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Equity and Distributions | 3 Months Ended
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Mar. 31, 2015
Equity and Distributions [Abstract] |
Equity and Distributions | Note 10. Equity and Distributions Partners’ equity reflects the various classes of limited partner interests (i.e., common units, including restricted common units) that we have outstanding. The following table summarizes changes in the number of our outstanding units since December 31, 2014:
|  | Common Units (Unrestricted) |  |  | Restricted Common Units |  |  | Total Common Units |
Number of units outstanding at December 31, 2014 |  |  | 1,933,095,027 |  |  |  | 4,229,790 |  |  |  | 1,937,324,817 |
Common units issued in connection with at-the-market program |  |  | 12,350,761 |  |  |  | -- |  |  |  | 12,350,761 |
Common units issued in connection with DRIP and EUPP |  |  | 1,940,832 |  |  |  | -- |  |  |  | 1,940,832 |
Common units issued in connection with Step 2 of Oiltanking acquisition |  |  | 36,827,517 |  |  |  | -- |  |  |  | 36,827,517 |
Common units issued in connection with the vesting and exercise of unit options |  |  | 291,250 |  |  |  | -- |  |  |  | 291,250 |
Common units issued in connection with the vesting of phantom unit awards |  |  | 519,247 |  |  |  | -- |  |  |  | 519,247 |
Common units issued in connection with the vesting of restricted common unit awards |  |  | 1,852,746 |  |  |  | (1,852,746 | ) |  |  | -- |
Forfeiture of restricted common unit awards |  |  | -- |  |  |  | (84,700 | ) |  |  | (84,700 | )
Acquisition and cancellation of treasury units in connection with the vesting of equity-based awards |  |  | (628,750 | ) |  |  | -- |  |  |  | (628,750 | )
Other |  |  | 12,360 |  |  |  | -- |  |  |  | 12,360 |
Number of units outstanding at March 31, 2015 |  |  | 1,986,260,990 |  |  |  | 2,292,344 |  |  |  | 1,988,553,334 |
We may issue additional equity or debt securities to assist us in meeting our future liquidity and capital spending requirements. We have a universal shelf registration statement (the “2013 Shelf”) on file with the SEC. The 2013 Shelf allows Enterprise Products Partners L.P. and EPO (on a standalone basis) to issue an unlimited amount of equity and debt securities, respectively. We have a registration statement on file with the SEC covering the issuance of up to $1.25 billion of our common units in amounts, at prices and on terms to be determined by market conditions and other factors at the time of such offerings. Pursuant to this “at-the-market” program, we may sell common units under an equity distribution agreement between Enterprise Products Partners L.P. and certain broker-dealers from time-to-time by means of ordinary brokers’ transactions through the NYSE at market prices, in block transactions or as otherwise agreed to with the broker-dealer parties to the agreement. During the three months ended March 31, 2015, we issued 12,350,761 common units under this program for aggregate gross proceeds of $407.8 million. This includes 3,225,057 common units sold in March 2015 to a privately held affiliate of EPCO, which generated gross proceeds of $100 million. After taking into account applicable costs, our transactions under the at-the-market program resulted in aggregate net cash proceeds of $404.2 million for the first quarter of 2015. As of March 31, 2015, we have the capacity to issue additional common units under this program up to an aggregate sales price of $783.9 million. We did not issue any common units under this program during the three months ended March 31, 2014. We also have registration statements on file with the SEC collectively authorizing the issuance of up to 140,000,000 of our common units in connection with a distribution reinvestment plan (or “DRIP”). We issued a total of 1,869,079 common units under our DRIP during the three months ended March 31, 2015, which generated net cash proceeds of $61.7 million. During the three months ended March 31, 2014, we issued 2,614,370 common units under our DRIP, which generated net cash proceeds of $81.0 million. After taking into account the number of common units issued under the DRIP through March 31, 2015, we have the capacity to issue an additional 25,612,270 common units under this plan. In addition to the DRIP, we have registration statements on file with the SEC authorizing the issuance of up to 8,000,000 of our common units in connection with our employee unit purchase plan (“EUPP”). We issued 71,753 common units under our EUPP during the three months ended March 31, 2015, which generated net cash proceeds of $2.5 million. During the three months ended March 31, 2014, we issued 62,560 common units under our EUPP, which generated net cash proceeds of $2.0 million. After taking into account the number of common units issued under the EUPP through March 31, 2015, we may issue an additional 7,081,315 common units under this plan. The net cash proceeds we received from the issuance of common units during the three months ended March 31, 2015 were used to temporarily reduce amounts outstanding under EPO’s commercial paper program and for general company purposes. Completion of Oiltanking Acquisition In October 2014, we completed the first step of a two-step acquisition of Oiltanking by paying approximately $4.41 billion to OTA for Oiltanking GP, the related IDRs and approximately 65.9% of the limited partner interests of Oiltanking. As a second step of the Oiltanking acquisition (separately negotiated by the conflicts committee of Oiltanking GP on behalf of Oiltanking), we entered into an Agreement and Plan of Merger (the “merger agreement”) with Oiltanking in November 2014 that provided for the following:
§ | the merger of a wholly owned subsidiary of Enterprise with and into Oiltanking, with Oiltanking surviving the merger as a wholly owned subsidiary of Enterprise; and
§ | all outstanding common units of Oiltanking at the effective time of the merger held by Oiltanking’s public unitholders (which consisted of Oiltanking unitholders other than Enterprise and its subsidiaries) to be cancelled and converted into Enterprise common units based on an exchange ratio of 1.30 Enterprise common units for each Oiltanking common unit.
In accordance with the merger agreement and Oiltanking’s partnership agreement, the merger was submitted to a vote of Oiltanking’s common unitholders, with the required majority of unitholders (including our ownership interests) voting to approve the merger on February 13, 2015. Upon approval of the merger, a total of 36,827,517 of our common units were issued to Oiltanking’s former public unitholders. With the completion of this second step, total consideration paid by Enterprise for Oiltanking was approximately $5.9 billion. Step 2 of the acquisition was accounted for in accordance with ASC Topic 810, Consolidations – Overall – Changes in Parent’s Ownership Interest in a Subsidiary. Since we had a controlling financial interest in Oiltanking before and after completion of Step 2, the increase in our ownership interest in Oiltanking was accounted for as an equity transaction with no gain or loss recognized. Step 2 represented our acquisition of the noncontrolling interests in Oiltanking; therefore, approximately $1.4 billion of noncontrolling interests attributable to Oiltanking was reclassified to limited partners’ equity to reflect the February 2015 issuance of 36,827,517 new common units. See Note 14 for information regarding requests from the Federal Trade Commission (“FTC”) and the Attorney General of the State of Texas in connection with the Oiltanking acquisition. With the exception of the fair value assigned to the Liquidity Option Agreement (see Note 4), we consider our purchase price allocation to be final. We expect to finalize the fair value of the Liquidity Option Agreement as soon as practicable but no later than one year from the acquisition date. Subsequent changes in the fair value of this option (other than those attributable to the finalization of the purchase price) will be recorded in earnings each reporting period until the option expires or is exercised. Noncontrolling Interests Noncontrolling interests represent third party equity ownership interests in our consolidated subsidiaries, including Enterprise EF78 LLC, Independence Hub LLC, Rio Grande Pipeline Company, Tri-States NGL Pipeline L.L.C., Panola Pipeline Company, LLC and Wilprise Pipeline Company LLC. As previously described, we reclassified approximately $1.4 billion of noncontrolling interests to limited partners’ equity in connection with completing Step 2 of the Oiltanking acquisition in February 2015. Cash distributions paid in the first quarter of 2015 to the limited partners of Oiltanking other than EPO and its subsidiaries are presented as amounts paid to noncontrolling interests. In February 2015, we formed a joint venture involving our Panola NGL Pipeline with affiliates of Anadarko Petroleum Corporation (“Anadarko”), DCP Midstream Partners, LP (“DCP”) and MarkWest Energy Partners, L.P. (“MarkWest”). We will continue to serve as operator of the Panola Pipeline and own 55% of the member interests in the joint venture. Affiliates of Anadarko, DCP and MarkWest will own the remaining 45% member interests, with each holding a 15% interest. The Panola Pipeline transports mixed NGLs from points near Carthage, Texas to Mont Belvieu, Texas and supports the Haynesville and Cotton Valley oil and gas production areas. Accumulated Other Comprehensive Income (Loss) The following tables present the components of accumulated other comprehensive income (loss) as reported on our Unaudited Condensed Consolidated Balance Sheets at the dates indicated:
|  | Gains (Losses) on Cash Flow Hedges |  |  |  |  |  |  |
|  | Commodity Derivative Instruments |  |  | Interest Rate Derivative Instruments |  |  | Other |  |  | Total |
Balance, December 31, 2014 |  | $ | 69.9 |  |  | $ | (314.8 | ) |  | $ | 3.3 |  |  | $ | (241.6 | )
Other comprehensive income before reclassifications |  |  | 30.8 |  |  |  | -- |  |  |  | -- |  |  |  | 30.8 |
Amounts reclassified from accumulated other comprehensive loss (income) |  |  | (61.1 | ) |  |  | 8.7 |  |  |  | -- |  |  |  | (52.4 | )
Total other comprehensive income (loss) |  |  | (30.3 | ) |  |  | 8.7 |  |  |  | -- |  |  |  | (21.6 | )
Balance, March 31, 2015 |  | $ | 39.6 |  |  | $ | (306.1 | ) |  | $ | 3.3 |  |  | $ | (263.2 | )
|  | Gains (Losses) on Cash Flow Hedges |  |  |  |  |  |  |
|  | Commodity Derivative Instruments |  |  | Interest Rate Derivative Instruments |  |  | Other |  |  | Total |
Balance, December 31, 2013 |  | $ | (14.7 | ) |  | $ | (347.2 | ) |  | $ | 2.9 |  |  | $ | (359.0 | )
Other comprehensive income before reclassifications |  |  | (9.2 | ) |  |  | -- |  |  |  | -- |  |  |  | (9.2 | )
Amounts reclassified from accumulated other comprehensive loss |  |  | 16.0 |  |  |  | 7.9 |  |  |  | -- |  |  |  | 23.9 |
Total other comprehensive income |  |  | 6.8 |  |  |  | 7.9 |  |  |  | -- |  |  |  | 14.7 |
Balance, March 31, 2014 |  | $ | (7.9 | ) |  | $ | (339.3 | ) |  | $ | 2.9 |  |  | $ | (344.3 | )
The following table presents reclassifications out of accumulated other comprehensive income (loss) into net income during the periods indicated:
|  |  | For the Three Months Ended March 31, |
| Location |  | 2015 |  |  | 2014 |
Losses (gains) on cash flow hedges: |  |  |  |  |  |  |
Interest rate derivatives | Interest expense |  | $ | 8.7 |  |  | $ | 7.9 |
Commodity derivatives | Revenue |  |  | (61.1 | ) |  |  | 16.9 |
Commodity derivatives | Operating costs and expenses |  |  | -- |  |  |  | (0.9 | )
Total |  |  | $ | (52.4 | ) |  | $ | 23.9 |
Cash Distributions The following table presents Enterprise’s declared quarterly cash distribution rates per common unit with respect to the quarter indicated:
|  | Distribution Per Common Unit |  | Record Date | Payment Date
2014: |  |  |  |  |
1st Quarter |  | $ | 0.3550 |  | 4/30/2014 | 5/7/2014
2015: |  |  |  |  |  |
1st Quarter |  | $ | 0.3750 |  | 4/30/2015 | 5/7/2015
Distributions paid during 2015 exclude 35,380,000 common units (or “Designated Units”) owned by a privately held affiliate of EPCO for which such affiliate has agreed to temporarily waive the regular quarterly cash distributions it would otherwise receive from us with respect thereto. The Designated Units will be entitled to receive quarterly cash distributions paid, if any, beginning in the first quarter of 2016.

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