Enterprise Products Partners (EPD) risk factors, FY2024 10-K

Other

1. 01Summary of Key Risk Factors

Risks Relating to Our Business

1. 02We may not be able to fully execute our growth strategy if we encounter illiquid capital markets or increased competition for investment opportunities
2. 03Our construction of new assets is subject to operational, regulatory, environmental, political, geopolitical, legal and economic risks, which may result in delays, increased costs or decreased cash flows
3. 04A natural disaster, catastrophe, terrorist attack or other extraordinary event could result in severe personal injury, property damage and environmental damage, which could curtail our operations and have a material adverse effect on our financial position, results of operations and cash flows
4. 05Our risk management policies cannot eliminate all commodity price risks. In addition, any noncompliance with our risk management policies could result in significant financial losses
5. 11Changes in the supply of and demand for hydrocarbon products impacts both the volume of products that we purchase and sell and the level of services that we provide to customers, which in turn impacts our financial position, results of operations and cash flows
6. 12Changes in price levels could negatively impact our revenue, our expenses, or both, which could adversely affect our business
7. 13Changes in demand for and prices and production of hydrocarbon products could have a material adverse effect on our financial position, results of operations and cash flows
8. 14We face competition from third parties in our midstream energy businesses
9. 15Our debt level may limit our future financial and operating flexibility
10. 16we may be more vulnerable to adverse economic and industry conditions as a result of our significant debt level
11. 17Our actual construction, development and acquisition costs could materially exceed forecasted amounts
12. 18A materialization of any of these risks could adversely affect our ability to achieve growth in the level of our cash flows or realize benefits from expansion opportunities or construction projects, which could impact the level of cash distributions we pay to our unitholders
13. 19We may face opposition to the construction and operation of our pipelines and facilities from various groups
14. 20diversion of the attention of management and other personnel from day-to-day business to the development or acquisition of new businesses and other business opportunities
15. 21Acquisitions that appear to increase our operating cash flows may nevertheless reduce our operating cash flows on a per unit basis
16. 22A cyber-attack on our IT or OT systems could affect our business and assets, and have a material adverse effect on our financial position, results of operations and cash flows
17. 23Failure of our critical IT or OT systems could have an adverse impact on our business, financial condition, results of operations and cash flows, as well as our ability to pay cash distributions
18. 24Our business requires extensive credit risk management that may not be adequate to protect against customer nonpayment
19. 25The use of derivative financial instruments could result in material financial losses by us
20. 26At December 31, 2024, we had $31.6 billion in principal amount of consolidated fixed-rate debt outstanding, including current maturities thereof. Additionally, at December 31, 2024, we had $582 million of variable-rate debt
21. 27If we were to incur material costs in connection with our pipeline integrity program or pipeline safety laws and regulations, those costs could have a material adverse effect on our financial condition, results of operations and cash flows
22. 28Environmental, health and safety costs and liabilities, and changing environmental, health and safety regulation, could have a material adverse effect on our financial position, results of operations and cash flows
23. 29In addition, future environmental, health and safety law developments, such as stricter laws, regulations, permits or enforcement policies, could significantly increase some costs of our operations. Areas of potential future environmental, health and safety law developments include the following items
24. 30The FERC regulates interstate transportation services provided by our liquids pipelines under the ICA. State regulatory agencies regulate many of our assets, including intrastate natural gas and NGL pipelines, intrastate storage facilities and gathering lines
25. 31The rates of our regulated assets are subject to review and possible adjustment by federal and state regulators, which could adversely affect our revenues
26. 32The adoption and implementation of new statutory and regulatory requirements for derivative transactions could have an adverse impact on our ability to hedge risks associated with our business and increase the working capital requirements to conduct these activities
27. 33While we believe that the majority of our hedging transactions would meet one or more of the enumerated categories for bona fide hedges under the Dodd-Frank Act, the rules could have an adverse impact on our ability to hedge certain risks associated with our business and could potentially affect our profitability
28. 34Our standalone operating cash flow is derived primarily from cash distributions we receive from EPO
29. 35Changes in management’s estimates and assumptions may have a material impact on our financial statements and financial performance

Risks Relating to Our Partnership Structure

1. 06We may not have sufficient operating cash flows to pay cash distributions at the current level following establishment of cash reserves and payments of fees and expenses
2. 07Our general partner and its affiliates have limited fiduciary responsibilities to, and conflicts of interest with respect to, our partnership, which may permit it to favor its own interests to your detriment
3. 08Our tax treatment depends on our status as a partnership for federal income tax purposes, which could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis
4. 09Tax gains or losses on the disposition of our common units could be more or less than expected
5. 10Discussion of Key Risk Factors
6. 36We may issue additional securities without the approval of our common unitholders
7. 37our general partner decides whether to retain separate counsel, accountants or others to perform services for us
8. 38The NYSE does not require a publicly traded limited partnership like us to comply with certain of its corporate governance requirements
9. 39Unitholders have limited voting rights and are not entitled to elect our general partner or its directors. In addition, even if unitholders are dissatisfied, they cannot easily remove our general partner
10. 40Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units
11. 41Our general partner has a limited call right that may require common unitholders to sell their common units at an undesirable time or price
12. 42Our common unitholders may not have limited liability if a court finds that limited partner actions constitute control of our business
13. 43Unitholders may have a liability to repay distributions
14. 44Our general partner’s interest in us and the control of our general partner may be transferred to a third party without unitholder consent
15. 45We do not have the same flexibility as other types of organizations to accumulate cash and issue equity to protect against illiquidity in the future
16. 46The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis
17. 47We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred
18. 48A successful IRS contest of the federal income tax positions we take may adversely impact the market for our common units and the cost of any IRS contest will reduce our cash available for distribution to unitholders
19. 49Our unitholders may be required to pay taxes on their share of our income even if they do not receive any cash distributions from us
20. 50Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us
21. 51Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them
22. 52We treat each purchaser of our common units as having the same tax benefits without regard to the common units purchased. The IRS may challenge this treatment, which could adversely affect the value of our common units
23. 53Our common unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a result of an investment in our common units
24. 54We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methods or the resulting allocations and such a challenge could adversely affect the value of our common units