Energy Transfer Partners Reports Second Quarter Results
Adjusted EBITDA for ETP for the six months ended
In July, ETP announced that its Board of Directors approved an increase
in its quarterly distribution to
ETP’s other recent key accomplishments include the following:
-
In
June 2014 , ETP announced that our Board of Directors approved the construction of a pipeline (“ET Rover”) to transport natural gas from the prolific Marcellus andUtica Shale areas to numerous market regions inthe United States andCanada . To date, ETP has secured 2.95 billion cubic feet per day (“Bcf/d”) of binding, fee-based commitments under predominantly 20 year agreements, representing 91% of the 3.25 Bcf/d total design capacity, and is still evaluating additional bids that were received in the open season. The project is fully subscribed to the Dawn,Ontario hub at 1.3 Bcf/d, with the balance of capacity commitments delivered to interconnects with other pipelines in the Midwest. ETP has ordered the pipe for the project and expects the segment to the Midwest markets to be in-service byDecember 2016 and in-service to Dawn,Ontario byJuly 2017 . -
In
June 2014 , ETP also announced that our Board of Directors approved the construction of an approximately 1,100 mile pipeline to transport crude oil supply from strategic receipt points in the Bakken/Three Forks production area inNorth Dakota toPatoka, Illinois , where the pipeline will interconnect with ETP’s existing Trunkline Pipeline, which is being converted from natural gas service to crude oil transportation service. ETP currently expects to build the pipeline to a capacity as high as 570,000 barrels per day based on binding commitments received to date and ongoing discussions with a number of key potential shippers. The pipeline is expected to be in-service byDecember 2016 . -
In
June 2014 , ETP sold 8.5 millionAmeriGas Partners, L.P. (“AmeriGas”) common units for net proceeds of $377 million, and sold an additional 1.2 millionAmeriGas common units for net proceeds of $55 million inAugust 2014 . -
The Partnership continues to make progress toward the close of its
recently announced acquisition of
Susser Holdings Corporation (“Susser”) with Susser’s shareholders scheduled to vote on the acquisition at a meeting to be held onAugust 28, 2014 .
An analysis of ETP’s segment results and other supplementary data is
provided after the financial tables shown below. ETP has scheduled a
conference call for
Forward-Looking Statements
This press release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject to a
variety of known and unknown risks, uncertainties, and other factors
that are difficult to predict and many of which are beyond management’s
control. An extensive list of factors that can affect future results are
discussed in the Partnership’s Annual Reports on Form 10-K and other
documents filed from time to time with the
The information contained in this press release is available on our web site at www.energytransfer.com.
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In millions) | ||||||||
(unaudited) | ||||||||
June 30, 2014 |
December 31, 2013 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS | $ | 7,213 | $ | 6,239 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 26,491 | 25,947 | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,850 | 4,436 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | — | 17 | ||||||
GOODWILL | 4,521 | 4,729 | ||||||
INTANGIBLE ASSETS, net | 1,512 | 1,568 | ||||||
OTHER NON-CURRENT ASSETS, net | 636 | 766 | ||||||
Total assets | $ | 44,223 | $ | 43,702 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES | $ | 7,515 | $ | 6,067 | ||||
LONG-TERM DEBT, less current maturities | 16,220 | 16,451 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 69 | 54 | ||||||
DEFERRED INCOME TAXES | 3,612 | 3,762 | ||||||
OTHER NON-CURRENT LIABILITIES | 1,037 | 1,080 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE NONCONTROLLING INTERESTS | 15 | — | ||||||
EQUITY: | ||||||||
Total partners’ capital | 10,816 | 11,540 | ||||||
Noncontrolling interest | 4,939 | 4,748 | ||||||
Total equity | 15,755 | 16,288 | ||||||
Total liabilities and equity | $ | 44,223 | $ | 43,702 |
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In millions, except per unit data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
REVENUES | $ | 13,029 | $ | 11,551 | $ | 25,261 | $ | 22,405 | ||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||
Cost of products sold | 11,636 | 10,229 | 22,502 | 19,823 | ||||||||||||||||
Operating expenses | 308 | 327 | 627 | 654 | ||||||||||||||||
Depreciation and amortization | 268 | 251 | 534 | 511 | ||||||||||||||||
Selling, general and administrative | 81 | 112 | 174 | 251 | ||||||||||||||||
Total costs and expenses | 12,293 | 10,919 | 23,837 | 21,239 | ||||||||||||||||
OPERATING INCOME | 736 | 632 | 1,424 | 1,166 | ||||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Interest expense, net of interest capitalized | (217 | ) | (211 | ) | (436 | ) | (422 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliates | 57 | 37 | 136 | 109 | ||||||||||||||||
Gain on sale of AmeriGas common units | 93 | — | 163 | — | ||||||||||||||||
Gains (losses) on interest rate derivatives | (46 | ) | 39 | (48 | ) | 46 | ||||||||||||||
Other, net | (14 | ) | (4 | ) | (17 | ) | (1 | ) | ||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 609 | 493 | 1,222 | 898 | ||||||||||||||||
Income tax expense from continuing operations | 70 | 89 | 216 | 92 | ||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 539 | 404 | 1,006 | 806 | ||||||||||||||||
Income from discontinued operations | 42 | 9 | 66 | 31 | ||||||||||||||||
NET INCOME | 581 | 413 | 1,072 | 837 | ||||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 110 | 93 | 186 | 195 | ||||||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 471 | 320 | 886 | 642 | ||||||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 125 | 155 | 238 | 283 | ||||||||||||||||
CLASS H UNITHOLDER’S INTEREST IN NET INCOME | 51 | — | 100 | — | ||||||||||||||||
COMMON UNITHOLDERS’ INTEREST IN NET INCOME | $ | 295 | $ | 165 | $ | 548 | $ | 359 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT: | ||||||||||||||||||||
Basic | $ | 0.79 | $ | 0.52 | $ | 1.47 | $ | 1.04 | ||||||||||||
Diluted | $ | 0.79 | $ | 0.52 | $ | 1.47 | $ | 1.04 | ||||||||||||
NET INCOME PER COMMON UNIT: | ||||||||||||||||||||
Basic | $ | 0.92 | $ | 0.53 | $ | 1.67 | $ | 1.08 | ||||||||||||
Diluted | $ | 0.92 | $ | 0.53 | $ | 1.67 | $ | 1.08 | ||||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | ||||||||||||||||||||
Basic | 318.5 | 352.6 | 321.4 | 326.9 | ||||||||||||||||
Diluted | 319.5 | 353.8 | 322.4 | 328.1 |
SUPPLEMENTAL INFORMATION |
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(Tabular dollar amounts in millions) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (a): | ||||||||||||||||||||
Net income | $ | 581 | $ | 413 | $ | 1,072 | $ | 837 | ||||||||||||
Interest expense, net of interest capitalized | 217 | 211 | 436 | 422 | ||||||||||||||||
Gain on sale of AmeriGas common units | (93 | ) | — | (163 | ) | — | ||||||||||||||
Income tax expense from continuing operations | 70 | 89 | 216 | 92 | ||||||||||||||||
Depreciation and amortization | 268 | 251 | 534 | 511 | ||||||||||||||||
Non-cash compensation expense | 13 | 10 | 27 | 24 | ||||||||||||||||
(Gains) losses on interest rate derivatives | 46 | (39 | ) | 48 | (46 | ) | ||||||||||||||
Unrealized (gains) losses on commodity risk management activities | 1 | (18 | ) | 30 | (37 | ) | ||||||||||||||
LIFO valuation adjustment | (20 | ) | 22 | (34 | ) | (16 | ) | |||||||||||||
Equity in earnings of unconsolidated affiliates | (57 | ) | (37 | ) | (136 | ) | (109 | ) | ||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 170 | 158 | 366 | 323 | ||||||||||||||||
Other, net | (27 | ) | 9 | (21 | ) | 24 | ||||||||||||||
Adjusted EBITDA (consolidated) | 1,169 | 1,069 | 2,375 | 2,025 | ||||||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (170 | ) | (158 | ) | (366 | ) | (323 | ) | ||||||||||||
Distributions from unconsolidated affiliates | 92 | 102 | 173 | 197 | ||||||||||||||||
Interest expense, net of interest capitalized | (217 | ) | (211 | ) | (436 | ) | (422 | ) | ||||||||||||
Amortization included in interest expense | (18 | ) | (24 | ) | (34 | ) | (47 | ) | ||||||||||||
Current income tax expense from continuing operations | (74 | ) | (24 | ) | (327 | ) | (19 | ) | ||||||||||||
Income tax expense related to the Trunkline LNG Transaction | 6 | — | 277 | — | ||||||||||||||||
Maintenance capital expenditures | (59 | ) | (121 | ) | (98 | ) | (172 | ) | ||||||||||||
Other, net | 1 | 1 | 3 | 2 | ||||||||||||||||
Distributable Cash Flow (consolidated) | 730 | 634 | 1,567 | 1,241 | ||||||||||||||||
Distributable Cash Flow attributable to Sunoco Logistics Partners L.P. (“Sunoco Logistics”) (100%) | (223 | ) | (184 | ) | (381 | ) | (379 | ) | ||||||||||||
Distributions from Sunoco Logistics to ETP | 68 | 49 | 130 | 94 | ||||||||||||||||
Distributions to ETE in respect of ETP Holdco Corporation (“Holdco”) | — | — | — | (50 | ) | |||||||||||||||
Distributions to Regency Energy Partners LP (“Regency”) in respect of Lone Star (b) | (37 | ) | (16 | ) | (70 | ) | (39 | ) | ||||||||||||
Distributable Cash Flow attributable to the partners of ETP | $ | 538 | $ | 483 | $ | 1,246 | $ | 867 | ||||||||||||
Distributions to the partners of ETP: | ||||||||||||||||||||
Limited Partners: | ||||||||||||||||||||
Common Units held by public | $ | 282 | $ | 246 | $ | 550 | $ | 487 | ||||||||||||
Common Units held by ETE | 29 | 89 | 58 | 178 | ||||||||||||||||
Class H Units held by ETE Common Holdings, LLC (“ETE Holdings”) (c) | 53 | — | 103 | — | ||||||||||||||||
General Partner interests held by ETE | 5 | 5 | 10 | 10 | ||||||||||||||||
Incentive Distribution Rights (“IDRs”) held by ETE | 178 | 183 | 346 | 363 | ||||||||||||||||
IDR relinquishment related to previous transactions | (58 | ) | (55 | ) | (115 | ) | (86 | ) | ||||||||||||
Total distributions to be paid to the partners of ETP | $ | 489 | $ | 468 | $ | 952 | $ | 952 | ||||||||||||
Distributions credited to Holdco transactions (d) | — | — | — | (68 | ) | |||||||||||||||
Net distributions to the partners of ETP | $ | 489 | $ | 468 | $ | 952 | $ | 884 | ||||||||||||
Distribution coverage ratio (e) | 1.10x | 1.03x | 1.31x | 0.98x |
(a) Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of ETP’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities, or other GAAP measures.
There are material limitations to using measures such as Adjusted EBITDA and Distributable Cash Flow, including the difficulty associated with using either as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA and Distributable Cash Flow may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as gross margin, operating income, net income, and cash flow from operating activities.
Definition of Adjusted EBITDA
ETP defines Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities and other non-operating income or expense items. Unrealized gains and losses on commodity risk management activities include unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Adjusted EBITDA reflects amounts for less than wholly-owned subsidiaries based on 100% of the subsidiaries’ results of operations and for unconsolidated affiliates based on ETP’s proportionate ownership.
Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.
Definition of Distributable Cash Flow
ETP defines Distributable Cash Flow as net income, adjusted for certain non-cash items, less maintenance capital expenditures. Non-cash items include depreciation and amortization, non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities and deferred income taxes. Unrealized gains and losses on commodity risk management activities includes unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Distributable Cash Flow reflects earnings from unconsolidated affiliates on a cash basis.
Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.
On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ETP’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among ETP’s subsidiaries, the Distributable Cash Flow generated by ETP’s subsidiaries may not be available to be distributed to the partners of ETP. In order to reflect the cash flows available for distributions to the partners of ETP, ETP has reported Distributable Cash Flow attributable to the partners of ETP, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:
-
For subsidiaries with publicly traded equity interests, Distributable
Cash Flow (consolidated) includes 100% of Distributable Cash Flow
attributable to such subsidiary, and Distributable Cash Flow
attributable to the partners of ETP includes distributions to be
received by the parent company with respect to the periods presented.
Currently,
Sunoco Logistics is the only such subsidiary. -
For consolidated joint ventures or similar entities, where the
noncontrolling interest is not publicly traded, Distributable Cash
Flow (consolidated) includes 100% of Distributable Cash Flow
attributable to such subsidiary, but Distributable Cash Flow
attributable to the partners of ETP is net of distributions to be paid
by the subsidiary to the noncontrolling interests. Currently,
Lone Star is such a subsidiary, as it is 30% owned by Regency, which is an unconsolidated affiliate. Prior toApril 30, 2013 , Holdco was also such a subsidiary, as ETE held a noncontrolling interest in Holdco.
The Partnership has presented Distributable Cash Flow in previous communications; however, the Partnership changed its calculation of this non-GAAP measure in recent periods and has revised amounts in prior periods to be consistent with the Partnership’s updated calculation of this measure.
Following is a summary of these changes:
- Previously, the Partnership’s calculation of Distributable Cash Flow reflected the impact of amortization included in interest expense. Such amortization includes amortization of deferred financing costs, premiums or discounts on the issuance of long-term debt, and fair value adjustments on long-term debt assumed in acquisitions. The Partnership revised its calculation of Distributable Cash Flow to exclude the impact of such amortization. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions.
- Previously, the Partnership’s calculation of Distributable Cash Flow reflected income tax expense from continuing operations, which included current and deferred income taxes. Current income tax expense represents the estimated taxes that will be payable or refundable for the current period, while deferred income taxes represent the estimated tax effects of tax carryforwards and the reversal of temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. The Partnership revised its calculation of Distributable Cash Flow to reflect current income tax expense from continuing operations, rather than total income tax expense from continuing operations. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions.
Distributable Cash Flow previously reported for the three and six months
ended
(b) Cash distributions to Regency in respect of
(c) Distributions on the Class H Units for the three and six months ended June 30, 2014 were calculated as follows:
Three Months Ended | Six Months Ended | |||||||||
June 30, 2014 | June 30, 2014 | |||||||||
General partner distributions and incentive distributions from Sunoco Logistics | $ | 43 | $ | 82 | ||||||
50.05 | % | 50.05 | % | |||||||
Share of Sunoco Logistics general partner and incentive distributions payable to Class H Unitholder | 21 | 41 | ||||||||
Incremental distributions payable to Class H Unitholder | 32 | 62 | ||||||||
Total Class H Unit distributions | $ | 53 | $ | 103 |
Incremental distributions to the Class H Unitholder is based on the scheduled amounts through the first quarter of 2017, as set forth in Amendment No. 5 to ETP’s Amended and Restated Agreement of Limited Partnership.
(d) For the six months ended
(e) Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to the partners of ETP divided by net distributions expected to be paid to the partners of ETP in respect of such period.
SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT |
(Tabular dollar amounts in millions) |
(unaudited) |
Our segment results were presented based on the measure of Segment Adjusted EBITDA. The tables below identify the components of Segment Adjusted EBITDA, which was calculated as follows:
- Gross margin, operating expenses, and selling, general and administrative. These amounts represent the amounts included in our consolidated financial statements that are attributable to each segment.
- Unrealized gains or losses on commodity risk management activities and LIFO valuation adjustments. These are the unrealized amounts that are included in cost of products sold to calculate gross margin. These amounts are not included in Segment Adjusted EBITDA; therefore, the unrealized losses are added back and the unrealized gains are subtracted to calculate the segment measure.
- Non-cash compensation expense. These amounts represent the total non-cash compensation recorded in operating expenses and selling, general and administrative expenses. This expense is not included in Segment Adjusted EBITDA and therefore is added back to calculate the segment measure.
- Adjusted EBITDA related to unconsolidated affiliates. These amounts represent our proportionate share of the Adjusted EBITDA of our unconsolidated affiliates. Amounts reflected are calculated consistently with our definition of Adjusted EBITDA.
Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||
Segment Adjusted EBITDA: | |||||||||||||
Midstream | $ | 157 | $ | 127 | $ | 30 | |||||||
NGL transportation and services | 141 | 77 | 64 | ||||||||||
Interstate transportation and storage | 265 | 361 | (96 | ) | |||||||||
Intrastate transportation and storage | 110 | 112 | (2 | ) | |||||||||
Investment in Sunoco Logistics | 280 | 244 | 36 | ||||||||||
Retail marketing | 136 | 97 | 39 | ||||||||||
All other | 80 | 51 | 29 | ||||||||||
$ | 1,169 | $ | 1,069 | $ | 100 |
Midstream |
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Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||||
Gathered volumes (MMBtu/d): | |||||||||||||||
ETP legacy assets | 2,851,414 | 2,531,076 | 320,338 | ||||||||||||
Southern Union gathering and processing(1) | — | 529,327 | (529,327 | ) | |||||||||||
NGLs produced (Bbls/d): | |||||||||||||||
ETP legacy assets | 163,780 | 112,951 | 50,829 | ||||||||||||
Southern Union gathering and processing(1) | — | 43,777 | (43,777 | ) | |||||||||||
Equity NGLs produced (Bbls/d): | |||||||||||||||
ETP legacy assets | 14,968 | 14,854 | 114 | ||||||||||||
Southern Union gathering and processing(1) | — | 8,216 | (8,216 | ) | |||||||||||
Revenues | $ | 720 | $ | 577 | $ | 143 | |||||||||
Cost of products sold | 530 | 402 | 128 | ||||||||||||
Gross margin | 190 | 175 | 15 | ||||||||||||
Unrealized gains on commodity risk management activities | — | (2 | ) | 2 | |||||||||||
Operating expenses, excluding non-cash compensation expense | (29 | ) | (41 | ) | 12 | ||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (5 | ) | 1 | ||||||||||
Segment Adjusted EBITDA | $ | 157 | $ | 127 | $ | 30 |
(1)
For the ETP legacy assets, the increases in gathered volumes, NGLs
produced and equity NGLs produced during the three months ended June 30,
2014 compared to the same period last year were primarily due to
increased production by our customers in the
Segment Adjusted EBITDA for the midstream segment reflected an increase in gross margin as follows:
Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||||
Gathering and processing fee-based revenues | $ | 134 | $ | 114 | $ | 20 | |||||||||
Non fee-based contracts and processing | 59 | 64 | (5 | ) | |||||||||||
Other | (3 | ) | (3 | ) | — | ||||||||||
Total gross margin | $ | 190 | $ | 175 | $ | 15 |
Midstream gross margin for the three months ended June 30, 2014 compared
to the same period last year reflected increases in fee-based revenues
of $20 million primarily due to increased production in the
Segment Adjusted EBITDA for the midstream segment also was favorably impacted by lower operating expenses primarily due to the deconsolidation of Southern Union’s gathering and processing operations.
NGL Transportation and Services |
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Three Months Ended June 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
NGL transportation volumes (Bbls/d) | 367,564 | 274,022 | 93,542 | ||||||||||||
NGL fractionation volumes (Bbls/d) | 191,255 | 98,915 | 92,340 | ||||||||||||
Revenues | $ | 903 | $ | 438 | $ | 465 | |||||||||
Cost of products sold | 731 | 329 | 402 | ||||||||||||
Gross margin | 172 | 109 | 63 | ||||||||||||
Unrealized gains on commodity risk management activities | — | (2 | ) | 2 | |||||||||||
Operating expenses, excluding non-cash compensation expense | (29 | ) | (28 | ) | (1 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (3 | ) | (1 | ) | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 1 | 1 | ||||||||||||
Segment Adjusted EBITDA | $ | 141 | $ | 77 | $ | 64 |
The increase in NGL transportation volumes for the three months ended
June 30, 2014 compared to the same period last year reflected an
increase of approximately 55,600 Bbls/d in volumes transported out of
west
Segment Adjusted EBITDA for the NGL transportation and services segment reflected an increase in gross margin as follows:
Three Months Ended June 30, |
||||||||||||
2014 | 2013 | Change | ||||||||||
Transportation margin | $ | 69 | $ | 45 | $ | 24 | ||||||
Processing and fractionation margin | 57 | 30 | 27 | |||||||||
Storage margin | 37 | 34 | 3 | |||||||||
Other margin | 9 | — | 9 | |||||||||
Total gross margin | $ | 172 | $ | 109 | $ | 63 |
Transportation margin increased as a result of higher volumes
transported from west
Processing and fractionation margin increased primarily due to higher
volumes resulting from the startup of Lone Star’s second fractionator at
Other margin increased as a result of increased commercial optimization
activities related to our fractionators, primarily due to the recent
commissioning of the second fractionator at
Interstate Transportation and Storage |
|||||||||||||||
Three Months Ended June 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Natural gas transported (MMBtu/d) | 5,594,099 | 6,204,788 | (610,689 | ) | |||||||||||
Natural gas sold (MMBtu/d) | 15,733 | 16,795 | (1,062 | ) | |||||||||||
Revenues | $ | 249 | $ | 357 | $ | (108 | ) | ||||||||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (67 | ) | (75 | ) | 8 | ||||||||||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (16 | ) | (19 | ) | 3 | ||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 99 | 98 | 1 | ||||||||||||
Segment Adjusted EBITDA | $ | 265 | $ | 361 | $ | (96 | ) | ||||||||
Distributions from unconsolidated affiliates | $ | 58 | $ | 55 | $ | 3 |
For the three months ended June 30, 2014 compared to the same period last year, transported volumes decreased due to declines in supply on the Tiger pipeline, lower contracted capacity on the Trunkline pipeline, and lower contract utilization on the Transwestern pipeline.
Segment Adjusted EBITDA for the interstate transportation and storage
segment decreased for the three months ended June 30, 2014 compared to
the same period last year due to the deconsolidation of Trunkline LNG
effective
Intrastate Transportation and Storage |
|||||||||||||||
Three Months Ended June 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Natural gas transported (MMBtu/d) | 9,069,215 | 9,654,524 | (585,309 | ) | |||||||||||
Revenues | $ | 712 | $ | 623 | $ | 89 | |||||||||
Cost of products sold | 551 | 447 | 104 | ||||||||||||
Gross margin | 161 | 176 | (15 | ) | |||||||||||
Unrealized gains on commodity risk management activities | (3 | ) | (12 | ) | 9 | ||||||||||
Operating expenses, excluding non-cash compensation expense | (43 | ) | (47 | ) | 4 | ||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (5 | ) | (5 | ) | — | ||||||||||
Segment Adjusted EBITDA | $ | 110 | $ | 112 | $ | (2 | ) |
Transported volumes decreased for the three months ended June 30, 2014 compared to the same period last year primarily due to the reduction of volumes under certain long-term transportation contracts offset by increased volumes due to a more favorable pricing environment.
Segment Adjusted EBITDA for the intrastate transportation and storage
segment decreased primarily due to a decrease in margin from lower
transportation fees as a result of the reduction of volumes under
certain long-term contracts. In addition, storage margin decreased due
to a less favorable storage environment leading to a decline in the
spreads between the spot and forward prices on natural gas we own in the
Investment in Sunoco Logistics |
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Three Months Ended June 30, |
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2014 | 2013 | Change | ||||||||||||
Revenues | $ | 4,821 | $ | 4,311 | $ | 510 | ||||||||
Cost of products sold | 4,517 | 4,023 | 494 | |||||||||||
Gross margin | 304 | 288 | 16 | |||||||||||
Unrealized (gains) losses on commodity risk management activities | 8 | (1 | ) | 9 | ||||||||||
Operating expenses, excluding non-cash compensation expense | (21 | ) | (25 | ) | 4 | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (25 | ) | (29 | ) | 4 | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 14 | 11 | 3 | |||||||||||
Segment Adjusted EBITDA | $ | 280 | $ | 244 | $ | 36 | ||||||||
Distributions from unconsolidated affiliates | $ | 4 | $ | 4 | $ | — |
For the three months ended June 30, 2014 compared to the same period
last year, Segment Adjusted EBITDA related to
-
An increase of
$16 million from crude oil pipelines, primarily due to higher throughput; -
An increase of
$27 million from terminal facilities, primarily due to higher volumes and increased margins from refined products acquisition and marketing activities; and -
An increase of
$10 million from refined products pipelines, primarily due to operating results from Sunoco Logistics’ Mariner West project; partially offset by -
A decrease of
$17 million from crude oil acquisition and marketing activities, primarily due to lower crude margins, the impact from which was partially offset by$5 million from increased crude volumes resulting from higher market demand and expansion in the crude oil trucking fleet.
Retail Marketing |
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Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||||
Total retail gasoline outlets, end of period | 5,152 | 4,974 | 178 | ||||||||||||
Total company-operated outlets, end of period | 568 | 440 | 128 | ||||||||||||
Gasoline and diesel throughput per company-operated site (gallons/month) | 197,824 | 204,320 | (6,496 | ) | |||||||||||
Revenues | $ | 5,568 | $ | 5,291 | $ | 277 | |||||||||
Cost of products sold | 5,260 | 5,087 | 173 | ||||||||||||
Gross margin | 308 | 204 | 104 | ||||||||||||
Unrealized gains on commodity risk management activities | (1 | ) | — | (1 | ) | ||||||||||
Operating expenses, excluding non-cash compensation expense | (124 | ) | (106 | ) | (18 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (28 | ) | (23 | ) | (5 | ) | |||||||||
LIFO valuation adjustment | (20 | ) | 22 | (42 | ) | ||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 1 | 1 | — | ||||||||||||
Other | — | (1 | ) | 1 | |||||||||||
Segment Adjusted EBITDA | $ | 136 | $ | 97 | $ | 39 |
Segment Adjusted EBITDA for the retail marketing segment increased for the three months ended June 30, 2014 compared to the same period last year primarily due to recent acquisitions and a favorable impact from increased fuel margins.
All Other |
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Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||||
Revenues | $ | 721 | $ | 485 | $ | 236 | |||||||||
Cost of products sold | 710 | 466 | 244 | ||||||||||||
Gross margin | 11 | 19 | (8 | ) | |||||||||||
Unrealized gains on commodity risk management activities | (3 | ) | (1 | ) | (2 | ) | |||||||||
Operating expenses, excluding non-cash compensation expense | 3 | (5 | ) | 8 | |||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (2 | ) | (20 | ) | 18 | ||||||||||
Adjusted EBITDA related to discontinued operations | — | 23 | (23 | ) | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 55 | 49 | 6 | ||||||||||||
Other | 19 | (11 | ) | 30 | |||||||||||
Elimination | (3 | ) | (3 | ) | — | ||||||||||
Segment Adjusted EBITDA | $ | 80 | $ | 51 | $ | 29 | |||||||||
Distributions from unconsolidated affiliates | $ | 28 | $ | 40 | $ | (12 | ) |
Amounts reflected in our all other segment primarily include:
-
our investment in
AmeriGas ; - our natural gas compression operations;
- an approximate 33% non-operating interest in PES, a refining joint venture;
-
our investment in Regency related to the Regency common and Class F
units received by
Southern Union in exchange for the contribution of its interest inSouthern Union Gathering Company, LLC to Regency onApril 30, 2013 ; and - our natural gas marketing operations.
For the three months ended June 30, 2014 compared to the same period last year, Segment Adjusted EBITDA increased due to the net impact of the following:
- an increase of $19 million in management fees, as further described below;
- a favorable impact of approximately $10 million due to costs associated with certain Sunoco activities that were included in the all other Segment Adjusted EBITDA in the prior year;
- favorable results from our commodity marketing business of $5 million;
-
an increase of $6 million in Adjusted EBITDA related to unconsolidated
affiliates, primarily due to higher earnings from our investments in
PES and Regency, including the impact of only recording a partial
period of earnings from Regency beginning on
April 30, 2013 ; - a refund of insurance premiums of $6 million included in the three months ended June 30, 2014;
-
Southern Union corporate expenses of $3 million that were no longer included in the all other segment subsequent to the merger ofSouthern Union ,PEPL Holdings and Panhandle inJanuary 2014 ; offset by - Adjusted EBITDA related to discontinued operations of $23 million in the prior period related to Southern Union’s local distribution operations that were sold in 2013.
In connection with the Trunkline LNG Transaction, ETP agreed to continue
to provide management services for ETE through 2015 in relation to both
Trunkline LNG’s regasification facility and the development of a
liquefaction project at Trunkline LNG’s facility, for which ETE has
agreed to pay incremental management fees to ETP of $75 million per year
for the years ending
The decrease in cash distributions from unconsolidated affiliates was
primarily due to a decrease in cash distributions from our ownership in
SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES |
(Tabular amounts in millions) |
(unaudited) |
The following is a summary of capital expenditures (net of contributions
in aid of construction costs) during the six months ended
Growth | Maintenance | Total | ||||||||||||
Midstream | $ | 297 | $ | 9 | $ | 306 | ||||||||
NGL transportation and services(1) | 175 | 8 | 183 | |||||||||||
Interstate transportation and storage | 20 | 27 | 47 | |||||||||||
Intrastate transportation and storage | 67 | 14 | 81 | |||||||||||
Investment in Sunoco Logistics | 1,092 | 31 | 1,123 | |||||||||||
Retail marketing | 34 | 18 | 52 | |||||||||||
All other (including eliminations) | 5 | (9 | ) | (4 | ) | |||||||||
Total capital expenditures | $ | 1,690 | $ | 98 | $ | 1,788 |
(1) Includes 100% of Lone Star’s capital expenditures, a
portion of which are funded through capital contributions from Regency
related to its 30% interest in
We currently expect capital expenditures (net of contributions in aid of construction costs) for the full year 2014 to be within the following ranges:
Growth | Maintenance | |||||||||||||||
Low | High | Low | High | |||||||||||||
Midstream | $ | 600 | $ | 650 | $ | 10 | $ | 15 | ||||||||
NGL transportation and services(1) | 360 | 380 | 20 | 25 | ||||||||||||
Interstate transportation and storage | 80 | 100 | 100 | 110 | ||||||||||||
Intrastate transportation and storage | 150 | 160 | 25 | 30 | ||||||||||||
Investment in Sunoco Logistics | 1,900 | 2,100 | 65 | 75 | ||||||||||||
Retail marketing | 130 | 150 | 50 | 60 | ||||||||||||
All other (including eliminations) | 110 | 120 | 10 | 20 | ||||||||||||
Total capital expenditures | $ | 3,330 | $ | 3,660 | $ | 280 | $ | 335 |
(1) Includes 100% of Lone Star’s capital expenditures. We
expect to receive capital contributions from Regency related to its 30%
interest in
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES |
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(In millions) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended June 30, |
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2014 | 2013 | Change | |||||||||||||
Equity in earnings (losses) of unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | (8 | ) | $ | (20 | ) | $ | 12 | |||||||
Citrus | 26 | 24 | 2 | ||||||||||||
FEP | 13 | 14 | (1 | ) | |||||||||||
Regency | 1 | 2 | (1 | ) | |||||||||||
PES | 18 | 13 | 5 | ||||||||||||
Other | 7 | 4 | 3 | ||||||||||||
Total equity in earnings of unconsolidated affiliates | $ | 57 | $ | 37 | $ | 20 | |||||||||
Proportionate share of interest, depreciation, amortization, non-cash items and taxes: | |||||||||||||||
AmeriGas | $ | 13 | $ | 36 | $ | (23 | ) | ||||||||
Citrus | 55 | 55 | — | ||||||||||||
FEP | 5 | 5 | — | ||||||||||||
Regency | 24 | 14 | 10 | ||||||||||||
PES | 7 | 5 | 2 | ||||||||||||
Other | 9 | 6 | 3 | ||||||||||||
Total proportionate share of interest, depreciation, amortization, non-cash items and taxes | $ | 113 | $ | 121 | $ | (8 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | 5 | $ | 16 | $ | (11 | ) | ||||||||
Citrus | 81 | 79 | 2 | ||||||||||||
FEP | 18 | 19 | (1 | ) | |||||||||||
Regency | 25 | 16 | 9 | ||||||||||||
PES | 25 | 18 | 7 | ||||||||||||
Other | 16 | 10 | 6 | ||||||||||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 170 | $ | 158 | $ | 12 | |||||||||
Distributions received from unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | 11 | $ | 24 | $ | (13 | ) | ||||||||
Citrus | 41 | 39 | 2 | ||||||||||||
FEP | 16 | 16 | — | ||||||||||||
Regency | 15 | 15 | — | ||||||||||||
Other | 9 | 8 | 1 | ||||||||||||
Total distributions received from unconsolidated affiliates | $ | 92 | $ | 102 | $ | (10 | ) |
Source:
Energy Transfer Partners, L.P.
Investor Relations:
Energy
Transfer
Brent Ratliff, 214-981-0700
or
Media
Relations:
Granado Communications Group
Vicki Granado,
214-599-8785
214-498-9272 (cell)