- Net income attributable to partners of $1.01 billion,
reflecting an increase over the prior period primarily due to
higher operating income.
- Adjusted EBITDA of $2.81 billion, up 5 percent from the fourth
quarter of 2018.
- Distributable Cash Flow attributable to partners of $1.55
billion, up 2 percent from the fourth quarter of 2018.
- Distribution coverage ratio of 1.88x, yielding excess coverage
of $725 million of Distributable Cash Flow attributable to partners
in excess of distributions.
- Provides 2020 outlook for Adjusted EBITDA of $11.0 billion to
$11.4 billion.
- 2020 growth capital expenditures outlook, updated to include
$300 million of capital expenditures related to the acquisition of
SemGroup Corporation (“SemGroup”), expected to range from $3.9
billion to $4.1 billion.
- Reduces expected annual run-rate growth capital expenditures
for 2021 and beyond to $2 billion to $2.5 billion based on
increased project returns threshold.
Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”)
today reported financial results for the quarter and year ended
December 31, 2019.
ET reported net income attributable to partners for the three
months ended December 31, 2019 of $1.01 billion, an increase of
$395 million compared to the three months ended December 31, 2018.
For the three months ended December 31, 2019, net income per
limited partner unit (basic and diluted) was $0.38 per unit.
Adjusted EBITDA for the three months ended December 31, 2019 was
$2.81 billion, an increase of $138 million compared to the three
months ended December 31, 2018. Results were supported by continued
strong performance among several of the Partnership’s core
segments, with additional record operating performance in our NGL
and refined products transportation and services segment.
Distributable Cash Flow attributable to partners, as adjusted,
for the three months ended December 31, 2019 was $1.55 billion, an
increase of $30 million compared to the three months ended December
31, 2018. The increase was primarily due to the increase in
Adjusted EBITDA.
Key accomplishments and recent developments:
Operational
- In October 2019, the Permian Express 4 pipeline expansion went
into full service.
- In December 2019, ET and Shell US LNG, LLC (“Shell”) announced
that a comprehensive commercial tender package has been issued to
engineering, procurement and construction contractors to submit
final commercial bids for the proposed Lake Charles LNG
liquefaction project being jointly developed by ET and Shell on a
50/50 basis. The project would modify ET’s existing LNG import
facility in Lake Charles, Louisiana to add LNG liquefaction
capacity of 16.45 million tonnes per annum for export to global
markets.
- In February 2020, Frac VII was placed in service, bringing the
total fractionation capacity at Mont Belvieu to over 900,000
barrels per day.
Strategic
- On December 5, 2019, ET successfully acquired SemGroup and as a
result of the merger, ET issued approximately 57.6 million of its
common units to SemGroup stockholders. The combined operations of
the two companies are expected to generate annual run-rate
efficiencies of more than $170 million, consisting of commercial
and operational synergies of $80 million, financial savings of $50
million and cost savings of $40 million.
Financial
- In January 2020, Energy Transfer Operating, LP (“ETO”)
completed a registered offering of $4.5 billion of its senior
notes, consisting of $1.0 billion aggregate principal amount of
2.90% senior notes due 2025, $1.5 billion aggregate principal
amount of 3.75% senior notes due 2030 and $2.0 billion aggregate
principal amount of 5.0% senior notes due 2050. ETO also completed
a public offering of 500,000 of its 6.75% Series F Fixed-Rate Reset
Cumulative Redeemable Perpetual Preferred Units at a price of
$1,000 per unit and 1,100,000 of its 7.125% Series G Fixed-Rate
Reset Cumulative Redeemable Perpetual Preferred Units at a price of
$1,000 per unit. ETO used the aggregate net proceeds of
approximately $6.04 billion from both offerings to repay certain of
its outstanding indebtedness, including prepayment of certain
senior indebtedness, and for general partnership purposes.
- In January 2020, ET announced a quarterly distribution of
$0.305 per unit ($1.220 annualized) on ET common units for the
quarter ended December 31, 2019.
- As of December 31, 2019, ETO’s $6.00 billion revolving credit
facilities had an aggregate $1.71 billion of available capacity,
and ETO’s leverage ratio, as defined by its credit agreement, was
3.96x.
Energy Transfer 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% of the Partnership’s
consolidated Adjusted EBITDA in 2019. The vast 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 4:00 p.m.
Central Time/5:00 p.m. Eastern Time on Wednesday, February 19, 2020
to discuss its fourth quarter 2019 results. The conference call
will be broadcast live via an internet webcast, which can be
accessed through www.energytransfer.com or ir.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
domestic 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, 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., also owns Lake Charles LNG Company, as well as 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 46.1 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
with core operations that include the distribution of motor fuel to
approximately 10,000 convenience stores, independent dealers,
commercial customers and distributors located in more than 30
states, as well as refined product transportation and terminalling
assets. SUN’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 natural gas 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 natural gas 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.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current assets
$
7,867
$
6,750
Property, plant and equipment, net
74,193
66,963
Advances to and investments in
unconsolidated affiliates
3,460
2,642
Lease right-of-use assets, net (a)
964
—
Other non-current assets, net
1,075
1,006
Intangible assets, net
6,154
6,000
Goodwill
5,167
4,885
Total assets
$
98,880
$
88,246
LIABILITIES AND EQUITY
Current liabilities
$
7,724
$
9,310
Long-term debt, less current
maturities
51,028
43,373
Non-current derivative liabilities
273
104
Non-current operating lease liabilities
(a)
901
—
Deferred income taxes
3,208
2,926
Other non-current liabilities
1,162
1,184
Commitments and contingencies
Redeemable noncontrolling interests
739
499
Equity:
Total partners’ capital
21,827
20,559
Noncontrolling interest
12,018
10,291
Total equity
33,845
30,850
Total liabilities and equity
$
98,880
$
88,246
(a)
Lease-related balances as of December 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.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per unit
data)
(unaudited)
Three Months Ended December
31,
Year Ended December 31,
2019
2018
2019
2018
REVENUES
$
13,720
$
13,573
$
54,213
$
54,087
COSTS AND EXPENSES:
Cost of products sold
10,120
9,977
39,727
41,658
Operating expenses
888
809
3,294
3,089
Depreciation, depletion and
amortization
804
750
3,147
2,859
Selling, general and administrative
195
187
694
702
Impairment losses
12
431
74
431
Total costs and expenses
12,019
12,154
46,936
48,739
OPERATING INCOME
1,701
1,419
7,277
5,348
OTHER INCOME (EXPENSE):
Interest expense, net of interest
capitalized
(584
)
(544
)
(2,331
)
(2,055
)
Equity in earnings of unconsolidated
affiliates
78
86
302
344
Losses on extinguishments of debt
—
(6
)
(18
)
(112
)
Gains (losses) on interest rate
derivatives
130
(70
)
(241
)
47
Other, net
6
(35
)
105
62
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE (BENEFIT)
1,331
850
5,094
3,634
Income tax expense (benefit) from
continuing operations
(19
)
(2
)
195
4
INCOME FROM CONTINUING OPERATIONS
1,350
852
4,899
3,630
Loss from discontinued operations, net of
income taxes
—
—
—
(265
)
NET INCOME
1,350
852
4,899
3,365
Less: Net income attributable to
noncontrolling interest
325
220
1,256
1,632
Less: Net income attributable to
redeemable noncontrolling interests
13
15
51
39
NET INCOME ATTRIBUTABLE TO PARTNERS
1,012
617
3,592
1,694
Convertible Unitholders’ interest in
income
—
—
—
33
General Partner’s interest in net
income
1
—
4
3
Limited Partners’ interest in net
income
$
1,011
$
617
$
3,588
$
1,658
NET INCOME PER LIMITED PARTNER UNIT:
Basic
$
0.38
$
0.26
$
1.37
$
1.16
Diluted
$
0.38
$
0.26
$
1.36
$
1.15
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic
2,646.2
2,332.1
2,628.0
1,423.8
Diluted
2,653.3
2,339.4
2,637.6
1,461.4
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Dollars and units in
millions)
(unaudited)
Three Months Ended December
31,
Year Ended December 31,
2019
2018
2019
2018
Reconciliation of net income to
Adjusted EBITDA and Distributable Cash Flow (b):
Net income
$
1,350
$
852
$
4,899
$
3,365
Loss from discontinued operations
—
—
—
265
Interest expense, net of interest
capitalized
584
544
2,331
2,055
Impairment losses
12
431
74
431
Income tax expense (benefit) from
continuing operations
(19
)
(2
)
195
4
Depreciation, depletion and
amortization
804
750
3,147
2,859
Non-cash compensation expense
28
23
113
105
(Gains) losses on interest rate
derivatives
(130
)
70
241
(47
)
Unrealized (gains) losses on commodity
risk management activities
95
(244
)
5
11
Losses on extinguishments of debt
—
6
18
112
Inventory valuation adjustments
(8
)
135
(79
)
85
Equity in earnings of unconsolidated
affiliates
(78
)
(86
)
(302
)
(344
)
Adjusted EBITDA related to unconsolidated
affiliates
156
152
626
655
Adjusted EBITDA from discontinued
operations
—
—
—
(25
)
Other, net
13
38
(54
)
(21
)
Adjusted EBITDA (consolidated)
2,807
2,669
11,214
9,510
Adjusted EBITDA related to unconsolidated
affiliates
(156
)
(152
)
(626
)
(655
)
Distributable Cash Flow from
unconsolidated affiliates
108
95
415
407
Interest expense, net of interest
capitalized
(584
)
(544
)
(2,331
)
(2,057
)
Subsidiary preferred unitholders’
distributions
(68
)
(54
)
(253
)
(170
)
Current income tax (expense) benefit
45
(7
)
22
(472
)
Transaction-related income taxes
(31
)
—
(31
)
470
Maintenance capital expenditures
(215
)
(137
)
(655
)
(510
)
Other, net(c)
30
19
85
49
Distributable Cash Flow (consolidated)
1,936
1,889
7,840
6,572
Distributable Cash Flow attributable to
Sunoco LP (100%)
(120
)
(115
)
(450
)
(446
)
Distributions from Sunoco LP
42
43
165
166
Distributable Cash Flow attributable to
USAC (100%)
(58
)
(55
)
(222
)
(148
)
Distributions from USAC
24
21
90
73
Distributable Cash Flow attributable to
noncontrolling interest in other non-wholly-owned consolidated
subsidiaries
(286
)
(294
)
(1,113
)
(874
)
Distributable Cash Flow attributable to
the partners of ET – pro forma for the ETO Merger (a)
1,538
1,489
6,310
5,343
Transaction-related expenses
8
27
14
52
Distributable Cash Flow attributable to
the partners of ET, as adjusted – pro forma for the ETO Merger
(a)
$
1,546
$
1,516
$
6,324
$
5,395
Distributions to partners – pro forma
for the ETO Merger (a):
Limited Partners (d)
$
820
$
799
$
3,221
$
3,104
General Partner
1
1
4
4
Total distributions to be paid to
partners
$
821
$
800
$
3,225
$
3,108
Common Units outstanding – end of
period
2,689.6
2,619.4
2,689.6
2,619.4
Distribution coverage ratio – pro forma
for the ETO Merger (a)
1.88x
1.90x
1.96x
1.74x
(a)
The closing of the restructuring
transaction in October 2018 (the “ETO Merger”) 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 and year ended December 31, 2018. In order to provide
information on a comparable basis for pre-ETO Merger and post-ETO
Merger periods, the Partnership has included certain pro forma
information for the year ended December 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 and USAC 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 ETO 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 ETO 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 any such measure 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 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, inventory
valuation adjustments, non-cash impairment charges, losses on
extinguishments of debt and other non-operating income or expense
items. Adjusted EBITDA reflects amounts for unconsolidated
affiliates based on the same recognition and measurement methods
used to record equity in earnings of unconsolidated affiliates.
Adjusted EBITDA related to unconsolidated affiliates excludes the
same items with respect to the unconsolidated affiliate as those
excluded from the calculation of Adjusted EBITDA, such as interest,
taxes, depreciation, depletion, amortization and other non-cash
items. Although these amounts are excluded from Adjusted EBITDA
related to unconsolidated affiliates, such exclusion should not be
understood to imply that we have control over the operations and
resulting revenues and expenses of such affiliates. We do not
control our unconsolidated affiliates; therefore, we do not control
the earnings or cash flows of such affiliates.
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, inventory valuation
adjustments, non-cash impairment charges, losses on extinguishments
of debt and deferred income taxes. 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 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; and
- 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)
For the three months and year ended
December 31, 2019, “Other, net” includes $19 million of
Distributable Cash Flow attributable to the operations of SemGroup
for October 1 through December 4, 2019, which represents amounts
distributable to ET’s common unitholders (including the holders of
the common units issued in the SemGroup acquisition) with respect
the fourth quarter 2019 distribution.
(d)
The amount reflected for the year ended
December 31, 2018 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.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUMMARY
ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
(Tabular dollar amounts in
millions)
(unaudited)
Three Months Ended December
31,
2019
2018
Segment Adjusted EBITDA:
Intrastate transportation and storage
$
222
$
306
Interstate transportation and storage
434
479
Midstream
397
402
NGL and refined products transportation
and services
743
569
Crude oil transportation and services
715
636
Investment in Sunoco LP
168
180
Investment in USAC
110
104
All other
18
(7
)
Total Segment Adjusted EBITDA
$
2,807
$
2,669
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. Among the GAAP measures reported by the Partnership,
the most directly comparable measure to segment margin is Segment
Adjusted EBITDA; a reconciliation of segment margin to Segment
Adjusted EBITDA is included in the following tables for each
segment where segment margin is presented.
In addition, for certain segments, the sections below include
information on the components of segment margin by sales type,
which components are included in order to provide additional
disaggregated information to facilitate the analysis of segment
margin and Segment Adjusted EBITDA. For example, these components
include transportation margin, storage margin, and other margin.
These components of segment margin are calculated consistent with
the calculation of segment margin; therefore, these components also
exclude charges for depreciation, depletion and amortization.
Intrastate Transportation and
Storage
Three Months Ended December
31,
2019
2018
Natural gas transported (BBtu/d)
13,098
11,708
Revenues
$
714
$
1,127
Cost of products sold
436
777
Segment margin
278
350
Unrealized (gains) losses on commodity
risk management activities
(1
)
5
Operating expenses, excluding non-cash
compensation expense
(53
)
(48
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(9
)
(7
)
Adjusted EBITDA related to unconsolidated
affiliates
7
6
Segment Adjusted EBITDA
$
222
$
306
For the three months ended December 31, 2019 compared to the
same period last year, transported volumes increased primarily due
to increased utilization of our Texas pipelines.
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our intrastate transportation and storage segment
decreased due to the net impacts of the following:
- a decrease of $101 million in realized natural gas sales and
other primarily due to lower realized gains from pipeline
optimization activity;
- an increase of $5 million in operating expenses primarily due
to a $3 million increase in maintenance projects costs, a $3
million increase in outside services and materials and a $2 million
increase in ad valorem tax expense, partially offset by lower
allocated overhead costs and a decrease in cost of fuel
consumption;
- a decrease of $4 million in retained fuel revenues due to lower
gas prices; and
- a decrease of $1 million in realized storage margin primarily
due to lower realized optimization; partially offset by
- an increase of $28 million in transportation fees primarily due
to new contracts, as well as volume ramp-ups on Red Bluff Express.
The increase also included the impact of a non-recurring adjustment
to a transportation services agreement in the prior period.
Interstate Transportation and
Storage
Three Months Ended December
31,
2019
2018
Natural gas transported (BBtu/d)
11,620
11,062
Natural gas sold (BBtu/d)
17
18
Revenues
$
493
$
495
Operating expenses, excluding non-cash
compensation, amortization and accretion expenses
(144
)
(120
)
Selling, general and administrative
expenses, excluding non-cash compensation, amortization and
accretion expenses
(23
)
(8
)
Adjusted EBITDA related to unconsolidated
affiliates
109
118
Other
(1
)
(6
)
Segment Adjusted EBITDA
$
434
$
479
Transported volumes reflected an increase due to stronger demand
for delivery to markets in the Western U.S., the successful
addition of new contracted volumes for delivery out of the
Haynesville Shale, and higher volumes on the Rover pipeline; offset
by lower utilization of contracted capacity on the Panhandle
Eastern and Trunkline pipelines.
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our interstate transportation and storage segment
decreased due to the net impacts of the following:
- an increase of $24 million in operating expenses primarily due
to an increase in ad valorem tax expense of $25 million on the
Rover pipeline system due to placing the final portions of this
asset into service in November 2018 and additional operating
expenses of $3 million for assets acquired in 2019, offset by lower
gas imbalances and system gas activity of $6 million;
- an increase of $15 million in selling, general and
administrative expenses primarily due to an increase of $5 million
resulting from the reclassification of an OPEB funding requirement
adjustment, an increase of $5 million in insurance expense, an
increase of $4 million in overhead allocations and an increase of
$2 million related to assets acquired in 2019; and
- a decrease of $9 million in Adjusted EBITDA related to
unconsolidated affiliates primarily resulting from the
re-contracting of expiring contracts on Midcontinent Express
Pipeline, partially offset by gains on the Citrus pipeline system;
partially offset by
- an increase of $5 million in other primarily due to the
reclassification of an OPEB funding requirement adjustment.
Midstream
Three Months Ended December
31,
2019
2018
Gathered volumes (BBtu/d)
14,000
12,827
NGLs produced (MBbls/d)
583
558
Equity NGLs (MBbls/d)
29
25
Revenues
$
1,535
$
1,781
Cost of products sold
899
1,172
Segment margin
636
609
Operating expenses, excluding non-cash
compensation expense
(217
)
(193
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(27
)
(22
)
Adjusted EBITDA related to unconsolidated
affiliates
6
8
Other
(1
)
—
Segment Adjusted EBITDA
$
397
$
402
For the three months ended December 31, 2019 compared to the
same period last year, gathered volumes increased primarily due to
increases in the Northeast, Permian, Ark-La-Tex, South Texas and
North Texas regions. NGL production increased due to increases in
the Permian region, partially offset by ethane rejection in the
South Texas and North Texas regions.
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our midstream segment decreased due to the net impacts
of the following:
- a decrease of $18 million in non fee-based margin due to lower
NGL prices of $8 million and lower gas prices of $21 million,
partially offset by an increase of $11 million in non fee-based
margin due to increased throughput volume in the Permian
region;
- an increase of $45 million in fee-based margin due to volume
growth in the Northeast, Permian and South Texas regions;
- an increase of $24 million in operating expenses due to
increases of $17 million in maintenance project costs, $6 million
in outside services and $2 million in materials; and
- an increase of $5 million in selling, general and
administrative expenses due to an increase of $3 million in
insurance expense and a decrease of $2 million in capitalized
overhead.
NGL and Refined Products Transportation
and Services
Three Months Ended December
31,
2019
2018
NGL transportation volumes (MBbls/d)
1,325
1,115
Refined products transportation volumes
(MBbls/d)
535
601
NGL and refined products terminal volumes
(MBbls/d)
935
898
NGL fractionation volumes (MBbls/d)
734
594
Revenues
$
3,120
$
2,946
Cost of products sold
2,257
2,106
Segment margin
863
840
Unrealized (gains) losses on commodity
risk management activities
66
(112
)
Operating expenses, excluding non-cash
compensation expense
(185
)
(156
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(26
)
(22
)
Adjusted EBITDA related to unconsolidated
affiliates
23
19
Other
2
—
Segment Adjusted EBITDA
$
743
$
569
For the three months ended December 31, 2019 compared to the
same period last year, NGL transportation volumes on our Texas NGL
pipeline system 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 our Mariner East 2 pipeline system.
Refined products transportation volumes decreased for the three
months ended December 31, 2019 compared to the same period last
year primarily due to the closure of a third-party refinery,
negatively impacting supply on our system in 2019. These decreases
are partially offset by the initiation of service on the JC Nolan
Pipeline in the third quarter of 2019.
NGL and refined products terminal volumes increased for the
three months ended December 31, 2019 compared to the same period
last year primarily due to the initiation of service on our Mariner
East 2 pipeline system which commenced operations in December 2018.
This increase was partially offset by lower volumes from our
refined products marketing terminals due to the closure of a
third-party refinery and lower volumes exported out of our
Nederland terminal.
Average fractionated volumes at our Mont Belvieu, Texas
fractionation facility increased for the three months ended
December 31, 2019 compared to the same period last year primarily
due to the commissioning of our sixth fractionator in February
2019.
Segment Adjusted EBITDA. For the three months ended December 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 $102 million in transportation margin primarily
due to a $77 million increase from the initiation of service on our
Mariner East 2 pipeline, which commenced in December 2018, and a
$33 million increase resulting from higher throughput volumes
received from the Permian region on our Texas NGL pipelines. These
increases were partially offset by lower propane throughput during
the fourth quarter of 2019, as well as a $7 million decrease due to
the closure of the a third-party refinery during 2019, which
negatively impacted supply to our refined product transportation
system;
- an increase of $29 million in fractionators and refinery
services margin primarily due to the commissioning of our sixth
fractionator in February 2019 and higher NGL volumes from the
Permian and North Texas regions feeding our Mont Belvieu
fractionation facility;
- an increase of $61 million in marketing margin primarily due to
optimization gains of $85 million related to the sale of NGL
component products at our Mont Belvieu facility due to higher
volumes and more favorable market conditions, a $6 million increase
from our butane and gasoline blending operations, and a $3 million
increase due to the initiation of service on the JC Nolan Pipeline.
These increases were partially offset by a $35 million decrease due
to capacity lease fees incurred by our marketing affiliate on our
Mariner East 2 pipeline;
- an increase of $10 million in terminal services margin
primarily due to a $40 million increase primarily resulting from
the initiation of service on our Mariner East 2 pipeline which
commenced operations in December 2018. This increase was partially
offset by a $7 million decrease due to fewer vessels exported out
of our Nederland terminal, a $7 million decrease in expense
reimbursements from third parties on Mariner East 1, a $6 million
decrease due to lower volumes from third party pipelines and lower
truck and rail deliveries into our to our Marcus Hook Industrial
Terminal, a $5 million decrease resulting from the timing of
affiliate vessels loaded at Marcus Hook, and a $3 million negative
adjustment for product losses; partially offset by
- an increase of $29 million in operating expenses primarily due
to a $10 million increase in employee and ad valorem tax expenses
on our terminals, fractionators, and transport operations, a $8
million increase in maintenance project costs, a $6 million
increase due to the write-off of a customer reimbursement, a $4
million increase in contract services expenses, and a $2 million
increase in material costs. These increases were partially offset
by an $8 million decrease in allocated overhead costs;
- an increase in general and administrative expenses of $4
million primarily due to a $3 million increase in allocated
overhead costs and a $3 million increase in insurance
expenses.
Crude Oil Transportation and
Services
Three Months Ended December
31,
2019
2018
Crude transportation volumes (MBbls/d)
4,734
4,330
Crude terminals volumes (MBbls/d)
1,923
2,202
Revenues
$
4,762
$
4,346
Cost of products sold
3,901
3,407
Segment margin
861
939
Unrealized (gains) losses on commodity
risk management activities
31
(132
)
Operating expenses, excluding non-cash
compensation expense
(160
)
(150
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(24
)
(22
)
Adjusted EBITDA related to unconsolidated
affiliates
8
1
Other
(1
)
—
Segment Adjusted EBITDA
$
715
$
636
Segment Adjusted EBITDA. For the three months ended December 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 $85 million in segment margin (excluding
unrealized gains and losses on commodity risk management
activities) primarily due to a favorable inventory valuation
adjustment of $59 million for the current period compared to an
unfavorable inventory valuation adjustment of $139 million for the
prior period, partially offset by a reduction of $101 million due
to lower basis spreads, net of hedges. We also realized gains of
$23 million from our Bayou Bridge Pipeline and increased revenues
from Permian gathering activity of $13 million, offset by losses of
$23 million from our Oklahoma assets resulting from a non-recurring
deficiency payment recognized in the prior period and $21 million
from our Texas crude pipelines system resulting from lower rates,
offset by higher volumes; and
- an increase of $7 million in Adjusted EBITDA related to
unconsolidated affiliates due to higher margin from jet fuel sales
by our joint ventures; partially offset by
- an increase of $2 million in selling, general and
administrative expenses primarily due to an increase in insurance
expense.
Investment in Sunoco LP
Three Months Ended December
31,
2019
2018
Revenues
$
4,098
$
3,877
Cost of products sold
3,813
3,694
Segment margin
285
183
Unrealized (gains) losses on commodity
risk management activities
(1
)
5
Operating expenses, excluding non-cash
compensation expense
(84
)
(111
)
Selling, general and administrative,
excluding non-cash compensation expense
(32
)
(36
)
Adjusted EBITDA related to unconsolidated
affiliates
3
—
Inventory fair value adjustments
(8
)
135
Other, net
5
4
Segment Adjusted EBITDA
$
168
$
180
The Investment in Sunoco LP segment reflects the consolidated
results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our investment in Sunoco LP decreased due to the net
impacts of the following:
- a decrease of $47 million in margin (excluding the change in
inventory fair value adjustments and unrealized losses on commodity
risk management activities) primarily due to lower fuel margins,
partially offset by an increase in volumes sold; partially offset
by
- a decrease of $27 million in operating expense, excluding
non-cash compensation expense primarily as a result of the May 2019
sale of Sunoco LP’s ethanol plant in Fulton, New York.
Investment in USAC
Three Months Ended December
31,
2019
2018
Revenues
$
178
$
172
Cost of products sold
22
23
Segment margin
156
149
Operating expenses, excluding non-cash
compensation expense
(32
)
(30
)
Selling, general and administrative,
excluding non-cash compensation expense
(14
)
(16
)
Other, net
—
1
Segment Adjusted EBITDA
$
110
$
104
The Investment in USAC segment reflects the consolidated results
of operations for USAC.
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our investment in USAC increased primarily due to an
increase in demand for compression services driven by increased
U.S. production of crude oil and natural gas, and an increase in
average revenue per revenue generating horsepower per month.
All Other
Three Months Ended December
31,
2019
2018
Revenues
$
413
$
630
Cost of products sold
366
585
Segment margin
47
45
Unrealized gains on commodity risk
management activities
—
(11
)
Operating expenses, excluding non-cash
compensation expense
(25
)
(6
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(24
)
(41
)
Adjusted EBITDA related to unconsolidated
affiliates
1
—
Other and eliminations
19
6
Segment Adjusted EBITDA
$
18
$
(7
)
Segment Adjusted EBITDA. For the three months ended December 31,
2019 compared to the same period last year, Segment Adjusted EBITDA
related to our all other segment increased due to the net impacts
of the following:
- an increase of $3 million in gains from park and loan and
storage activity;
- an increase of $16 million related to a legal settlement;
- an increase of $3 million from the acquisition of SemGroup, for
which the impact to our all other segment included adjusted EBITDA
from SemCAMS, offset by SemGroup corporate expenses; and
- a decrease of $21 million in merger and acquisition expenses;
partially offset by
- a decrease of $6 million due to lower gas prices and increased
power costs; and
- a decrease of $7 million due to lower revenue from our
compressor equipment business.
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 consolidated subsidiaries
with revolving credit facilities which are not included.
Facility Size
Funds Available at December 31,
2019
Maturity Date
ETO Five-Year Revolving Credit
Facility
$
5,000
$
709
December 1, 2023
ETO 364-Day facility
1,000
1,000
November 27, 2020
$
6,000
$
1,709
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 December
31,
2019
2018
Equity in earnings of unconsolidated
affiliates:
Citrus
$
33
$
39
FEP
16
14
MEP
—
7
Other
29
26
Total equity in earnings of unconsolidated
affiliates
$
78
$
86
Adjusted EBITDA related to
unconsolidated affiliates:
Citrus
$
82
$
81
FEP
19
18
MEP
8
19
Other
47
34
Total Adjusted EBITDA related to
unconsolidated affiliates
$
156
$
152
Distributions received from
unconsolidated affiliates:
Citrus
$
50
$
46
FEP
20
18
MEP
3
8
Other
21
34
Total distributions received from
unconsolidated affiliates
$
94
$
106
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT
VENTURE SUBSIDIARIES
(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,
which are non-wholly-owned subsidiaries that are publicly
traded.
Three Months Ended December
31,
2019
2018
Adjusted EBITDA of non-wholly-owned
subsidiaries (100%) (a)
$
642
$
669
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries (b)
335
351
Distributable Cash Flow of
non-wholly-owned subsidiaries (100%) (c)
$
601
$
626
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries (d)
315
332
Below is our 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200219005972/en/
Energy Transfer Investor Relations: Bill Baerg, Brent
Ratliff, Lyndsay Hannah, 214-981-0795 or Media Relations:
Vicki Granado, 214-840-5820
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