Enterprise Products Partners LP (EPD) 2005 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you so much for standing by. All parties will be on a listen-only mode until the question-and-answer segment of today's call. Also, the call is being recorded today for replay purposes. If you have any objection, you may disconnect at this time.

Now, I would like to the call over to your first speaker, Mr. Randy Burkhalter. Sir, you may begin.

Thank you, Margie. Good morning and welcome to the Enterprise Products Partners conference call to discuss earnings for our third quarter 2005. Bob Phillips, Enterprise's President and CEO, will lead the call, followed by Mike Creel, the Company's Executive Vice President and CFO. Also included on the call today from Enterprise are Dan Duncan, our Chairman and Co-Founder and several senior members of our management (technical difficulty). Afterward, we will open the call up for your questions.

Before we get started, let me make a couple statements about forward-looking statements (technical difficulty) make during the call under 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 information currently available to Enterprise's management. Although management believes that the expectations reflected in such forward-looking statements are reasonable (technical difficulty) no assurance such expectations (technical difficulty) correct. Please refer to our latest filings with the Securities and Exchange Commission for a list of factors (technical difficulty) cause actual results to differ materially from those in the forward-looking statements made during this call.

Now, I will turn the call over to Bob.

Thanks, Randy, and good morning to all of you. And thanks of course for joining us. I had hoped to start this presentation with a, "How about them Astros?" But after a long night at the ballpark, it's obvious that the home team is not playing very well. Certainly, the home team here at Enterprise had a much better quarter then the Astros are having in the World Series. So we will move forward with that and focus on the highlights of our business.

I think you would all agree with me that our record results in the third quarter were outstanding by any comparison and particularly given the challenges of hurricanes and price volatility that we faced during the third quarter of this year.

I want to make several strategic comments first and then provide some highlights for the quarter because they were numerous, and I want to recognize a number of our assets in our operating divisions that did particularly well during the quarter.

Let me start by saying that the record gross operating margin of $312 million is no doubt quite an achievement in this marketplace, particularly against a backdrop of significant industry-wide hurricane damage that occurred; in several instances, numerous supply-and-demand disruptions; and of course as I said record price volatility. The quarter again highlights what I believe is our primary strength; that is Enterprise's strong competitive position in the various markets we operate in, our diversified portfolio of Midstream assets across several different industries with a particularly large geographic footprint.

Now this is a very important point to us, as we reflect not only on the quarter that we just had but the strategies that we adopted a year ago when we completed the merger with GulfTerra and as we continue to invest for the future. And I will make these points and then touch on these again in the summary.

Business diversification, as you know, is a very important aspect of our strategy here at Enterprise. It was in fact one of the main objectives of the GulfTerra merger in 2004. The combination of Enterprise's legacy assets with GulfTerra's legacy assets, we thought created a very powerful force in the Midstream business. And that diversity has paid off in spades here in this quarter. And I think that would be obvious to you when you begin to look at the operating statistics and the financial performance of the various groups.

But that diversification strategy is one that we continue to pursue with a highly visible set of organic projects that we know will drive future growth. And we think that clearly sets apart from the other MLPs in this sector. With a continuing portfolio of more than 2 to $3 billion of either projects that we have announced that we are moving forward with or projects that continue to be underdevelopment with more than $200 million in organic capital spent in the second half of 2004 carrying over, not earning a return today investing for the future.

With more than $600 million in growth capital spent year to date in the first three quarters of 2003, again not currently earning a return but investing for the future. You add those together, a normal 15% cash return on those projects that capital invested would equal more than $120 million of current cash flow. And we believe that we are investing in the future for that cash flow at much higher rates of return than others would be able to accomplish by spending the same capital on acquisitions. Now that is not to say that we have exited the acquisition market; we certainly haven't. We have made $325 million worth of acquisitions already this year.

But the point of investing all of this capital, the sunk capital not earning a current return but investing for the future, selectively acquiring assets that fit our particular portfolio and that add to our earnings power currently and in the future. The point of all that is that while we are investing for the future, we have been able to increase current distributions by 9% year over year. But more importantly, we have been able to maintain our leverage at very appropriate levels on our balance sheet and deliver a 1.2 times coverage ratio in the third quarter.

We think that is a powerful, attractive combination in a very sustainable business model that we believe strongly will generate significant total returns for our investors. Frankly, I am a little bit surprised and somewhat dismayed that we have not been getting a better valuation in the market, given how visible that growth strategy is and how compelling those numbers are, our ability to manage our balance sheet to deliver a strong coverage ratio. And yet, increased distributions and invest for the future in projects that will deliver much higher rates of return than some of the high-cost acquisitions that we've seen in the market recently.

So that is my speech for the day. Now let me turn to the quarter. We are very pleased with it. I would like to touch on some of the highlights before Mike Creel gives you the specific operating and financial performance data.

It was certainly a combined effort across a number of our different businesses. Our natural gas pipeline and storage business posted solid results across all of the regions that we operate in that business -- Texas, Permian Basin, San Juan Basin, the Acadian system in Louisiana, our Petal Gas Storage facility in Mississippi -- all made very positive contributions for the quarter. Now of course, these assets were largely unaffected by the hurricanes. But we have seen the very positive effects of strong drilling supported by strong prices in these developing areas.

Evidence of that is the record well-connect numbers coming out of the San Juan and Permian Basins. Record volumes across the Texas pipeline system bolstered by wider basis differentials, which have promoted a higher earnings from that. The Barnett Shale in North Texas continues to ramp up. In the San Juan Basin alone, we have connected year to date 259 new wells compared to an original annual forecast of 245, which we have now revised up to 325 new connects estimated in the year 2005. That would be a record for us. This indicates strong drilling and future volumes to support that $48 million system optimization program that we have been investing in for the past couple years, and we are now completing in the fourth quarter of this year -- another example of that sunk capital not yet earning a current return but again investing for the future and being supported by drilling and development from our producers.

While I am in the San Juan Basin, I also want to announce -- and I am very pleased to announce this because we have worked on this -- we just recently completed a new 20-year right-of-way agreement with the Navajo Nation for approximately 300 miles of our gathering system in the San Juan Basin and Northwest in Mexico. We are very pleased with that. And we are excited about moving forward in partnership with our friends in the Navajo Nation. We are pleased to have a 20-year agreement there. We think that sets us up nicely for continued growth of our gathering system in the San Juan.

In the Permian area, we are also seeing a similar response to high gas prices with a new volume record on our San Juan System, which is located on the Texas side of the Permian Basin, due to some very nice developments in the MAPL and an extension of the Barnett Shale all the way out into the Permian Basin area, which is quite a ways from Dallas-Fort Worth. So we are excited about that and the promise that that holds for our gathering volumes there in that region.

We have also seen year to date a record number of new well connects in the Carlsbad region of Southeast New Mexico due to higher drilling from our producers out there.

Moving on to gas processing, another great contributor to the quarter. I think the processing business delivered as we expected. And particularly in light of the significant re-negotiations of these processing portfolios over the last several years, we saw higher unit margins due obviously to higher commodity prices. And the performance was not withstanding lower volumes in Louisiana due to the hurricanes, so volumetric reductions offset by higher unit margins driven by higher prices.

Our South Texas and New Mexico plants performed very well during the quarter. And again, we saw the value of our renegotiated processing portfolio, which now as you know includes mainly fee-based processing, margin sharing or percentage of proceeds -- no more keep-whole in that portfolio.

Our Louisiana processing plants are in various stages of ramp up and recovery. I can say that we have monitored this on a daily basis -- very pleased with our operations and commercial and engineering staffs and the jobs that they have done collectively to get our assets back underway as quickly as possible.

Let me start with Toca; that's one of the three that has been in the news. It's the one that we operate; the one we had the most control over. And therefore, I'm pleased to say the one that is back up and running first. It is a 60%-owned-and-operated plant located near New Orleans. It is currently running at a rate of about 280 million a day, and we expect the plant to continue to ramp up progressively through the fourth quarter, as volumes on Sonat -- the upstream and downstream pipeline -- returned from the offshore.

In addition to that, we're seeing good progress in our other South Louisiana plants -- North Terrebonne, Calumet, Neptune -- all operated by Enterprise were largely undamaged and are ramping up as offshore volumes recover. Pascagoula, straddling the Destin Pipeline processing gas coming largely from the Eastern Gulf of Mexico, had minimal damage but significant shut-ins upstream of that. Production volumes on the Destin system continue to ramp up. That processing plant is currently running at about 82% of pre-storm volumes.

At this point of our material processing plant investments in South Louisiana, only our 13% interest in Venice, our 30% interest in Yscloskey -- both of those operated by Dynegy -- and our 15.5% interest in Sea Robin operated by Amerodahess (ph) are shut in. Everything else is running and ramping up. And again, Mike Creel will give you the specifics about particular impacts of Hurricanes Katrina and Rita on our third quarter and what's expected for the fourth quarter. So I will leave that to Mike. But I am pleased to report that most of our assets are back in service and in the process of ramping up to pre-storm volumes.

I would also like to highlight our Petrochemical Services division. For the third quarter, they turned in a great quarter by any comparison. Butane isomerization business had its best quarter since the third quarter of 1999 on record volume of about 96,000 barrels a day and higher margins, as butane and isobutane were in very high demand during the quarter as feedstocks for motor gasoline additives. We were pleased to be there for our customers, as a lot of the infrastructure was shut in due to the storms. Again, I complement our people and their perseverance during this time period. And I think we really provided a great service to our customers.

Also in the petchem division, our propylene fractionation facility hosted its best results year to date with a combination of both higher volume demand for propylene as well as very strong propylene pricing during the quarter. You might recall that we bottomed out on propylene pricing in the second quarter of the year. But we've seen very strong increases in prices for those products and for those services as well.

And then finally in that division, our octane enhancement unit rebounded nicely from a slow first half of the year with an extremely strong contribution in the third quarter, again due largely to higher demand for octane additives.

I guess the final highlight that I'd like to direct your attention to is the great job that our natural gas liquids marketing and distribution groups did. They had an exceptional quarter. They really packaged all of our assets and our services and our skills nicely and utilized our strategic assets located at Mont Belvieu and throughout the Houston ship channel and into Louisiana to provide the petrochemical and refining markets with the essential feedstock and blendstock supplies that they needed during the third quarter. And that was again despite experiencing numerous disruptions due to hurricanes.

The combination of our fractionators, our storage facilities, our extensive pipeline distribution network in this region, and our import/export facility on the Houston ship channel combined to allow Enterprise to continue providing those much-needed services to our customers when others were either shut in or offering reduced levels of service.

And I want to compliment again our Enterprise employees in the Eastern region particularly, who worked tirelessly during this quarter to keep those facilities running and reliable, to restart them as quickly as possible both onshore and offshore, to move quickly to obtain the resources and the materials to get repair work underway. And I can tell you that was no small feat. It was a heroic effort on everybody's part. And our investors should be very proud of their performance and the results of that work, which flowed right through to the bottom line. Our people worked a tremendous number of hours to keep our assets running and to generate this kind of quarterly performance.

Now let me turn to the offshore area. I know there's a lot of interest in how those assets are doing. Of course, our key pipelines and platforms are all back up to near pre-hurricane levels. Cameron Highway, Poseidon, Allegheny, Nautilus, Manta Ray, Falcon and East Breaks mixing the oil pipelines with the gas pipelines are largely back to about 100% of pre-storm volumes. HIOS, High Island Offshore Gas System, running at about 72%. Again, no material damage on that system but some downstream pipeline damage. So, we're waiting on additional capacity from ANR there.

Viosca Knoll, the gas-gathering system over in the Eastern Gulf of Mexico currently running at 69% of pre-storm levels. Medusa, which is a lateral off of Viosca Knoll, is down for repairs, which should be completed in the next 3 to 4 weeks.

Phoenix, another gas pipeline located in the Central Gulf of Mexico, no damage there, no damage to the supply source but some damage to the downstream pipeline again ANR. So we are waiting on them. It should be back up in December. Typhoon, as you know, is a lateral where we gathered oil and gas from Chevron's Typhoon platform. It had a bit of an upset and will be down we think sometime until mid 2006.

Marco Polo, our very important strategic hub -- gathering hub in the South Green Canyon area, was undamaged. We are very pleased with that. Production has been slow to recover though. But we're back up and producing near pre-storm levels. But we're beginning to see the possibility of a slight delay in our expectation for new production from K2, K2 North and Genghis Khan. As you know, we had reported to you that we expected K2 and K2 North to being -- all those wells be on and fully in productivity by the end of the year. It looks like it's going to be the early part of 2006 and so some delays there. That is delayed cash flow; that's not a reduction of our base business.

And before I leave our segment performance, I'd like to touch on our natural gas liquid pipeline business segment. Although not having a record quarter like some of our other business operations did, it did come in slightly under our expectations for the quarter. But of course, we had some slight reduction in volumes on the Louisiana NGL systems that were affected by the hurricanes. But our other NGL pipelines in the region did provide a very strategic and very competitive position for us. The LouTex Pipeline System for example running from Belvieu to a number of the customers in Southern Louisiana played a critical role in moving natural gas liquids between Belvieu and the Louisiana markets to meet the needs of some of our customers. So we are very pleased that a lot of those pipelines did play a critical role during the quarter.

In the Western U.S., I would touch on our Mid-America Pipeline System and the Seminole, which brings y-grade natural gas liquids from the Rocky Mountains down for fractionation at Belvieu. It also provides quite a market service for the delivery of finished products in the Mid-Continent and Central region of the United States. Those pipeline systems during the quarter were impacted by higher fuel costs and lower volumes. But that was largely due to processing plant turnarounds in the Rockies, some refinery shutdowns and turnarounds in the Mid-Continent area and not particular due to any ethane rejection, which frankly did not occur on any type of extensive basis during the third quarter.

I'd also let you know that we have additionally lowered the incentive tariff for some of our Rocky shippers recently, and that is to ensure that we are getting the full y-grade stream during times of higher gas prices; although, we didn't experience that in the third quarter.

And also to let you know that we're going to continue to be very competitive in the Rockies to provide our customers from up there with the best cost-effective transportation and fractionation solutions that are available to them to support the growing gas and gas liquid supplies, which we see coming out of the Rocky Mountain region.

In that regard, you know that we have talked but not formally announced a 50,000 barrel-a-day expansion of the Mid-America Pipeline System coming out of the Rockies. We continue to make good progress on that and expect to be formally announcing that fairly soon, as we finish up some long-term dedications that would support that capital. We are moving forward with design work and engineering. Our permitting and regulatory approval process has gone exceptionally well so far. Frankly, we're looking for a finding of no significant impact on our environmental permit by the end of the year and hopefully a right-of-way grant and a notice to proceed from the PLM (ph) by February of 2006. So we will update you more on that as we close the fourth quarter and hopefully receive those permits.

We are making good progress and proceeding with settlement discussions with several of our customers, who have weighed in on our cost of service increase filing earlier in the year, affecting just the Northern and the Central portions of the Apple (ph) System, not the Rocky Mountain section. And I'm convinced that we're headed in the right direction there. And we will come away with a good settlement for Enterprise and our customers and move that process forward.

And finally, in the NGL pipelines as you know, we assumed operatorship of Dixie. In the middle part of the year, it provides propane service to the Southeastern U.S. We are very much back on track on that pipeline system after a product contamination problem that occurred in the second quarter before we had assumed operatorship. That system is now running fine. We had talked about in the last quarterly call, so I thought I would update you there. And we're now ready for wintertime service levels. The cleanup is complete. We will be seeking recovery of our costs as we move forward.

And a bit surprising, we have settled most of our third-party claims, and it's only about $0.5 million. So I think that issue that we raised last time is in very good shape and moving forward. We're ready for the wintertime in all of our assets.

Let me close by saying that again, this was a great quarter by any expectation, certainly one that we had hoped for as we completed the merger just a year ago. I think it's owing largely to our business diversity, where we took some shots due to the hurricanes. Other assets and businesses performed exceptionally well. And while we are making very good progress on many of our organic growth initiatives and we have invested a substantial amount of capital, I would again point out and leave it to Mike to give you more detail on this, that that significant investment, while not generating a current return and investing for the future, is obviously not hurting our balance sheet. We are delivering a very strong coverage ratio. And we've obviously been able to continue to increase distributions to our unit holders.

So all in all, we are very pleased with our current performance and our future strategy. And with that review of the third quarter, I will turn it over to Mike Creel.

Thanks, Bob. Total gross operating margin for the third quarter of 2005 was 311.8 million; that's a 126% increase over the 138 million in the same quarter of 2004. Bob mentioned the Hurricane Katrina and Rita and the impact on operations. We estimate that the negative impact of that -- those two hurricanes on gross operating margin in the quarter -- was about $27 million, and that's primarily from decreased volumes in our offshore and NGL business. This also includes accruals for cost to repair the facilities up to the $2.5 million deductible per storm and also includes the $1.8 million increase in our insurance premiums associated with Hurricane Katrina.

Now largely offsetting the negative impacts of these hurricanes were the increases in gross operating margin that we earned due to strong demand for NGLs, octane additives in the production of motor gasoline, as well as increased demand for natural gas. We estimate in the fourth quarter this year that the negative impact of those hurricanes will be about $34 million. However, we expect this to be offset by the continuing increased levels of demands for NGLs and octane additives for use in motor gasoline.

Turning to the business segment, the gross operating margin from our NGL Pipelines and Services was 153.8 million or an increase of 70.2% -- 84% quarter to quarter, primarily due to contributions for the natural gas processing assets acquired in connection with the GulfTerra merger; the South Texas Midstream asset that we purchased from El Paso last year; and our NGL marketing business, which turned in a solid performance.

NGL marketing benefit from strong demand for NGL as feedstock for the production of motor gasoline, higher NGL import activities and improved sales margins -- indicative U.S. Gulf Coast's natural gas processing margins for the third quarter of this year averaged $0.22 per gallon compared with $0.26 per gallon for the same quarter last year, roughly flat with the margins for the second quarter this year.

The gross operating margin from the NGL pipelines and storage business was $42 million to the third quarter of this year compared with 55.3 million for the same period last year. Most of that decrease is in our Mid-America and Seminole Pipelines, reflecting the net effect of tariffs that became effective in the second and third quarters of this year as well as a 54,000 barrel-a-day decrease in transportation volumes due in part to maintenance outages at several third-party owned gas processing facilities that are connected to our pipeline system in the Rockies.

Gross operating margin from our NGL import business and our (technical difficulty) channel pipeline increased by 3.3 million in the third quarter compared with the same quarter of last year. And on a 100% basis, the Dixie Pipeline's third-quarter gross operating margin increased $4.5 million over the same quarter of last year. As you know, we began consolidating Dixie in our financial statements in the first quarter of this year once we increased our ownership percentage to 65.9%.

The gross operating margin from Offshore Pipelines and Services was 16.9 million; it's an increase of 16.2 million over the third quarter of last year, primarily due to the offshore Gulf of Mexico assets we obtained in connection with the GulfTerra merger. Hurricane Katrina negatively impacted our offshore business during the third quarter. In spite of this, our offshore natural gas pipelines reported gross operating margin of 4.9 million on average of 1.6 trillion Btus per day. Our offshore oil pipelines had gross operating margin of 1.2 million, and our offshore platform services and production business earned 10.8 million in gross operating margin for the quarter.

Gross operating margin for the offshore -- for the onshore natural gas pipeline and services was 93.5 million compared to 7.2 million in the third quarter of 2004. Approximately 82.2 million of that increase is attributable to the assets added in the GulfTerra merger.

The onshore gas pipelines transported 6 trillion Btus per day in the third quarter of this year compared with 0.7 trillion Btus in the same quarter of last year. Gross operating margin for the petrochemical services segment increased $12.1 million or 34% quarter to quarter. Approximately 7 million of that increase was from our octane enhancement business, which generated gross operating margins of $14.2 million for the quarter. The improved margins resulted from increased demand for motor gasoline additives. The remaining 5 million of the increase came from our butane isomerization business, which benefited from higher demand price of butanes, as a feedstock production of motor gasolines.

The other gross operating margin in the third quarter of 2004 was 10.8 million, and that is the equity earnings that we recorded from our ownership of the GulfTerra general partner prior to the completion of the merger on September 30 last year. Upon completion of the merger, the GulfTerra general partner became a wholly-owned subsidiary of Enterprise.

Depreciation expense included in operating costs and expenses was $103 million for the third quarter of this year compared with 32.4 million for the third quarter of '04. And this is primarily attributable to the depreciation and amortization associated with the values assigned to GulfTerra's property, plant, equipment and intangible assets.

G&A expense was 13.3 million for the third quarter of 2005 compared with 10.1 million for the third quarter of 2004. And year to date, it was 46.7 million. We are certainly on track to hit the 60 to 70 million number for the year. It's attractive to us compared to where we thought we'd be a year ago. The year-over-year increase is attributable to higher expenses associated with the combined GulfTerra and Enterprise partnership.

Operating income for the third quarter of 2005 was 194.4 million, and that is 109% higher than the $92.9 million recorded a year ago. Interest expense for the third quarter was $60.5 million compared with 32.5 million for the third quarter last year and reflects a higher average debt level after the completion of the GulfTerra merger in '04. Our weighted average debt outstanding was $4.7 billion for the third quarter of 2005 compared with 1.8 billion in the third quarter of '04. Net income for this quarter was a record 131.2 million, and that compares to 57.2 million for the third quarter of last year.

Distributable cash flow totaled $222.5 million for the third quarter of 2005, resulting in a distribution coverage ratio for the quarter of 1.2 times. The Board of Directors of our general partner increased the quarterly distribution to the third quarter of 2005 to $0.43 per unit from $0.42 per unit for the second quarter this year. And this represents a 9% increase over the 39.5% rate that was paid with respect to the third quarter of 2004.

Capital expenditures for the third quarter of this year totaled $323 million, and that included the $144 million for the acquisition of underground storage and propane terminaling assets that we acquired from Feral Gas (ph). That also includes 76 million on Independence Hub and Trail and $29 million on constitutional oil and gas pipelines.

Our spending for pipeline integrity totaled $10 million in the quarter. With about 6.1 million of that recorded as an operating expense, and the remaining 3.9 million capitalized.

At September 30, 2005, we had just over 4.8 million of debt outstanding. And our consolidated net debt-to-total capitalization was 45.4%. We would have had total liquidity of about 780 million at the end of the quarter including 33 million of unrestricted cash on-hand and taking into consideration the amendment of our revolving credit facility that we completed in October. This credit facility was amended to increase it from $750 million to $1.25 billion. We also extended the maturity a year to October of 2010. And we reduced the sum of the applicable margin for a year dollar rate and the facility to be by about 37.5 basis points based on current debt levels.

Our floating interest rate exposure is about 31% of total debt at the end of the quarter. And our debt had a weighted average life of about 10.7 years and an average interest rate of just over 5.4%. So we are in very good shape in terms of liquidity. We've got a great set-up with our long-term debt being locked in for long-terms at low costs. And we think that's going to help drive the growth in the business going forward, as we capitalize on those organic growth projects that Bob had talked about.

With that, we are happy to open it up to any questions.

(OPERATOR INSTRUCTIONS). Mark Reichman, A.G. Edwards.

On the third-quarter results, the $27 million impact on gross operating margins from the hurricane, could you break the 27 million in the third quarter and also the expected $34 million in the fourth quarter between the estimated cost to repair facilities versus gross margin on volumes?

No, I don't have that level of detail. I've got it broken down by business segment; I do not have it broken down between property damage and business interruption. But the property damage fees for the third quarter was going to be the $5 million, which (technical difficulty) deductibles for the insurance. We have a $2.5 million full occurrence deductible on our insurance. And each of the hurricanes is treated as a single occurrence.

Could you just remind me just what the breakout between the business segments. I guess it's mainly offshore and the onshore segments, right? Primarily offshore?

Are you talking about where the damage was -- the $27 million?

Right. Right.

The negative impact we expect to see about $9.5 million of that in the offshore. And about the same amount frankly in the onshore gas plants, fractionators and pipelines.

Ross Payne, Wachovia.

First question would be -- can you just talk a little bit more about the marketing profits, how those are generated? And what maybe we can expect going forward on those?

Yes, Ross. This is Bob. Just a couple of comments to remind people about what our marketing business is. It is first and foremost a group that sells our equity production from our processing plants and to a certain extent the finished products that we receive for a fee from our fractionators. So when we talk about marketing, they truly are marketing kind of our equity liquids per se. In addition to that because we have such extensive Midstream assets around the Company, they are many times a preferred supplier to the propane markets.

As you know, propane is usually sold on a wholesale business through jobbers around the country. In moves from the supply sources out into the market areas kind of on a seasonal basis. And then it goes into either primary or secondary storage and is brought out during the wintertime months, weather-related, and in the fall for crop drying and other agricultural uses for propane. So they have an extensive business in wholesale propane.

The third area of business in marketing is what we call our agency business. And that is because we have really the industry-leading distribution network out there. We tie into so many petrochem and refiners that they look to us to actually provide their feedstocks on an agency basis. So we have a fairly broad portfolio of the kind of supply arrangements we provide on behalf of the end-use customers, the refiners largely, to make sure they get the products in the amount they need -- the different types of products ranging from ethane, propane, butane, isobutane, natural gasoline and on -- and that they did it on a timely basis. That's where our storage factors in. We have extensive storage in the Mont Belvieu area. And then we have isolated areas where we rent storage capacity in other regions to provide all of those functions that I just described -- the sale of our equity barrels and our fractionated finished product, the management of our wholesale propane business because of our extensive pipeline network, and then the management of the agency business as well.

As many of you know -- and I think we talked about it in 2004 -- this is not a trading organization. We don't take large positions in products. What we do is provide customers with the services that they need. And oftentimes, that is a just-in-time delivery service if you will. So we make use of all of our physical assets; our pipelines bringing y-grade into the Belvieu area; our fractionators, which convert that to finished product. We oftentimes store that finished product in amounts for our customers both under third-party storage agreements as well as storing on their behalf. And then we aggregate those supplies and deliver them to our different customers at the time that we need.

What made the third quarter so special from that standpoint is because of the things that went on in the refining and marketing business. There was a fairly significant increase in the value of just being able to deliver those octane additives. And the fact that we had the physical supplies, that we were not a trading organization out there -- and there are many of those in this industry -- and they are shippers on our pipelines and they're stores in our storage facilities. But because we had the ability because of our great suite of physical assets to deliver the products, we got paid handsomely for those services.

So that's the way I would describe our marketing business and the impact it had on our third-quarter performance. Now, marketing in general is an ongoing business. And those guys operate down there 365 days a year. And the fact that they were highlighted this quarter is in my mind because they did such a great job of hanging in there under very difficult circumstances with the supply-and-demand disruptions that were caused by the hurricanes. And they hung in there, and they provided some great services for our suppliers and for our customers.

Normally, we would not highlight our marketing business because frankly, it's normally not a very large contributor to our bottom line. As practical matter, it's a small percentage points of the total. And so that is why we do not normally highlight them. But they did such a great job for us this quarter, we thought it was worthy of recognition.

Are some of the dynamics -- obviously, some of the dynamics are continuing. Can we expect a decent amount of profitability out of that group going into the fourth quarter and then kind of migrating down to a more insignificant point going into the first part of next year? Or what might we think about--?

Yes, Ross, I think that is fair. One of the things that marketing really points out is the benefit of having a diversified portfolio of assets. So where we have perhaps a weakness in one part of our system because of hurricanes, it provides benefits in others. I think we will that continue in the fourth quarter.

I would definitely agree. One final question -- organic spending, you gave us those levels year to date. Can you give us some ideas on what you expect for '06?

Ross, I appreciate you asking that question because it gives me an opportunity to let all of you analysts and investors know that we will be attempting -- no guarantees but certainly a promise here -- will be attempting to have a very broad annual analysts meeting very early in the year, hopefully February. At which, we will announce what we expect to be our strategic initiatives and our capital spending plan for the year and hopefully be in better shape to provide you with a better level of guidance than maybe we have been able to in the past.

We cram together our profit plan late in 2004 in preparation for 2005. It came right at the time that we were merging and integrating GulfTerra into Enterprise. And we just didn't feel comfortable at that point in time in providing a level of guidance that I think Mike and I and others here would like to provide you. We've had a full year under our belt. Our planning process works much better today than it did a year ago. And so we are going to be able to provide in either late January or early February, I think some pretty specific information on our spending plans for 2006.

I can tell you and if you picked up in my early comments that there continues to be that kind of rolling through the $3 billion worth of projects that we are actively pursuing. And I frame those as both announced and kind of unannounced, under development or in development. And we are moving forward with those. We've I think the best suite of growth projects in the entire industry, certainly within the MLP space. We are going to continue to pursue those. We believe strongly in this strategy. We are not deterred by the amount of sunk capital that we had invested in future growth projects, which we know will deliver higher returns and drive our distributions in the future.

As I said, we are a little bit dismayed that we are not getting more credit for that in our valuation because the growth is so visible compared to all of the other MLPs in this business, particularly the small acquisition-dependent MLPs, who seem to be getting the best valuation are the ones that the least-attractive sustainable growth profile.

So if you will wait until February, I think you will be pleased with the level of guidance and detail that we'd be able to give you guys for 2006.

Yves Siegel, Wachovia.

Just a couple of follow-ups. One, Bob, just in terms of the growth initiatives, the impact of the hurricanes, does that delay any of the projects meaningfully from the start dates that you anticipated?

This is James Lytal. No, it did not. I think we've mentioned before, our constitutional and gas pipelines are installed -- will be out in the next couple of months making the connections to the platforms and doing the subsea connections. The Kerr-McGee Hull is on location so that is on track.

On our Independence Hub and Trail, we did -- there was a coating yard (ph) South, Louisiana was delayed a little bit due to the storms. But we've worked on our schedule, and we don't believe it is going to impact it. We should be out first quarter laying the pipeline and still be out fourth quarter 2006 installing the platform.

A follow-up to that, James, based on the problems that the hurricanes had, is there any change in thinking in terms of future projects or any change in thinking in terms of operations in the Gulf?

Our assets made it through the storm well. I can tell you these platforms are designed for the wave heights of a Category 5 hurricane, and that's got a big safety factor built into it. So I don't see us changing anything. I hope some of these drilling rigs will start staying in place during the (multiple speakers). We designed for these. And I don't -- there is no need to change that.

(multiple speakers) Can I make one quick comment on that? Remember that not only is diversification important currently, but our growth portfolio is highly diversified as well. And we are going to be talking about how much we are investing in a number of different businesses, where in late 2004, early 2005 that it appeared that we were investing heavily in offshore compared to everything else. That certainly has leveled out at this point in time. And I just think the offshore, deepwater trend opportunities are there.

We can be more selective today than we could've been at GulfTerra a couple of years ago when it was our primary gross driver. Again, it goes back to that -- very large portfolio of opportunities. We are going to be selective in where we pick our choices to invest future growth capital. But certainly, the opportunities continue to be there in the deepwater trend.

Just to follow-up on that, Bob, I would think that those other projects probably have faster paybacks or at least generates returns maybe sooner than the offshore. Is that right or maybe not?

Well, I don't know that that's necessarily true. Again, that's back to what we call the "sunk capital concept." We have a very rigorous analysis of our projects here. And we make decisions about where to invest, not just on the speed of payback, we take into it account the returns. And those return calculations, which have a very high threshold, also include that sunk capital if you will. It includes the dilutive effect of whether it's a 1-year investment to turn a new gathering system on or a 2-year investment to put a new processing plant in place in the Rockies, or a 2.5 to 3-year investment for an offshore pipeline and a platform. So we bear all that in mind when we make our investment decisions.

Last one for me is just -- any observation on petrochem demand?

This is Jim Teague. One of the things that we are hearing as you saw the storms go through was due to a lot of downtime in petrochemicals. What we are seeing is definitely in inventories being drawn down dramatically. Consequently as these plants ramp up and they have, we expect to see their run rates at pretty good levels and a pretty good demand on all our NGL production.

This is Joe Randy (ph). (multiple speakers) expand to that is -- haven't seen the (technical difficulty) inventories (technical difficulty) for ethylene and propylene. But we would expect a pretty significant draw on both of those. I would (technical difficulty) that is just going to lead to fourth-quarter (technical difficulty) very strong for petrochemical demand just to reap those and restock those (technical difficulty).

Is that a one quarter phenomenon, do you think?

I think the restocking of inventories is probably a one quarter phenomenon. But I think you'll see very strong demand from around the world for both ethylene and propylene. It's just I think economies are doing pretty (technical difficulty).

I'd like to make one comment on your question of offshore. This came out with one of the governmental agencies, and I don't remember which one come out with it but the one that's in charge of Gulf of Mexico. Of all the platforms that were built from 1986, 1987 under what we call the "new platforms," none of those platforms had any major damage other than the top structure other than typhoons that something happened it -- they got flipped upside-down.

But all your major platforms went through both of those hurricanes without major damages. Some of the pipelines because of mudslides that happened back in the Ivan days -- we had a little of that happen is past times two. So I think industry is correcting the concept of mudslides.

But the new platform that is being developed in the Gulf of Mexico since the mid 1980s did not have any major damage to them. It was all the what we call the "shelf platforms" because it did all the damages. And that is what has been wiped out over there.

John Freeman, Raymond James.

You briefly mentioned the Dixie pipeline. Any update on the status of recovering damages from the Dixie shipper from last quarter?

Yes, the only update I will give is that we have not made a determination yet as to which course of action we are going to take in terms of recovery from the potential parties that we may have had some liability in this event. It was a little bit difficult for us in taking over operatorship almost after the fact. We got there just in time to clean the pipeline up and try to figure out exactly what happened. I think we had have gotten our arms around what happened.

We immediately instituted changes in the protocol -- operating protocols. So we can ensure this won't happen again. But we're not at a point where we have either allocated liability or decided exactly which strategy to pursue. We don't think it is a significant amount of money that we are going to have to recover. But we certainly believe that we have legal grounds to do that. So I think until we have actually moved forward with the recovery strategy and started those discussions with the parties that we'd like to talk, it would not be appropriate for me to comment any further on this call.

John, let me make a comment -- further comment on that. This is Dan again. The end of the tariffs of the Dixie Pipeline, there's two avenues that we can collect damages like this. Number one, you can go to ever who the shipment point was -- every who that shipment point would design back, then you can to that particular customer and say -- okay, he has to pay for the damages. And that would be like if you went to one of our facilities like Grangeville, where we did ship our records on the Grangeville Terminal, we are obligated to give Dixie superior products that means all of their specifications. And any damages that would cause, we would be obligated to pay for that.

They also have another backup field there, the actual guy that tended it in from that particular deal. Because you have some of your Dixie Pipeline's injunction like Belvieu, you'll have three or four people that would be tending product into that injunction. The shippers themselves that take that product, they are also obligated to pay you back damages. So we have two avenues that back each other up on paying that -- the guy that actually ships it -- and we know who the shippers are; they tendered into Dixie -- then the guy that actually has the responsibility for the operating of the injecting point. So there's not a question that it will not be collected.

I appreciate that insight. Looking at the octane enhancement business, obviously a phenomenal quarter where the gross margins were able to double despite volumes being down by about a third. I noticed that facility has some modifications and did not get restarted until I believe late July. And at that time of Leba (ph) was started -- it was doing around 11,000. I saw that the volumes, the average was 8,000. Should I assume that going forward that the 11,000 is more indicative of where that will be?

Let me make a quick comment and then turn it over to Gil Radtke, who runs that division. We've invested the money last year and the year before to be able to produce isooctane there to have the flexibility -- that's the key phrase there -- the flexibility to meet the needs of the market for octane additives. And there's several different variations of that octane additive theme.

I would describe it as not what I would call a constant run rate business, but one in which because we had the flexibility at that location, we can move into the market, move back out of the market. I wouldn't draw a whole lot from that 11,000 barrels a day compared to some prior number or try to forecast that. We think that is a nice level of business and wouldn't expect it to be a whole lot less or a whole lot more. But again, the key is -- might have a month where you ran very little, when the market was not looking for some production from that facility or another month where you ran flat out. So I think field -- the flat out run rate is probably 14,000 barrels a day?

Isooctane mode, it's about 12,000 barrels a day.

12,000 barrels a day.

But I think this is going to be the type of business (technical difficulty) added to the second and third quarters. First quarters will probably not be as (technical difficulty). But the 8,000 barrels-a-day run rate (technical difficulty) third quarter (technical difficulty) fixing a few things (technical difficulty). So what you see there is really something I would characterize as less than 100% of what it could have been, had we not had a few little fixes here and there that would (technical difficulty). On a seasonally-adjusted basis, I think you're probably going to see us average somewhere between 10 and 11 (technical difficulty).

And last question I had -- and I apologize if I missed this -- what were the average volumes on Cameron Highway during the quarter? And what did it exited at?

Good question. We are looking. Not sure what it exited at; that is not going to be meaningful because it was still down or ramping out.

I think John, if you look at what Cameron Highway is coming in at, we was in the 93, 95, to 103 barrels a day when it got up in the end of the second quarter and even sometimes in third quarter. When the hurricanes came through, of course we went to 0. And today, we're back on the run rate of 92 to 95,000 barrels a day. And some of the new wells have got put off because of Hurricane Rita when it came through, and Katrina affects it a little bit. But not counting the downtime of the actual hurricanes, it's basically the same running run rate now as it was back in the end of second quarter.

(multiple speakers) In the days, it should be shut down completely because of the hurricanes. But we just on a daily basis of our run rates of all our pipelines.

I can add to that. This is James. We do expect another whole scene at Mad Dog Well here before the end of the year to be added onto that. There's some more Mad Dog Wells that will come on next year. Of course, Constitution and 50% of Ticonderoga are dedicated. They should be on in the second quarter. And then you've got Atlanta still from a timing standpoint projected to start flows in June of 2006. So a lot of better days ahead for Cameron Highway as far as volume growth.

Even with some disruptions from the hurricanes, it still flowed just under 100,000 barrels a day on average for the quarter.

Alex Myer (ph), Zimmer Lucas.

I just had one question that was just related to I guess offshore production that you guys have exposure to your gathering pipelines. Could you just maybe I guess give us kind of high-level detail about what the status of development is there offshore?

Alex, be more specific in your question. (multiple speakers) amount of level of detail, I think that is an oxymoron in it.

Is the question related to activity?

Yes, just activity in terms of --

I can tell you that the rigs that we see working are working in the areas of South Grand Canyon, which is obviously where we have a lot of oil and gas infrastructure. We still see activity over in the Eastern Gulf -- a lot of good drilling activity around where we are going to install our Independence Hub platforms. I can tell you that it is looking so good over there, we're actually looking at expanding platforms to a Bcf a day from 850 million cubic feet a day.

So the areas of drilling -- current drilling are around our assets. You know, Anadarko is a big customer of ours. And if you follow them, they've recently signed up some long-term rigs, so they are committed to the deepwater and drilling around the Marco Polo Hub and the Independence Hub. We like where the drilling is going on.

Do you see any limitations just in terms of workforce related to them, working on getting existing infrastructure up and running again versus building out new development?

I have not seen that so far. Obviously, there is a strain on equipment right now because people are having to inspect facilities related to the hurricanes. But there are some rigs that were damaged during the hurricanes. They're going to have to get those fixed and get them back. We're not running at the rig rates we were before. But people that have developments ongoing had already locked in the equipment and had contractual arrangements.

As I mentioned earlier, even on our projects, we don't anticipate any delays from the hurricanes. So I don't think over the long-term, there is going to be any impact from an equipment standpoint to keep these developments going.

Paul Tice, Lehman Brothers.

Bob Phillips mentioned at the beginning that you think you are maintaining appropriate leverage at this point through '05. And as I calculate it using your EBITDA definition, you are at 4.5 times leverage at the end of September. And I know Mike has made the point that 3.5 to 4 times was your target. So any plans for deleveraging over the near-term?

The way that we calculate and we look at debt-to-EBITDA ratio is the way that our banks look at it and the way that is defined in our credit agreement. In the credit agreement, EBITDA is adjusted by subtracting equity earnings, debt to we have in unconsolidated affiliates and adding back the actual cash distributions. It's also adjusted to reflect a full year of EBITDA from any acquisitions that we've completed within the last 12 months. And so calculating it that way so you don't get penalized for doing an acquisition and not getting a full year's credit for it, the rolling month consolidated EBITDA calculated that way is 1.15 billion. And we had 4.83 billion of debt, so our debt-to-EBITDA ratio on net basis is about 4.17, 4.15 times. So I think that the way you're calculating it, really just doesn't take into effect a full year of some of the acquisitions, some of the projects that we have done.

So you're saying you are comfortable at that 4.1 kind of level?

Well, obviously we'd like to get it down.

I assume there are no asset sales planned. So if you were to get it down, you're probably looking at more unit issuance?

That is a fair assumption.

Second question, can you give us any more color around the amendment to your bank facility that you mentioned in the press release? I assume that you upsized given that your liquidity cushion has grown?

Yes, in fact, I talked about that. We upsized it from 750 million to 1.25 billion. We pushed the maturity date out a year to October of 2010. And we reduced the borrowing spread based on our current borrowing levels by about 0.375%.

And how much is currently drawn?

Of the liquidity at the end of the quarter pro forma for the amendment was -- I think it was in the press release of about $750 million. That's 780, including then -- yes, 750 plus we had 33 million of unrestricted cash.

So that 780 would be pro forma for the upsizing to 1.25?

That is correct.

And then last question, I think you mentioned that you weren't going to be releasing an '06 CapEx plan. But what is the fourth-quarter target for capital spending?

It's probably looking at running about 80 million a month.

Growing by 80 million -- I'm sorry, I think originally we were talking, Mike, roughly $1 billion for the full year? Is that still the '05 target?

Yes.

So your 628 is 9 months, so you're like 350 area?

Right.

And lastly, any update in terms of your conversations with the agencies just around the hurricane issues or your CapEx program?

No, we have certainly been keeping them apprised of where we stand with respect to any hurricane damage and the facilities coming back up. We are quite happy with the progress we've made and the way our facilities (technical difficulty) through the hurricanes and haven't really had any undue concern from the rating agencies that they have expressed to us.

And no plans to sit down with them over the next quarter?

Of course, we could always sit down with them.

And again, the good news is the hurricanes were just not a big capital event for us. We didn't run out and expand our lines because we felt like we had a bunch of hurricane-related damage that we had to cover. We expanded our line in the ordinary course of business. Because we have a growing portfolio of projects and an expanding business that we need to finance, and we had the opportunity to extend the term and to lower the cost. And our guys in the financial group do a great job. So once again, they hit the market perfectly. That's the kind of liquidity and flexibility we need to manage the size of the business with.

Maura McFadden, Vanguard.

I was wondering if you could comment on the impact on your NGL business with respect to commodity prices and natural gas prices.

Yes, I will comment. Let me first start with an overriding theme that we have here at Enterprise; this may be what you've directed your question to. And that is the hedge effect that we received by combining what we will call the old Enterprise assets with the old GulfTerra assets.

And we have talked about the impact of high gas prices on our business. And I suppose historically, it did have a major impact as Enterprise was largely a gas user that had a short gas exposure to natural gas prices. So when it ran up, fuel costs did increase, and they were offset to a large degree with escalators and other reimbursement features of our various service contracts but not enough to cover 100% increase in gas prices.

When we combined Enterprise with GulfTerra, GulfTerra had a unique set of contracts, where it gathered gas for a percentage of index gas prices. Therefore when gas prices went up, GulfTerra tended to make more money. And we said from the beginning of the merger that those tended to offset one another. I think the third quarter clearly displays how almost perfect that hedge really was. As gas prices moved up across the country, our increased earnings from our percentage of index gathering contracts fairly closely offset, and I think maybe even were a little bit on top of our increase in fuel cost. So we are very pleased that the entire portfolio of businesses at Enterprise is largely hedged to an increase in gas prices.

As far as an increase in oil and NGL prices, clearly, we benefited from that. I don't deny that at all. (Multiple speakers.)

We benefited from that again because our processing portfolio is largely a percentage of proceeds contract. So that when we process gas or fractionate liquids on behalf of our customers, we oftentimes get paid in the form of a percentage of the overall liquids running through the plants. And when the liquids prices were higher, we made more money for that service. And that's a benefit that we have in renegotiating those contracts away from the old keep-whole contracts that we both had over the last several years.

The portfolio, you might be interested in knowing, is fairly evenly distributed. And you might make note of this, our processing portfolio currently is about 48% fee-based, 24% margin-based, and about 23 or 24% percentage of proceeds, with the balance of that fairly small, probably less than 5% of the overall total, being either discretionary or nondiscretionary conditioning fee with an election to go keep-whole in the event the producer opts not to process the gas and reelect to do that on a keep-whole basis.

Remember that processing is the tip of the spear for us. That's where we gather rich gas into our value chain; we process it. And so anytime we've process and we get to keep the liquids or we move the producer's liquids through our system, we get a transportation fee on the liquids, we typically get a fractionation fee, then a storage fee, and then another fee to market and distribute those liquids to the customers. So processing is just a part of the overall story. And we clearly benefited from higher oil prices during the quarter. And I think we are set up to do that. And it shows the earnings power of our assets.

John Zawinger (ph), Luma Sales.

I have somewhat related questions. First, do you do any hedging of the equity NGL volumes that you have in your system?

No, sir, we don't. As a policy matter, we decided that one of the strengths of the merger between Enterprise and GulfTerra was that natural hedge. And as a result, we don't, as Mr. Duncan likes to tell us, we are not smarter than the market. So we do not try to pick the tops and the bottoms of the market. We have been very, very disciplined over the last year in allowing that natural hedge to really guide our exposure of the changes in commodity prices. So that is not a tool that we employ and not one that we expect to employ in the future.

Your G&A expense I believe declined sequentially. I don't have the prior-quarter number in front of me, but I am sort of trying to remember from last call. If I recall, in the last quarter, it did rise I think somewhat to the surprise of the number of people who were on the call. And you indicated at that time that the second-quarter level is probably indicative of the kind of levels you'd be seeing in that line item going forward.

The question I have is -- where are we with respect to that G&A outlook? And what is the truth -- just remembered the second-quarter number correctly?

The second quarter number was a bit higher. There was some incentive compensation that hit that quarter and some adjustments between first and second quarter. Third quarter is between 13, $14 million. I think that certainly for an annual run rate, something in the kind of the mid-$60 million range is in the ballpark. Somewhere -- 60 to 70 is going to be there. And that frankly is a lower G&A number than we expected when we looked at the combination of Enterprise and GulfTerra on a combined basis. So we are quite pleased with that.

I think that leads me into my last question, and that was this issue of synergy capture. You were looking for some amount of synergies, and the exact number escapes me at this point in time. And in the very first call you had post the merger, you were very satisfied that you had captured a large bulk of the synergies that you were looking to nail down. Is it fair to say that most of those synergies would have been in the SG&A line? Are they in other places? Can you split that out? And can you give us an idea as to what you've already grabbed or whether you've grabbed more than you expected as you apparently had with respect to G&A?

I think there's answers to that. One is, we did (technical difficulty) to the merger integration; we are done. And when we laid out what our expectations were in terms of saving, we were pretty conservative and we have surpassed those. As you get further along with the combined operation, it gets more difficult to kind of define what is exactly a synergy. We are continuing to have business opportunities that arise because we have a combined business. We did not include those as synergies. We are continuing to do things on the procurement side that frankly we had not counted in that synergy number. And those are proving to be fairly substantial.

So again, the items that we had detailed out back in December of '04 when we announced the merger, we have captured all of those and frankly have realized more savings than we had anticipated. I think what you are seeing here in the third quarter kind of reflects that.

What were you looking for in the way of savings in the G&A line back in December just like in a frame of reference?

We had a number of different things. I think we had a number in there of 40 to $50 million. Part of that included insurance that is allocated to the business units, and not all of that is flowing into G&A. So the costs weren't specifically identified as G&A. Also cost savings in terms of lower lease payments because we are consolidating our spaces into these office buildings and out of Greenway Plaza; that has been done. We are pretty tightly packed. So the cost savings there are pretty good.

And again, when we gave out those indications, that was very early in the process. We were trying to be very conservative. We have not tried to track every dollar of savings. We just want to make sure that we captured what we thought we were going to capture. And frankly now what were interested in is capturing cost savings regardless of whether we plan for them or not. We want to drive to make this a very lean company.

John Tysseland, Citigroup.

Mike, in your comments, you had mentioned that you expect fourth quarter to be impacted by the hurricanes to the tune of about $34 million. So you expect some of that to be offset by the positive margins in your NGL business? Is that to say that you expect the fourth quarter look similar to the third quarter? How do you view that?

I didn't say that, John.

I know; I was implying.

What I said was that we expected the negative effects of the hurricanes to be about 34 million, and we expected that to be offset. And in fact, it may be a little more than offset by improved conditions and the demand for NGLs in the motor gasoline additives. But we've not given any guidance with respect to fourth quarter.

I was just trying to get something out of you that I thought -- this might be a question for Jim or Dan. Given that there's strong demand for ethylene by the petrochemical companies given the outages, are you also seeing any strong demand for ethane as feedstock given that -- I guess nabs it in this kind of commodity price environment -- has a cost advantage as a feedstock?

John, this is Jim. If you look at the price of NAFTA, driven by the price of crude oil and motor gasoline, what we're seeing in natural gas liquids are quite competitive relative to the heavy end of the feedstock barrel. And you know as these petrochemicals continue to ramp up, we're seeing strong demand for our NGL products even as it relates to the NAFTA and the gas, oils and the condensates. Dan?

I think, John, the biggest probably we have right now is everybody getting their hands around on who's down and when will they get back on. We have some of the down plants in Louisiana that still really got troubles. They have got them up yet. We've got some of those (indiscernible) over there because of lack of feedstock in Louisiana. They're not running that capacity because they cannot get the feedstock. Then you got of course the -- down in Fort Lavaca, not Fort Lavaca, down in South Texas, you've got one of them plants had that major explosion. That is a lied-in (ph) plant, and it is not on yet. Although they expect to haven on about a month from now.

I think when you get through the deal, we really don't understand -- we don't know where the demand is relative to the plants until we get everybody back on. Like Dallas plant (indiscernible) Tampa (indiscernible) -- it is completely down and probably will be down some time I think the latest heard is about December 1, it should come back on.

How much inventory of feedstocks are in the system at this point in time to support the level of demand that you're seeing out there from the petrochems and the refineries?

There is ample inventory. It's not an issue of inventory right now. It's really an issue of dislocation. I mean there's plenty of inventory of ethane and propane. I'm looking to Gil with the storage. In the Mont Belvieu area, the issue is, the production that is often some of the consuming locations, such as in Louisiana where you have a pretty good concentration of refineries and petrochemical plants. That's really where we have been able to play a key role, as Bob mentioned earlier, in order to use our network of assets, primarily our LouTex Pipeline and our distribution system in Louisiana to take care of those guys and their needs for NGL products, primarily ethane and for petrochemicals and the C4s (indiscernible) of refineries.

The inventories at this point are not an issue. We've had -- as you've lost supply, you have also lost some demand, as some of these crackers went down that pretty much offset that. So you did not have a huge draw on the NGL inventories. But like I said earlier the dislocation is what is creating the opportunity for us.

And coincidentally, one of the things as prices react to this sort of an event, this market becomes a magnet to international movements of natural gas liquids. And I think Bob mentioned in his comments early on that we had a strong import season. In fact, we had a record level of imports in our terminal at much higher fees than historically we have been able to command, driven by the magnet effect of this market. And we take that product and distribute it to our network to folks in Louisiana primarily right now.

Jim raises an interesting point that the import and export facility played a key role in the overall solution to manage these supply-and-demand disruptions. So we are very pleased to have that. It's one of only three on the Gulf Coast area. Two of our competitors and customers operate the other ones, but we have more flexibility and more capacity. So we were the destination of choice for the international cargoes that came in very quickly to try to help solve some of these problems. And again, our marketing and distribution group did a great job in allocating resources there.

Margie, this is Randy Burkhalter. I think we have time for one more.

Mark Reichman, AG Edwards.

Well, we have already highlighted the favorable growth outlook for the offshore pipeline segment. If you could just briefly summarize the incremental volumes and the timing of those volume that are expected from the Holstein and Mad Dog developments, which will flow into Cameron Highway. And then also the K1 and K2 North developments that will go into the Marco Polo pipeline. And then also the Atlantis, Constitution, and Ticonderoga fields, which I think will come on-stream in '06 and '07.

Mark, I'm going to beg your forgiveness on that question with a simple explanation that our producers have not yet had their third-quarter calls yet. They are the ones that need to describe in great detail what their plans are for bringing their production back on and for tying in the new wells. I will promise you that based upon our conversations with producers that support those projects, we feel very comfortable with our original estimates about where Marco Polo will be as a platform, 120,000 barrels a day of production across the platform by the end of 2006, where Cameron Highway will be with Mad Dog, Atlantis, Holstein, the Constitution, the Ticonderoga at 300 to 350,000 barrels a day roughly by the end of 2006.

Nothing has changed. No information we've received from our producers indicates to us that we have any significant reduction in expected volumes or significant delays in those volumes. But I think it would be inappropriate for us to give any level of detail when our producers have not yet made their third-quarter announcements and had the opportunity to give more specifics about that.

So we will tag off on that and close the call on that note. Randy just one final comment to the crowd -- again, we appreciate your participation. Certainly, this is the longest call that we have had since I have been here at Enterprise over the last year. I hope this means that you're now paying much more attention to not only our quarterly performance but also our growth prospects. And again, I want to hammer that point that we are investing a lot of money for the future here. And hopefully with your help, our investors will begin to see the kind of future growth profile that this strategy is developing. And so we expect to be out to the market sometime in February with a much more detailed presentation on our 2006 performance expectations. And we will look forward to visiting with you all at that point in time.

Margie, before we close, let me just give the replay information. There will be a replay of today's discussion available beginning today at 11:30 Eastern Time running through Wednesday of next week, November 2nd, at 12:00 Eastern Time. To access the replay, you may dial 800-860-4708. With that, I will close the call. Thank you for joining us today.

Thank you very much.

Thank you again for joining. Have a wonderful day, everyone.