Energy Transfer Partners, L.P. (NYSE: ETP) (“ETP” or the
“Partnership”) today reported its financial results for the quarter
ended September 30, 2016. Net income for the three months
ended September 30, 2016 was $138 million, a decrease of $255
million compared to the three months ended September 30, 2015,
primarily due to a $308 million non-cash impairment of the
Partnership’s investment in the Midcontinent Express Pipeline.
Adjusted EBITDA for ETP for the three months ended September 30,
2016 totaled $1.39 billion, a decrease of $110 million
compared to the three months ended September 30, 2015, primarily
due to lower earnings from the Partnership’s unconsolidated
affiliates, including the impact from the Partnership’s
contribution of certain assets to Sunoco LP in March 2016.
Distributable Cash Flow attributable to the partners of ETP, as
adjusted, for the three months ended September 30, 2016 totaled
$720 million, a decrease of $14 million compared to the three
months ended September 30, 2015, primarily due to a decrease in
distributable cash flow from unconsolidated affiliates, which was
largely offset by an increase in distributions received from Sunoco
Logistics Partners L.P. (“Sunoco Logistics”) and a decrease in
current income tax expense.
In October 2016, ETP announced a quarterly distribution of
$1.055 per unit ($4.22 annualized) on ETP Common Units for the
quarter ended September 30, 2016.
ETP’s other recent key accomplishments include the
following:
- On November 1, 2016, ETP acquired
certain interests in PennTex Midstream Partners, LP (“PennTex”)
from various parties for total consideration of approximately $640
million in ETP units and cash.
- As of September 30, 2016, ETP’s
$3.75 billion credit facility had $1.58 billion of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 4.26x.
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 8:00 a.m. Central Time, Thursday,
November 10, 2016 to discuss the third quarter 2016 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 ETP’s website for a limited time.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master
limited partnership that owns and operates one of the largest and
most diversified portfolios of energy assets in the United States.
ETP’s subsidiaries include Panhandle Eastern Pipe Line Company, LP
(the successor of Southern Union Company) and Lone Star NGL LLC,
which owns and operates natural gas liquids storage, fractionation
and transportation assets. In total, ETP currently owns and
operates more than 62,500 miles of natural gas and natural gas
liquids pipelines. ETP also owns the general partner, 100% of the
incentive distribution rights, and approximately 67.1 million
common units in Sunoco Logistics Partners L.P. (NYSE: SXL), which
operates a geographically diverse portfolio of pipelines,
terminalling and acquisition and marketing assets. ETP recently
acquired the general partner, 100% of the incentive distribution
rights, and an approximate 65% limited partnership interest in
PennTex Midstream Partners, LP (Nasdaq: PTXP), which is a
growth-oriented master limited partnership that provides natural
gas gathering and processing and residue gas and natural gas
liquids transportation services to producers in northern Louisiana.
ETP’s general partner is owned by Energy Transfer Equity, L.P. For
more information, visit the Energy Transfer Partners, L.P. website
at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master
limited partnership that owns the general partner and 100% of the
incentive distribution rights (IDRs) of Energy Transfer Partners,
L.P. (NYSE:ETP) and Sunoco LP (NYSE:SUN). ETE also owns
approximately 2.6 million ETP common units and approximately 81.0
million ETP Class H Units, which track 90% of the underlying
economics of the general partner interest and IDRs of Sunoco
Logistics Partners L.P. (NYSE:SXL). On a consolidated basis, ETE’s
family of companies owns and operates approximately 71,000 miles of
natural gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer Equity,
L.P. website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master
limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary
pipeline, terminalling and acquisition and marketing assets which
are used to facilitate the purchase and sale of crude oil, natural
gas liquids, and refined products. Sunoco Logistics’ general
partner is a consolidated subsidiary of Energy Transfer Partners,
L.P. (NYSE: ETP). For more information, visit the Sunoco Logistics
Partners L.P. website at www.sunocologistics.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.
ENERGY TRANSFER
PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
September 30, December 31, 2016
2015
ASSETS Current assets $ 5,481 $ 4,698
Property, plant and equipment, net 49,082 45,087 Advances to
and investments in unconsolidated affiliates 4,648 5,003
Non-current derivative assets 11 — Other non-current assets, net
581 536 Intangible assets, net 3,985 4,421 Goodwill 4,139
5,428 Total assets $ 67,927 $ 65,173
LIABILITIES
AND EQUITY Current liabilities $ 6,182 $ 4,121
Long-term debt, less current maturities 29,182 28,553 Long-term
notes payable – related companies 83 233 Non-current derivative
liabilities 160 137 Deferred income taxes 4,438 4,082 Other
non-current liabilities 919 968 Commitments and
contingencies Series A Preferred Units 33 33 Redeemable
noncontrolling interests 15 15 Equity: Total partners’
capital 19,364 20,836 Noncontrolling interest 7,551
6,195 Total equity 26,915 27,031 Total liabilities
and equity $ 67,927 $ 65,173
ENERGY TRANSFER
PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2016
2015 2016 2015
REVENUES $ 5,531 $ 6,601 $ 15,301 $ 28,467 COSTS AND
EXPENSES: Cost of products sold 3,931 4,942 10,529 22,792 Operating
expenses 388 518 1,110 1,763 Depreciation, depletion and
amortization 503 471 1,469 1,451 Selling, general and
administrative 71 94 226
389 Total costs and expenses 4,893
6,025 13,334 26,395
OPERATING INCOME 638 576 1,967 2,072 OTHER INCOME (EXPENSE):
Interest expense, net (345 ) (333 ) (981 ) (979 ) Equity in
earnings of unconsolidated affiliates 65 214 260 388 Impairment of
investment in an unconsolidated affiliate (308 ) — (308 ) — Losses
on extinguishments of debt — (10 ) — (43 ) Losses on interest rate
derivatives (28 ) (64 ) (179 ) (14 ) Other, net 52
32 96 56 INCOME BEFORE
INCOME TAX EXPENSE (BENEFIT) 74 415 855 1,480 Income tax expense
(benefit) (64 ) 22 (131 ) (20 )
NET INCOME 138 393 986 1,500 Less: Net income (loss) attributable
to noncontrolling interest 64 (24 ) 231 182 Less: Net loss
attributable to predecessor — —
— (34 ) NET INCOME ATTRIBUTABLE TO PARTNERS 74 417
755 1,352 General Partner’s interest in net income 220 277 740 779
Class H Unitholder’s interest in net income 93 66 257 184 Class I
Unitholder’s interest in net income 2 15
6 80 Common Unitholders’
interest in net income (loss) $ (241 ) $ 59 $ (248 ) $ 309
NET INCOME (LOSS) PER COMMON UNIT: Basic $ (0.49 ) $ 0.11 $
(0.54 ) $ 0.70 Diluted $ (0.49 ) $ 0.10 $ (0.54 ) $ 0.68 WEIGHTED
AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: Basic 507.4 485.0 499.8
415.1 Diluted 507.4 487.3 499.8 417.7
SUPPLEMENTAL
INFORMATION
(Dollars and units in millions, except per
unit amounts)
(unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2016
2015 2016 2015
Reconciliation of net income to Adjusted EBITDA and
Distributable Cash Flow (a): Net income $ 138 $ 393 $ 986 $
1,500 Interest expense, net of interest capitalized 345 333 981 979
Income tax expense (benefit) (64 ) 22 (131 ) (20 ) Depreciation,
depletion and amortization 503 471 1,469 1,451 Non-cash
compensation expense 22 16 60 59 Losses on interest rate
derivatives 28 64 179 14 Unrealized (gains) losses on commodity
risk management activities 15 (47 ) 96 72 Inventory valuation
adjustments (37 ) 134 (143 ) (16 ) Impairment of investment in an
unconsolidated affiliate 308 — 308 — Losses on extinguishments of
debt — 10 — 43 Equity in earnings of unconsolidated affiliates (65
) (214 ) (260 ) (388 ) Adjusted EBITDA related to unconsolidated
affiliates 240 350 711 711 Other, net (43 ) (32 )
(84 ) (51 ) Adjusted EBITDA (consolidated) 1,390
1,500 4,172 4,354 Adjusted EBITDA related to unconsolidated
affiliates (240 ) (350 ) (711 ) (711 ) Distributable cash flow from
unconsolidated affiliates 124 228 384 517 Interest expense, net of
interest capitalized (345 ) (333 ) (981 ) (979 ) Amortization
included in interest expense (4 ) (9 ) (16 ) (30 ) Current income
tax (expense) benefit (11 ) (79 ) (23 ) 42 Maintenance capital
expenditures (97 ) (124 ) (234 ) (308 ) Other, net 7
4 13 11
Distributable Cash Flow (consolidated)
824 837 2,604 2,896 Distributable Cash Flow attributable to Sunoco
Logistics (100%) (240 ) (212 ) (696 ) (634 ) Distributions from
Sunoco Logistics to ETP 136 107 393 295 Distributions from PennTex
(b) 8 — 8 — Distributable Cash Flow attributable to Sunoco LP
(100%) (c) — — — (68 ) Distributions from Sunoco LP to ETP (c) — —
— 24 Distributable cash flow attributable to noncontrolling
interest in other consolidated subsidiaries (10 ) (5
) (26 ) (15 ) Distributable Cash Flow attributable to
the partners of ETP 718 727 2,283 2,498 Transaction-related
expenses 2 7 4 37
Distributable Cash Flow attributable to the partners of ETP,
as adjusted $ 720 $ 734 $ 2,287 $ 2,535
Distributions to the partners of ETP (d): Limited
Partners: Common Units held by public $ 554 $ 508 $ 1,607 $ 1,458
Common Units held by ETE 3 3 8 51 Class H Units held by ETE (e) 92
68 263 186 General Partner interests held by ETE 8 8 24 23
Incentive Distribution Rights (“IDRs”) held by ETE 346 320 1,012
937 IDR relinquishments net of Class I Unit distributions (f)
(127 ) (28 ) (271 ) (83 ) Total
distributions to be paid to the partners of ETP $ 876 $ 879
$ 2,643 $ 2,572 Common Units outstanding – end
of period (d) 512.0 495.6 512.0
495.6 Distribution coverage ratio (g) 0.82x
0.84x 0.87x 0.99x
(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, 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 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, depletion 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, 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 fair value
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.
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) Amount reflects distributions for the third quarter of 2016,
to be paid by PennTex on November 14, 2016 with respect to ETP’s
ownership interests of 6.3 million common units and 20 million
subordinated units of PennTex acquired on November 1, 2016.
(c) Amounts related to Sunoco LP reflect the periods through
June 30, 2015, subsequent to which Sunoco LP was deconsolidated and
is now reflected as an unconsolidated affiliate.
(d) Distributions on ETP Common Units and the number of ETP
Common Units outstanding at the end of the period, both as
reflected above, exclude amounts related to ETP Common Units held
by subsidiaries of ETP.
(e) Distributions on the Class H Units for the three and nine
months ended September 30, 2016 and 2015 were calculated as
follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015
General partner distributions and incentive distributions from
Sunoco Logistics $ 102 $ 76 $ 292 $ 207 90.05 % 90.05
% 90.05 % 90.05 % Total Class H Unit distributions $
92 $ 68 $ 263 $ 186
(f) IDR relinquishments for the three and nine months ended
September 30, 2016 include the impact of $85 million and
$160 million, respectively, of incentive distribution
reductions beginning with respect to the second quarter 2016
distributions, as agreed to between ETE and ETP in July 2016.
Additionally, the three and nine months ended September 30,
2016 include the impact of $8 million of incentive
distribution reductions beginning with respect to the third quarter
of 2016 distributions, as agreed to between ETE and ETP in November
2016 related to ETP’s acquisition of PennTex.
(g) 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.
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 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 September 30, 2016
2015
Segment Adjusted EBITDA: Midstream $ 314 $ 315 Liquids
transportation and services 240 195 Interstate transportation and
storage 278 286 Intrastate transportation and storage 133 127
Investment in Sunoco Logistics 312 289 Retail marketing 83 195 All
other 30 93 $ 1,390 $ 1,500
Midstream
Three Months Ended September 30, 2016
2015 Gathered volumes (MMBtu/d)
9,675,003 10,384,106 NGLs produced (Bbls/d) 420,877 413,426 Equity
NGLs (Bbls/d) 34,341 26,296 Revenues $ 1,343 $ 1,379 Cost of
products sold 867 915 Gross margin 476
464 Operating expenses, excluding non-cash compensation expense
(153 ) (148 ) Selling, general and administrative expenses,
excluding non-cash compensation expense (17 ) (9 ) Adjusted EBITDA
related to unconsolidated affiliates 7 6 Other 1
2 Segment Adjusted EBITDA $ 314 $ 315
Gathered volumes decreased primarily due to declines in the
South Texas, North Texas, and Mid-Continent/Panhandle regions. NGL
production increased due to increased gathering and processing
capacities in the Permian and Cotton Valley regions, partially
offset by declines in the South Texas, North Texas, and
Mid-Continent/Panhandle regions.
Segment Adjusted EBITDA for the midstream segment reflected an
increase in gross margin as follows:
Three Months Ended September 30, 2016
2015 Gathering and processing fee-based revenues $ 393 $ 418 Non
fee-based contracts and processing 83 46 Total gross
margin $ 476 $ 464
For the three months ended September 30, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to our
midstream segment decreased due to the net effects of the
following:
- an increase of $27 million in non-fee
based margin due to volume increases in the Permian region,
partially offset by volume declines in the South Texas, North
Texas, and Mid-Continent/Panhandle regions; and
- an increase of $10 million in non-fee
based margins due to higher crude oil and NGL prices; offset
by
- a decrease of $25 million in
fee-based margin due to volume declines in the South Texas, North
Texas, and Mid-Continent/Panhandle regions, partially offset by
increased gathering and processing volumes in the Permian and
Cotton Valley regions; and
- an increase in general and
administrative expenses of $8 million primarily due to an
increase of $3 million in insurance allocation from corporate, a
decrease of $3 million in capitalized overhead, and an increase of
$2 million in legal expenses.
Liquids Transportation and Services
Three Months Ended September 30, 2016
2015 Liquids transportation volumes
(Bbls/d) 647,018 509,894 NGL fractionation volumes (Bbls/d) 338,237
228,695 Revenues $ 1,207 $ 858 Cost of products sold 927
615 Gross margin 280 243 Unrealized (gains)
losses on commodity risk management activities 5 (4 ) Operating
expenses, excluding non-cash compensation expense (43 ) (40 )
Selling, general and administrative expenses, excluding non-cash
compensation expense (2 ) (4 ) Segment Adjusted
EBITDA $ 240 $ 195
NGL transportation volumes increased in all major producing
regions, including the Permian, North Texas, Southeast Texas, Eagle
Ford, and Louisiana. Our crude pipeline, originating in Nederland
and delivering into Lake Charles, also began transporting volumes
in April 2016, and transported approximately 69,000 Bbls/d during
the three months ended September 30, 2016.
Average daily fractionated volumes increased for the three
months ended September 30, 2016 compared to the same period
last year due to the ramp-up of our third 100,000 Bbls/d
fractionator at Mont Belvieu, Texas, which was commissioned in late
December 2015, as well as increased producer volumes as mentioned
above.
Segment Adjusted EBITDA for the liquids transportation and
services segment reflected an increase in gross margin as
follows:
Three Months Ended September 30, 2016
2015 Transportation margin $ 124 $ 109 Processing and fractionation
margin 103 76 Storage margin 50 41 Other margin 3 17
Total gross margin $ 280 $ 243
For the three months ended September 30, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to our
liquids transportation and services segment increased due to net
impact of the following:
- an increase in transportation fees of
$15 million primarily due to higher volumes transported out of the
Permian and North Texas regions;
- an increase of $27 million in
processing and fractionation margin (excluding change in unrealized
gains of $1 million) primarily due to the ramp-up of our third
100,000 Bbls/d fractionator at Mont Belvieu, Texas, along with
higher producer volumes, primarily from West Texas;
- an increase in storage margin of $9
million partially due to an increase in demand for leased storage
capacity as a result of favorable market conditions, which
increased fee-based storage revenues by $2 million. The remainder
of the storage margin increase was primarily due to an increase in
throughput fees, as shuttle volumes increased by 9%;
- a decrease of $6 million in other
margin (excluding increases in unrealized losses of $9 million)
primarily due to fluctuating optimization opportunities at our Mont
Belvieu facility;
- an increase in operating expenses of $3
million primarily due to increased costs associated with our third
fractionator at Mont Belvieu; and
- a decrease in general and
administrative expenses of $2 million due to lower capitalized
overhead as a result of reduced capital spending.
Interstate Transportation and Storage
Three Months Ended September 30, 2016
2015 Natural gas transported (MMBtu/d)
5,385,679 5,903,285 Natural gas sold (MMBtu/d) 19,478 19,171
Revenues $ 236 $ 248 Operating expenses, excluding non-cash
compensation, amortization and accretion expenses (76 ) (78 )
Selling, general and administrative expenses, excluding non-cash
compensation, amortization and accretion expenses (13 ) (14 )
Adjusted EBITDA related to unconsolidated affiliates 131
130 Segment Adjusted EBITDA $ 278 $ 286
Distributions from unconsolidated affiliates $ 84 $
104
Transported volumes decreased 346,817 MMBtu/d on the Trunkline
pipeline primarily due to lower utilization resulting from lower
customer demand, a decrease of 115,926 MMBtu/d on the Sea Robin
pipeline due to reduced supply as a result of producer system
maintenance and overall lower production, and a decrease of 107,178
MMBtu/d on the Transwestern pipeline due to lower customer demand
in the West and San Juan areas, partially offset by opportunities
in the Texas Intrastate markets.
Segment Adjusted EBITDA. For the three months ended
September 30, 2016 compared to the same period last year,
Segment Adjusted EBITDA related to our interstate transportation
and storage segment decreased due to the net effect of the
following:
- a decrease of $9 million in revenues
due to contract restructuring on the Tiger pipeline, a decrease of
$6 million due to lower rates on the Panhandle, Trunkline and
Transwestern pipelines due to weak spreads, and a decrease of $3
million on the Sea Robin pipeline due to declines in production and
third party maintenance. These decreases were partially offset by
higher reservation revenues on the Transwestern pipeline of $4
million from a growth project and higher parking revenues of
$2 million, primarily on the Panhandle pipeline; partially
offset by
- a decrease of $2 million in operating
expenses primarily due to lower maintenance projects and lower
allocated costs; and
- a decrease of $1 million in selling,
general and administrative expenses primarily due to insurance
proceeds received in 2016 and lower allocated costs.
The decrease in cash distributions from unconsolidated
affiliates is due to higher Citrus cash taxes.
Intrastate Transportation and Storage
Three Months Ended September 30, 2016
2015 Natural gas transported (MMBtu/d)
8,088,132 8,308,105 Revenues $ 758 $ 592 Cost of products sold
586 428 Gross margin 172 164 Unrealized
gains on commodity risk management activities (7 ) (4 ) Operating
expenses, excluding non-cash compensation expense (43 ) (43 )
Selling, general and administrative expenses, excluding non-cash
compensation expense (5 ) (6 ) Adjusted EBITDA related to
unconsolidated affiliates 15 16 Other 1 —
Segment Adjusted EBITDA $ 133 $ 127
Distributions from unconsolidated affiliates $ 13 $ 14
Transported volumes decreased primarily due to lower production
volumes, primarily in the Barnett Shale region, partially offset by
increased volumes related to significant new long-term
transportation contracts.
Segment Adjusted EBITDA. For the three months ended
September 30, 2016 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:
- a decrease of $1 million in
transportation fees due to lower throughput volumes;
- an increase of $6 million in natural
gas sales (excluding changes in unrealized losses of $1 million)
and other primarily due to higher realized gains from the buying
and selling of gas along our system;
- a decrease of $2 million from the sale
of retained fuel primarily due to lower throughput volumes;
- an increase of $2 million in storage
margin (excluding net changes in unrealized amounts of $4 million
related to fair value inventory adjustments and unrealized gains
and losses on derivatives), primarily driven by the timing of
withdrawals and sales of natural gas from our Bammel storage
cavern; and
- a decrease of $1 million in general and
administrative expenses due to lower insurance costs, as well as
lower allocated overhead costs due to shared services cost
savings.
Investment in Sunoco Logistics
Three Months Ended September 30, 2016
2015 Revenues $ 2,189 $ 2,406 Cost of
products sold 1,818 2,144 Gross margin
371 262 Unrealized (gains) losses on commodity risk management
activities 16 (31 ) Operating expenses, excluding non-cash
compensation expense (38 ) (40 ) Selling, general and
administrative expenses, excluding non-cash compensation expense
(25 ) (23 ) Inventory valuation adjustments (37 ) 103 Adjusted
EBITDA related to unconsolidated affiliates 25
18 Segment Adjusted EBITDA $ 312 $ 289
Distributions from unconsolidated affiliates $ 4 $ 5
Segment Adjusted EBITDA. For the three months ended
September 30, 2016 compared to the same period last year,
Segment Adjusted EBITDA related to Sunoco Logistics increased due
to the following:
- an increase of $11 million from Sunoco
Logistics’ NGLs operations, primarily attributable to increased
volumes and fees from Sunoco Logistics’ Mariner NGLs projects,
which includes Sunoco Logistics’ NGLs pipelines and Marcus Hook and
Nederland facilities; and
- an increase of $26 million from Sunoco
Logistics’ refined products operations, primarily due to improved
operating results from Sunoco Logistics’ refined products
pipelines, which benefited from higher volumes on Sunoco Logistics’
Allegheny Access pipeline, and higher results from Sunoco
Logistics’ refined products acquisition and marketing activities.
Improved contributions from joint venture interests and Sunoco
Logistics’ refined products terminals also contributed to the
increase; offset by
- a decrease of $14 million from Sunoco
Logistics’ crude oil operations, primarily due to lower operating
results from Sunoco Logistics’ crude oil acquisition and marketing
activities, which includes transportation and storage fees related
to Sunoco Logistics’ crude oil pipelines and terminal facilities,
resulting from lower crude oil differentials compared to the prior
year period. This decrease was partially offset by improved results
from Sunoco Logistics’ crude oil pipelines which benefited from the
Delaware Basin Extension and Permian Longview and Louisiana
Extension pipelines that commenced operations in the third quarter
2016. Higher contributions from joint venture interests also
contributed to the offset.
Retail Marketing
Three Months Ended September 30, 2016
2015 Revenues $ — $ 1,363 Cost of products
sold — 1,149 Gross margin — 214 Unrealized
gains on commodity risk management activities — (1 ) Operating
expenses, excluding non-cash compensation expense — (149 ) Selling,
general and administrative expenses, excluding non-cash
compensation expense — (8 ) Inventory valuation adjustments — 4
Adjusted EBITDA related to unconsolidated affiliates 83
135 Segment Adjusted EBITDA $ 83 $ 195
Distributions from unconsolidated affiliates $ 36 $ —
Due to the transfer of the general partnership interest of
Sunoco LP from ETP to ETE in 2015 and completion of the dropdown of
remaining Retail Marketing interests from ETP to Sunoco LP in March
2016, the Partnership’s retail marketing segment has been
deconsolidated, and the segment results now reflect an equity
method investment in limited partnership units of Sunoco LP. As of
September 30, 2016, the Partnership owns 43.5 million
Sunoco LP common units, representing 45.6% of Sunoco LP’s total
outstanding common units.
For the three months ended September 30, 2016,
distributions from unconsolidated affiliates reflect the
distributions to be received from Sunoco LP for the period. No
comparable amounts are reflected in the prior period, because
Sunoco LP was a consolidated subsidiary at that time.
All Other
Three Months Ended September 30, 2016
2015 Revenues $ 956 $ 976 Cost of
products sold 877 855 Gross margin 79
121 Unrealized (gains) losses on commodity risk management
activities 1 (7 ) Operating expenses, excluding non-cash
compensation expense (20 ) (33 ) Selling, general and
administrative expenses, excluding non-cash compensation expense
(14 ) (33 ) Adjusted EBITDA related to unconsolidated affiliates
(20 ) 47 Other 23 23 Eliminations (19 ) (25 ) Segment
Adjusted EBITDA $ 30 $ 93 Distributions from
unconsolidated affiliates $ 2 $ 16
Amounts reflected in our all other segment primarily
include:
- our natural gas marketing and
compression operations;
- a non-controlling interest in PES,
comprising 33% of PES’ outstanding common units; and
- our investment in Coal Handling, an
entity that owns and operates end-user coal handling
facilities.
For the three months ended September 30, 2016 compared to
the same period last year, Segment Adjusted EBITDA decreased due to
lower earnings from our investment in PES, a decrease in
revenue-generating horsepower and lower project revenue from our
compression operations, partially offset by a favorable variance
from lower transaction-related expenses in 2016 and higher selling,
general and administrative expenses in 2015.
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) for the nine months
ended September 30, 2016:
Growth Maintenance Total
Direct(1): Midstream $ 868 $ 82 $ 950 Liquids transportation and
services(2) 1,460 14 1,474 Interstate transportation and storage(2)
138 55 193 Intrastate transportation and storage 34 11 45 All other
(including eliminations) 66 32 98 Total direct
capital expenditures 2,566 194 2,760 Indirect(1): Investment in
Sunoco Logistics 1,237 40 1,277 Total capital
expenditures $ 3,803 $ 234 $ 4,037
(1)
Indirect capital expenditures comprise those funded by our
publicly traded subsidiary; all other capital expenditures are
reflected as direct capital expenditures.
(2)
Includes capital expenditures related to the Bakken, Rover and
Bayou Bridge pipeline projects, which includes $268 million related
to Sunoco Logistics’ proportionate ownership in the Bakken and
Bayou Bridge pipeline projects.
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 $ 1,225 $ 1,275 $
100 $ 110 Liquids transportation and services: NGL 875 900 20 25
Crude(2)(3) 300 325 — — Interstate transportation and storage(2)(3)
210 250 95 105 Intrastate transportation and storage(3) 40 50 20 25
All other (including eliminations) 90 100 40
45 Total direct capital expenditures $ 2,740 $ 2,900 $ 275 $
310
(1)
Direct capital expenditures exclude those funded by our
publicly traded subsidiary.
(2)
Includes capital expenditures related to our proportionate
ownership of the Bakken, Rover and Bayou Bridge pipeline projects.
(3)
Net of amounts forecasted to be financed at the asset level with
non-recourse debt of approximately $1.17 billion.
We expect total direct growth capital expenditures of
approximately $1.9 billion in 2017, net of amounts expected to
be financed at the asset level.
SUPPLEMENTAL
INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)
Three Months Ended September 30, 2016
2015
Equity in earnings
(losses) of unconsolidated affiliates: Citrus $ 31 $ 29 FEP 12
14 PES (26 ) 39 MEP 9 10 HPC 8 9 AmeriGas (2 ) (2 ) Sunoco, LLC —
(13 ) Sunoco LP 16 117 Other 17 11
Total equity in earnings of unconsolidated affiliates $ 65 $
214
Adjusted EBITDA related to unconsolidated
affiliates: Citrus $ 90 $ 88 FEP 19 19 PES (19 ) 46 MEP 22 23
HPC 15 16 Sunoco, LLC — 53 Sunoco LP 83 81 Other 30
24 Total Adjusted EBITDA related to unconsolidated
affiliates $ 240 $ 350
Distributions
received from unconsolidated affiliates: Citrus $ 50 $ 65 FEP
17 19 AmeriGas 3 2 PES — 15 MEP 17 20 HPC 13 14 Sunoco LP 36 —
Other 13 21 Total distributions
received from unconsolidated affiliates $ 149 $ 156
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161109006313/en/
Investor Relations:Energy TransferLyndsay Hannah or Brent
Ratliff, 214-981-0795orMedia Relations:Granado
Communications GroupVicki Granado, 214-599-8785214-498-9272
(cell)
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