Document






UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 8, 2019
Date of Report (Date of earliest event reported)
 
ENERGY TRANSFER LP
(Exact name of Registrant as specified in its charter)
 
 
 
Delaware
1-32740
30-0108820
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
8111 Westchester Drive, Suite 600,
Dallas, Texas 75225
(Address of principal executive offices)
(214) 981-0700
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨







Item 2.02. Results of Operations and Financial Condition.
On May 8, 2019, Energy Transfer LP (the “Partnership”) issued a press release announcing its financial and operating results for the first quarter ended March 31, 2019. A copy of this press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 2.02 and in the attached exhibit shall be deemed to be “furnished” and not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
Exhibit Number
 
Description of the Exhibit
 




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ENERGY TRANSFER LP
 
 
By:
LE GP, LLC, its general partner
 
 
 
 
Date:
May 8, 2019
By:
/s/ Thomas E. Long
 
 
 
Thomas E. Long
 
 
 
Chief Financial Officer (duly
authorized to sign on behalf of the registrant)

Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12890524&doc=3
ENERGY TRANSFER REPORTS RECORD FIRST QUARTER 2019 RESULTS WHILE DELIVERING ON CAPITAL PROJECT BACKLOG
Net income attributable to partners of $870 million, reflecting an increase over previous periods primarily due to the impact of the simplification transaction.
Record Adjusted EBITDA of $2.80 billion, up 40 percent from the first quarter of 2018.
Record Distributable Cash Flow attributable to partners of $1.66 billion, up 39 percent from the first quarter of 2018.
Distribution coverage ratio of 2.07x, yielding excess coverage of $856 million of Distributable Cash Flow attributable to partners in excess of distributions.
Placed Bayou Bridge pipeline expansion in-service in March.
Reaffirms 2019 outlook for Adjusted EBITDA of approximately $10.7 billion and capital expenditures of approximately $5 billion.
Dallas - May 8, 2019 - Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”) today reported financial results for the quarter ended March 31, 2019.
ET reported net income attributable to partners for the three months ended March 31, 2019 of $870 million, an increase of $507 million compared to the three months ended March 31, 2018. For the prior period, net income attributable to partners continues to reflect only the amount of net income attributable to the legacy Energy Transfer LP partners prior to the simplification merger transaction of ET and Energy Transfer Operating, L.P. (“ETO”) on October 19, 2018 (the “Merger”).
Adjusted EBITDA for the three months ended March 31, 2019 was $2.80 billion, an increase of $795 million compared to the three months ended March 31, 2018. Results were supported by increases in all of the Partnership’s five core segments, with record operating performance in the Partnership’s NGL and refined products and crude businesses.
Distributable Cash Flow attributable to partners, as adjusted, for the three months ended March 31, 2019 was a record $1.66 billion, an increase of $461 million compared to the three months ended March 31, 2018. The increase was primarily due to the increase in Adjusted EBITDA.
Key accomplishments and current developments:
Operational
ET is currently progressing with plans on a Bakken pipeline optimization project, which is targeted to start up in 2020.
ET is currently expanding its Permian Express pipeline system by an incremental 120,000 barrels per day. The Permian Express 4 expansion is expected to be in-service by the end of the third quarter of 2019.
ET and Phillips 66 Partners LP (“PSXP”) launched a non-binding expansion open season in April 2019 for expanded joint tariff transportation service connecting into Bayou Bridge.
ET and PSXP announced in March 2019 that the second phase of the Bayou Bridge pipeline was complete and ready for service.
Strategic
ET and Shell US LNG, LLC initiated an invitation to tender to solicit engineering, procurement and construction (EPC) bids for the Lake Charles LNG liquefaction project in May 2019.
ET announced an expanded presence in China to meet growing demand for LNG and NGL products by opening an office in Beijing in April 2019.
ET signed a non-binding letter of intent with Sunoco LP to enter into a joint venture on a diesel fuel pipeline to West Texas.
ET sold a 30 percent interest in Red Bluff Express pipeline to a subsidiary of Western Midstream Partners LP.

1



Financial
In April 2019, ET announced a quarterly distribution of $0.305 per unit ($1.220 annualized) on ET common units for the quarter ended March 31, 2019. The distribution coverage ratio for the first quarter of 2019 is 2.07x.
ETO issued 32 million of its 7.600% Series E Preferred Units in April 2019 for gross proceeds of $800 million, primarily replacing debt and efficiently improving leverage metrics.
In March 2019, ET and ETO completed a debt exchange whereby ETO issued $4.21 billion aggregate principal amount of senior notes in exchange for settling approximately 97% of ET’s outstanding senior notes.
As of March 31, 2019, ETO’s $6.00 billion revolving credit facilities had an aggregate $4.15 billion of available capacity, and ETO’s leverage ratio, as defined by its credit agreement, was 3.82x.
ET benefits from a portfolio of assets with exceptional product and geographic diversity. The Partnership’s multiple segments generate high-quality, balanced earnings with no single segment contributing more than 30 percent of the Partnership’s consolidated Adjusted EBITDA for the three months ended March 31, 2019. The great majority of the Partnership’s segment margins are fee-based and therefore have limited commodity price sensitivity.
Conference Call information:
The Partnership has scheduled a conference call for 8:00 a.m. Central Time, Thursday, May 9, 2019 to discuss its first quarter 2019 results. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.
Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major U.S. production basins. ET is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets.  ET, through its ownership of Energy Transfer Operating, L.P., formerly known as Energy Transfer Partners, L.P., also owns the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco LP (NYSE: SUN), and the general partner interests and 39.7 million common units of USA Compression Partners, LP (NYSE: USAC). For more information, visit the Energy Transfer LP website at www.energytransfer.com.
Sunoco LP (NYSE: SUN) is a master limited partnership that distributes motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states. Sunoco’s general partner is owned by Energy Transfer Operating, L.P., a subsidiary of Energy Transfer LP (NYSE: ET). For more information, visit the Sunoco LP website at www.sunocolp.com.
USA Compression Partners, LP (NYSE: USAC) is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of compression services in terms of total compression fleet horsepower. USAC partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USAC focuses on providing compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. For more information, visit the USAC website at www.usacompression.com.
Forward-Looking Statements
This news 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 Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.
The information contained in this press release is available on our website at www.energytransfer.com.
Contacts
Energy Transfer
Investor Relations:
Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795
or
Media Relations:
Vicki Granado, 214-840-5820

2



ENERGY TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets
$
7,127

 
$
6,750

 
 
 
 
Property, plant and equipment, net
67,317

 
66,963

 
 
 
 
Advances to and investments in unconsolidated affiliates
2,653

 
2,642

Lease right-of-use assets, net (a)
872

 

Other non-current assets, net
1,007

 
1,006

Intangible assets, net
5,912

 
6,000

Goodwill
4,885

 
4,885

Total assets
$
89,773

 
$
88,246

LIABILITIES AND EQUITY
 
 
 
Current liabilities
$
6,695

 
$
9,310

 
 
 
 
Long-term debt, less current maturities
46,373

 
43,373

Non-current derivative liabilities
150

 
104

Non-current operating lease liabilities (a)
817

 

Deferred income taxes
3,023

 
2,926

Other non-current liabilities
1,154

 
1,184

 
 
 
 
Commitments and contingencies
 
 
 
Redeemable noncontrolling interests
499

 
499

 
 
 
 
Equity:
 
 
 
Total partners’ capital
20,654

 
20,559

Noncontrolling interest
10,408

 
10,291

Total equity
31,062

 
30,850

Total liabilities and equity
$
89,773

 
$
88,246

(a)
Lease-related balances as of March 31, 2019 were recorded in connection with the required adoption of the new lease accounting principles (referred to as ASC 842) on January 1, 2019.


3



ENERGY TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
 
Three Months Ended
March 31,
 
2019
 
2018
REVENUES
$
13,121

 
$
11,882

COSTS AND EXPENSES:
 
 
 
Cost of products sold
9,415

 
9,245

Operating expenses
808

 
724

Depreciation, depletion and amortization
774

 
665

Selling, general and administrative
147

 
148

Impairment losses
50

 

Total costs and expenses
11,194

 
10,782

OPERATING INCOME
1,927

 
1,100

OTHER INCOME (EXPENSE):
 
 
 
Interest expense, net of interest capitalized
(590
)
 
(466
)
Equity in earnings of unconsolidated affiliates
65

 
79

Losses on extinguishments of debt
(18
)
 
(106
)
Gains (losses) on interest rate derivatives
(74
)
 
52

Other, net
(4
)
 
57

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE (BENEFIT)
1,306

 
716

Income tax expense (benefit) from continuing operations
126

 
(10
)
INCOME FROM CONTINUING OPERATIONS
1,180

 
726

Loss from discontinued operations, net of income taxes

 
(237
)
NET INCOME
1,180

 
489

Less: Net income attributable to noncontrolling interest
297

 
126

Less: Net income attributable to redeemable noncontrolling interests
13

 

NET INCOME ATTRIBUTABLE TO PARTNERS
870

 
363

Series A Convertible Preferred Unitholders’ interest in income

 
21

General Partner’s interest in net income
1

 
1

Limited Partners’ interest in net income
$
869

 
$
341

NET INCOME PER LIMITED PARTNER UNIT:
 
 
 
Basic
$
0.33

 
$
0.31

Diluted
$
0.33

 
$
0.31

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
 
 
 
Basic
2,619.5

 
1,079.1

Diluted
2,627.9

 
1,154.7


4



ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Dollars and units in millions)
(unaudited)
 
Three Months Ended
March 31,
 
2019
 
2018
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (b):
 
 
 
Net income
$
1,180

 
$
489

Loss from discontinued operations

 
237

Interest expense, net
590

 
466

Impairment losses
50

 

Income tax expense (benefit)
126

 
(10
)
Depreciation, depletion and amortization
774

 
665

Non-cash compensation expense
29

 
23

(Gains) losses on interest rate derivatives
74

 
(52
)
Unrealized (gains) losses on commodity risk management activities
(49
)
 
87

Losses on extinguishments of debt
18

 
106

Inventory valuation adjustments
(93
)
 
(25
)
Equity in earnings of unconsolidated affiliates
(65
)
 
(79
)
Adjusted EBITDA related to unconsolidated affiliates
146

 
156

Adjusted EBITDA from discontinued operations

 
(20
)
Other, net
17

 
(41
)
Adjusted EBITDA (consolidated)
2,797

 
2,002

Adjusted EBITDA related to unconsolidated affiliates
(146
)
 
(156
)
Distributable cash flow from unconsolidated affiliates
93

 
104

Interest expense, net
(590
)
 
(468
)
Preferred unitholders’ distributions
(53
)
 
(24
)
Current income tax expense
(28
)
 
(468
)
Transaction-related income taxes

 
480

Maintenance capital expenditures
(92
)
 
(91
)
Other, net
18

 
7

Distributable Cash Flow (consolidated)
1,999

 
1,386

Distributable Cash Flow attributable to Sunoco LP (100%)
(97
)
 
(84
)
Distributions from Sunoco LP
41

 
41

Distributable Cash Flow attributable to USAC (100%)
(55
)
 

Distributions from USAC
21

 

Distributable Cash Flow attributable to noncontrolling interest in other non-wholly-owned consolidated subsidiaries
(251
)
 
(147
)
Distributable Cash Flow attributable to the partners of ET – pro forma for the Merger (a)
1,658

 
1,196

Transaction-related adjustments
(2
)
 
(1
)
Distributable Cash Flow attributable to the partners of ET, as adjusted – pro forma for the Merger (a)
$
1,656

 
$
1,195

 
 
 
 
Distributions to partners – pro forma for the Merger (a):
 
 
 
Limited Partners (c)
$
799

 
$
709

General Partner
1

 
1

Total distributions to be paid to partners
$
800

 
$
710

Common Units outstanding – end of period – pro forma for the Merger (a)
2,619.6

 
2,535.3

Distribution coverage ratio – pro forma for the Merger (a)
2.07x

 
1.68x


5



(a)
The closing of the Merger has impacted the Partnership’s calculation of Distributable Cash Flow attributable to partners, as well as the number of ET Common Units outstanding and the amount of distributions to be paid to partners for the three months ended March 31, 2018. In order to provide information on a comparable basis for pre-Merger and post-Merger periods, the Partnership has included certain pro forma information for the three months ended March 31, 2018.
Pro forma Distributable Cash Flow attributable to partners reflects the following merger related impacts:
ETO is reflected as a wholly-owned subsidiary and pro forma Distributable Cash Flow attributable to partners reflects ETO’s consolidated Distributable Cash Flow (less certain other adjustments);
Distributions from Sunoco LP include distributions to both ET and ETO; and
Distributable Cash Flow attributable to noncontrolling interest in our other non-wholly-owned subsidiaries is subtracted from consolidated Distributable Cash Flow to calculate Distributable Cash Flow attributable to partners.
Pro forma distributions to partners include actual distributions to legacy ET partners, as well as pro forma distributions to legacy ETO partners. Pro forma distributions to ETO partners are calculated assuming (i) historical ETO common units converted under the terms of the Merger and (ii) distributions on such converted common units were paid at the historical rate paid on ET Common Units.
Pro forma Common Units outstanding include actual Common Units outstanding, in addition to Common Units assumed to be issued in the Merger, which are based on historical ETO common units converted under the terms of the Merger.
(b)
Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio are non-GAAP financial measures used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of ET’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, Distributable Cash Flow and distribution coverage ratio, 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, Distributable Cash Flow and distribution coverage ratio 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 segment margin, operating income, net income and cash flow from operating activities.
Definition of Adjusted EBITDA
We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, 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, non-cash impairment charges, losses on extinguishments of debt 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 valuation 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 our 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
We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest 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, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. Unrealized gains and losses on commodity risk management activities includes unrealized gains and losses on commodity derivatives and inventory valuation adjustments (excluding lower of cost or market adjustments). For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.

6



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 ET’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:
For subsidiaries with publicly traded equity interests, other than ETO, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners 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 subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest.
For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related and non-recurring expenses that are included in net income are excluded.
Definition of Distribution Coverage Ratio
Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of ET in respect of such period.
(c)
Includes distributions to unitholders who elected to participate in a plan to forgo a portion of their future potential cash distributions on common units and reinvest those distributions in ETE Series A convertible preferred units representing limited partner interests in the Partnership. The quarter ended March 31, 2018 was the final quarter of participation in the plan.

7



ENERGY TRANSFER LP AND SUBSIDIARIES
SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
(Tabular dollar amounts in millions)
(unaudited)
As a result of the Merger in October 2018, our reportable segments were reevaluated during the quarter ended December 31, 2018 and currently reflect the following segments.
 
Three Months Ended
March 31,
 
2019
 
2018
Segment Adjusted EBITDA:
 
 
 
Intrastate transportation and storage
$
252

 
$
192

Interstate transportation and storage
456

 
366

Midstream
382

 
377

NGL and refined products transportation and services
612

 
451

Crude oil transportation and services
806

 
464

Investment in Sunoco LP
153

 
109

Investment in USAC
101

 

All other
35

 
43

Total Segment Adjusted EBITDA
$
2,797

 
$
2,002

In the following analysis of segment operating results, a measure of segment margin is reported for segments with sales revenues. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization.
Following is a reconciliation of our segment margin to operating income, as reported in the Partnership’s consolidated statements of operations:
 
Three Months Ended
March 31,
 
2019
 
2018
Segment Margin:
 
 
 
Intrastate transportation and storage
$
284

 
$
171

Interstate transportation and storage
498

 
365

Midstream
577

 
553

NGL and refined products transportation and services
705

 
600

Crude oil transportation and services
1,086

 
568

Investment in Sunoco LP
370

 
296

Investment in USAC
149

 

All other
42

 
95

Intersegment eliminations
(5
)
 
(11
)
Total segment margin
3,706

 
2,637

 
 
 
 
Less:
 
 
 
Operating expenses
808

 
724

Depreciation, depletion and amortization
774

 
665

Selling, general and administrative
147

 
148

Impairment losses
50

 

Operating income
$
1,927

 
$
1,100


8



Intrastate Transportation and Storage
 
Three Months Ended
March 31,
 
2019
 
2018
Natural gas transported (BBtu/d)
11,982

 
9,271

Withdrawals from storage natural gas inventory (BBtu)

 
17,703

Revenues
$
856

 
$
875

Cost of products sold
572

 
704

Segment margin
284

 
171

Unrealized losses on commodity risk management activities
10

 
53

Operating expenses, excluding non-cash compensation expense
(42
)
 
(39
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(6
)
 
(6
)
Adjusted EBITDA related to unconsolidated affiliates
6

 
13

Segment Adjusted EBITDA
$
252

 
$
192

Transported volumes increased primarily due to the impact of reflecting RIGS as a consolidated subsidiary beginning in April 2018 and the impact of the Red Bluff Express pipeline coming online in May 2018, as well as the impact of favorable market pricing spreads.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 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 $29 million in realized natural gas sales and other due to higher realized gains from pipeline optimization activity;
an increase of $13 million in transportation fees, excluding the impact of consolidating RIGS as discussed below, primarily due to new contracts, as well as the impact of the Red Bluff Express pipeline coming online in May 2018;
a net increase of $11 million due to the consolidation of RIGS beginning in April 2018, resulting in increases in transportation fees, retained fuel revenues and operating expenses of $24 million, $2 million and $6 million, respectively, and a decrease of $9 million in Adjusted EBITDA related to unconsolidated affiliates; and
an increase of $6 million in realized storage margin primarily due to a negative adjustment to the Bammel storage inventory of $25 million in 2018, partially offset by a $13 million decrease due to lower physical withdrawals and a $6 million decrease in realized derivative gains.
Interstate Transportation and Storage
 
Three Months Ended
March 31,
 
2019
 
2018
Natural gas transported (BBtu/d)
11,532

 
8,204

Natural gas sold (BBtu/d)
19

 
17

Revenues
$
498

 
$
365

Operating expenses, excluding non-cash compensation, amortization and accretion expenses
(146
)
 
(99
)
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses
(14
)
 
(18
)
Adjusted EBITDA related to unconsolidated affiliates
119

 
116

Other
(1
)
 
2

Segment Adjusted EBITDA
$
456

 
$
366

Transported volumes reflected an increase of 1,645 BBtu/d as a result of the initiation of full service on the Rover pipeline; an increase of 517 BBtu/d on the Tiger pipeline as a result of production increases in the Haynesville Shale; increases of 418 BBtu/

9



d each on the Panhandle and Trunkline pipelines due to increased utilization of higher contracted capacity; and an increase of 197 BBtu/d on the Transwestern pipeline as a result of favorable market opportunities in the West.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment increased due to the net impacts of the following:
an increase of $133 million in revenues primarily due to an increase of $106 million on contracted capacity from additional connections and compression on the Rover pipeline and an increase of $21 million due to higher reservation and usage revenues from capacity sold at higher rates on the Transwestern, Panhandle and Trunkline pipelines;
a decrease of $4 million in selling, general and administrative expenses due to lower excise taxes and lower employee costs; and
an increase of $3 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to sales of additional capacity on Citrus; partially offset by
an increase of $47 million in operating expenses primarily due to a $31 million increase in ad valorem taxes and a $16 million increase in third-party transportation expense due to the initiation of full service on the Rover pipeline.
Midstream
 
Three Months Ended
March 31,
 
2019
 
2018
Gathered volumes (BBtu/d)
12,718

 
11,306

NGLs produced (MBbls/d)
563

 
503

Equity NGLs (MBbls/d)
35

 
28

Revenues
$
1,718

 
$
1,614

Cost of products sold
1,141

 
1,061

Segment margin
577

 
553

Operating expenses, excluding non-cash compensation expense
(183
)
 
(164
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(19
)
 
(20
)
Adjusted EBITDA related to unconsolidated affiliates
6

 
7

Other
1

 
1

Segment Adjusted EBITDA
$
382

 
$
377

Gathered volumes and NGL production increased primarily due to increases in the North Texas, Permian and Northeast regions, partially offset by smaller declines in other regions.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment increased due to the net effects of the following:
an increase of $63 million in fee-based margin due to volume growth in the North Texas, Permian and Northeast regions, offset by declines in the South Texas and midcontinent/Panhandle regions;
an increase of $6 million in non-fee-based margin due to higher throughput in the North Texas and Permian regions; and
a decrease of $1 million in selling, general and administrative expenses due to lower allocated overhead; partially offset by
a decrease of $45 million in non-fee-based margin due to a $37 million decrease from lower NGL prices and an $8 million decrease from lower gas prices; and
an increase of $19 million in operating expenses due to increases of $10 million in outside services, $4 million in employee costs, $3 million in materials and $2 million in office expenses.

10



NGL and Refined Products Transportation and Services
 
Three Months Ended
March 31,
 
2019
 
2018
NGL transportation volumes (MBbls/d)
1,178

 
936

Refined products transportation volumes (MBbls/d)
617

 
620

NGL and refined products terminal volumes (MBbls/d)
879

 
702

NGL fractionation volumes (MBbls/d)
678

 
472

Revenues
$
3,031

 
$
2,546

Cost of products sold
2,326

 
1,946

Segment margin
705

 
600

Unrealized (gains) losses on commodity risk management activities
57

 
(13
)
Operating expenses, excluding non-cash compensation expense
(149
)
 
(139
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(19
)
 
(18
)
Adjusted EBITDA related to unconsolidated affiliates
18

 
21

Segment Adjusted EBITDA
$
612

 
$
451

NGL transportation volumes increased due to higher receipt of liquids production from both wholly-owned and third-party gas plants primarily in the Permian and North Texas regions. In addition, NGL transportation volumes on our Northeast assets increased due to the initiation of service on the Mariner East 2 pipeline system in the fourth quarter of 2018.
Refined products transportation volumes decreased slightly primarily due to turnarounds at third-party refineries in the Northeast region.
NGL and refined products terminal volumes increased primarily due to the ramp-up of our Mariner East 2 project which commenced operations in late 2018, more volumes loaded at our Nederland terminal due to increased export demand and higher throughput volumes at our refined products terminals in the Northeast.
Average fractionated volumes at our Mont Belvieu, Texas fractionation facility increased primarily due to the commissioning of our fifth and sixth fractionators in July 2018 and February 2019, respectively.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment increased due to net impacts of the following:
an increase of $97 million in transportation margin primarily due to a $68 million increase resulting from higher volumes received from the Permian region on our Texas NGL pipelines, a $28 million increase due to the ramp-up of our Mariner East 2 project which commenced operations in late 2018 and a $7 million increase due to higher throughput volumes from the Barnett region. These increases were partially offset by an $8 million decrease resulting from Mariner East 1 system downtime;
an increase of $52 million in fractionation and refinery services margin primarily due to a $59 million increase resulting from the commissioning of our fifth and sixth fractionators in July 2018 and February 2019, respectively, and higher NGL volumes from the Permian region feeding our Mont Belvieu fractionation facility. This increase was partially offset by a $3 million decrease from unplanned downtime at a vendor facility which reduced the supply to our o-grade processing facility, a $2 million decrease in blending gains as a result of less favorable market pricing and a $2 million decrease from lower throughput volumes into our Geismar fractionation facility due to unplanned down time from a third-party refinery;
an increase of $23 million in terminal services margin primarily due to a $32 million increase from the ramp-up of our Mariner East 2 project which commenced operations in late 2018 and a $2 million increase due to higher throughput at our refined products terminals in the Northeast. These increases were partially offset by a $11 million decrease related to Mariner East 1 system downtime, which resulted in lower volumes delivered to our Marcus Hook terminal facility; and
an increase of $3 million in marketing margin due to a $6 million increase from the timing of optimization gains from our Mont Belvieu marketing operations, partially offset by a $3 million decrease from our gasoline optimization and NGL marketing operations in the Northeast; partially offset by
an increase of $10 million in operating expenses primarily due to increases of $4 million in employee costs, $2 million in materials costs, $2 million in management fees and $2 million in utilities costs.

11



Crude Oil Transportation and Services
 
Three Months Ended
March 31,
 
2019
 
2018
Crude transportation volumes (MBbls/d)
4,522

 
3,827

Crude terminals volumes (MBbls/d)
2,086

 
1,940

Revenues
$
4,186

 
$
3,745

Cost of products sold
3,100

 
3,177

Segment margin
1,086

 
568

Unrealized (gains) losses on commodity risk management activities
(109
)
 
43

Operating expenses, excluding non-cash compensation expense
(150
)
 
(127
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(20
)
 
(22
)
Adjusted EBITDA related to unconsolidated affiliates
(2
)
 
2

Other
1

 

Segment Adjusted EBITDA
$
806

 
$
464

Crude transportation and terminal volumes benefited from an increase in barrels through our existing Texas pipelines and our Bakken pipeline.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment increased due to the net impacts of the following:
an increase of $366 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $142 million increase resulting from higher throughput on our Texas crude pipeline system primarily due to increased production from Permian producers, a $91 million favorable variance resulting from increased throughput on the Bakken Pipeline, a $124 million increase (excluding a net change of $152 million in unrealized gains and losses on commodity risk management activities) from our crude oil acquisition and marketing business primarily resulting from improved basis differentials between the Permian and Bakken producing regions to our Nederland terminal on the Texas Gulf Coast, as well as a $9 million increase primarily from higher throughput, ship loading and tank rental fees at our Nederland terminal; and
a decrease of $2 million in selling, general and administrative expenses primarily due to a $2 million decrease in overhead allocations and a $1 million decrease in management fees, partially offset by a $1 million increase in insurance costs; partially offset by
an increase of $23 million in operating expenses primarily due to a $30 million increase in throughput related costs on existing assets, partially offset by a $7 million decrease in ad valorem taxes and management fees; and
a decrease of $4 million in Adjusted EBITDA related to unconsolidated affiliates due to lower margin from jet fuel sales by our joint ventures.

12



Investment in Sunoco LP
 
Three Months Ended
March 31,
 
2019
 
2018
Revenues
$
3,692

 
$
3,749

Cost of products sold
3,322

 
3,453

Segment margin
370

 
296

Unrealized gains on commodity risk management activities
(6
)
 

Operating expenses, excluding non-cash compensation expense
(98
)
 
(113
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(24
)
 
(32
)
Inventory valuation adjustments
(93
)
 
(25
)
Adjusted EBITDA related to discontinued operations

 
(20
)
Other
4

 
3

Segment Adjusted EBITDA
$
153

 
$
109

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP segment increased due to the net impacts of the following:
an aggregate decrease of $23 million in expenses primarily due to the conversion of 207 retail sites to commission agent sites in April 2018; and
an increase of $20 million in Adjusted EBITDA from discontinued operations due to Sunoco LP’s retail divestment in January 2018.
Investment in USAC
 
Three Months Ended
March 31,
 
2019
 
2018
Revenues
$
171

 
$

Cost of products sold
22

 

Segment margin
149

 

Operating expenses, excluding non-cash compensation expense
(35
)
 

Selling, general and administrative expenses, excluding non-cash compensation expense
(13
)
 

Segment Adjusted EBITDA
$
101

 
$

Amounts reflected above reflects the consolidated results of USAC. Changes between periods are due to the consolidation of USAC beginning April 2, 2018, the date ET obtained control of USAC.

13



All Other
 
Three Months Ended
March 31,
 
2019
 
2018
Revenues
$
497

 
$
571

Cost of products sold
455

 
476

Segment margin
42

 
95

Unrealized (gains) losses on commodity risk management activities
(1
)
 
4

Operating expenses, excluding non-cash compensation expense
(7
)
 
(31
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(11
)
 
(20
)
Adjusted EBITDA related to unconsolidated affiliates
(1
)
 
(3
)
Other and eliminations
13

 
(2
)
Segment Adjusted EBITDA
$
35

 
$
43

Segment Adjusted EBITDA. For the three months ended March 31, 2019 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment decreased due to the net impacts of the following:
a decrease of $36 million due to the contribution of CDM to USAC in April 2018, subsequent to which CDM is reflected in the Investment in USAC segment; partially offset by
an increase of $11 million due to our investment in PES;
an increase of $7 million due to an increase in power trading gains; and
an increase of $3 million from residue gas sales.


14



ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON LIQUIDITY
(In millions)
(unaudited)
The following table is a summary of ETO’s revolving credit facilities. We also have other consolidated subsidiaries with revolving credit facilities which are not included in this table.
 
Facility Size
 
Funds Available at March 31, 2019
 
Maturity Date
ETO Five-Year Revolving Credit Facility
$
5,000

 
$
3,151

 
December 1, 2023
ETO 364-Day Revolving Credit Facility
1,000

 
1,000

 
November 30, 2019
 
$
6,000

 
$
4,151

 
 

15



ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)
The table below provides information on an aggregated basis for our unconsolidated affiliates, which are accounted for as equity method investments in the Partnership’s financial statements for the periods presented.
 
Three Months Ended
March 31,
 
2019
 
2018
Equity in earnings of unconsolidated affiliates:
 
 
 
Citrus
$
32

 
$
27

FEP
14

 
14

MEP
7

 
9

Other
12

 
29

Total equity in earnings of unconsolidated affiliates
$
65

 
$
79

 
 
 
 
Adjusted EBITDA related to unconsolidated affiliates:
 
 
 
Citrus
$
81

 
$
75

FEP
19

 
19

MEP
19

 
22

Other
27

 
40

Total Adjusted EBITDA related to unconsolidated affiliates
$
146

 
$
156

 
 
 
 
Distributions received from unconsolidated affiliates:
 
 
 
Citrus
$
35

 
$
46

FEP
17

 
17

MEP
11

 
13

Other
16

 
21

Total distributions received from unconsolidated affiliates
$
79

 
$
97


16



ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT VENTURE SUBSIDIARIES
(Dollars in millions)
(unaudited)
The table below provides information on an aggregated basis for our non-wholly-owned joint venture subsidiaries, which are reflected on a consolidated basis in our financial statements. The table below excludes Sunoco LP and USAC, our non-wholly-owned subsidiaries that are publicly traded.
 
Three Months Ended
March 31,
 
2019
 
2018
Adjusted EBITDA of non-wholly-owned subsidiaries (100%) (a)
$
617

 
$
361

Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries (b)
342

 
197

 
 
 
 
Distributable Cash Flow of non-wholly-owned subsidiaries (100%) (c)
$
579

 
$
332

Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries (d)
328

 
185

Below is our current ownership percentage of certain non-wholly-owned subsidiaries:
Non-wholly-owned subsidiary:
ET Percentage Ownership (e)
Bakken Pipeline
36.4
%
Bayou Bridge
60.0
%
Ohio River System
75.0
%
Permian Express Partners
87.7
%
Red Bluff Express
70.0
%
Rover
32.6
%
Others
various

(a)
Adjusted EBITDA of non-wholly-owned subsidiaries reflects the total Adjusted EBITDA of our non-wholly-owned subsidiaries on an aggregated basis. This is the amount of EBITDA included in our consolidated non-GAAP measure of Adjusted EBITDA.
(b)
Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries reflects the amount of Adjusted EBITDA of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest.
(c)
Distributable Cash Flow of non-wholly-owned subsidiaries reflects the total Distributable Cash Flow of our non-wholly-owned subsidiaries on an aggregated basis.
(d)
Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries reflects the amount of Distributable Cash Flow of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. This is the amount of Distributable Cash Flow included in our consolidated non-GAAP measure of Distributable Cash Flow attributable to the partners of ET.
(e)
Our ownership reflects the total economic interest held by us and our subsidiaries. In some cases, this percentage comprises ownership interests held in (or by) multiple entities.



17