UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number:  1-14323

ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
76-0568219
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
1100 Louisiana Street, 10th Floor
Houston, Texas 77002
    (Address of Principal Executive Offices, including Zip Code)
(713) 381-6500
(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of Each Class
Trading Symbol(s)
Name of Each Exchange On Which Registered
Common Units
EPD
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☑  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 
Accelerated filer
Non-accelerated filer   
Smaller reporting company
Emerging growth company   
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No  

There were 2,185,178,603 common units of Enterprise Products Partners L.P. outstanding at the close of business on April 30, 2021. 


Table of Contents

ENTERPRISE PRODUCTS PARTNERS L.P.
TABLE OF CONTENTS

 
 
Page No.
PART I.  FINANCIAL INFORMATION.
Item 1.
Financial Statements.
 
 
Unaudited Condensed Consolidated Balance Sheets
2
 
Unaudited Condensed Statements of Consolidated Operations
3
 
Unaudited Condensed Statements of Consolidated Comprehensive Income
4
 
Unaudited Condensed Statements of Consolidated Cash Flows
5
 
Unaudited Condensed Statements of Consolidated Equity
6
 
Notes to Unaudited Condensed Consolidated Financial Statements:
 
 
1.  Partnership Organization and Operations
8
 
2.  Summary of Significant Accounting Policies
9
 
3.  Inventories
9
 
4.  Property, Plant and Equipment
10
 
5.  Investments in Unconsolidated Affiliates
12
 
6.  Intangible Assets and Goodwill
12
 
7.  Debt Obligations
14
 
8.  Capital Accounts
16
 
9.  Revenues
18
 
10.  Business Segments and Related Information
20
 
11.  Earnings Per Unit
24
 
12.  Equity-Based Awards
24
 
13.  Hedging Activities and Fair Value Measurements
26
 
14.  Related Party Transactions
32
 
15.  Income Taxes
33
 
16.  Commitments and Contingent Liabilities
35
 
17.  Supplemental Cash Flow Information
37
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
38
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
60
Item 4.
Controls and Procedures.
62
 
 
 
PART II.  OTHER INFORMATION.
Item 1.
Legal Proceedings.
62
Item 1A.
Risk Factors.
62
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
63
Item 3.
Defaults Upon Senior Securities.
63
Item 4.
Mine Safety Disclosures.
63
Item 5.
Other Information.
64
Item 6.
Exhibits.
64
 
 
 
Signatures
73

1


Table of Contents

PART I.  FINANCIAL INFORMATION.

ITEM 1.  FINANCIAL STATEMENTS.

ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)

   
March 31,
2021
   
December 31,
2020
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
229.4
   
$
1,059.9
 
Restricted cash
   
105.0
     
98.2
 
Accounts receivable – trade, net of allowance for credit losses
of $47.3 at March 31, 2021 and $46.5 at December 31, 2020
   
5,779.9
     
4,802.6
 
Accounts receivable – related parties
   
7.0
     
5.6
 
Inventories (see Note 3)
   
3,703.3
     
3,303.5
 
Derivative assets (see Note 13)
   
323.0
     
228.6
 
Prepaid and other current assets
   
436.5
     
411.0
 
Total current assets
   
10,584.1
     
9,909.4
 
Property, plant and equipment, net (see Note 4)
   
42,102.4
     
41,912.8
 
Investments in unconsolidated affiliates (see Note 5)
   
2,449.8
     
2,429.2
 
Intangible assets, net (see Note 6)
   
3,259.8
     
3,309.1
 
Goodwill (see Note 6)
   
5,448.9
     
5,448.9
 
Other assets
   
1,138.5
     
1,097.3
 
Total assets
 
$
64,983.5
   
$
64,106.7
 
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Current maturities of debt (see Note 7)
 
$
1,513.4
   
$
1,325.0
 
Accounts payable – trade
   
830.7
     
704.6
 
Accounts payable – related parties
   
85.1
     
149.5
 
Accrued product payables
   
7,053.0
     
5,395.4
 
Accrued interest
   
224.2
     
455.6
 
Derivative liabilities (see Note 13)
   
239.4
     
349.2
 
Other current liabilities
   
593.1
     
608.7
 
Total current liabilities
   
10,538.9
     
8,988.0
 
Long-term debt (see Note 7)
   
27,145.9
     
28,540.7
 
Deferred tax liabilities (see Note 15)
   
482.8
     
464.7
 
Other long-term liabilities
   
696.4
     
686.6
 
Commitments and contingent liabilities (see Note 16)
   
     
 
Redeemable preferred limited partner interests: (see Note 8)
               
    Series A cumulative convertible preferred units (“preferred units”)
        (50,412 units outstanding at March 31, 2021 and 50,138 units outstanding
         at December 31, 2020)
   
49.3
     
49.3
 
Equity: (see Note 8)
               
Partners’ equity:
               
Common limited partner interests (2,185,178,603 units issued and outstanding at March 31, 2021, 2,182,308,958 units issued and outstanding at December 31, 2020)
   
26,108.6
     
25,766.6
 
Treasury units, at cost
   
(1,297.3
)
   
(1,297.3
)
Accumulated other comprehensive income (loss)
   
181.0
     
(165.2
)
Total  partners’ equity
   
24,992.3
     
24,304.1
 
Noncontrolling interests in consolidated subsidiaries
   
1,077.9
     
1,073.3
 
Total equity
   
26,070.2
     
25,377.4
 
Total liabilities, preferred units, and equity
 
$
64,983.5
   
$
64,106.7
 


See Notes to Unaudited Condensed Consolidated Financial Statements.
2


Table of Contents


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
 (Dollars in millions, except per unit amounts)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Revenues:
           
Third parties
 
$
9,141.1
   
$
7,466.5
 
Related parties
   
14.2
     
16.0
 
Total revenues (see Note 9)
   
9,155.3
     
7,482.5
 
Costs and expenses:
               
Operating costs and expenses:
               
Third party and other costs
   
7,229.3
     
5,735.3
 
Related parties
   
324.1
     
325.0
 
Total operating costs and expenses
   
7,553.4
     
6,060.3
 
General and administrative costs:
               
Third party and other costs
   
21.5
     
23.0
 
Related parties
   
34.8
     
32.5
 
Total general and administrative costs
   
56.3
     
55.5
 
Total costs and expenses (see Note 10)
   
7,609.7
     
6,115.8
 
Equity in income of unconsolidated affiliates
   
148.9
     
140.8
 
Operating income
   
1,694.5
     
1,507.5
 
Other income (expense):
               
Interest expense
   
(322.8
)
   
(317.5
)
Change in fair market value of Liquidity Option
   
     
(2.3
)
Interest income
   
1.1
     
7.2
 
Other, net
   
(0.2
)
   
0.9
 
Total other expense, net
   
(321.9
)
   
(311.7
)
Income before income taxes
   
1,372.6
     
1,195.8
 
Benefit from (provision for) income taxes (see Note 15)
   
(10.0
)
   
179.2
 
Net income
   
1,362.6
     
1,375.0
 
Net income attributable to noncontrolling interests
   
(21.3
)
   
(24.9
)
Net income attributable to preferred units
   
(0.9
)
   
 
Net income attributable to common unitholders
 
$
1,340.4
   
$
1,350.1
 
 
               
Earnings per unit: (see Note 11)
               
Basic and diluted earnings per common unit
 
$
0.61
   
$
0.61
 

















See Notes to Unaudited Condensed Consolidated Financial Statements.
3


Table of Contents


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED
COMPREHENSIVE INCOME
(Dollars in millions)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
 
           
Net income
 
$
1,362.6
   
$
1,375.0
 
Other comprehensive income (loss):
               
Cash flow hedges: (see Note 13)
               
Commodity hedging derivative instruments:
               
Changes in fair value of cash flow hedges
   
(461.2
)
   
475.1
 
Reclassification of losses (gains) to net income
   
616.1
     
(155.6
)
Interest rate hedging derivative instruments:
               
Changes in fair value of cash flow hedges
   
182.9
     
(278.1
)
Reclassification of losses to net income
   
8.6
     
9.6
 
Total cash flow hedges
   
346.4
     
51.0
 
Other
   
(0.2
)
   
(0.1
)
Total other comprehensive income
   
346.2
     
50.9
 
Comprehensive income
   
1,708.8
     
1,425.9
 
Comprehensive income attributable to noncontrolling interests
   
(21.3
)
   
(24.9
)
Comprehensive income attributable to preferred units
   
(0.9
)
   
 
Comprehensive income attributable to common unitholders
 
$
1,686.6
   
$
1,401.0
 





























See Notes to Unaudited Condensed Consolidated Financial Statements.
4


Table of Contents



ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
Operating activities:
           
Net income
 
$
1,362.6
   
$
1,375.0
 
Reconciliation of net income to net cash flows provided by operating activities:
               
Depreciation and accretion
   
425.4
     
414.0
 
Amortization of intangible assets
   
36.1
     
39.6
 
Amortization of major maintenance costs for reaction-based plants
   
2.6
     
 
Other amortization expense
   
60.9
     
55.4
 
Impairment of assets other than goodwill (see Note 4)
   
65.6
     
1.6
 
Equity in income of unconsolidated affiliates
   
(148.9
)
   
(140.8
)
Distributions received from unconsolidated affiliates attributable to earnings
   
111.9
     
126.9
 
Net losses attributable to asset sales and related matters
   
10.9
     
0.1
 
Deferred income tax expense (benefit)
   
4.6
     
(184.1
)
Change in fair market value of derivative instruments
   
(15.6
)
   
(29.5
)
Change in fair market value of Liquidity Option
   
     
2.3
 
Non-cash expense related to long-term operating leases (see Note 16)
   
9.3
     
10.0
 
Net effect of changes in operating accounts (see Note 17)
   
99.0
     
341.7
 
Other operating activities
   
(1.3
)
   
 
Net cash flows provided by operating activities
   
2,023.1
     
2,012.2
 
Investing activities:
               
Capital expenditures
   
(679.0
)
   
(1,079.5
)
Investments in unconsolidated affiliates
   
(1.3
)
   
(3.3
)
Distributions received from unconsolidated affiliates attributable to the return of capital
   
18.6
     
10.3
 
Proceeds from asset sales
   
6.2
     
0.6
 
Other investing activities
   
(1.5
)
   
0.2
 
Cash used in investing activities
   
(657.0
)
   
(1,071.7
)
Financing activities:
               
Borrowings under debt agreements
   
7,531.8
     
5,411.8
 
Repayments of debt
   
(8,741.8
)
   
(3,406.6
)
Debt issuance costs
   
     
(28.4
)
Monetization of interest rate derivative instruments
   
75.2
     
(33.3
)
Cash distributions paid to common unitholders (see Note 8)
   
(981.7
)
   
(974.2
)
Cash payments made in connection with distribution equivalent rights
   
(7.0
)
   
(5.8
)
Cash distributions paid to noncontrolling interests
   
(29.8
)
   
(29.9
)
Cash contributions from noncontrolling interests
   
13.1
     
5.2
 
Repurchase of common units under 2019 Buyback Program (see Note 8)
   
(13.9
)
   
(140.1
)
Other financing activities
   
(35.7
)
   
(33.6
)
Cash provided by (used in) financing activities
   
(2,189.8
)
   
765.1
 
Net change in cash and cash equivalents, including restricted cash
   
(823.7
)
   
1,705.6
 
Cash and cash equivalents, including restricted cash, at beginning of period
   
1,158.1
     
410.0
 
Cash and cash equivalents, including restricted cash, at end of period
 
$
334.4
   
$
2,115.6
 









See Notes to Unaudited Condensed Consolidated Financial Statements.
5


Table of Contents


ENTERPRISE PRODUCTS PARTNERS L.P.
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY
(Dollars in millions)

 
 
Partners’ Equity
             
   
Common
Limited
Partner
Interests
   
Treasury
Units
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests in
Consolidated
Subsidiaries
   
Total
 
 Balance, December 31, 2020
 
$
25,766.6
   
$
(1,297.3
)
 
$
(165.2
)
 
$
1,073.3
   
$
25,377.4
 
   Net income
   
1,340.4
     
     
     
21.3
     
1,361.7
 
   Cash distributions paid to common unitholders
   
(981.7
)
   
     
     
     
(981.7
)
   Cash payments made in connection with distribution equivalent rights
   
(7.0
)
   
     
     
     
(7.0
)
   Cash distributions paid to noncontrolling interests
   
     
     
     
(29.8
)
   
(29.8
)
   Cash contributions from noncontrolling interests
   
     
     
     
13.1
     
13.1
 
   Amortization of fair value of equity-based awards
   
38.8
     
     
     
     
38.8
 
   Repurchase and cancellation of common units under
      2019 Buyback Program (see Note 8)
   
(13.9
)
   
     
     
     
(13.9
)
   Cash flow hedges
   
     
     
346.4
     
     
346.4
 
   Other, net
   
(34.6
)
   
     
(0.2
)
   
     
(34.8
)
   Balance, March 31, 2021
 
$
26,108.6
   
$
(1,297.3
)
 
$
181.0
   
$
1,077.9
   
$
26,070.2
 



 
 
Partners’ Equity
             
   
Common
Limited
Partner
Interests
   
Treasury
Units
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Noncontrolling
Interests in
Consolidated
Subsidiaries
   
Total
 
Balance, December 31, 2019
 
$
24,692.6
   
$
   
$
71.4
   
$
1,063.5
   
$
25,827.5
 
Net income
   
1,350.1
     
     
     
24.9
     
1,375.0
 
Cash distributions paid to common unitholders
   
(974.2
)
   
     
     
     
(974.2
)
Cash payments made in connection with distribution equivalent rights
   
(5.8
)
   
     
     
     
(5.8
)
Cash distributions paid to noncontrolling interests
   
     
     
     
(29.9
)
   
(29.9
)
Cash contributions from noncontrolling interests
   
     
     
     
5.2
     
5.2
 
Amortization of fair value of equity-based awards
   
39.1
     
     
     
     
39.1
 
Repurchase and cancellation of common units under
   2019 Buyback Program (see Note 8)
   
(140.1
)
   
     
     
     
(140.1
)
Common units issued to Skyline North Americas, Inc. in connection with
   settlement of Liquidity Option (see Note 8)
   
1,297.3
     
     
     
     
1,297.3
 
Treasury units acquired in connection with settlement of Liquidity Option,
   at cost (see Note 8)
   
     
(1,297.3
)
   
     
     
(1,297.3
)
Cash flow hedges
   
     
     
51.0
     
     
51.0
 
Other, net
   
(33.6
)
   
     
(0.1
)
   
0.1
     
(33.6
)
Balance, March 31, 2020
 
$
26,225.4
   
$
(1,297.3
)
 
$
122.3
   
$
1,063.8
   
$
26,114.2
 














See Notes to Unaudited Condensed Consolidated Financial Statements.  For information regarding Unit History,
Accumulated Other Comprehensive Income (Loss), see Note 8.
6


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KEY REFERENCES USED IN THESE
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, references to “we,” “us” or “our” within these Notes to Unaudited Condensed Consolidated Financial Statements are intended to mean the business and operations of Enterprise Products Partners L.P. and its consolidated subsidiaries.  

References to the “Partnership” mean Enterprise Products Partners L.P. on a standalone basis.

References to “EPO” mean Enterprise Products Operating LLC, which is an indirect wholly owned subsidiary of the Partnership, and its consolidated subsidiaries, through which the Partnership conducts its business.  We are managed by our general partner, Enterprise Products Holdings LLC (“Enterprise GP”), which is a wholly owned subsidiary of Dan Duncan LLC, a privately held Texas limited liability company.

The membership interests of Dan Duncan LLC are owned by a voting trust, the current trustees (“DD LLC Trustees”) of which are: (i) Randa Duncan Williams, who is also a director and Chairman of the Board of Directors (the “Board”) of Enterprise GP;  (ii) Richard H. Bachmann, who is also a director and Vice Chairman of the Board of Enterprise GP; and (iii) W. Randall Fowler, who is also a director and the Co-Chief Executive Officer and Chief Financial Officer of Enterprise GP.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as managers of Dan Duncan LLC.

References to “EPCO” mean Enterprise Products Company, a privately held Texas corporation, and its privately held affiliates.  The outstanding voting capital stock of EPCO is owned by a voting trust, the current trustees (“EPCO Trustees”) of which are:  (i) Ms. Duncan Williams, who serves as Chairman of EPCO; (ii) Mr. Bachmann, who serves as the President and Chief Executive Officer of EPCO; and (iii) Mr. Fowler, who serves as an Executive Vice President and the Chief Financial Officer of EPCO.  Ms. Duncan Williams and Messrs. Bachmann and Fowler also currently serve as directors of EPCO.

We, Enterprise GP, EPCO and Dan Duncan LLC are affiliates under the collective common control of the DD LLC Trustees and the EPCO Trustees.  EPCO, together with its privately held affiliates, owned approximately 32.2% of the Partnership’s common units outstanding at March 31, 2021.

With the exception of per unit amounts, or as noted within the context of each disclosure,
the dollar amounts presented in the tabular data within these disclosures are
stated in millions of dollars.
7


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Partnership Organization and Operations

We are a publicly traded Delaware limited partnership, the common units of which are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “EPD.”  Our preferred units are not publicly traded.  We were formed in April 1998 to own and operate certain natural gas liquids (“NGLs”) related businesses of EPCO and are a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, petrochemicals and refined products.  We are owned by our limited partners (preferred and common unitholders) from an economic perspective.   Enterprise GP, which owns a non-economic general partner interest in us, manages our Partnership.  We conduct substantially all of our business operations through EPO and its consolidated subsidiaries.

Our fully integrated, midstream energy asset network (or “value chain”) links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States (“U.S.”), Canada and the Gulf of Mexico with domestic consumers and international markets.  Our midstream energy operations include:

natural gas gathering, treating, processing, transportation and storage;

NGL transportation, fractionation, storage, and marine terminals (including those used to export liquefied petroleum gases, or “LPG,” and ethane);

crude oil gathering, transportation, storage, and marine terminals;

propylene production facilities (including propane dehydrogenation (“PDH”) facilities), butane isomerization, octane enhancement, isobutane dehydrogenation (“iBDH”) and high purity isobutylene (“HPIB”) production facilities;

petrochemical and refined products transportation, storage, and marine terminals (including those used to export ethylene and polymer grade propylene (“PGP”); and

a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. 

Like many publicly traded partnerships, we have no employees.  All of our management, administrative and operating functions are performed by employees of EPCO pursuant to an administrative services agreement (the “ASA”) or by other service providers.  See Note 14 for information regarding related party matters.

Our results of operations for the three months ended March 31, 2021 are not necessarily indicative of results expected for the full year of 2021.  In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring accruals necessary for fair presentation.  Although we believe the disclosures in these financial statements are adequate and make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

These Unaudited Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the year ended December 31, 2020  (the “2020 Form 10-K”) filed with the SEC on March 1, 2021.




8


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 2.  Summary of Significant Accounting Policies

Apart from those matters described in this footnote, there have been no updates to our significant accounting policies since those reported under Note 2 of the 2020 Form 10-K.

Allowance for Credit Losses

We estimate our allowance for credit losses (formerly, the allowance for doubtful accounts) at each reporting date using a current expected credit loss model, which requires the measurement of expected credit losses for financial assets (e.g., accounts receivable) based on historical experience with customers, current economic conditions, and reasonable and supportable forecasts.  We may also increase the allowance for credit losses in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties.

The following table presents our allowance for credit losses activity since December 31, 2020:

Allowance for credit losses, December 31, 2020
 
$
46.5
 
Charged to costs and expenses
   
0.2
 
Charged to other accounts
   
1.1
 
Deductions
   
(0.5
)
Allowance for credit losses, March 31, 2021
 
$
47.3
 

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets that sum to the total of the amounts shown in the Unaudited Condensed Statements of Consolidated Cash Flows.

   
March 31,
2021
   
December 31,
2020
 
Cash and cash equivalents
 
$
229.4
   
$
1,059.9
 
Restricted cash
   
105.0
     
98.2
 
Total cash, cash equivalents and restricted cash shown in the
  Unaudited Condensed Statements of Consolidated Cash Flows
 
$
334.4
   
$
1,158.1
 

Restricted cash primarily represents amounts held in segregated bank accounts by our clearing brokers as margin in support of our commodity derivative instruments portfolio and related physical purchases and sales of natural gas, NGLs, crude oil, refined products and power.  Additional cash may be restricted to maintain our commodity derivative instruments portfolio as prices fluctuate or margin requirements change.  See Note 13 for information regarding our derivative instruments and hedging activities.


Note 3.  Inventories

Our inventory amounts by product type were as follows at the dates indicated:

   
March 31,
2021
   
December 31,
2020
 
NGLs
 
$
1,707.8
   
$
1,888.1
 
Petrochemicals and refined products
   
1,151.0
     
642.6
 
Crude oil
   
825.7
     
758.1
 
Natural gas
   
18.8
     
14.7
 
Total
 
$
3,703.3
   
$
3,303.5
 

9


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Due to fluctuating commodity prices, we recognize lower of cost or net realizable value adjustments when the carrying value of our available-for-sale inventories exceeds their net realizable value.  The following table presents our total cost of sales amounts and lower of cost or net realizable value adjustments for the periods indicated:

 
For the Three Months
Ended March 31,
 
 
2021
 
2020
 
Cost of sales (1)
 
$
6,263.0
   
$
4,823.0
 
Lower of cost or net realizable value adjustments recognized in cost of sales
   
10.0
     
38.0
 

(1)
Cost of sales is a component of “Operating costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.  Fluctuations in these amounts are primarily due to changes in energy commodity prices and sales volumes associated with our marketing activities.


Note 4.  Property, Plant and Equipment

The historical costs of our property, plant and equipment and related balances were as follows at the dates indicated:

 
 
Estimated
Useful Life
in Years
   
March 31,
2021
   
December 31,
2020
 
Plants, pipelines and facilities (1)
   
3-45
(5)
 
$
50,036.0
   
$
49,972.8
 
Underground and other storage facilities (2)
   
5-40
(6)
   
4,231.4
     
4,207.5
 
Transportation equipment (3)
   
3-10
     
199.2
     
204.9
 
Marine vessels (4)
   
15-30
     
929.6
     
932.7
 
Land
           
372.1
     
371.9
 
Construction in progress
           
2,055.3
     
1,807.7
 
   Subtotal
           
57,823.6
     
57,497.5
 
Less accumulated depreciation
           
15,805.9
     
15,584.7
 
   Subtotal property, plant and equipment, net
           
42,017.7
     
41,912.8
 
Capitalized major maintenance costs for reaction-based
   plants, net of accumulated amortization (7)
           
84.7
     
 
   Property, plant and equipment, net
         
$
42,102.4
   
$
41,912.8
 

(1)
Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; laboratory and shop equipment and related assets.
(2)
Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets.
(3)
Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(4)
Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(5)
In general, the estimated useful lives of major assets within this category are: processing plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; buildings, 20-40 years; office furniture and equipment, 3-20 years; and laboratory and shop equipment, 5-35 years.
(6)
In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years.
(7)
For reaction-based plants, we use the deferral method when accounting for major maintenance activities.  Under the deferral method, major maintenance costs are capitalized and amortized over the period until the next major overhaul project.   On a weighted-average basis, the expected amortization period for these costs is 2.8 years.

Property, plant and equipment at March 31, 2021 and December 31, 2020 includes $69.0 million and $69.7 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.  The following table presents information regarding our asset retirement obligations, or AROs, since December 31, 2020:

ARO liability balance, December 31, 2020
 
$
149.5
 
Liabilities incurred
   
 
Liabilities settled
   
 
Revisions in estimated cash flows
   
(1.1
)
Accretion expense
   
1.7
 
ARO liability balance, March 31, 2021
 
$
150.1
 
10


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Of the $150.1 million total ARO liability recorded at March 31, 2021, $11.3 million was reflected as a current liability and $138.8 million as a long-term liability.

The following table summarizes our depreciation and accretion expense and capitalized interest amounts for the periods indicated:

 
For the Three Months
Ended March 31,
 
 
2021
 
2020
 
Depreciation expense (1)
 
$
423.7
   
$
412.2
 
Accretion expense (1)
   
1.7
     
1.8
 
Capitalized interest (2)
   
19.6
     
30.5
 

(1)
Depreciation and accretion expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.
(2)
We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase.  The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life as a component of depreciation expense.  When capitalized interest is recorded, it reduces interest expense from what it would be otherwise.

Asset impairment charges

In March 2021, we entered into agreements to sell a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System, to a third party for $40.0 million in cash.  The transaction closed and was effective on April 1, 2021.  In total, we recognized an impairment charge of $43.4 million, which reflects the write down of $36.6 million of property, plant and equipment and $6.8 million of intangible assets (see Note 6).  The impairment charge attributable to this transaction primarily reflects the reclassification of the underlying assets and liabilities (at their estimated fair values) to their respective held-for-sale accounts at March 31, 2021. The remainder of our impairment charges for the three month periods ended March 31, 2021 and 2020 are attributable to the complete write-off of assets that are no longer expected to be used or constructed.

Asset impairment charges related to operations are a component of “Third party and other costs” within the “Operating costs and expenses” section of our Unaudited Condensed Statements of Consolidated Operations.

We are closely monitoring the recoverability of our long-lived assets, investments in unconsolidated affiliates and goodwill in light of the adverse economic effects of the coronavirus disease 2019 (“COVID-19”) pandemic.  If the adverse economic impacts of the pandemic persist for longer periods than currently expected, these developments could result in the recognition of non-cash impairment charges in the future.




11


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 5.  Investments in Unconsolidated Affiliates

The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated.  We account for these investments using the equity method.

   
March 31,
2021
   
December 31,
2020
 
NGL Pipelines & Services
 
$
664.6
   
$
671.6
 
Crude Oil Pipelines & Services
   
1,749.5
     
1,723.7
 
Natural Gas Pipelines & Services
   
32.5
     
31.4
 
Petrochemical & Refined Products Services
   
3.2
     
2.5
 
Total
 
$
2,449.8
   
$
2,429.2
 

The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
NGL Pipelines & Services
 
$
28.1
   
$
32.7
 
Crude Oil Pipelines & Services
   
118.9
     
107.3
 
Natural Gas Pipelines & Services
   
1.4
     
1.6
 
Petrochemical & Refined Products Services
   
0.5
     
(0.8
)
Total
 
$
148.9
   
$
140.8
 


Note 6.  Intangible Assets and Goodwill

Identifiable Intangible Assets

The following table summarizes our intangible assets by business segment at the dates indicated:

   
March 31, 2021
   
December 31, 2020
 
 
 
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
   
Gross
Value
   
Accumulated
Amortization
   
Carrying
Value
 
NGL Pipelines & Services:
                                   
Customer relationship intangibles
 
$
447.8
   
$
(224.5
)
 
$
223.3
   
$
447.8
   
$
(221.3
)
 
$
226.5
 
Contract-based intangibles
   
162.6
     
(57.8
)
   
104.8
     
162.6
     
(55.0
)
   
107.6
 
Segment total
   
610.4
     
(282.3
)
   
328.1
     
610.4
     
(276.3
)
   
334.1
 
Crude Oil Pipelines & Services:
                                               
Customer relationship intangibles
   
2,195.0
     
(306.1
)
   
1,888.9
     
2,195.0
     
(291.6
)
   
1,903.4
 
Contract-based intangibles
   
283.1
     
(253.2
)
   
29.9
     
283.1
     
(249.9
)
   
33.2
 
Segment total
   
2,478.1
     
(559.3
)
   
1,918.8
     
2,478.1
     
(541.5
)
   
1,936.6
 
Natural Gas Pipelines & Services:
                                               
Customer relationship intangibles
   
1,350.3
     
(521.1
)
   
829.2
     
1,350.3
     
(512.2
)
   
838.1
 
Contract-based intangibles
   
231.1
     
(179.1
)
   
52.0
     
470.7
     
(403.8
)
   
66.9
 
Segment total
   
1,581.4
     
(700.2
)
   
881.2
     
1,821.0
     
(916.0
)
   
905.0
 
Petrochemical & Refined Products Services:
                                               
Customer relationship intangibles
   
181.4
     
(69.7
)
   
111.7
     
181.4
     
(68.3
)
   
113.1
 
Contract-based intangibles
   
44.9
     
(24.9
)
   
20.0
     
44.9
     
(24.6
)
   
20.3
 
Segment total
   
226.3
     
(94.6
)
   
131.7
     
226.3
     
(92.9
)
   
133.4
 
Total intangible assets
 
$
4,896.2
   
$
(1,636.4
)
 
$
3,259.8
   
$
5,135.8
   
$
(1,826.7
)
 
$
3,309.1
 


12


Table of Contents
ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following table presents the amortization expense of our intangible assets by business segment for the periods indicated:

 
 
For the Three Months
Ended March 31,
 
 
 
2021
   
2020
 
NGL Pipelines & Services
 
$
6.0
   
$
6.5
 
Crude Oil Pipelines & Services
   
17.8
     
20.9
 
Natural Gas Pipelines & Services
   
10.6
     
10.2
 
Petrochemical & Refined Products Services
   
1.7
     
2.0
 
Total
 
$
36.1
   
$
39.6