Energy Transfer Partners Reports Fourth Quarter Results
Adjusted EBITDA for ETP for the year ended December 31, 2015 totaled
In
ETP’s other recent key accomplishments include the following:
-
In
December 2015 , ETP announced that theLake Charles LNG Project has received approval from the FERC to site, construct and operate a natural gas liquefaction and export facility inLake Charles, Louisiana . OnFebruary 15, 2016 ,Royal Dutch Shell plc completed its acquisition ofBG Group plc . Final investment decisions fromRoyal Dutch Shell plc andLake Charles LNG Export Company, LLC , a subsidiary ofETP andEnergy Transfer Equity, L.P. (“ETE”), are expected to be made in 2016, with construction to start immediately following an affirmative investment decision and first LNG export anticipated about four years later. -
In
November 2015 ,ETP andSunoco LP announced ETP’s contribution toSunoco LP of the remaining 68.42% interest inSunoco, LLC and 100% interest in the legacySunoco, Inc. retail business for$2.23 billion .Sunoco LP will pay ETP$2.03 billion in cash, subject to certain working capital adjustments, and will issue to ETP 5.7 millionSunoco LP common units. The transaction will be effectiveJanuary 1, 2016 , and is expected to close inMarch 2016 . -
As of December 31, 2015, ETP’s
$3.75 billion revolving credit facility had$1.36 billion of outstanding borrowings, and its leverage ratio, as defined by the credit agreement, was 4.50x. - In the fourth quarter of 2015, ETP issued 6.7 million common units through its at-the-market equity program, generating net proceeds of $293 million.
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 Partnerships’ 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 website at www.energytransfer.com.
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions) |
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(unaudited) |
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December 31, | ||||||
2015 | 2014 | |||||
ASSETS | ||||||
Current assets | $ | 4,698 | $ | 6,029 | ||
Property, plant and equipment, net | 45,087 | 38,907 | ||||
Advances to and investments in unconsolidated affiliates | 5,003 | 3,760 | ||||
Non-current derivative assets | — | 10 | ||||
Other non-current assets, net | 536 | 644 | ||||
Intangible assets, net | 4,421 | 5,526 | ||||
Goodwill | 5,428 | 7,642 | ||||
Total assets | $ | 65,173 | $ | 62,518 | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities | $ | 4,121 | $ | 6,585 | ||
Long-term debt, less current maturities | 28,553 | 24,831 | ||||
Long-term notes payable – related party | 233 | — | ||||
Non-current derivative liabilities | 137 | 154 | ||||
Deferred income taxes | 4,082 | 4,331 | ||||
Other non-current liabilities | 968 | 1,258 | ||||
Commitments and contingencies | ||||||
Series A Preferred Units | 33 | 33 | ||||
Redeemable noncontrolling interests | 15 | 15 | ||||
Equity: | ||||||
Total partners’ capital | 20,836 | 12,070 | ||||
Noncontrolling interest | 6,195 | 5,153 | ||||
Predecessor equity | — | 8,088 | ||||
Total equity | 27,031 | 25,311 | ||||
Total liabilities and equity | $ | 65,173 | $ | 62,518 |
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 |
Years Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUES | $ | 5,825 | $ | 13,427 | $ | 34,292 | $ | 55,475 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of products sold | 4,237 | 11,591 | 27,029 | 48,414 | |||||||||||
Operating expenses | 498 | 696 | 2,261 | 2,059 | |||||||||||
Depreciation, depletion and amortization | 478 | 463 | 1,929 | 1,669 | |||||||||||
Selling, general and administrative | 86 | 148 | 475 | 520 | |||||||||||
Impairment losses | 339 | 370 | 339 | 370 | |||||||||||
Total costs and expenses | 5,638 | 13,268 | 32,033 | 53,032 | |||||||||||
OPERATING INCOME | 187 | 159 | 2,259 | 2,443 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net | (312 | ) | (297 | ) | (1,291 | ) | (1,165 | ) | |||||||
Equity in earnings from unconsolidated affiliates | 81 | 67 | 469 | 332 | |||||||||||
Gain on sale of AmeriGas common units | — | — | — | 177 | |||||||||||
Losses on extinguishments of debt | — | (25 | ) | (43 | ) | (25 | ) | ||||||||
Losses on interest rate derivatives | (4 | ) | (84 | ) | (18 | ) | (157 | ) | |||||||
Other, net | (34 | ) | 24 | 22 | (12 | ) | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | (82 | ) | (156 | ) | 1,398 | 1,593 | |||||||||
Income tax expense (benefit) from continuing operations | (103 | ) | 87 | (123 | ) | 358 | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 21 | (243 | ) | 1,521 | 1,235 | ||||||||||
Income (loss) from discontinued operations | — | (2 | ) | — | 64 | ||||||||||
NET INCOME (LOSS) | 21 | (245 | ) | 1,521 | 1,299 | ||||||||||
Less: Net income (loss) attributable to noncontrolling interest | (25 | ) | (103 | ) | 157 | 116 | |||||||||
Less: Net loss attributable to predecessor | — | (250 | ) | (34 | ) | (153 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 46 | 108 | 1,398 | 1,336 | |||||||||||
General Partner’s interest in net income | 285 | 140 | 1,064 | 513 | |||||||||||
Class H Unitholder’s interest in net income | 74 | 58 | 258 | 217 | |||||||||||
Class I Unitholder’s interest in net income | 14 | — | 94 | — | |||||||||||
Common Unitholders’ interest in net income (loss) | $ | (327 | ) | $ | (90 | ) | $ | (18 | ) | $ | 606 | ||||
INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON UNIT: | |||||||||||||||
Basic | $ | (0.68 | ) | $ | (0.27 | ) | $ | (0.09 | ) | $ | 1.58 | ||||
Diluted | $ | (0.68 | ) | $ | (0.27 | ) | $ | (0.10 | ) | $ | 1.58 | ||||
NET INCOME (LOSS) PER COMMON UNIT: | |||||||||||||||
Basic | $ | (0.68 | ) | $ | (0.28 | ) | $ | (0.09 | ) | $ | 1.77 | ||||
Diluted | $ | (0.68 | ) | $ | (0.28 | ) | $ | (0.10 | ) | $ | 1.77 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | |||||||||||||||
Basic | 485.1 | 351.2 | 432.8 | 331.5 | |||||||||||
Diluted | 485.5 | 351.2 | 435.4 | 332.8 |
SUPPLEMENTAL INFORMATION |
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(Dollars and units in millions, except per unit amounts) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended |
Years Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow (a): | ||||||||||||||||
Net income (loss) | $ | 21 | $ | (245 | ) | $ | 1,521 | $ | 1,299 | |||||||
Interest expense, net of interest capitalized | 312 | 297 | 1,291 | 1,165 | ||||||||||||
Gain on sale of AmeriGas common units | — | — | — | (177 | ) | |||||||||||
Impairment losses | 339 | 370 | 339 | 370 | ||||||||||||
Income tax expense (benefit) from continuing operations (b) | (103 | ) | 87 | (123 | ) | 358 | ||||||||||
Depreciation, depletion and amortization | 478 | 463 | 1,929 | 1,669 | ||||||||||||
Non-cash compensation expense | 20 | 18 | 79 | 68 | ||||||||||||
Losses on interest rate derivatives | 4 | 84 | 18 | 157 | ||||||||||||
Unrealized (gains) losses on commodity risk management activities | (7 | ) | (113 | ) | 65 | (112 | ) | |||||||||
Inventory valuation adjustments | 120 | 456 | 104 | 473 | ||||||||||||
Losses on extinguishments of debt | — | 25 | 43 | 25 | ||||||||||||
Equity in earnings of unconsolidated affiliates | (81 | ) | (67 | ) | (469 | ) | (332 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates | 226 | 164 | 937 | 748 | ||||||||||||
Other, net | 31 | (11 | ) | (20 | ) | (1 | ) | |||||||||
Adjusted EBITDA (consolidated) |
1,360 | 1,528 | 5,714 | 5,710 | ||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (226 | ) | (164 | ) | (937 | ) | (748 | ) | ||||||||
Distributable cash flow from unconsolidated affiliates (c) | 214 | 119 | 682 | 482 | ||||||||||||
Interest expense, net of interest capitalized | (312 | ) | (297 | ) | (1,291 | ) | (1,165 | ) | ||||||||
Amortization included in interest expense | (6 | ) | (12 | ) | (36 | ) | (60 | ) | ||||||||
Current income tax (expense) benefit from continuing operations (b) | 283 | (70 | ) | 325 | (407 | ) | ||||||||||
Transaction-related income taxes (d) | (51 | ) | 15 | (51 | ) | 396 | ||||||||||
Maintenance capital expenditures | (177 | ) | (184 | ) | (485 | ) | (444 | ) | ||||||||
Other, net | 1 | 2 | 12 | 7 | ||||||||||||
Distributable Cash Flow (consolidated) | 1,086 | 937 | 3,933 | 3,771 | ||||||||||||
Distributable Cash Flow attributable to Sunoco Logistics Partners L.P. (“Sunoco Logistics”) (100%) | (245 | ) | (177 | ) | (879 | ) | (750 | ) | ||||||||
Distributions from Sunoco Logistics to ETP | 118 | 81 | 413 | 285 | ||||||||||||
Distributable Cash Flow attributable to Sunoco LP (100%) (e) | — | (52 | ) | (68 | ) | (56 | ) | |||||||||
Distributions from Sunoco LP to ETP (e) | — | 10 | 24 | 18 | ||||||||||||
Distributable cash flow attributable to noncontrolling interest in Edwards Lime Gathering LLC | (5 | ) | (5 | ) | (20 | ) | (19 | ) | ||||||||
Distributable Cash Flow attributable to the partners of ETP | 954 | 794 | 3,403 | 3,249 | ||||||||||||
Transaction-related expenses | 5 | — | 42 | — | ||||||||||||
Distributable Cash Flow attributable to the partners of ETP, as adjusted | $ | 959 | $ | 794 | $ | 3,445 | $ | 3,249 | ||||||||
Distributions to the partners of ETP (f): | ||||||||||||||||
Limited Partners: | ||||||||||||||||
Common units held by public | $ | 512 | $ | 321 | $ | 1,970 | $ | 1,179 | ||||||||
Common units held by ETE | 3 | 31 | 54 | 119 | ||||||||||||
Class H Units held by ETE (g) | 77 | 60 | 263 | 219 | ||||||||||||
General Partner interests held by ETE | 8 | 5 | 31 | 21 | ||||||||||||
Incentive Distribution Rights (“IDRs”) held by ETE | 324 | 208 | 1,261 | 754 | ||||||||||||
IDR relinquishments net of Class I Unit distributions | (28 | ) | (68 | ) | (111 | ) | (250 | ) | ||||||||
Total distributions to be paid to the partners of ETP | $ | 896 | $ | 557 | $ | 3,468 | $ | 2,042 | ||||||||
Common Units outstanding – end of period | 505.6 | 355.5 | 505.6 | 355.5 | ||||||||||||
Distribution coverage ratio (h) |
1.07 |
x |
1.43 |
x |
0.99 |
x |
1.59 |
x |
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Distributable Cash Flow per Common Unit (i) | $ | 1.19 | $ | 1.68 | $ | 4.62 | $ | 7.56 | ||||||||
(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, including (i) for unconsolidated affiliates with publicly traded equity interests, distributions paid or expected to be paid for the periods presented and (ii) for unconsolidated affiliates that are under common control of ETP’s parent, ETP’s proportionate share of the distributable cash flow of the investee.
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.
- 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.
For Distributable Cash Flow attributable to the partners of ETP, as adjusted, certain transaction-related and non-recurring expenses that are included in net income are excluded.
(b) For the three and twelve months ended December 31, 2015, the
Partnership’s effective income tax rate decreased from the prior year
primarily due to lower earnings among the Partnership’s consolidated
corporate subsidiaries. The three and twelve months ended December 31,
2015 also reflect a benefit of $24 million of net state tax benefit
attributable to statutory state rate changes resulting from the Regency
Merger and sale of Susser to
The three months ended December 31, 2015 reflect current income tax
benefits of
(c) For the three months ended December 31, 2015, distributable cash
flow from unconsolidated affiliates includes distributions to be paid by
(d) For the three months ended December 31, 2015, transaction-related
income taxes reflect a $51 million current income tax benefit related to
the funding of
Transaction-related income taxes primarily included income tax expense related to the Lake Charles LNG Transaction. For the three months and year ended December 31, 2014, amounts previously reported for each of the interim periods have been adjusted to reflect income taxes related to other transactions, which amounts had not previously been reflected in the calculation of Distributable Cash Flow for such interim periods.
(e) Amounts related to
(f) Distributions on ETP Common Units, as reflected above, exclude cash distributions on Partnership common units held by subsidiaries of ETP.
(g) Distributions on the Class H Units for the three months and years ended December 31, 2015 and 2014 were calculated as follows:
Three Months Ended |
Years Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
General partner distributions and incentive distributions from Sunoco Logistics | $ | 86 | $ | 54 | $ | 293 | $ | 185 | ||||||||
90.05 | % | 50.05 | % | 90.05 | % | 50.05 | % | |||||||||
Share of Sunoco Logistics general partner and incentive distributions payable to Class H Unitholder | 77 | 27 | 263 | 93 | ||||||||||||
Incremental distributions payable to Class H Unitholder | — | 33 | — | 126 | ||||||||||||
Total Class H Unit distributions | $ | 77 | $ | 60 | $ | 263 | $ | 219 | ||||||||
* | Incremental distributions previously paid to the Class H Unitholder were eliminated in Amendment No. 9 to ETP’s Amended and Restated Agreement of Limited Partnership effective in the first quarter of 2015. | |
(h) Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to the partners of ETP, as adjusted, divided by net distributions expected to be paid to the partners of ETP in respect of such period.
(i) The Partnership defines Distributable Cash Flow per Common Unit for a period as the quotient of Distributable Cash Flow attributable to the partners of ETP, as adjusted, net of distributions related to the Class H Units, Class I Units and the General Partner and IDR interests, divided by the weighted average number of Common Units outstanding.
Similar to Distributable Cash Flow as described above, Distributable Cash Flow per Common Unit is a significant liquidity measure used by the Partnership’s senior management to compare net cash flows generated by the Partnership to the distributions the Partnership expects to pay to its unitholders. Using this measure, the Partnership’s management can compare Distributable Cash Flow attributable to the partners of ETP, as adjusted, among different periods on a per-unit basis.
Distributable Cash Flow per Common Unit is calculated as follows:
Three Months Ended |
Years Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Distributable Cash Flow attributable to the partners of ETP, as adjusted | $ | 959 | $ | 794 | $ | 3,445 | $ | 3,249 | ||||||||
Less: | ||||||||||||||||
Class H Units held by ETE | (77 | ) | (60 | ) | (263 | ) | (219 | ) | ||||||||
General Partner interests held by ETE | (8 | ) | (5 | ) | (31 | ) | (21 | ) | ||||||||
IDRs held by ETE | (324 | ) | (208 | ) | (1,261 | ) | (754 | ) | ||||||||
IDR relinquishments net of Class I Unit distributions | 28 | 68 | 111 | 250 | ||||||||||||
$ | 578 | $ | 589 | $ | 2,001 | $ | 2,505 | |||||||||
Weighted average Common Units outstanding – basic | 485.1 | 351.2 | 432.8 | 331.5 | ||||||||||||
Distributable Cash Flow per Common Unit | $ | 1.19 | $ | 1.68 | $ | 4.62 | $ | 7.56 | ||||||||
SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT |
(Tabular dollar amounts in millions) |
(unaudited) |
Our segment results are 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 expenses. 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 inventory 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 |
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2015 | 2014 | |||||||
Segment Adjusted EBITDA: | ||||||||
Midstream | $ | 264 | $ | 360 | ||||
Liquids transportation and services | 222 | 159 | ||||||
Interstate transportation and storage | 283 | 307 | ||||||
Intrastate transportation and storage | 122 | 120 | ||||||
Investment in Sunoco Logistics | 317 | 237 | ||||||
Retail marketing | 119 | 295 | ||||||
All other | 33 | 50 | ||||||
$ | 1,360 | $ | 1,528 | |||||
Midstream |
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|
Three Months Ended |
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2015 | 2014 | |||||||
Gathered volumes (MMBtu/d): | 10,051,612 | 9,531,307 | ||||||
NGLs produced (Bbls/d): | 443,741 | 376,724 | ||||||
Equity NGLs produced (Bbls/d): | 29,437 | 30,656 | ||||||
Revenues | $ | 1,289 | $ | 1,599 | ||||
Cost of products sold | 840 | 993 | ||||||
Gross margin | 449 | 606 | ||||||
Unrealized gains on commodity risk management activities | — | (76 | ) | |||||
Operating expenses, excluding non-cash compensation expense | (183 | ) | (156 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (8 | ) | (16 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates | 6 | 2 | ||||||
Segment Adjusted EBITDA | $ | 264 | $ | 360 | ||||
Gathered volumes and NGLs produced increased during the three months
ended
Segment Adjusted EBITDA for the midstream segment reflected a decrease in gross margin as follows:
Three Months Ended |
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2015 | 2014 | |||||
Gathering and processing fee-based revenues | $ | 393 | $ | 382 | ||
Non fee-based contracts and processing | 56 | 224 | ||||
Total gross margin | $ | 449 | $ | 606 | ||
For the three months ended December 31, 2015 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment decreased due to the net impacts of the following:
-
lower natural gas prices and lower NGL prices resulted in lower
non-fee based margins of
$22 million and$51 million , respectively; -
a decrease of
$19 million due to realized gains on derivatives in the prior year; and -
an increase of
$27 million in operating expenses primarily due to assets recently placed in service, including the Rebel system in westTexas , theKing Ranch system in southTexas , as well as theDubberly plant in northLouisiana ; partially offset by -
an increase of
$11 million in fee-based revenues due to increased production and increased capacity from assets placed in service in theEagle Ford Shale ,Permian Basin andCotton Valley , partially offset by volume declines in theNorth Texas and Mid-Continent/Panhandle regions; and -
a decrease of
$8 million in general and administrative expenses primarily due to a reduction in employee-related cost.
Liquids Transportation and Services |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Liquids transportation volumes (Bbls/d) | 473,656 | 393,743 | ||||||
NGL fractionation volumes (Bbls/d) | 249,566 | 204,565 | ||||||
Revenues | $ | 972 | $ | 982 | ||||
Cost of products sold | 716 | 770 | ||||||
Gross margin | 256 | 212 | ||||||
Unrealized (gains) losses on commodity risk management activities | 6 | (11 | ) | |||||
Operating expenses, excluding non-cash compensation expense | (38 | ) | (38 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (5 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 1 | ||||||
Segment Adjusted EBITDA | $ | 222 | $ | 159 | ||||
NGL transportation volumes increased due to increases from the Eagle
Ford, Permian, and
Segment Adjusted EBITDA for the liquids transportation and services segment reflected an increase in gross margin as follows:
Three Months Ended |
||||||
2015 | 2014 | |||||
Transportation margin | $ | 104 | $ | 100 | ||
Processing and fractionation margin | 79 | 66 | ||||
Storage margin | 48 | 44 | ||||
Other margin | 25 | 2 | ||||
Total gross margin | $ | 256 | $ | 212 | ||
For the three months ended December 31, 2015 compared to the same period last year, Segment Adjusted EBITDA related to our liquids transportation and services segment increased due to the net impacts of the following:
-
an increase of
$4 million in transportation margin primarily due to higher volumes transported out of the Permian and the Eagle Ford producing regions. Increased volumes from the Eagle Ford region led to increases in margin of$3 million for the three months endedDecember 31, 2015 ; -
an increase of
$6 million in processing and fractionation margin (excluding changes in unrealized gains of$7 million ) due to a$15 million increase in fees from the Mariner South export terminal which ramped up starting in April of 2015, offset by a reduction of$8 million in margin associated with our off-gas fractionator inGeismar, Louisiana for the three months endedDecember 31, 2015 as NGL and olefins market prices decreased significantly for the comparable period; -
an increase of
$4 million in storage margin due to a$3 million increase in fee-based storage margin for the three months endedDecember 31, 2015 as a result of favorable market conditions and a specific contract negotiated in connection with the Mariner South LPG export project. In addition, non-fee based storage margin increased$1 million for the three months endedDecember 31, 2015 due to gains recognized on the withdrawal of inventory from our caverns; -
an increase of
$48 million in other margin (excluding changes in unrealized losses of$25 million ) primarily due to the withdrawal and sale of physical storage volumes; and -
a decrease of
$1 million in selling, general and administrative expenses primarily due to lower employee-related costs.
Interstate Transportation and Storage |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Natural gas transported (MMBtu/d) | 5,739,157 | 6,125,616 | ||||||
Natural gas sold (MMBtu/d) | 18,665 | 15,643 | ||||||
Revenues | $ | 258 | $ | 267 | ||||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (83 | ) | (72 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (9 | ) | (16 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates | 117 | 117 | ||||||
Other | — | 11 | ||||||
Segment Adjusted EBITDA | $ | 283 | $ | 307 | ||||
Distributions from unconsolidated affiliates | $ | 75 | $ | 80 | ||||
Transported volumes decreased primarily due to a managed contract roll
off to facilitate the transfer of one of the pipelines that was taken
out of service in advance of being repurposed from natural gas service
to crude oil service. The decrease was partially offset by increased
deliveries on the Transwestern pipeline due to sustained cooling demand
in the
Segment Adjusted EBITDA for the interstate transportation and storage
segment decreased primarily due to a
The decrease in cash distributions from unconsolidated affiliates
reflected a decrease in cash distributions from Citrus due to slightly
higher cash taxes on Citrus for the three months ended
Intrastate Transportation and Storage |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Natural gas transported (MMBtu/d) | 7,926,907 | 8,485,823 | ||||||
Revenues | $ | 503 | $ | 610 | ||||
Cost of products sold | 327 | 446 | ||||||
Gross margin | 176 | 164 | ||||||
Unrealized gains on commodity risk management activities | (23 | ) | (4 | ) | ||||
Operating expenses, excluding non-cash compensation expense | (42 | ) | (49 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (6 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates | 15 | 15 | ||||||
Segment Adjusted EBITDA | $ | 122 | $ | 120 | ||||
Transported volumes decreased compared to the same period last year
primarily due to lower production volume, mostly in the
For the three months ended December 31, 2015 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation and storage segment increased due to the net impacts of the following:
-
an increase of
$6 million in transportation fees margin (excluding changes in unrealized loss of$1 million ), primarily due to increased revenue from renegotiated and newly initiated long-term fixed-capacity fee contracts on our Houston Pipeline system; -
a decrease of
$7 million in operating expenses primarily due to a decrease in fuel consumption expense driven by a decrease in fuel market prices; and -
a decrease of
$2 million in selling, general and administrative expenses primarily due to lower employee-related costs; partially offset by -
a decrease of
$3 million in storage margin (excluding changes in unrealized gains of$14 million ), primarily due to the timing of the movement of market prices; -
a decrease of
$2 million (excluding changes in unrealized gains of$7 million ) due to a decrease from the purchase and sale of natural gas on our system; -
a decrease of
$8 million in retained fuel revenues (excluding changes in unrealized loss of$1 million ) due to significantly lower market prices. The average spot price at the Houston Ship Channel location for the twelve month period endingDecember 31, 2015 decreased by$1.76 , or 41%, to$2.57 as compared to$4.32 for the prior year period.
Investment in Sunoco Logistics |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Revenue | $ | 2,305 | $ | 3,875 | ||||
Cost of products sold(1) | 2,067 | 3,812 | ||||||
Gross margin | 238 | 63 | ||||||
Unrealized (gains) losses on commodity risk management activities | 13 | (3 | ) | |||||
Operating expenses, excluding non-cash compensation expense(1) | (42 | ) | (63 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (24 | ) | (32 | ) | ||||
Inventory valuation adjustments | 118 | 258 | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 14 | 13 | ||||||
Other | — | 1 | ||||||
Segment Adjusted EBITDA | $ | 317 | $ | 237 | ||||
(1) | Prior period expenses have been recast to conform to Sunoco Logistics’ current presentation. |
For the three months ended December 31, 2015 compared to the same period
last year, Segment Adjusted EBITDA related to
-
an increase of
$9 million from crude oil pipelines, primarily due to the commencement of operations on the Permian Express 2 pipeline in the third quarter of 2015. Higher contributions from crude oil terminals also contributed to the increase. These positive factors were partially offset by decreased margins related to crude oil acquisition and marketing activities which were negatively impacted by narrowing crude oil differentials compared to the same period last year; -
an increase of
$36 million from NGL pipelines, primarily due to improved contributions from NGLs pipelines which was driven by the Mariner South and Mariner East 1 pipeline projects which commenced operations in late 2014. Increased results from theNederland and Marcus Hook NGLs terminals also contributed to the increase. These positive factors were partially offset by decreased margins related to NGLs acquisition and marketing activities; and -
an increase of
$35 million from refined products pipelines, primarily due to increased contributions which was largely attributable to the Allegheny Access pipeline which commenced operations in the first quarter of 2015. Results related to the refined products terminals and acquisition and marketing activities improved compared to the prior year period. Adjusted EBITDA related to refined products joint venture interest also contributed to the increase.
Retail Marketing |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Motor fuel outlets and convenience stores, end of period: | ||||||||
Retail | 438 | 1,251 | ||||||
Third-party wholesale | — | 5,399 | ||||||
Total | 438 | 6,650 | ||||||
Total motor fuel gallons sold (in millions): | ||||||||
Retail | 266 | 608 | ||||||
Third-party wholesale | — | 1,304 | ||||||
Total | 266 | 1,912 | ||||||
Motor fuel gross profit (cents/gallon): | ||||||||
Retail | 24.1 | 37.4 | ||||||
Third-party wholesale | — | 13.0 | ||||||
Volume-weighted average for all gallons | 24.1 | 20.7 | ||||||
Merchandise sales (in millions) | $ | 143 | $ | 489 | ||||
Retail merchandise margin % | 25.6 | % | 30.1 | % | ||||
Revenue | $ | 777 | $ | 5,920 | ||||
Cost of products sold | 655 | 5,493 | ||||||
Gross margin | 122 | 427 | ||||||
Unrealized gains on commodity risk management activities | — | (7 | ) | |||||
Operating expenses, excluding non-cash compensation expense | (95 | ) | (283 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (41 | ) | ||||
Inventory valuation adjustments | 2 | 198 | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 94 | 1 | ||||||
Segment Adjusted EBITDA | $ | 119 | $ | 295 |
The results reflected above include
For the three months ended December 31, 2015 compared to the same period last year, Segment Adjusted EBITDA related to our retail marketing segment decreased due to the net impacts of the following:
-
a decrease of
$57 million due to the deconsolidation ofSunoco LP as a result of the sale of Sunoco LP’s general partner interest and incentive distribution rights to ETE effectiveJuly 1, 2015 ; -
a decrease of
$140 million due to unfavorable fuel margins and$15 million due to unfavorable volumes in the retail and wholesale channels; and -
a decrease of
$7 million in margins as 2014 benefited from favorable regional market conditions for ethanol; partially offset by -
an increase of
$19 million in merchandise margins and$9 million from other retail and wholesale margins; -
a favorable impact of
$8 million from recent acquisitions; and -
a decrease of
$7 million in expenses primarily due to one-time acquisition costs in 2014.
All Other |
||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Revenue | $ | 853 | $ | 949 | ||||
Cost of products sold | 748 | 868 | ||||||
Gross margin | 105 | 81 | ||||||
Unrealized gains on commodity risk management activities | (3 | ) | (12 | ) | ||||
Operating expenses, excluding non-cash compensation expense | (24 | ) | (31 | ) | ||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (31 | ) | (28 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates | (20 | ) | 17 | |||||
Other | 19 | 17 | ||||||
Elimination | (13 | ) | 6 | |||||
Segment Adjusted EBITDA | $ | 33 | $ | 50 | ||||
Distributions from unconsolidated affiliates | $ | 43 | $ | 3 | ||||
Amounts reflected in our all other segment primarily include:
- our natural gas marketing and compression operations;
- an approximate 33% non-operating interest in PES, a refining joint venture;
- our investment in Coal Handling, an entity that owns and operates end-user coal handling facilities; and
-
our investment in
AmeriGas untilAugust 2014 .
Segment Adjusted EBITDA decreased primarily due to lower earnings driven by the impact of weaker refining crack spreads on our investment in PES.
In connection with the Lake Charles LNG Transaction, ETP agreed to
continue to provide management services for ETE through 2015 in relation
to both Lake Charles LNG’s regasification facility and the development
of a liquefaction project at Lake Charles LNG’s facility, for which ETE
has agreed to pay incremental management fees to ETP of
The increase in cash distributions from unconsolidated affiliates was
due to an increase of
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 year ended December 31, 2015:
Growth | Maintenance | Total | |||||||
Direct(1): | |||||||||
Midstream | $ | 2,055 | $ | 117 | $ | 2,172 | |||
Liquids transportation and services(2) | 2,091 | 18 | 2,109 | ||||||
Interstate transportation and storage(2) | 741 | 119 | 860 | ||||||
Intrastate transportation and storage | 74 | 31 | 105 | ||||||
Retail marketing(3) | 259 | 63 | 322 | ||||||
All other (including eliminations) | 337 | 46 | 383 | ||||||
Total direct capital expenditures |
5,557 | 394 | 5,951 | ||||||
Indirect(1): | |||||||||
Investment in Sunoco Logistics | 2,042 | 84 | 2,126 | ||||||
Investment in Sunoco LP(4) | 83 | 7 | 90 | ||||||
Total indirect capital expenditures | 2,125 | 91 | 2,216 | ||||||
Total capital expenditures | $ | 7,682 | $ | 485 | $ | 8,167 | |||
(1) | Indirect capital expenditures comprise those funded by our publicly traded subsidiaries; all other capital expenditures are reflected as direct capital expenditures. | |
(2) | Includes capital expenditures related to our proportionate ownership of the Bakken and Rover pipeline projects. | |
(3) | The retail marketing segment includes our wholly-owned retail marketing operations. | |
(4) | Investment in Sunoco LP includes capital expenditures for the period prior to deconsolidation on July 1, 2015. |
We currently expect capital expenditures for the full year 2016 to be within the following ranges:
Growth | Maintenance | |||||||||||
Low | High | Low | High | |||||||||
Direct(1): | ||||||||||||
Midstream | $ | 1,200 | $ | 1,250 | $ | 110 | $ | 120 | ||||
Liquids transportation and services | ||||||||||||
NGL | 1,150 | 1,200 | 25 | 30 | ||||||||
Crude(3) | 1,275 | 1,325 | — | — | ||||||||
Interstate transportation and storage(2)(3) | 375 | 415 | 140 | 145 | ||||||||
Intrastate transportation and storage(2) | 10 | 20 | 35 | 40 | ||||||||
All other (including eliminations) | 65 | 75 | 20 | 25 | ||||||||
Total direct capital expenditures | 4,075 | 4,285 | 330 | 360 | ||||||||
Indirect(1): | ||||||||||||
Investment in Sunoco Logistics | 2,600 | 2,800 | 75 | 85 | ||||||||
Total projected capital expenditures | $ | 6,675 | $ | 7,085 | $ | 405 | $ | 445 | ||||
(1) | Indirect capital expenditures comprise those funded by our publicly traded subsidiary; all other capital expenditures are reflected as direct capital expenditures. | |
(2) | Net of amounts forecasted to be financed at the asset level with non-recourse debt of approximately $325 million. | |
(3) | Includes capital expenditures related to our proportionate ownership of the Bakken and Rover pipeline projects. |
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES |
||||||||
(In millions) | ||||||||
(unaudited) | ||||||||
Three Months Ended |
||||||||
2015 | 2014 | |||||||
Equity in earnings (losses) of unconsolidated affiliates: | ||||||||
Citrus | $ | 20 | $ | 20 | ||||
FEP | 14 | 14 | ||||||
PES | (25 | ) | 10 | |||||
MEP | 12 | 13 | ||||||
HPC | 8 | 3 | ||||||
AmeriGas | (5 | ) | (2 | ) | ||||
Sunoco, LLC | 3 | — | ||||||
Sunoco LP | 85 | — | ||||||
Other | (31 | ) | 9 | |||||
Total equity in earnings of unconsolidated affiliates | $ | 81 | $ | 67 | ||||
Adjusted EBITDA related to unconsolidated affiliates(1): | ||||||||
Citrus | $ | 73 | $ | 72 | ||||
FEP | 19 | 19 | ||||||
PES | (16 | ) | 17 | |||||
MEP | 25 | 26 | ||||||
HPC | 15 | 9 | ||||||
Sunoco, LLC | 38 | — | ||||||
Sunoco LP | 56 | — | ||||||
Other | 16 | 21 | ||||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 226 | $ | 164 | ||||
Distributions received from unconsolidated affiliates: | ||||||||
Citrus | $ | 37 | $ | 42 | ||||
FEP | 18 | 19 | ||||||
PES | 42 | — | ||||||
MEP | 20 | 19 | ||||||
HPC | 11 | 13 | ||||||
Sunoco LP | 39 | — | ||||||
Other | 12 | 10 | ||||||
Total distributions received from unconsolidated affiliates | $ | 179 | $ | 103 | ||||
(1) | These amounts represent our proportionate share of the Adjusted EBITDA of our unconsolidated affiliates and are based on our equity in earnings or losses of our unconsolidated affiliates adjusted for our proportionate share of the unconsolidated affiliates’ interest, depreciation, depletion, amortization, non-cash items and taxes. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160224006658/en/
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Lyndsay Hannah, 214-840-5477
or
Media
Relations:
Granado Communications Group
Vicki Granado,
214-599-8785
214-498-9272 (cell)