Energy Transfer Partners, L.P. (NYSE: ETP) (“ETP” or the
“Partnership”) today reported its financial results for the quarter
ended September 30, 2017. For the three months ended September
30, 2017, net income was $761 million and Adjusted EBITDA was
$1.74 billion. Adjusted EBITDA increased $354 million
compared to the three months ended September 30, 2016, reflecting
an increase of $227 million in Adjusted EBITDA from the crude
oil transportation and services segment, as well as significantly
higher results from several of the other segments, as discussed in
the segment results analysis below. Net income increased
$623 million compared to the three months ended
September 30, 2016, primarily due to increased operating
income and higher equity in earnings from unconsolidated
affiliates, as well as the impact of a non-cash impairment recorded
in the prior year on an investment in an unconsolidated affiliate.
Distributable Cash Flow attributable to partners, as adjusted, for
the three months ended September 30, 2017 totaled
$1.05 billion, an increase of $226 million compared to
the three months ended September 30, 2016 (on a pro forma basis for
the Sunoco Logistics merger completed in April 2017), primarily due
to the increase in Adjusted EBITDA.
ETP’s other recent key accomplishments include the
following:
- In October 2017, ETP announced a
quarterly distribution of $0.565 per unit ($2.26 annualized) on ETP
common units for the quarter ended September 30, 2017.
- In October 2017, ETP completed the
previously announced contribution transaction with a fund managed
by Blackstone Energy Partners and Blackstone Capital Partners,
pursuant to which ETP exchanged a 49.9% interest in the holding
company that owns 65% of the Rover pipeline.
- In August 2017, the Partnership issued
54 million ETP common units in an underwritten public
offering. Net proceeds of $997 million from the offering were
used by the Partnership to repay amounts outstanding under its
revolving credit facilities, to fund capital expenditures and for
general partnership purposes.
- In September 2017, Sunoco Logistics
Partners Operations L.P., a subsidiary of ETP, issued
$750 million aggregate principal amount of 4.00% senior notes
due 2027 and $1.50 billion aggregate principal amount of 5.40%
senior notes due 2047. The $2.22 billion net proceeds from the
offering were used to redeem all of the $500 million aggregate
principal amount of ETLP’s 6.5% senior notes due 2021, to repay
borrowings outstanding under the Sunoco Logistics Credit Facility
and for general partnership purposes. Also, in October 2017, ETP
redeemed all of the outstanding $700 million of 5.5% senior notes
due 2023 previously issued by Regency Energy Partners LP.
- As of September 30, 2017, ETP had
approximately $2.1 billion outstanding under its aggregate $6.25
billion revolving credit facilities and its leverage ratio, as
defined by the legacy Sunoco Logistics credit agreement, was
4.16x.
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, Wednesday,
November 8, 2017 to discuss the third quarter 2017 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. Strategically positioned in all of the major U.S.
production basins, ETP owns and operates a geographically diverse
portfolio of 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 assets; and various
acquisition and marketing assets. ETP’s general partner is owned by
Energy Transfer Equity, L.P. (NYSE: ETE). 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 Lake Charles LNG Company. On a consolidated basis, ETE’s
family of companies owns and operates a diverse portfolio of
natural gas, natural gas liquids, crude oil and refined products
assets, as well as retail and wholesale motor fuel operations and
LNG terminalling. For more information, visit the Energy Transfer
Equity, L.P. website at www.energytransfer.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, 2017
2016 (a)
ASSETS Current assets $ 5,780 $ 5,729
Property, plant and equipment, net 56,972 50,917 Advances to
and investments in unconsolidated affiliates 4,221 4,280 Other
non-current assets, net 752 672 Intangible assets, net 5,379 4,696
Goodwill 3,907 3,897 Total assets $ 77,011 $
70,191
LIABILITIES AND EQUITY Current
liabilities $ 6,886 $ 6,203 Long-term debt, less current
maturities 33,630 31,741 Long-term notes payable – related company
— 250 Non-current derivative liabilities 132 76 Deferred income
taxes 4,374 4,394 Other non-current liabilities 1,111 952
Commitments and contingencies Series A Preferred Units — 33
Redeemable noncontrolling interests 21 15 Equity: Total
partners’ capital 26,666 18,642 Noncontrolling interest
4,191 7,885 Total equity 30,857 26,527
Total liabilities and equity $ 77,011 $ 70,191
(a) The Sunoco Logistics Merger resulted in Energy Transfer
Partners, L.P. being treated as the surviving consolidated entity
from an accounting perspective, while Sunoco Logistics (prior to
changing its name to “Energy Transfer Partners, L.P.”) was the
surviving consolidated entity from a legal and reporting
perspective. Therefore, for the pre-merger periods, the
consolidated financial statements reflect the consolidated
financial statements of the legal acquiree (i.e., the entity that
was named “Energy Transfer Partners, L.P.” prior to the merger and
name changes).
The Sunoco Logistics Merger was accounted for as an equity
transaction. The Sunoco Logistics Merger did not result in any
changes to the carrying values of assets and liabilities in the
consolidated financial statements, and no gain or loss was
recognized. For the periods prior to the Sunoco Logistics Merger,
the Sunoco Logistics limited partner interests that were owned by
third parties (other than Energy Transfer Partners, L.P. or its
consolidated subsidiaries) are presented as noncontrolling interest
in these consolidated financial statements.
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, 2017
2016 (a)
2017 (a)
2016 (a)
REVENUES $ 6,973 $ 5,531 $ 20,444 $ 15,301 COSTS AND EXPENSES: Cost
of products sold 4,876 3,844 14,582 10,280 Operating expenses 571
475 1,603 1,359 Depreciation, depletion and amortization 596 503
1,713 1,469 Selling, general and administrative 105
71 335 226 Total costs
and expenses 6,148 4,893 18,233
13,334 OPERATING INCOME 825 638 2,211 1,967
OTHER INCOME (EXPENSE): Interest expense, net (367 ) (345 ) (1,052
) (981 ) Equity in earnings of unconsolidated affiliates 127 65 139
260 Impairment of investment in an unconsolidated affiliate — (308
) — (308 ) Losses on interest rate derivatives (8 ) (28 ) (28 )
(179 ) Other, net 72 52 169
96 INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)
649 74 1,439 855 Income tax expense (benefit) (112 )
(64 ) 22 (131 ) NET INCOME 761 138 1,417 986
Less: Net income attributable to noncontrolling interest 110
64 243 231 NET
INCOME ATTRIBUTABLE TO PARTNERS 651 74 1,174 755 General Partner’s
interest in net income 270 220 727 740 Class H Unitholder’s
interest in net income — 93 98 257 Class I Unitholder’s interest in
net income — 2 — 6
Common Unitholders’ interest in net income (loss) $ 381
$ (241 ) $ 349 $ (248 ) NET INCOME (LOSS) PER COMMON
UNIT: (b) Basic $ 0.33 $ (0.33 ) $ 0.35 $ (0.36 ) Diluted $ 0.33 $
(0.33 ) $ 0.34 $ (0.36 ) WEIGHTED AVERAGE NUMBER OF COMMON UNITS
OUTSTANDING: (b) Basic 1,125.2 761.1 990.9 749.7 Diluted 1,128.9
761.1 995.5 749.7
(a) See note (a) to the condensed consolidated balance
sheets.
(b) The historical common units and net income (loss) per
limited partner unit amounts presented in these consolidated
financial statements have been retrospectively adjusted to reflect
the 1.5 to one unit-for-unit exchange in connection with the Sunoco
Logistics Merger.
SUPPLEMENTAL
INFORMATION
(Dollars and units in millions)
(unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 (a)
2017 (a)
2016 (a)
Reconciliation of net income to Adjusted EBITDA and
Distributable Cash Flow (b): Net income $ 761 $ 138 $ 1,417 $
986 Interest expense, net 367 345 1,052 981 Income tax expense
(benefit) (112 ) (64 ) 22 (131 ) Depreciation, depletion and
amortization 596 503 1,713 1,469 Non-cash unit-based compensation
expense 19 22 57 60 Losses on interest rate derivatives 8 28 28 179
Unrealized (gains) losses on commodity risk management activities
81 15 (17 ) 96 Inventory valuation adjustments (86 ) (37 ) (30 )
(143 ) Impairment of investment in an unconsolidated affiliate —
308 — 308 Equity in earnings of unconsolidated affiliates (127 )
(65 ) (139 ) (260 ) Adjusted EBITDA related to unconsolidated
affiliates 279 240 765 711 Other, net (42 ) (43 )
(111 ) (84 ) Adjusted EBITDA (consolidated) 1,744
1,390 4,757 4,172 Adjusted EBITDA related to unconsolidated
affiliates (279 ) (240 ) (765 ) (711 ) Distributable cash flow from
unconsolidated affiliates 169 124 436 384 Interest expense, net
(367 ) (345 ) (1,052 ) (981 ) Current income tax expense (9 ) (11 )
(22 ) (23 ) Maintenance capital expenditures (119 ) (97 ) (286 )
(234 ) Other, net 16 3 43
(3 ) Distributable Cash Flow (consolidated) 1,155 824 3,111
2,604 Distributable Cash Flow attributable to PennTex Midstream
Partners, LP (“PennTex”) (100%) (c) — — (19 ) — Distributions from
PennTex to ETP (c) — 8 8 8 Distributable cash flow attributable to
noncontrolling interest in other consolidated subsidiaries
(119 ) (11 ) (199 ) (28 ) Distributable Cash
Flow attributable to the partners of ETP 1,036 821 2,901 2,584
Transaction-related expenses 13 2
45 4 Distributable Cash Flow
attributable to the partners of ETP, as adjusted $ 1,049 $
823 $ 2,946 $ 2,588
Distributions to
partners (d): Limited Partners: Common Units held by public $
638 $ 530 $ 1,794 $ 1,495 Common Units held by parent 15 2 45 6
General Partner interests 4 3 12 10 Incentive Distribution Rights
(“IDRs”) held by parent 431 346 1,204 968 IDR relinquishments
(163 ) (135 ) (482 ) (278 ) Total
distributions to be paid to partners $ 925 $ 746 $
2,573 $ 2,201 Common Units outstanding – end of
period (d)(e) 1,155.5 1,019.9
1,155.5 1,019.9 Distribution coverage ratio
(f) 1.13x 1.10x 1.14x 1.18x
(a) For the nine months ended September 30, 2017 and the
three and nine months ended September 30, 2016, the
calculation of Distributable Cash Flow and the amounts reflected
for distributions to partners and common units outstanding reflect
the pro forma impacts of the Sunoco Logistics Merger as though the
merger had occurred on January 1, 2016. As a result, the prior
period amounts reported above differ from information previously
reported by legacy ETP, as follows:
- Distributable cash flow attributable to
the partners of ETP includes amounts attributable to the partners
of both legacy ETP and legacy Sunoco Logistics. Previously, the
calculation of distributable cash flow attributable to the partners
of ETP (as previously reported by legacy ETP) excluded the
distributable cash flow attributable to Sunoco Logistics and only
included distributions from legacy Sunoco Logistics to legacy
ETP.
- Distributable cash flow attributable to
noncontrolling interest in other consolidated subsidiaries includes
amounts attributable to the noncontrolling interests in the other
consolidated subsidiaries of both legacy ETP and legacy Sunoco
Logistics.
- The transaction-related expenses
adjustment in distributable cash flow attributable to the partners
of ETP, as adjusted, includes amounts incurred by both legacy ETP
and legacy Sunoco Logistics.
- Distributions to limited partners
include distributions paid on the common units of both legacy ETP
and legacy Sunoco Logistics but exclude the following distributions
in the prior periods on units that were cancelled in the merger,
which comprise the following: (i) distributions paid by legacy
Sunoco Logistics on its common units held legacy ETP and (ii)
distributions paid by legacy ETP on its Class H units held by
ETE.
- Distributions on General Partner
interests and incentive distribution rights are reflected on a pro
forma basis, based on the pro forma cash distributions to limited
partners and the current distribution waterfall per the limited
partnership agreement (i.e., the legacy Sunoco Logistics
distribution waterfall).
- Common units outstanding for the
pre-merger periods reflect (i) the legacy ETP common units
outstanding at the end of the period multiplied by a factor of 1.5x
and (ii) the legacy Sunoco Logistics common units outstanding at
the end of the period minus 67.1 million legacy Sunoco Logistics
common units held by ETP, which were cancelled in connection with
the closing of the merger.
(b) 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 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 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 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 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 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
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, 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 subsidiary, but
Distributable Cash Flow attributable to partners is net of
distributions to be paid by the subsidiary to the noncontrolling
interests.
For Distributable Cash Flow attributable to partners, as
adjusted, certain transaction-related and non-recurring expenses
that are included in net income are excluded.
(c) Beginning with the second quarter of 2017, PennTex became a
wholly owned subsidiary of ETP. The amounts reflected above for
PennTex relate only to the first quarter of 2017, and no
distributable cash flow has been attributed to noncontrolling
interests in PennTex subsequent to March 31, 2017.
(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) Reflects the sum of (i) the ETP Common Units outstanding at
the end of period multiplied by a factor of 1.5x and (ii) the
Sunoco Logistics Common Units outstanding at end of period minus
67.1 million Sunoco Logistics Common Units held by ETP, which units
were cancelled in connection with the closing of the merger.
(f) Distribution coverage ratio for a period is calculated as
Distributable Cash Flow attributable to partners, 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)
Three Months Ended September 30, 2017
2016
Segment Adjusted EBITDA: Intrastate
transportation and storage $ 163 $ 133 Interstate transportation
and storage 273 278 Midstream 356 314 NGL and refined products
transportation and services (1) 423 383 Crude oil transportation
and services (1) 396 169 All other 133 113 $ 1,744 $
1,390
(1) Subsequent to the Sunoco Logistics Merger, the Partnership’s
reportable segments were revised. Amounts reflected in prior
periods have been retrospectively adjusted to conform to the
current reportable segment presentation for NGL and refined
products transportation and services and crude oil transportation
and services.
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.
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.
For prior periods reported herein, certain transactions related
to the business of legacy Sunoco Logistics have been reclassified
from cost of products sold to operating expenses; these
transactions include sales between operating subsidiaries and their
marketing affiliates. These reclassifications had no impact on net
income or total equity.
Following is a reconciliation of Segment Margin to operating
income, as reported in the Partnership’s consolidated statements of
operations:
Three Months Ended September 30, 2017
2016 Intrastate transportation and
storage $ 167 $ 172 Interstate transportation and storage 224 236
Midstream 530 476 NGL and refined products transportation and
services 488 484 Crude oil transportation and services 588 266 All
other 112 79 Intersegment eliminations (12 ) (26 )
Total Segment Margin 2,097 1,687 Less: Operating expenses
571 475 Depreciation, depletion and amortization 596 503 Selling,
general and administrative 105 71
Operating income $ 825 $ 638
Intrastate Transportation and
Storage
Three Months Ended September 30, 2017
2016 Natural gas transported
(MMBtu/d) 8,942,066 8,289,826 Revenues $ 773 $ 758 Cost of products
sold 606 586 Segment margin 167 172
Unrealized (gains) losses on commodity risk management activities
22 (7 ) Operating expenses, excluding non-cash compensation expense
(40 ) (43 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (6 ) (5 ) Adjusted EBITDA related to
unconsolidated affiliates 19 15 Other 1 1
Segment Adjusted EBITDA $ 163 $ 133
Distributions from unconsolidated affiliates $ 10 $ 13
Transported volumes increased primarily due to higher demand for
exports to Mexico, along with the addition of new pipes to our
intrastate pipeline system. These increases were partially offset
by lower production volumes in the Barnett Shale region.
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 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
natural gas sales and other (excluding net changes in unrealized
gains and losses of $13 million) primarily due to higher
realized gains from pipeline optimization activity;
- an increase of $9 million in
storage margin (excluding net changes in unrealized gains and
losses of $16 million related to fair value inventory
adjustments and unrealized gains and losses on derivatives);
- a decrease of $3 million in
operating expenses primarily due to the timing of project related
expenses of $3 million, lower allocated expenses and lower
capitalized overhead of $2 million, partially offset by higher
outside services and employee expenses of $2 million; and
- an increase of $4 million in
Adjusted EBITDA related to unconsolidated affiliates due to two new
joint venture pipelines placed in service in 2017; partially offset
by
- a decrease in transportation fees of
$14 million due to renegotiated contracts resulting in lower
billed volumes, offset by increased margin from optimization
activity recorded in natural gas sales and other.
Interstate Transportation and
Storage
Three Months Ended September 30, 2017
2016 Natural gas transported
(MMBtu/d) 6,074,783 5,385,679 Natural gas sold (MMBtu/d) 19,012
19,478 Revenues $ 224 $ 236 Operating expenses, excluding non-cash
compensation, amortization and accretion expenses (79 ) (76 )
Selling, general and administrative expenses, excluding non-cash
compensation, amortization and accretion expenses (14 ) (13 )
Adjusted EBITDA related to unconsolidated affiliates 140 131 Other
2 — Segment Adjusted EBITDA $ 273
$ 278 Distributions from unconsolidated
affiliates $ 81 $ 84
Transported volumes reflected increases of 157,060 MMBtu/d on
the Trunkline pipeline as a result of increased backhaul
deliveries, 153,401 MMBtu/d on the Tiger pipeline due to an
increase in production in the Haynesville Shale, and 142,207
MMBtu/d on the Transwestern pipeline as a result of weather driven
demand in the West and opportunities in the Texas intrastate
market. The remainder of the increase was primarily due to the
Rover pipeline, which was placed in partial service on August 31,
2017.
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 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 in reservation revenues of
$16 million on the Panhandle, Trunkline and Transwestern pipelines
and a decrease of $3 million in gas parking service related
revenues on the Panhandle and Trunkline pipelines, primarily due to
lack of customer demand driven by weak spreads and mild weather. In
addition, revenues on the Tiger pipeline decreased $3 million due
to contract restructuring. These decreases were offset by $10
million of revenues from the placement in partial service of the
Rover pipeline effective August 31, 2017; and
- an increase in operating expenses of
$3 million primarily due to higher ad valorem taxes resulting
from higher valuations; offset by
- an increase in income from
unconsolidated joint ventures of $9 million primarily due to a
legal settlement and lower operating expenses on Citrus.
Midstream
Three Months Ended September 30, 2017
2016 Gathered volumes (MMBtu/d)
11,090,285 9,675,003 NGLs produced (Bbls/d) 449,454 420,877 Equity
NGLs (Bbls/d) 27,185 34,341 Revenues $ 1,765 $ 1,343 Cost of
products sold 1,235 867 Segment margin
530 476 Unrealized losses on commodity risk management activities 1
— Operating expenses, excluding non-cash compensation expense (157
) (153 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (26 ) (17 ) Adjusted EBITDA related
to unconsolidated affiliates 6 7 Other 2 1
Segment Adjusted EBITDA $ 356 $ 314
Gathered volumes and NGL production increased primarily due to
recent acquisitions, including PennTex, and gains in the Permian
and Northeast regions, partially offset by basin declines in the
South Texas, North Texas, and Mid-Continent/Panhandle regions.
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 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 $24 million
(excluding net changes in unrealized gains and losses of
$1 million) in non-fee based margin due to higher crude oil
and NGL prices;
- an increase of $16 million in
fee-based revenue due to minimum volume commitments in the South
Texas region, as well as volume increases in the Permian and
Northeast regions. These increases were partially offset by volume
declines in South Texas, North Texas and the
Mid-Continent/Panhandle regions; and
- an increase of $15 million in
fee-based revenue due to recent acquisitions, including PennTex;
partially offset by
- an increase of $4 million in
operating expenses primarily due to recent acquisitions, including
PennTex; and
- an increase in selling, general and
administrative expenses primarily due to an increase in shared
services allocation.
NGL and Refined Products Transportation
and Services
Three Months Ended September 30, 2017
2016 NGL transportation volumes
(MBbls/d) 836 766 Refined products transportation volumes (MBbls/d)
612 611 NGL and refined products terminal volumes (MBbls/d) 782 822
NGL fractionation volumes (MBbls/d) 390 338 Revenues $ 2,070 $
1,545 Cost of products sold 1,582 1,061
Segment margin 488 484 Unrealized losses on commodity risk
management activities 56 21 Operating expenses, excluding non-cash
compensation expense (105 ) (109 ) Selling, general and
administrative expenses, excluding non-cash compensation expense
(13 ) (12 ) Adjusted EBITDA related to unconsolidated affiliates 19
21 Inventory valuation adjustments (22 ) (22 )
Segment Adjusted EBITDA $ 423 $ 383
NGL and refined products transportation volumes increased in the
major producing regions, including the Permian, Southeast Texas,
Louisiana, Eagle Ford and North Texas. NGL and refined products
terminal volumes decreased for the three months ended
September 30, 2017 primarily due to the sale of one of our
refined product terminals in April 2017.
Average daily fractionated volumes increased 17% compared to the
same period last year primarily due to the commissioning of our
fourth fractionator at Mont Belvieu, Texas, in October 2016, which
has a capacity of 120,000 Bbls/d, as well as increased producer
volumes as mentioned above.
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 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 impact of
the following:
- an increase in transportation margin of
$20 million primarily due to higher volumes on our Texas NGL
pipelines and our Mariner East system;
- an increase in fractionation and
refinery services margin of $13 million (excluding net changes
in unrealized gains and losses of $1 million) primarily due to
higher NGL volumes from most major producing regions, as noted
above;
- an increase in terminal services margin
of $7 million due to higher terminal volumes from the Mariner
NGL projects; and
- a decrease of $4 million in
operating expenses primarily due to a legal settlement of $8
million and a quarterly ad valorem tax true-up of $1 million;
partially offset by
- a decrease of $1 million in
marketing margin (excluding net changes in unrealized gains and
losses of $36 million) primarily due to the timing of the
recognition of margin from optimization activities; and
- an increase of $1 million in
selling, general and administrative expenses due to higher
allocations and lower capitalized overhead resulting from reduced
capital spending.
Crude Oil Transportation and
Services
Three Months Ended September 30, 2017
2016 Crude Transportation
Volumes (MBbls/d) 3,758 2,686 Crude Terminals Volumes (MBbls/d)
1,923 1,559 Revenues $ 2,725 $ 1,856 Cost of products sold
2,137 1,590 Segment margin 588 266 Unrealized
gains on commodity risk management activities (1 ) — Operating
expenses, excluding non-cash compensation expense (119 ) (71 )
Selling, general and administrative expenses, excluding non-cash
compensation expense (13 ) (16 ) Inventory valuation adjustments
(64 ) (15 ) Adjusted EBITDA related to unconsolidated affiliates
5 5 Segment Adjusted EBITDA $ 396
$ 169
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 compared to the same period last year,
Segment Adjusted EBITDA related to our crude oil transportation and
services segment increased due to the following:
- an increase of $194 million resulting
primarily from placing our Bakken Pipeline in service in the second
quarter of 2017, as well as the acquisition of a crude oil
gathering system in West Texas;
- an increase of $28 million from
existing assets due to increased volumes throughout the system;
and
- an increase of $18 million due to the
impact of LIFO accounting; partially offset by
- additional operating expense as a
result of placing other new projects in service and costs
associated with increased volumes on our system.
All Other
Three Months Ended September 30, 2017
2016 Revenues $ 683 $ 956 Cost
of products sold 571 877 Segment margin
112 79 Unrealized losses on commodity risk management activities 3
1 Operating expenses, excluding non-cash compensation expense (34 )
(20 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (34 ) (14 ) Adjusted EBITDA related
to unconsolidated affiliates 88 63 Other and eliminations (2
) 4 Segment Adjusted EBITDA $ 133 $ 113
Distributions from unconsolidated affiliates $ 39 $ 38
Amounts reflected in our all other segment primarily
include:
- our equity method investment in limited
partnership units of Sunoco LP consisting of 43.5 million
units, representing 43.7% of Sunoco LP’s total outstanding common
units;
- 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.
Segment Adjusted EBITDA. For the three months ended
September 30, 2017 compared to the same period last year,
Segment Adjusted EBITDA related to our all other segment increased
primarily due to the net impact of the following:
- an increase of $25 million in
Adjusted EBITDA related to unconsolidated affiliates, reflecting an
increase of $34 million from our investment in PES, offset by
a decrease of $9 million from our investment in Sunoco
LP;
- an increase of $7 million from
commodity trading activities; and
- an increase of $4 million from our
compression operations; partially offset by
- an increase of $11 million in
transaction related expenses; and
- an increase of $9 million in operating
expenses related to an equipment lease buyout.
SUPPLEMENTAL
INFORMATION ON CAPITAL EXPENDITURES
(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, 2017:
Growth Maintenance
Total Intrastate transportation and storage $ 34 $ 22 $ 56
Interstate transportation and storage 1,704 50 1,754 Midstream 914
76 990 NGL and refined products transportation and services 2,106
53 2,159 Crude oil transportation and services 331 36 367 All other
(including eliminations) 128 49 177 Total
capital expenditures $ 5,217 $ 286 $ 5,503
SUPPLEMENTAL
INFORMATION ON LIQUIDITY
(In millions)
(unaudited)
Funds Available at
Facility Size September 30, 2017 Maturity Date Legacy ETP Revolving
Credit Facility $ 3,750 $ 1,549 November 18, 2019 Legacy Sunoco
Logistics Revolving Credit Facility 2,500 2,463 March
20, 2020 $ 6,250 $ 4,012
SUPPLEMENTAL
INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)
Three Months Ended September 30, 2017
2016
Equity in earnings (losses) of unconsolidated
affiliates: Citrus $ 35 $ 31 FEP 14 12 PES 11 (26 ) MEP 9 9 HPC
5 8 Sunoco LP 35 16 Other 18 15 Total equity
in earnings of unconsolidated affiliates $ 127 $ 65
Adjusted EBITDA related to unconsolidated affiliates: Citrus
$ 99 $ 90 FEP 18 19 PES 15 (19 ) MEP 23 22 HPC 13 15 Sunoco LP 74
83 Other 37 30 Total Adjusted EBITDA related
to unconsolidated affiliates $ 279 $ 240
Distributions received from unconsolidated affiliates:
Citrus $ 50 $ 50 FEP 18 17 MEP 13 17 HPC 9 13 Sunoco LP 36 36 Other
18 16 Total distributions received from
unconsolidated affiliates $ 144 $ 149
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107006769/en/
Energy TransferInvestor Relations:Lyndsay Hannah, Brent
Ratliff, Helen Ryoo, 214-981-0795orMedia Relations:Vicki
Granado, 214-840-5820
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