Enterprise Product Partners (NYSE:EPD)

Matthew | Michal | Jeremy | Lauring

Agenda

Executive Summary

Industry Overview

Company Overview

Valuation and Recommendation

Company Thesis

EPD intrinsic value value - $31.57

Strong Buy @ 24.16: 23.47% Margin of Safety

Buy @ 27.16: 13.97% Margin of Safety

Strategically positioned to take advantage of international increase demand in

Executive Summary

Market Cap - $56.0B

Enterprise Val - $76.8B DPS $1.53

Coverage Ratio 1.3x

Capital Projects $8.7B

Debt to Equity 1.02

Price 3/31/17 $24.55

Target Price: $31.57

● EPD is a midstream service company that stores transports and refines crude oil and natural gas.

● Strategically positioned the take full advantage of the increase in demand for NGL’s domestically and internationally (one of first to export GL’s)

● CEO has been with the company for more 17 years.

Key Figures

EPD Overview

Industry Overview

● Increasing demand for NGL’s in the international markets.

● 40 year ban lifted on exporting domestically produced crude

Industry Overview and Thesis

Background

Upstream Midstream Downstream

● Transportation

● Storage

● Exploration

● Drilling

● Production

● Refining

● Distribution

● Marketing

Background

Background

Background

Company Overview

Business Structure

%06

34% of LP

66% of LP

Public

Types of Contracts

1. Keep Whole and Margin-Band Contracts

take ownership of the mixed NGL extracted, EPD makes the margin in between the cost of the oil and the price it is sold for under contract.

2. Percent-of-Liquids

EPD takes ownership of the NGL’s sells them and the difference between cost and price is their revenue.

3. Percent-of-Proceeds

Take a percent of the proceeds the producer receives.

Contract Makeup

● Long term contracts with highly rated E&P companies

● Top 200 account for 95.7% of EPD’s 2015 Revenue

● Only 20 customers or 4.3% of revenues come from sub-investment grade customers

● Therefore low risk profile to weak oil prices / high costs.

Current Events

Acquisitions

Enterprise Product Partners(NYSE: EPD)

Oiltanking Partners(NYSE:OILT)

EFS Midstream LLC

Divestitures:

Offshore Pipeline & Services Business Segment

???

● LPG export expansion ● Aegis Ethane pipeline

● Ethane Export Terminal● Waha gas processing

plant

● PDH terminal● Infrastructure for

crude/refined products

● NGL & Propylene pipeline expansions

● Eagle Ford JV dock

SWOTStrength

● Asset infrastructure and Integrated Network ● Long-term contracts generally inflation

protected.● In lead position to export NGL’s and crude

Weakness● Macroeconomic Risks (Supply & Demand) ● Upstream bankruptcies nullify contracts. ● Long term debt

Opportunities ● Obtain Approval to build a pipeline connecting

the northeast region● Increase in global demand for natural gas

Threats ● Correlation between oil prices ● New gas transmission safety rule could add

costly expenses to existing infrastructure

Valuation and Recommendation

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Key Stats of EPD and Competitors

Sensitivity Analysis of Gordon Growth Dividend Model

● Red is bad case

● Blue is base case

● Green is good case

Given our assumptions :

Football Analysis

Three Cases A. At the end of

2017 where will WTI be ?

Bad Case =$40

OK Case =$65

Good Case =$95

$31.57

Bad (10%)

Base (60%)

Good (30%)

Evaluation

Recommendation and Q&A

We believe the stock is a BUY at its current market price of $ 24.64 with a 21.95% upside to $31.57.