Good morning. Welcome to the Enterprise Products Partners conference call to discuss first quarter 2024 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise's General Partner, Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call 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 with that, I will turn it over to you Jim.

Thank you, Libby. We have a war in Europe, turmoil in the Middle East. We've got student protests occupying elite university campuses. A former President is being tried for crimes in courts up and down the East Coast; chaos seems to reign. In many ways, what's going on today reminds me of the 1960s. We had a war in Asia known as the Vietnam War. We had student anti-war demonstrators occupying campuses throughout the country. While no President was on trial, one was chased from running for a second term. And on top of all that, like in 1968, we find that the DNC will hold its convention in Chicago. For any of you too young to know what that means, I suggest you look it up. But amidst all this chaos, there is a constant today that should bring calm to investors' concerns in this volatile world. Enterprise continues to deliver month after month, quarter after quarter, and year after year, and the first quarter was no exception. Our total gross operating margin for the quarter was $2.5 billion, a 7% increase compared to the first quarter of last year. Earnings growth for the first quarter was primarily driven by contributions from new assets placed into service during the second half of last year, along with a 17% increase in net marine terminal volumes attributable to continued strength in global demand for U.S. energy and higher sales volumes and margins in our Octane Enhancement business. Our system transported 12.3 million barrels a day of crude oil equivalent, which includes NGLs, crude oil, petrochemicals, refined products, and natural gas. We generated $1.9 billion in DCF during the quarter, providing a 1.7x coverage that supported a 5% increase in cash distributions to partners compared to the same quarter last year. We retained $786 million of DCF. Randy, you're going to provide more details on this, right?

Right. Good morning, everyone. Starting with first quarter income statement items. Net income attributable to common unitholders for the first quarter of 2024 increased 5% to $1.5 billion or $0.66 per common unit on a fully diluted basis compared to $1.4 billion or $0.63 per common unit for the first quarter of 2023. Turning to cash flow. Adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital, increased 6% to $2.1 billion for the first quarter of 2024 compared to $2 billion for the first quarter of last year. We declared a distribution of $0.515 per common unit for the first quarter of 2024. As Jim mentioned, this is a 5.1% increase over the distribution declared for the first quarter of 2023. The distribution will be paid on May 14 to common unitholders of record as of the close of business today. In the first quarter, the partnership purchased approximately 1.4 million common units on the open market for $40 million, with total purchases for the 12 months ending March 31 being $211 million or approximately 8 million enterprise common units, bringing total purchases under our buyback program to approximately $960 million. In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.5 million common units on the open market for $172 million during the last 12 months, including 1.6 million common units on the open market for $43 million during the first quarter of 2024. For the 12 months ended March 31, 2024, Enterprise paid out approximately $4.4 billion in distributions to limited partners combined with the $211 million of common unit repurchases across the same time period. Enterprise's payout ratio of adjusted cash flow from operations was 56% for that 12-month period. Total capital investments in the first quarter were $1.1 billion, including $875 million for growth capital projects and $180 million of sustaining capital expenditures. We expect growth capital expenditures for 2024 and 2025 to be in the range of $3.25 billion to $3.75 billion. We continue to estimate 2024 sustaining capital expenditures to be approximately $550 million, which includes planned turnarounds at both of our PDH plants and our high-purity isobutylene facility. As previously mentioned, these scheduled turnarounds typically occur every 3 to 4 years. At this time, we expect the PDH turnaround to be completed in May 2024. We plan to begin addressing the issues on the fourth reactor within PDH 2 in June. Our total debt principal outstanding was approximately $29.7 billion as of March 31, 2024. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio is approximately 19 years. Our weighted average cost of debt is 4.7%. As of March 31, approximately 98% of our debt was fixed rate. Our consolidated liquidity was approximately $4.5 billion at the end of the first quarter, including availability under our credit facilities and unrestricted cash on hand. Our adjusted EBITDA for the first quarter was $2.5 billion and $9.5 billion for the trailing 12 months. As of March 31, 2024, our consolidated leverage ratio was 3.0x on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reducing the debt outstanding by the partnership's unrestricted cash on hand. As a reminder, our leverage target remains 3.0x, plus or minus 0.25x. And with that, Libby, I think we can open it up for questions.

Thank you. Operator, we are ready to open the call for questions from our participants. If you could please remind them of instructions to ask the questions.

Our first question comes from Theresa Chen from Barclays.

First, congratulations on obtaining the deepwater port license for SPOT. I'm sure that was a labor of love over the past 5 years. Can you provide us an update on the commercialization progress since you received the license earlier this month? And also, can you help us think about how much CapEx the project would require and over what period that would be spent?

Yes, I'll talk to the CapEx. First of all, it's not what was in the article by a long shot, and we typically don't share with people what our CapEx is. I'll turn it over to Brent to answer the other question.

I mean the commercialization, Theresa, is still ongoing. I'd say, for the most part, it's positive. We're spending a lot of time on the road. We expect to have 2 contracts by the end of, call it, next month. We're in ongoing discussions with other counterparties to commercialize that. But the mindset is we're not going to move forward on that project until we have the contracts to support it.

And then turning to your onshore activities. Can you provide an update on the status of the Texas Western products project so far after the initial phase began service? What are the key gating factors until Phase I is brought online? And what should we look for?

Yes, this is Tug Hanley speaking. I'll turn it over to Justin on the future activities. But as far as current status goes, we have 2 terminals online in West Texas. We just loaded over 50 trucks yesterday. It seems like every single day, we're setting a new record on volumes loaded. Regarding the margins we're getting, those have met our expectations or are currently exceeding them. And then you want to talk about having Justin Kleiderer online?

Yes, I'd say Theresa, this is Justin Kleiderer. Just considering Phase 2, which includes Albuquerque and Grand Junction, as Jim mentioned, we feel good. We're on the verge of commissioning Albuquerque as we speak. So in the second quarter rolling into early third quarter, the timing for getting that Phase II seems to be pretty good.

Thank you.

One moment for our next question. And our next question comes from the line of Tristan Richardson from Scotiabank.

Could you talk a little bit about the projects you added in the quarter on the Midland side? Are these with existing customers, or are these new customers, primarily in the Delaware versus the Midland? And then should this support plants that are already currently under construction, or is this gathering projects that could support future new plant sanctions?

This is Natalie Gayden. The new dedications, the gathering expansions in the Delaware and Midland are supported by new acreage dedication, some from existing customers and some from new customers. Those gathering expansions feed the new plants we've built. I was looking this morning, and we're over 91% of our plant capacity full. So it's a combination of everything.

That's helpful. And then just thinking about the crude side, you saw a significant move back into NGL service. Could you talk about the crude volumes in the quarter? Were you seeing increased utilization on the existing infrastructure there? Can you talk about the use of DRA to sort of enhance utilization out of your existing plants?

Yes, Tristan, this is Jay Bany. Yes, we utilize a combination of optimization for both DRA and power. With 2 going out of service, we saw a modest increase in variable costs, but it was near negligible just due to the optimization.

Thank you.

One moment for our next question. And our next question comes from the line of Spiro Dounis from Citi.

Maybe if we could just go back to exports. Jim, once you talked about getting to that 100 million barrels a month without SPOT. I'm curious if you could dive into that a little bit more and provide a bit more detail on how you think you can do that. With SPOT potentially moving forward, where does that goal go from here, especially considering the ability to free up some of that LPG capacity?

Spiro, I had a dream one night that we got to 100 million barrels, so I made it an initiative. If you're going to reach that goal, it's going to be driven by a great supply position. Some of the things Natalie is talking about is building that supply position, and we know what it takes to get to that number and what we need to do from a supply perspective. I don't think we have to spend a lot of money on our ship channel or any of our docks in order to handle it.

Got it. Appreciate that. Second question, just regarding the prices we're seeing on Waha. There's been a lot of volatility there recently and into the second quarter. It looks like maybe you benefited from those negative prices in the first quarter. However, I imagine the second quarter impact could even be bigger. Could you remind us again about some of the exposure you have there and open capacity to benefit from that?

This is Tug Hanley. So it's puts and takes. From the negative gas price perspective, we are seeing lower prices for our equity volumes. However, on the positive side of lower gas prices, we're seeing wider margins on C2 to gas, leading to higher KF margins for us. They're over $0.22 a gallon, which signifies higher ethane recoveries across the systems, so we're seeing record pipeline volumes. We have around 375 million a day that we can participate in, bringing Waha down to the Gulf Coast, which is the premium market versus the Waha negative price.

Great. I'll leave it there, helpful as always.

One moment for our next question. And our next question comes from the line of Keith Stanley from Wolfe Research.

Just a follow-up on SPOT. You mentioned hoping to have 2 contracts soon while working on others. What’s the soonest you think you could get to an FID, kind of a bull case and a base case on that project? Just a sense of how long it could take?

Keith, it's Brent. I think we'd like to target before the end of this year to go forward on that project.

Okay. The stock has lagged a bit recently. Your yield plus growth proposition is very high. How are you thinking about the return on stock buybacks versus the returns you get on growth investments? Is that spread narrowing a lot in your eyes, or do you think growth projects are still much more accretive than what you can do with buybacks?

Over the last 3 or 4 years, the stock prices have ebbed and flowed with the overall volatility in the energy sector. It comes and goes. We try to maintain an all-above approach. When it seems attractive to do buybacks, we do it. It has been measured at around $200 million to $250 million a year, and I expect that to stay in that range. Our growth CapEx, the projects that we're working on deliver attractive returns on capital that grow our business and serve our customers. We take a look at it, but we don’t make capital allocation decisions based on daily stock prices. We maintain a longer-term view.

Thank you.

One moment for our next question. And our next question comes from the line of Zack Van Everen from TPH & Company.

Sorry on liquids marketing, specifically propane. We've seen domestic storage and production based on the weekly EIA data come in pretty high. I was just curious about your expectations for domestic prices on the propane side? Do you see this widening the spreads to the international markets? Along with that, can you just remind us of the sensitivity and exposure you guys have to that spread?

Yes. Tug Hanley speaking. I'll just comment on the international market. The U.S. barrels have to price clear across the water. We're seeing lower freight prices, which are leading to higher SPOT export opportunities for us. Some of those opportunities are materializing in the low single-digit numbers, which has been a benefit to us.

Overall, Zach, it's Brent. Propane is going to be constrained domestically until new export capacity comes online, which we expect will happen next year. At that point, you could see storage values start widening out because that's the only area for supply to go for the time being. This could be beneficial for some of our other assets and our customers in the PDH area. However, as we look out, we anticipate a strong appetite for LPGs across the world, and freight should remain favorable. So eventually, this will yield a better alignment with export capacity, freight, and overall global demand for U.S. producers.

Got it. That makes sense. I appreciate that. Moving to Wink to Webster, I saw there might be some downtime in early Q2. Can you comment on that? And can you move those volumes to another asset like Midland to L1, along with any overall impact?

Yes, Zack, this is Jay. We notified our shippers of downtime in June starting on the first. It’s estimated to last around 10 days. Until we receive actual nominations in mid-May, it's tough to determine how that will impact our customer base.

Perfect, thank you.

Thank you, one moment for our next question. And our next question comes from the line of John Mackay from Goldman Sachs.

I wanted to stay in the Permian. I'd be curious to get an update from you guys on how activity levels are trending so far this year versus your baseline expectations. I understand producers are not making decisions based on gas prices, but I'm curious if you're seeing the weak Waha and any gas takeaway issues in the near term affect overall activity levels.

This is Tony. Essentially, we've seen no effect from the weak natural gas prices. If you look at what drives the economics of the producers in the Permian, it’s not natural gas. What we've seen regarding natural gas prices isn't going to lead producers to shut in or throttle back oil production at this point. We haven't seen any negative impact. If you check the rig counts in the Permian since the start of the year, they remain steady.

That's fair. Maybe just shifting gears, octane was pretty strong. Could you give us a quick read on how you expect that to evolve throughout the rest of the year? Also, where can we expect the contributions from PDH to unfold as well?

John, this is Chris D'Anna. On the octane enhancement side, about 80% of the improved performance was due to volumes and higher fees, along with favorable hedge performance. Looking forward, the forward curve for normal RBOB indicates steady prices. For the second quarter, we have observed a $1.80 spread. Just a reminder, the biggest contributor to octane enhancement is our MTBE, which combines normal RBOB and what we call uplift, representing the market price difference. Regarding PDH, we expect contributions from PDH1 and the return of PDH2 after our outage in June to return both to their full production rates.

Operator, we have time for one more question.

Certainly, one moment for our final question. And our final question for today comes from the line of Neil Dingmann from Truist Securities.

Guys, my question is on future capital allocation. You boosted the 2025 CapEx a bit based on opportunities out there. When you look at future years, considering 2025 as a baseline for both shareholder return and projects, how should we think about the balance between the two as you start considering 2025 and 2026?

Yes, Neal. What we discussed at Analyst Day was really regarding a combination of distributions and buybacks operating in the 55% to 60% zone of adjusted cash flow from operations. We've been in that zone since 2021 and foresee staying there for the next few years. As for organic growth CapEx, we see a lot of opportunities in the Permian and also the downstream benefits that arise with increased supply. With the license for SPOT, we'll work to get it contracted. We expect a baseline of around $2 billion to $2.5 billion for growth CapEx, of which only $800 million currently consists of approved projects. Therefore, we have room to increase that, particularly with SPOT, which has a 3-year construction cycle.

No, that makes sense. Just a quick follow-up on buybacks. Do you see this overall increase in earnings and cash flow shifting your strategy on buybacks?

Yes, Neal, I think we’ll have more flexibility with buybacks. We aim to be opportunistic with our approach. You've seen us do $200 million to $300 million over the last few years. If there was a market dislocation, we've got the flexibility to increase that. Here in 2024 and 2025, we anticipate growth CapEx in the range of $3.25 billion to $3.75 billion. Once we reach 2026, assuming normalized CapEx returns, like $2 billion to $2.5 billion, we will have significantly greater flexibility for buybacks as well.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Libby Strait for any further remarks.

Thank you, everyone, for joining us today. That concludes our remarks. Have a good day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.