased 12% through a record 792,000 barrels per day this quarter, compared to the same quarter in 2013.

Gross operating margin from the Onshore Natural Gas Pipelines & Services increased to $220 million this quarter compared to $191 million for the same quarter of 2013. The primary reasons for the $29 million improvement were a $19 million increase from higher natural gas marketing sales, and a $10 million increase from higher transportation fees and volumes on our Texas Intrastate pipeline.

Our Onshore Crude Oil Pipelines & Services segment reported gross operating margin of $160 million down from the $236 million reported in the first quarter of 2013. Lower margins from our crude oil marketing and related trucking activities accounted for $111 million decrease in gross operating margins.

And as we’ve said in the last few quarterly calls regional price differences continue to be much lower than the record spreads we saw in the first quarter of 2013. The average WTI to LLS spread was a little less than $6 per barrel this quarter compared to almost $20 a barrel in the first quarter of 2013.

Partially offsetting the decrease in marketing was a combined $42 million increase in gross operating margin from our South Texas and West Texas pipeline systems and our Eagle Ford joint venture pipelines each of which had increased volumes this quarter.

Total onshore crude oil pipeline volumes increased to 1.3 million barrels per day this quarter, 28% higher than the first quarter of 2013. Gross operating margin from our Offshore Pipelines & Services segment was $39 million this quarter which was slightly below the $41 million in the first quarter of last year.

We're beginning to see crude oil volumes respond to the pickup in activity in the Gulf of Mexico. Our offshore crude oil pipelines averaged 335,000 barrels per day in the first quarter of 2014, which was the highest we've seen since the 354,000 barrels a day in the first quarter of 2010.

Currently there are 40 drilling ships in deepwater semi-submersible drilling rigs active in the U.S. Gulf of Mexico and another 16 vessels are expected to arrive before the end of next year. Approximately 50% of this drilling fleet will be focused on existing fields, many of which are already connected to Enterprise assets.

The Petrochemical & Refined Products Services segment reported gross operating margin of $130 million for the quarter compared to $171 million in the first quarter of 2013. Gross operating margins from the octane enhancement and high-purity isobutylene system decreased $38 million, primarily due to an extended period of unscheduled maintenance at our octane enhancement facility this quarter.

Gross operating margin from our refined products pipelines and related marketing activities decreased $14 million primarily due to $17 million benefit that was recognized in the first quarter of 2013 and a provision for pipeline capacity obligations. We had a $14 million improvement in gross operating margins from our propylene fractionation and related marketing business this quarter due to higher propylene sales margins.

We are pleased to announce last week our plans to construct an ethane export facility. We continue to receive strong interest in this facility and are having ongoing discussions with other potential customers that could result in our fully contracting its remaining capacity. Jim will cover this in more detail in a moment.

This quarter we completed $2.5 billion of capital projects including our ATEX ethane pipeline, the Front Range pipeline that extends from the Niobrara in Colorado and connects to the Texas Express Pipeline, and our Mid-America Pipeline expansion. Those collectively have resulted in about 1,100 miles of new pipeline being placed in the service.

We have another $2.5 billion of capital project targeted for completion this year and $4.2 billion planned to begin service in 2015 and 2016. These are only the capital project that have been approved and announced, and as usual, we have quite a backlog of other projects that our commercial teams are working on. Given our extensive asset footprint we're not lacking for growth opportunities.

Before I turn the call over to Jim I would like to thank all of you that participated in our Annual Investor and Analyst Day that was in March. We enjoyed the opportunity to update you on our progress and future plans. And we welcome the opportunity for our deep management team to interact with analysts and investors.

We're already in the process of making arrangements for next year’s conference and are currently targeting the last week in February for that meeting. If you would like to pencil in February the 25th I think that is going to be about the right day.

And with that I will turn the call over to Jim.

A. J. Teague

Thank you, Mike. On our last earnings call we discussed at that time we are in the midst of a significant extended winter, especially in the upper Midwest. When it’s finally over it looks like winter in the Midwest in plain stage ranked in the top 10 coldest in the last 115 years with the upper Midwest officially ranking fifth. This created challenges especially to propane and natural gas. But bottom line is the laws of supply and demand still work.

Because of high prices such chemical industry quickly moved up to propane in a meaningful way. Cargoes of LPG were diverted to Northwest Europe to the East Coast and exports from the Gulf Coast were either canceled or deferred. Extremely high natural gas prices, those natural gas to be diverted to meet regional needs. And those who panicked were quickly reminded that price does create supply. Interestingly, the price hikes for both natural gas and propane were not very long, the suppliers responded quickly to this location.

Mike mentioned in the first quarter one of our biggest challenge is was an unplanned and significant outage at our base unit. The north to south crude oil spreads were lower and frankly we expected that. We knew $20 spreads couldn’t sustain themselves.

Other Enterprise businesses are the including considerable amount of new infrastructure we have added we are quick to pick up the slab. We put in our Mid-America, Rocky Mountain expansion, our Front Range pipeline and our ATEX ethane pipeline. This ATEX pipeline is pretty important to the producers of the Northeast. Now they have the reliable ethane solutions, so they can continue drilling liquids rich gas hence no longer be threatened by too much ethane in the residue of gas.

With that we got several other significant projects under construction, which continue to move forward on our PDH plant, which is expected to be commissioned in the first quarter of 2016. Phase I of Aegis ethane header to Lake Charles to be up and running during the first quarter of next year. If you think about it, Aegis in combination with our ethane pipeline to Corpus, we will an ethane header system that literally stretches from Corpus Christi Texas to the Mississippi river. Therefore any ethylene plant it uses to connect and load on our storage at Mont Belvieu.

On our crude side our Seaway loop is expected to be completed at this quarter and we are also going to growing on another 900,000 barrels of new storage into service at ECHO, over the next 18 months – 12 months to 18 months we will continue to add capacity at ECHO, as we had to being adding more than $6 million barrels a day, and frankly I think that needs to be larger. That is in conjunction with ECHO. We also continue to buildout our crude oil delivery systems in the Houston Ship Channel and Texas City which is a key to our ECHO success. We began commissioning our refined products export project where we completed Phase I and we will begin exports this month and gasoline soon afterwards, I think in July.

Work continues on our two LPG export expansions at [indiscernible] and as Mike said we are going to begin work on an ethane export facility. And we will soon announce the location of that.

We’ve talked about that project for a long time and it seems like this project was a long time coming, but given the magnitude of the commitments and investments required by our customers really they move pretty fast. Although there is a lot of ethylenes kept capacity expansions planned here, producers have significantly more ethane than the U.S. ethylene industry can consume and they need new markets.

We’ve tried to be clear about our views on supply and demand fundamentals because of rapidly growing shale. The U.S. and global markets have come to the realization that for many of these new molecules we’re rapidly becoming an exporting nation. We now have more natural gas than we can consume, we have more NGOs that we can consume, we have more refined products than we can consume and we’re now developing a similar long position for some types of crude, specifically growing volumes of light crudes and condensates. This will continue to create meaningful opportunities.

Our integrated assets plus multiple commodities including some significant access to water and our asset development capabilities will continue to service well as we enter this new phase of global significance as a supplier of hydrocarbons.

Since the expansion of the shales our business model has been focused on providing the assets and services producers needed to handle these growing supplies and we are going to continue to focus on their needs. However, we’re also ideally situated on the demand side of the value chain. The demand side of the value chain is integrated into all of our systems here at Enterprise.

We’re pipeline connected to every ethylene plant in the U.S. We’re pipeline connected to greater than 90% of the refineries east of the Rockies, and we’re now building a critical header to connect these growing crude oil supplies to all of the major refineries in the Houston Ship Channel, Texas City, and in Beaumont/Port Arthur. We’re significantly expanding our focus on the demand side of the equation in order to take growing production to growing markets, including global markets.

And with that, I’ll turn it over to Randy.

W. Randall Fowler

Okay. Thanks, Jim. I will take a few minutes to discuss additional income state items and capitalization for the quarter. We reported net income of $807 million and fully diluted earnings per unit of $0.85 for the first quarter of 2014. Net income included $90 million or $0.10 per unit gain from asset sales and insurance recoveries. Net income also included, although it was reduced, for non-cash asset impairment, charges of $9 million or $0.01 per unit. After adjusting these items EPU on a fully diluted basis would have been $0.76 per unit.

Interest expense increased $25 million to $221 million in the first quarter of 2014 due to a $30 million decrease in capitalized interest as well as interest expense associated with higher average debt balances. We had capital spending of $980 million this quarter, which included $78 million of sustaining capital expenditures. We currently expect growth capital expenditures for the full year of 2014 to range between $3.7 billion and $4.1 billion and expect sustaining capital expenditures for the full year of 2014 to be approximately $350 million.

Adjusted EBITDA for the 12 months ended March 31, 2014, was $4.8 billion. Our ratio of debt principal to adjusted EBITDA was 3.6 times for this period after adjusting for the 50% equity treatment of the hybrid debt securities. If we further reduce debt by the $988 million of unrestricted cash on hand at the end of the first, debt to EBITDA would have been 3.4 times.

We issued $850 million of 10-year notes at 3.9% and $1.15 billion of 30-year notes at 5.1% in February 2014. The proceeds of this offering repaid debt and are also being used for general company purposes. We are still in the process of deploying this cash.

Based on our current plans, we do not expect to be back in the term debt market for the remainder of 2014. The average life of our debt portfolio is now 14.6 years using the first call date for our hybrid debt securities and the average effective cost of debt for this portfolio is now down to 5.2%. At the end of the first quarter we had consolidated liquidity of $5.5 billion, which included unrestricted cash and approximately $4.5 billion of available borrowing capacity under our credit facility. As a result of our liquidity and our performance, we elected to terminate $1 billion 364-day bank credit facility in advance of the scheduled maturity date, which was June 18 of 2014. The effective date of this termination is actually today on May 1.

With that, Randy, I think we’ll ready for questions.

W. Randall Fowler

Okay, Tom, we’re ready to take questions from our listeners.

Question-and-Answer session

Operator

(Operator Instructions) Your first question comes from the line of Darren Horowitz from Raymond James. Your line is open.

Darren C. Horowitz – Raymond James & Associates, Inc.

Good morning, guys. Jim, congratulations on the ethane export project announcement. I’ve got a few questions for you first and then maybe one for Tony. Recently we’ve heard some of the petchem customers with more domestic capacity publicly state that U.S. Gulf Coast ethane export potential is high risk. And I guess they’re calling into question whether or not the facility is going to get built on schedule and they’re talking about the scale possibly not impacting global supplier, their feedstock costs. But I think there’s also some concern maybe that the market might not be as elusive as what you guys have indicated and I understand that they’re concerned about their feedstock rising. So effectively they’re talking their book, but I’d like your thoughts in regard.

A Jim Teague

Well, I’m not going to accuse anyone of talking their book. First of all, I think you know as well anyone, Darren, that we have a high regard for the U.S. petrochemical industry. And that is very supportive of their expansions and very supportive to the extent that we’re willing to put money in things like the Aegis pipeline system and the ATEX pipeline system. Frankly producers need market and I know that a lot of people haven’t got the same robust forecast as we do, but invariably when we sit down with a petrochemical company or with a producing company by the time we’re through they have a full understanding of what we’re looking at and they start to have a little more sympathy for it just to become a bigger believer.

We also say that when we talk about what we believe our forecast to be, we talk about potential supplier and that potential supplier says it has a market and it has a margin. If I look at our sheet from this morning there’s not a single plant that I see across the country that ethane hidden underwater as much as $0.13 a gallon on a market based TNF basis and still underwater on a variable basis for someone like Enterprise or someone that has demand fee.

So in a nutshell, we believe that there’s plenty of ethane. We don’t think that this is going to change things dramatically. We believe producers need markets. If you think about it ethane used to sell at 40% of crude. It’s selling at 12.5% of credit. Propane traditionally sold at 65% to 75% of crude. We are now exporting a lot of propane, yet it’s selling at 45% of crude. So I think exports are a good bridge. Frankly, I’d add everything this country exported to be solid rather than liquid, but that’s not reality today. One more thing, Darren. You can’t have propane selling at below natural gas and expect people to put ethane extraction capability.

So I’m going to look at Leonard. If the $300 million as a plant cost currency of $175 million, what is the ethane extraction part of that capital $65 million, $70 million? So I’m going to spend $65 million to $70 million to extract a product that I’m losing money on or am I just going to do some C3 plus where frankly those processing margins are better than what Bill and I used to look at for the total?

Darren C. Horowitz – Raymond James & Associates, Inc.

Well, Jim, I agree with you. I think to a large degree you’re preaching to the choir. If you look at just the economics around C3 plus on a composite barrel basis, you’re going to have a tremendous amount of C2 suppliers and associated product. I guess what we worry about or what we think about over the five to six to seven years is the practicality of maybe that out closing and also a lot of the incremental upfront retrofit cost for a lot of those European crackers and that’s difficult to pinpoint.

And that bridges me to my second question, maybe for [Tony] (ph). If you just think about the Gulf Coast to Northwest Europe ethane arbitrage opportunity and you look at your ethane supply growth assumptions and the ability of that export capacity to ramp, how much Northwest European ethylene nap the feedstock capacity you ultimately think can be displayed by Gull Coast exported ethane?

Michael A. Creel

I don’t know the answer to that question. Every plant is different. Obviously it’s going to be plants that have access to water and even being on the water have pipeline to bring feedstock to them. There’s not a generic general answer to your question.

A. J. Teague

Let me take this, Darren. Everybody has got their cracker model momentum from the right because like [Tony] (ph) said every cracker has its own unique characteristics, but we all have a generic model and our generic model it says basically your cash cost produce an ethylene from methane is $0.13 per ounce.

Your cash cost from naphtha is $4.48 per ounce. You got $0.35 of pound difference. Let’s just say you realized $0.02 a pound on that versus naphtha have to break all that stuff. That’s $150 million a half or a $1.5 billion pound year cracker. If you want 20% return, Randy, you could spend $750 million. I mean you can have – likely talk about, Mike mentioned, $20 spreads LLS to WTI first quarter of last year. We knew that was going to last. We knew what is sustainable. Large bridges are not sustainable.

Michael A. Creel

Hey, it’s Mike. The comment that ethane exports were high risk, I listened to that and I listened to that three times and what I took away from there was he was saying that it was high risk for them, that particular petrochemical company, because it’s where their plants were geographically located and their downstream plants, not that it was a high risk proposition for enterprise.

Darren C. Horowitz – Raymond James & Associates, Inc.

I agree with you, Mike, and I appreciate the clarification. I was thinking more about the risk that you’re impacting there are actually margins of variability to source fee that’s more competitive for them. I fully agree. Last question for you, Jim, and I hope this is a little bit easier one, but I'm just thinking about the math and not to push on the spot so I’ll give you our math. If we think about the scale or scope of the project for ethane export that you’ve announced. And let’s just say, we assume it's roughly $1 billion cost and we also assume that you got about two-thirds of the capacity committed. Would it be fair for us to assume a low double-digit, unlevered rate of return just based on what you have committed?

A. J. Teague

You are good, Darren. I've got to give you credit. I’m going to tell you, and we’ve got enough contracts that if we don’t sign another barrel, we’ve got a nice project that it is not low single-digit returns.

Darren C. Horowitz – Raymond James & Associates, Inc.

I appreciate it, Jim, and just so you that's state school math for you.

A. J. Teague

By the way one other question you talked about some comments whether we could build it in the timeframe that we were – that we advertised, those guys forget, we've got a Leonard Mallett and a Richard Hutchinson over here. We’ve gotten pretty good at building stuff on time and under budget.

Darren C. Horowitz – Raymond James & Associates, Inc.

Thanks Jim.

Operator

Your next question comes from the line of Brian Zarahn from Barclays. Your line is open.

Brian Joshua Zarahn – Barclays Capital, Inc.

Good morning.

A. J. Teague

Good morning.

Brian Joshua Zarahn – Barclays Capital, Inc.

I’ll shock you and ask a couple more ethane export questions. So it looks like $1 billion is reasonable on your cost given you’ve increased your project inventory by that amount. How should we think about contracted capacity, contract length?

A. J. Teague

Before somebody answers that question, the increase in our capital expenditures is – a number of things, it's not just this project. So I wouldn't necessarily assume this is $1 billion project.

Brian Joshua Zarahn – Barclays Capital, Inc.

So is that more of …

A. J. Teague

I’m not going to tell you.

Brian Joshua Zarahn – Barclays Capital, Inc.

We’ll use round numbers for now. But I guess maybe a little more additional color on contracts and how you – sort of length?

A. J. Teague

I think we could say it’s 10 plus years.

Brian Joshua Zarahn – Barclays Capital, Inc.

Okay and your – what’s your expectation for your additional discussions with customers for additional contracted capacity?

A. J. Teague

Let me expand on that a little bit. To me this is like a pipeline. This isn't going to be, in my mind, like a LPG where you have a spot market trade. These ships have been built specific to a need. I think – so you are not going to see a spot trade, I don't think, anytime soon if ever on ethane. But, yes, we have a lot interest, we are talking to a lot of folks. And I fully expect with Al Martinez involved we’ll sign more contracts.

Brian Joshua Zarahn – Barclays Capital, Inc.

In terms of geography, how are markets outside of Europe looking?

A. J. Teague

I know Panama Canal doesn't hurt. We are talking to people all over.

Brian Joshua Zarahn – Barclays Capital, Inc.

Okay, and then Jim how do you expect pricing to beat ethane would it be more naphtha related or sort of will be ethane plus.

A. J. Teague

The beauty of the U.S. NGL market is there's a pricing point that it can buy all the ethane, you want it and it’s a pretty dynamic market and we are not going to do naphtha related contracts.

Brian Joshua Zarahn – Barclays Capital, Inc.

Okay and then last one from me. What type of opportunities longer-term do you see for your marketing business with the export terminal?

A. J. Teague

The ethane, the LPG?

Brian Joshua Zarahn – Barclays Capital, Inc.

Ethane.

A. J. Teague

Yes, what I think we are going to end up doing is doing our best to contract it up to onto long-term contracts.

Brian Joshua Zarahn – Barclays Capital, Inc.

To keep some of that for – to keep some of that for similar to your LPG side to keep some of that for your marketing business?

A. J. Teague

Absolutely not.

Brian Joshua Zarahn – Barclays Capital, Inc.

Okay, thanks Jim.

Operator

Your next question comes from the line of Ross Payne from Wells Fargo. Your line is open.

Ross Payne – Wells Fargo Securities LLC

How are you doing guys? Two quick questions for you, sticking with the ethylene just for a second. Can you talk about what were the ship development is? How many ships you’re seeing? What the timeline might look like on that. And second of all for Mike, you might have touched on this. But, if you can talk about the utilization on Foothill and Texas Express, thanks.

A. J. Teague

More ships are being built.

Ross Payne – Wells Fargo Securities LLC

Oh, thank you. Yes.

A. J. Teague

Ships are I think it’s not specific to one of the major ship building facilities, I think ships are being built in the Korean shipyard, the Japanese shipyards and also possibly and also in China. Earlier the three major locations were the ships of this nature the gas carriers, the OTCs and we’ll call the ethane carrier, will look very similar.

Ross Payne – Wells Fargo Securities LLC

Okay, do you know how many ships and what the timeline is in terms of delivery might be?

A. J. Teague

Don’t know many getting the timeline.

Michael A. Creel

So basically all of our discussions are there in concert with our contracts.

Ross Payne – Wells Fargo Securities LLC

Okay.

W. Randall Fowler

In other words they will have the ships when the facility comes up there.

Ross Payne – Wells Fargo Securities LLC

And to refresh my memory – the timeline on that for completion fee on your side?

Michael A. Creel

Randy?

W. Randall Fowler

Third quarter.

A. J. Teague

Okay third quarter 16.

Ross Payne – Wells Fargo Securities LLC

Okay great. Okay and then on the utilization of foothills and Texas Express, give us an idea how much ramp up we probably are going to be seeing the future?

Michael A. Creel

Hey, Ross, you mean front range truck?

Ross Payne – Wells Fargo Securities LLC

Front range, I am sorry.

A. J. Teague

Mike, you have that?

Michael A. Creel

Of course there is being impacted by ethane rejection and when I talk about physical volumes we are not talking about contractual because we’ve got deficiencies on there.

A. J. Teague

70,000 barrels plus.

Michael A. Creel

70,000barrel a day.

A. J. Teague

Almost 80,000 barrels a day.

Michael A. Creel

Correct.

Ross Payne – Wells Fargo Securities LLC

Correct.

Michael A. Creel

For the quarter Ross, Texas Express is more like 67,000 barrels a day.

Ross Payne – Wells Fargo Securities LLC

Okay with the contractual agreement it’s higher than that and as…

Michael A. Creel

(indiscernible)

Ross Payne – Wells Fargo Securities LLC

Okay thanks guys. That is it from me.

Operator

Your next question comes from the line of John Edwards from Credit Suisse. Your line is open.

John D. Edwards – Credit Suisse Securities LLC

Yes, good morning everybody. Just Randy, when you running down the financing activity, I didn’t hear you mentioned issuing any equity during the quarter, was non-issued?

W. Randall Fowler

John, the only equity that we issued was through the dividend – distribution reinvestment plans. So there was not a follow on equity offering to the public overnight deal nor was there any activity under the ATM facility.

John D. Edwards – Credit Suisse Securities LLC

Okay, all right and then just, I guess one more question on the ethane export. I mean at this point what kind of volumes are you anticipating on that?

Michael A. Creel

Order capacity as John…

W. Randall Fowler

John we haven’t announced, with respect to the contracted volumes.

John D. Edwards – Credit Suisse Securities LLC

Okay.

Michael A. Creel

As we kind of mentioned we are still talking about a lot of other people, but we are confident in the project with the contracts that we have in place today.

John D. Edwards – Credit Suisse Securities LLC

Okay, thanks. All right, that’s all I had thank you.

Operator

(Operator Instructions) Your next question comes from the line of Michael Blum from Wells Fargo. Your line is open.

Michael J. Blum – Wells Fargo Securities LLC

Thank you. Just one worded question on the ethane thing, and I apologize. So just to be clear, the ultimate contracts for supply will be between U.S. producers and foreign petrochemical companies, and you as Enterprise will just effectively clip a coupon to move it through your dock?

Michael A. Creel

We might be the seller, but it is going to be on an (indiscernible) related price, Michael. So effectively you are right, we are going to be flex in the fee.

Michael J. Blum – Wells Fargo Securities LLC

Okay, would it be your marketing arm then you will be selling the products?

W. Randall Fowler

Yes, but in every…

A. J. Teague

No we are not taking price risk on that at all. It's strictly a pass through. We are basically accommodating their need, but our contract customers have rights to buy their own, I think, they can either way.

Michael J. Blum – Wells Fargo Securities LLC

Okay.

Michael A. Creel

We are offering the service to aggregate product for them or if they buy it or sell it to them, deliver to the…

Michael J. Blum – Wells Fargo Securities LLC

Got it. Okay and then just a couple of questions on ATEX. So just based on what you said, running about 30,000 barrels a day in the first quarter. Would you expect based on everything you were saying the reasons for why that wasn't at 60,000 or that’s going to now ramp up to the 60,000 as those fraction come on, et cetera?

Michael A. Creel

We’ve got two plants that are connected to ATEX and we are waiting on two more to connect scheduled either later this month or early in June. So I guess those additional two plants get connected to our system will see the volume to ramp up.

Michael J. Blum – Wells Fargo Securities LLC

Okay, and then last question on ATEX. Are there any additional discussions with northeast producers, for propane sellers on that line just giving kind of all the moving pieces up in the northeast?

Michael A. Creel

We are always talking to them as opportunities but nothing specific.

Michael J. Blum – Wells Fargo Securities LLC

Okay, thanks guys.

Operator

There are no further questions at this time.

Michael A. Creel

Okay, Kyle. If you don’t mind, Kyle would you give our listeners the replay information?

Operator

Yes, sir. A replay of today’s conference will be available beginning later today. To access the replay please dial 855-859-2056 or dialing internationally 404-537-3406. To access the call please enter your conference ID number 31363407. Thank you, this concludes today’s conference call you may now disconnect.

Michael A. Creel

Thank you, Kyle. You guys have a good day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Enterprise Products Partners' CEO Discusses Q1 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts