Enterprise Products Partners (NYSE: EPD)
Q2 2024 Earnings Call
Jul 30, 2024, 10:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Thank you for standing by and welcome to Enterprise Products Partners LP's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] I would now like to hand the call over to Libby Strait, senior director of investor relations.
Please go ahead.
Libby Strait -- Director, Investor Relations
Good morning and welcome to the Enterprise Products Partners conference call to discuss second quarter 2024 earnings. Our speakers today will be co-chief executive officers of Enterprise's general partner, Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by and information currently available to Enterprise's management team.
Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. With that, I'll turn it over to Jim.
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A. James Teague -- Co-Chief Executive Officer
Thank you, Libby. We had another solid quarter, both in terms of volume and cash flow. We reported adjusted EBITDA of 2.4 billion, compared to 2.2 billion in the same quarter of last year. We generated 1.8 billion of distributable cash flow.
We had 1.6 times coverage for the quarter. We retained $661 million of DCF in the second quarter, and we're at 1.5 billion year to date. Even though the second quarter can be seasonally our weakest quarter, our company handled a near-record 12.6 million barrels per day of crude oil-equivalent volumes and 2.2 million barrels a day of marine terminal volumes, as well as record natural gas processing and record NGL pipeline and fractionation volumes. Our investments to support growth in the Permian Basin are visible both volumetrically and financially in our NGL pipeline and service segment, which reported a 19% increase in gross operating margin compared to the second quarter of last year, primarily attributable to our four new natural gas processing plants in the Permian and our 12th NGL fractionator at our Mont Belvieu area complex.
In addition, we also benefited from improvements in natural gas processing margins compared to last year. Our natural gas pipelines and service segment also reported a 23% increase in gross operating margin compared to the same quarter in 2023. This increase was primarily driven by higher transportation revenues and higher marketing margins associated with the wider spreads between Waha and higher-valued market hubs. We had a very good quarter in spite of the challenges of our PDH plants.
They have been somewhat of a headwind throughout the year. We recently completed our turnaround at PDH 1. Planning for the turnaround took over a year and involved a dedicated turnaround team, in addition to field engineering and maintenance personnel. This team documented every issue we've had with this plant and developed solutions for each one.
The turnaround took 100 days. A few factoids on turnaround. There was over 1.25 million hours worked. At the peak, we had 1,250 people per shift.
We had 590 work packages executed, 17 million pounds of catalyst handled, 1,465 crane lifts, 190 18-wheeler deliveries, 52,800 bricks hand inspected, over 41,000 replaced. Those bricks are the catalyst support and the catalyst reactor. The plan is now up and running and exceed -- and exceeding its nameplate. PDH 2 is currently in turnaround.
We expect it to be producing PGP sometime around mid-August. The PDH 2 turnaround is not nearly as involved as PDH 1. I'd like to thank our Mont Belvieu team and our supporting service providers for their long hours and hard work during these back-to-back turnarounds. We're confident that these two plants will be a tailwind the rest of the year.
We also completed our diluent open season on the TE Products system. We'll close the open season with 100,000 barrels a day of new and reach contracted commitments, and I think those are five-year deals. We then accommodate -- we can accommodate this incremental demand with a suite of debottlenecks and horsepower additions while ensuring we do not impact our existing customers. Finally, our company has 6.7 billion of projects under construction that provide visibility to future earnings and cash flow growth.
These projects include three processing plants, one in the Midland Basin, two in the Delaware and associated gathering; our Bahia NGL Pipeline; Frac 14; and export expansions at the Neches River terminal and the Ship Channel. All of these projects are backed by long-term contracts and significantly enhance what is already a very strong NGL value chain. And as has been the case for several years running, we continue to see even more rich gas volumes coming from the Permian than we have previously forecasted, and Tony may have something on this in the Q&A. And with that, I'll turn it over to Randy.
W. Randall Fowler -- Director and Co-Chief Executive Officer
All right. Thank you, Jim. Good morning, everyone. Starting with the income statement, net income attributable to common unitholders was $1.4 billion or $0.64 per unit for the second quarter of 2024.
This was a 12% increase over the second quarter of 2023. Our adjusted cash flow from operations, which is cash flow from operating activities on the cash flow statement before changes in working capital, this number increased 11% to $2.1 billion for the second quarter of 2024, compared to $1.9 billion for the second quarter of last year. We declared a distribution of 52.5 cents per common unit for the second quarter of 2024. This is a 5% increase over the distribution declared for the second quarter of last year.
The distribution will be paid on August 14th to common unitholders of record as of the close of business tomorrow, July 31st. In the second quarter, the partnership purchased approximately 1.4 million common units off the open market for $40 million. Total purchases for the 12 months ending June 30, 2024 were 176 million or approximately 6.5 million Enterprise common units. And this brings total repurchases under our buyback program to approximately $1 billion or about 50% of the total program amount.
In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.3 million common units on the open market for $171 million during the last 12 months, including 1.8 million common units on the open market for $50 million during the second quarter of 2024. For the 12 months ending June 30, 2024, Enterprise paid out $4.4 billion in distributions to limited partners. Combined with the $176 million of common unit purchases over the same period, Enterprise's payout ratio of adjusted cash flow from operations was 55%. Total capital investments in the second quarter of 2024 were 1.3 billion, which included 1 billion for growth capital projects and 245 million for sustaining capital expenditures.
While our expected growth capital expenditures for 2024 did not change, as a result of the LPG export announcement we announced this morning, we did refine the bottom of our range. Our current estimate of growth capital expenditures for 2024 is now in the range of 3.5 billion to 3.75 billion. We continue to expect 2025 growth capital investments to be in the range of 3.25 billion to 3.75 billion. 2024 sustaining capital expenditures are elevated due to planned turnarounds for our PDH 1 plant and our iBDH facility and our high-purity isobutylene facility.
These turnarounds typically occur every three to four years. We now estimate 2024 sustaining capital expenditures to be approximately 600 million, up from 550 million, primarily due to higher capital costs associated with the turnaround at the PDH 1 facility, which was completed in June. The turnaround at the PDH 2 facility began in late June 2024. And as Jim noted, we anticipate completion in the middle of August.
As of June 30, 2024, our total debt principal outstanding was approximately 30.6 billion. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio was approximately 18 years, our weighted average cost of debt was 4.7%, and approximately 95% of our debt was fixed rate. Our consolidated liquidity was approximately 3.4 billion at the end of the quarter, including availability under our credit facilities and unrestricted cash. Our adjusted EBITDA was 2.4 billion for the second quarter and 9.7 billion for the 12 months ending June 30, 2024.
As of June 2024, our consolidated leverage ratio was 3.0 times on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand. Our leverage target remains 3.0 times, plus or minus 0.25 times. With that, Libby, I think we can open it up for questions.
Libby Strait -- Director, Investor Relations
Thank you, Randy. And, operator, we are ready to open the call for questions from our participants.
Questions & Answers:
Operator
[Operator instructions] Our first question comes from the line of Theresa Chen of Barclays.
Theresa Chen -- Barclays -- Analyst
Good morning. Thank you for taking my questions. Maybe starting with the LPG export. So, on that front, you've executed and announced multiple expansions, with another one just today.
Can you just help us think about what inning are we in terms of export expansion build-outs for the industry? And across your system, you know, how much more brownfield capacity expansion do you have left?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Yeah. So, the market is obviously calling for additional capacity. We announced that expansion this morning around, call it, 85% to 90% contracted of our existing and expansion capacity. But as far as our brownfield capacity, we have additional opportunities to execute that.
This project was using existing infrastructure. Concerning our term contracts, we're out there with highly competitive rates. And yeah, like I said, we have additional brownfield opportunities ahead of us.
Theresa Chen -- Barclays -- Analyst
OK. And, Brent, if you can just, you know, help us think about like from a commercial perspective, what is the going rate for brownfield expansion across your system, maybe on a per gallon or other unit basis, and how does that compare with greenfield expansion, someone wanting to get into this part of the NGL value chain right now?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Theresa, this is Tug talking. But I won't get into a specific rate, but relative to greenfield, it's significantly more competitive.
Theresa Chen -- Barclays -- Analyst
OK. Thank you, Tug. And as a follow-up, do you have an update on the commercialization of spot at this point?
A. James Teague -- Co-Chief Executive Officer
Yeah, this is Jim. I'll take that. Yeah, we -- you know, up until now, what we've been marketing is a concept. And since we've gotten our license to construct, we're marketing a real project now.
And we've done a heck of a lot of work to determine how competitive we are versus a single-lightering and multilightering. And now, if you look at the single-lightering, we tracked 563 ships that were single-lightering. And out of those 563, we put it into quartiles, and we were, hands down, better than 280 of those and competed very effectively with the first two quartiles. In the multilightering, we looked at over 400, and we beat those, hands down, across the board.
So, if you looked at all the ships we tracked, we tracked 969 ships, and we beat, hands down, 686 of those ships over that time frame. So, now, we're going to see if the market wants it.
Theresa Chen -- Barclays -- Analyst
Thank you so much.
Operator
Thank you. Our next question comes from the line of Michael Blum of Wells Fargo.
Michael Blum -- Analyst
Thank you. Good morning, everyone. So, I just wanted to go back to the LPG export discussion a little bit. I wonder if you can just refresh us on what you're seeing for end-market demand as you continue to expand capacity.
And I guess I'm particularly interested in -- if you're seeing a lot of that incremental demand coming from China. Thanks.
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Yeah. This is Tug. So, the demand equation is, you know, obviously important to our LPG export expansions. But fundamentally, at the end of the day, the barrel has to clear the U.S., and the barrel will price accordingly to do so.
With respect to China, right now, our exports stand around 43% going to China, but we're also, you know, around, call it, 21% to the Americas and 13% to Europe. So, we're seeing robust demand across the board.
Michael Blum -- Analyst
OK.
A. James Teague -- Co-Chief Executive Officer
Tug, is that LPG?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
That's LPG.
A. James Teague -- Co-Chief Executive Officer
What percentage of LPG goes to China?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Around 40 -- around 43%.
A. James Teague -- Co-Chief Executive Officer
Propane, butane.
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Propane, butane.
A. James Teague -- Co-Chief Executive Officer
OK. PDH plants. OK.
Michael Blum -- Analyst
Great. No, I appreciate that. And then I just wanted to revisit in the capital allocation discussion around buybacks. I think we all understand at this point that, you know, Enterprise, your definitely preferred method of returning cash is distribution growth over buybacks.
So, I'm wondering if you can just refresh us on the criteria where you decide to allocate capital to buybacks, especially given that it seems like you have a pretty nice slate of organic growth opportunities at attractive returns. Thanks.
W. Randall Fowler -- Director and Co-Chief Executive Officer
Yeah, Michael. This is Randy. Yeah. Mike, what we've been, you know, targeting, you know, over the last few years, and 2024 is not that different, is probably coming in and doing buybacks in the $200 million range.
And what that's done is, you know, we do issue equity as a component of compensation. But when you come in and take a look at what we issue in terms of compensation and what we buy back, you'll see, over the last four years, there are -- there was a decrease in the number of overall units outstanding. So, you know, I think that's our focus. Once we get back out, you know, this year and next year -- again, you know, we're talking this year growth capital expenditures in the $3.5 billion to $3.75 billion range growth capex.
Next year, we're still estimating at $3.25 billion to $3.75 billion. That's probably going to keep those buybacks in that $200 million range. Once we get back out to 2026, you know, there, we're thinking growth capex could be, call it, around 2.5 billion. Then I think we have more room to return capital, and then I think we really just need to get some visibility on 2026 to see what form that increase in the return of capital would look like as far as distributions and buybacks.
Michael Blum -- Analyst
Great. Thanks, Randy.
Operator
Thank you. Our next question comes from the line of Jeremy Tonet of J.P. Morgan.
Jeremy Tonet -- Analyst
Hi. Good morning. Hello. Good morning.
W. Randall Fowler -- Director and Co-Chief Executive Officer
Good morning, Jeremy.
Jeremy Tonet -- Analyst
Just wanted to make sure you could hear me there. Thank you. Just want to see, I guess, you know, there's been -- some of your midstream peers out there have been acquiring assets. There's been some bolt-ons.
And I just wanted to, you know, get your thoughts about Enterprise's role within industry consolidation at this point and wanted to see, you know, I guess, any thoughts you could share on that at this point if this is the last major wave of consolidation in midstream?
W. Randall Fowler -- Director and Co-Chief Executive Officer
OK, Jeremy, I'll take first crack at that, and from a strategic standpoint, I'll let Jim comment. But I think our -- first and foremost, what we're looking at is returns on capital and what gives us the best returns on capital and grow in cash flow per unit because, at the end of the day, that's what's going to drive value. And we've taken a look at a number of opportunities, more asset acquisitions than, I would say, public company M&A. But, you know, what we've seen thus far is organic growth is providing us good opportunities at good returns on capital -- relatively better returns on capital and in growing cash flow per unit.
Obviously, the Navitas deal that we did, that also provided good returns on capital, good cash flow growth. So, that's really where our focus is.
A. James Teague -- Co-Chief Executive Officer
Yeah. Strategically, I think we've always said, it kind of has to fit what we already have. And, you know, we talked about the plants we're building in the Permian. I don't think we're through building plants.
So, I like -- you know, it's got to be -- the price has got to be right. It's got to fit who we are. And when you build a plant, you can put it where it fits who we are. So, I like the organic side, but we look at everything that comes along from a -- we have more investment bankers come in here than you can say grace over.
Jeremy Tonet -- Analyst
Got it. Makes sense there. Just wanted to also, I guess, get your thoughts as it relates to power in Texas overall. We've seen, you know, instability in the ERCOT market and other issues out there, and just wondering how you feel about that going forward.
Could there be room for your own generation or other measures to kind of ensure, I guess, stability?
Graham W. Bacon -- Executive Vice President, Chief Operating Officer
This is Graham. I'll take that. Yeah, certainly, power in Texas can be a challenge, and it evolves consistently. We're doing things with our projects to basically do some hedging of that through purchase of power generation and looking at other options.
We work very closely with the power providers and their status and evaluate whether grid power will be acceptable or we need to have other either backup power or we need to have other power sources available. And each situation is different. Every provider is different, whether you're working out in West Texas or East Texas. So, each situation is individual.
Jeremy Tonet -- Analyst
Got it. Makes sense. I'll leave it there. Thank you.
Operator
Thank you. Our next question comes from the line of Tristan Richardson of Scotiabank.
Tristan Richardson -- Analyst
Hi. Good morning, guys. Just on Bahia, can you give a general update on progress there and maybe how you see utilization ramping as that project comes on? And then maybe just your updated thoughts on a base case for Seminole based on what you're seeing on the supply growth side of that?
Justin M. Kleiderer -- Senior Vice President, Pipelines and Terminals
Yeah, Tristan. This is Justin Kleiderer. I mean, I think updates on Bahia are we're still on track from a timing perspective. From a commercial perspective, I think go back a couple of quarters from what -- how we sort of talked strategically about it, and that is -- it's -- you know, the growth is underpinned by our G&P platform, which Jim just spoke to, the fact that we don't think we're done building plants.
So, Bahia will be there to catch those volumes. And then when you think about NGL pipelines, you have to also understand the totality of the system that feeds them, in which we think we have a premier system with all the connectivity to every -- a majority of the third-party plants that have supply that can feed the system as well. So, you really have to look at plant connectivity to really understand what capacity and utilization could look like. And then third, we always have the sort of optionality that all of our pipelines give us in terms of potential conversions and things like that.
So, with respect to Seminole, I think it's a prime candidate for repurposing. I think we've been public with that. In which case, if that happens, then those NGLs will feed into Bahia.
Tristan Richardson -- Analyst
Great. Thank you. And then maybe just a clarification question, sorry if I missed this, but could you talk about the EHT expansion announced this morning and the 300 a day versus maybe what you had talked about in -- previously in that capital slide for EHT? I think you guys referred to it as facility upgrades versus an outright expansion. Can you maybe talk a little bit about the distinction there?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
I mean, it's a -- so we're adding an additional refrigeration unit there, expanding the existing dock infrastructure. We're utilizing the existing dock infrastructure and pipeline infrastructure that's ultimately getting us to 300,000 barrels a day.
Zachary Strait -- Senior Vice President, Unregulated NGLs
This is Zach. The original project that was on there was more of a flexibility project between different commodities, which I -- this new train ends up providing.
Tristan Richardson -- Analyst
Great. Thank you, guys, very much. Appreciate it.
Operator
Thank you. Our next question comes from the line of Spiro Dounis of Citi.
Spiro Dounis -- Analyst
Thanks, operator. Good morning, team. First question, just on capex, but really kind of want to focus on what's uncommitted at this point. Obviously, spot is a big one, and you've mentioned a few times now the potential for more processing plants to get built.
But as you think about the rest of the system, you've obviously got plenty of pipeline, plenty of export expansion. Obviously, some fracs in there. Curious if you can give us a sense of what you think is still missing from that system or maybe areas where customers are coming to you like with this export expansion and demanding more.
A. James Teague -- Co-Chief Executive Officer
Yeah, I remember Dan one time. This is Jim. He told me we were looking at something, and he said, you know, this may be the last deal, Jim. And they keep coming at us.
I think we are doing a pretty good job of expanding our primary petrochemical product system, meaning our ethylene system and our propylene system. And I think we'll be surprised in the years to come how good we'll do in that. And I mean, I don't think we have enough export capability based on what I see coming at us in the future. We believe that rich gas out of the Permian is going to be a couple of 3 Bcf a day more than we have forecasted in the past.
So, we're on that export train.
Spiro Dounis -- Analyst
Gotcha. I guess that does tie to my second question a bit. But just thinking about producers here, curious, maybe this one is for Tony, on how you're thinking about the outlook or what happens next. But curious if you've seen any change in behavior? Obviously seeing gas kind of turn over here a little bit again.
And crude, of course, has kind of come off the highs. So, are producers acting differently yet? Just curious how you're seeing maybe the next, call it, medium term.
Anthony C. Chovanec -- Executive Vice President, Fundamentals and Commodity Risk Assessment
Yeah. Sure. This is Tony. You know, Jim mentioned in his prepared remarks -- I guess, first of all, they -- we don't see significant changes in producers.
In other words, there is a lot of money on the tables for producers to continue to produce because of price of oil and how profitable they are. And frankly, they get more profitable every day. So, while certainly none of them can like very weak prices at Waha, that doesn't keep them from putting barrels on the table. Jim, in his remarks, mentioned that rich gas continues the trend of exceeding both ours and producers' expectations.
What I'd like to add to that is, you know, with Natalie's team, we spend a lot of time with commercial people and producers and technical people. And in those meetings with producers, we're definitely discussing incremental rich gas over and above, frankly, the type curves that we have in our forecast. I think there's a number of reasons for this. But to boil it down, I think it boils down to some of the richer, gassier benches now being drilled and planned by producers, especially in the Delaware Basin, plus some of the GOR increases that we're predicting, driven by the multibench completion methods, whatever you want to call them, that continue to evolve.
When we talked about that in our analysts meeting, you know, Natalie always reminds me that we want to be directionally correct in our forecast. No forecast is correct. But without talking to you all about what we're seeing, again, in these commercial and technical meetings, I think our -- from directionally correct, I think we'd be lacking. Jim, I think you mentioned two to three incremental Bs.
I would say that's over and above the approximately 30 Bs of rich gas at 2030 that we had in our forecast. When you look at a basin producing that much gas, you'd think, well, that's not really a big number. But when you consider the fact that it's liquid-rich and as rich as it is, it gets to be a pretty big number pretty quick. So, that's the reality of what we're dealing with.
Anybody else want to add anything? Natalie, do you agree?
Natalie K. Gayden -- Senior Vice President, Natural Gas Assets
Yeah. The only thing I'd add is when you think about that much incremental rich gas and more efficient plants in the basin that are capable of extracting higher ethane than before, it becomes a very quick NGL growth number also. So, one thing that I think has surprised people to the upside is the NGL production out of the basin, price is said to do it. So, the capability of the plants and the portfolio of processing plants now there in the Permian just is much greater than past.
Spiro Dounis -- Analyst
Got it. I'll leave it there. Thanks as always.
Operator
Thank you. Our next question comes from the line of Keith Stanley of Wolfe Research.
Keith Stanley -- Wolfe Research -- Analyst
Hi. Good morning. I'm following up on the Houston LPG export project. Is this a sign that you're perhaps seeing more demand for phase 2 at the Neches River project to be all ethane, instead of a mix of ethane and propane? And so, you have to do the Houston project to accommodate the propane side.
And then can you just give an update on how much of the Neches River capacity is contracted at this point on both phases?
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Sure. This is Tug. So, you're exactly right. We will maintain the flexibility at the Neches River facility to do LPG.
However, as the VLEC order book continues to get delivered out between now and, call it, end of '26, that facility will be in ethane service long term. As far as the contract level we have on that facility, it is 100% contracted. I will tell you, we have additional debottlenecking projects that we can execute, fairly capital efficient to get additional capacity there if the market asks for it. We're in good discussions around that capacity right now, and we'll evaluate if we proceed with that.
So, yeah, I could see it being ethane long term. What's the second question?
Keith Stanley -- Wolfe Research -- Analyst
Great. Thank you. And second question, any -- kind of a technical one, but just any ability for the company to benefit from the wide isobutane to butane spreads that we've seen, or is the focus really still just MTBE to butane?
A. James Teague -- Co-Chief Executive Officer
We benefit from that spread.
Keith Stanley -- Wolfe Research -- Analyst
From the isobutane to butane?
A. James Teague -- Co-Chief Executive Officer
Yes.
Keith Stanley -- Wolfe Research -- Analyst
Got it. Thank you.
Operator
Thank you. Our next question comes from the line of John Mackay of Goldman Sachs.
John Mackay -- Goldman Sachs -- Analyst
Hey, everyone. Good morning. Thanks for the time. I want to go back to -- I think maybe it was Michael's question on China.
We're seeing at least oil demand kind of trending decently below expectations right now. I guess I'd just be curious to hear from your perspective kind of where demand is trending overall versus your forecast, your expectations on maybe when that could start to pick up, and maybe just how sensitive your outlook could be to that global demand picture, acknowledging the high contracting levels? Thanks.
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
I'll -- this is Tug. I'll pass it over to Tony, but as far as Enterprise's exports to China, that's around 43%. The U.S. is around 52%.
So, we're a little bit lower than the U.S. average. I will add that while our product does go to China, it's all indirect. So, we don't have any direct contract exposure per se on the LPG side.
But we are seeing it, you know, ramp up quarter over quarter. And then, Tony, I'll --
Anthony C. Chovanec -- Executive Vice President, Fundamentals and Commodity Risk Assessment
Yeah. If you talk about other liquids demand, and, you know, Tug is referencing the barrels going to China, that's -- we all know we've been watching the build-out of PDHs in China for the last three years, and it's nothing short of eye-popping. They dominate the olefins market in Asia at this point, especially relative to PDH activity. So, it's really important in the equation.
If you're also referring to oil demand, I will tell you, from our view, there's nothing wrong with oil demand globally, probably on track to be -- growth somewhere between 1.2 million to 1.4 million barrels a day year on year. That's not a bad number, you know, especially with China demand and somewhat weak economies. So, I think other forecasters will tell you the same, but that's about the trajectory we're on.
A. James Teague -- Co-Chief Executive Officer
And this is Jim. I don't think we can undersell the benefits that LPG has with places like Africa and India as a transition fuel from wood and coal. And what we're seeing is that's a lot stickier demand, and it doesn't go away.
Anthony C. Chovanec -- Executive Vice President, Fundamentals and Commodity Risk Assessment
In that regard, for those of you who want to search the internet for TotalEnergies' recent commercial that they have been running specifically on LPG in Africa, it's a pretty moving commercial.
John Mackay -- Goldman Sachs -- Analyst
I appreciate all that. Thanks. I might push for just one more. I mean, looking ahead to November, you know, tariffs are obviously front of mind.
Are those coming up in your commercialization discussions, either around kind of incremental NGL sales or maybe on spot?
A. James Teague -- Co-Chief Executive Officer
What -- say the question again. I'm sorry.
W. Randall Fowler -- Director and Co-Chief Executive Officer
Tariffs, export tariffs.
John Mackay -- Goldman Sachs -- Analyst
I guess if we're talking about the risk of incremental tariffs starting next year, if that has any impact on commercialization. Thanks.
Brent B. Secrest -- Executive Vice President, Chief Commercial Officer
It gets brought up occasionally, but I'll tell you the truth. If you were to ask me that question two or three years ago, four years ago, especially, is -- at the later days of when Trump was in office, it was brought up quite often. We've been over to Asia a couple of times this year. Those questions and those conversations don't happen near the frequency that they once did.
A. James Teague -- Co-Chief Executive Officer
What does happen, Brent, after the LNG pause is can I depend on the U.S? Aren't you getting some of that?
Brent B. Secrest -- Executive Vice President, Chief Commercial Officer
Yeah. I mean, I think people question in terms of what projects are real and if we're going to continue to expand the export capabilities of this country. So, I think, obviously, the people that have contracts in place at the incumbent assets, I think, benefit. But in terms of trying to expand anything that they have, especially over in Asia, I think, you know, that makes them pause if they can continue to grow and depend on the U.S.
But the tariff side, I mean, I'll just -- I'm going to expand on that. On the tariff side, you know, I think we fundamentally believe that if the U.S. product has to price to export and ultimately the U.S. price has to overcome that tariff based on just pure geography and the transit that they have to incur.
So, I mean, that's a -- that's probably more of a reflection of what the U.S. -- what happens to the U.S. price.
John Mackay -- Goldman Sachs -- Analyst
All right. That's very clear. I appreciate all the thoughts today. Thank you.
Operator
Thank you. Our next question comes from the line of Neal Dingmann of Truist.
Neal Dingmann -- Analyst
Good morning, all. Thanks for the time. My first question, I just -- I always appreciate that capital project slide. I'm just wondering -- something you mentioned earlier kind of got my attention.
I'm just wondering, is it fair to say you won't spend future capex until, you know, it's largely contracted? Or maybe said in another way, wondering if you have, you know, an amount that needs to be contracted or percent of volumes that need to be contracted before FID or capex is spent?
A. James Teague -- Co-Chief Executive Officer
It kind of depends on the project, if you want to know the truth. On PDH, we wanted to make sure we had every bit of that contracted and turned into an annuity. If we see a lot of upside, we'll probably take less of a contract needs because we see upside on the asset. So, it really depends on the asset.
For example, on spot, I'm not going to tell you what it is, but we know what we have to have contracted in order to build it.
Neal Dingmann -- Analyst
That makes a lot of sense. Thanks, Jim. And then just one follow-up. Quarter to date, the marketing margins continue to look quite strong, and I'm just wondering, with about a third of the third quarter now in the books and Waha prices remaining still quite volatile, I think, we're anything from $1.50 to negative $2, just any update you would give on that marketing margins.
Thank you.
Brent B. Secrest -- Executive Vice President, Chief Commercial Officer
Yeah, this is Brent. So, from Enterprise's perspective, our number is still the same. We have about 380 million a day of exposure. We've hedged a small amount for the balance of this year.
But by and large, we still have a lot of exposure to all gas markets that originate from Waha.
Neal Dingmann -- Analyst
Perfect. Thanks, Brent.
Brent B. Secrest -- Executive Vice President, Chief Commercial Officer
Yes, sir.
Operator
Thank you. Our next question comes from the line of Manav Gupta of UBS.
Manav Gupta -- UBS -- Analyst
Hi. This is Manav from UBS. My first question is can we talk a little bit about the capex creep that happened in 2024? What were the drivers of this? And could this repeat in 2025? Do you have confidence that, you know, this will not happen in 2025?
W. Randall Fowler -- Director and Co-Chief Executive Officer
I think we would come in and say we really didn't see capex creep in 2024. We did modify the range. That's why we gave you -- gave the market an upper range. So, the lower part of the range changed, but the upper part of the range is still 3.75 billion.
And where we sit currently, we're still, you know -- 2025, we still feel good about a range of 3.25 to 3.75.
Manav Gupta -- UBS -- Analyst
OK. And in terms of PDH 2, you get it up in August, so should we assume it runs like at full rates by September or do you think it's more of like you get to the full rate in the fourth quarter?
A. James Teague -- Co-Chief Executive Officer
I'm looking at Graham, and I'm expecting to run up at full rates in September.
Graham W. Bacon -- Executive Vice President, Chief Operating Officer
We should be at full rates in September.
Manav Gupta -- UBS -- Analyst
Thank you.
Operator
Thank you. As there are no further questions in queue, I would now like to turn the conference back to Libby Strait for closing remarks. Madam.
Libby Strait -- Director, Investor Relations
Thank you to our participants for joining us today. That concludes our remarks. Have a good day.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Libby Strait -- Director, Investor Relations
A. James Teague -- Co-Chief Executive Officer
W. Randall Fowler -- Director and Co-Chief Executive Officer
Theresa Chen -- Barclays -- Analyst
Michael C. Hanley -- Senior Vice President, Hydrocarbon Marketing
Tug Hanley -- Senior Vice President, Hydrocarbon Marketing
Jim Teague -- Co-Chief Executive Officer
Michael Blum -- Analyst
Randy Fowler -- Director and Co-Chief Executive Officer
Jeremy Tonet -- Analyst
Graham W. Bacon -- Executive Vice President, Chief Operating Officer
Tristan Richardson -- Analyst
Justin M. Kleiderer -- Senior Vice President, Pipelines and Terminals
Zachary Strait -- Senior Vice President, Unregulated NGLs
Spiro Dounis -- Analyst
Anthony C. Chovanec -- Executive Vice President, Fundamentals and Commodity Risk Assessment
Natalie K. Gayden -- Senior Vice President, Natural Gas Assets
Keith Stanley -- Wolfe Research -- Analyst
John Mackay -- Goldman Sachs -- Analyst
Tony Chovanec -- Executive Vice President, Fundamentals and Commodity Risk Assessment
Brent B. Secrest -- Executive Vice President, Chief Commercial Officer
Brent Secrest -- Executive Vice President, Chief Commercial Officer
Neal Dingmann -- Analyst
Manav Gupta -- UBS -- Analyst
Graham Bacon -- Executive Vice President, Chief Operating Officer
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Enterprise Products Partners (EPD) Q2 2024 Earnings Call Transcript was originally published by The Motley Fool