Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”)
today reported financial results for the quarter ended June 30,
2020.
ET reported net income attributable to partners for the three
months ended June 30, 2020 of $353 million and net income per unit
(basic and diluted) of $0.13 per unit.
Adjusted EBITDA for the three months ended June 30, 2020 was
$2.44 billion compared with $2.83 billion for the three months
ended June 30, 2019. Results were significantly impacted by the
COVID-19 related economic slow-down resulting in lower volumes and
market prices among several of ET’s core segments.
Distributable Cash Flow attributable to partners, as adjusted,
for the three months ended June 30, 2020 was $1.27 billion compared
with $1.60 billion for the three months ended June 30, 2019. The
change was primarily due to the decrease in Adjusted EBITDA.
Distribution coverage ratio for the three months ended June 30,
2020 was 1.54x, yielding excess coverage of $448 million of
Distributable Cash Flow attributable to partners in excess of
distributions.
In response to current market conditions, ET further reduced its
growth capital outlook by an additional $200 million and now
expects to invest approximately $3.4 billion in 2020. In the first
half of 2020, ET spent approximately $1.8 billion on growth capital
projects. Further, ET expects growth capital expenditures to be
approximately $1.3 billion in 2021 and $500 million to $700 million
in 2022 and 2023. ET expects that approximately 80% of the growth
capital in 2020 will be spent on projects that are expected to be
in-service in 2020 or early 2021.
ET is encouraged by the signs of recovery with an upward trend
in production volumes and commodity prices at the end of the second
quarter; however, given the uncertainty of the pace of recovery, ET
is updating its 2020 outlook for Adjusted EBITDA to range from
$10.2 billion to $10.5 billion.
Key accomplishments and current developments:
Operational
- As the COVID-19 pandemic continues, our field operations have
continued uninterrupted, and remote work and other COVID-19 related
conditions have not significantly impacted our ability to maintain
operations nor caused us to incur significant additional
expenses.
- For the second quarter of 2020, ET achieved record high
transportation and fractionation volumes in its NGL and refined
products transportation and services segment.
- The Partnership also achieved record high gathering and
processing volumes in the Midland Basin near the end of the second
quarter of 2020.
Strategic
- During the second quarter of 2020, the Partnership made
significant progress on capital projects throughout the U.S., with
many such projects to be placed in service by year-end.
- The Partnership exited the second quarter of 2020 with an
upward trend in volumes on the majority of its oil, natural gas and
NGL assets.
Financial
- During the second quarter of 2020, the Partnership continued to
implement cost reduction measures among both its corporate offices
and field operations, achieving approximately $200 million in
savings on operating expenses and selling, general and
administrative expenses to date in 2020.
- ET lowered 2020 expected capital spending to $3.4 billion, a
reduction of at least $600 million from original guidance in
February 2020.
- In July 2020, ET announced a quarterly distribution of $0.305
per unit ($1.220 annualized) on ET common units for the quarter
ended June 30, 2020. The distribution coverage ratio for the second
quarter of 2020 was 1.54x.
- As of June 30, 2020, Energy Transfer Operating, L.P.’s (“ETO”)
$6.00 billion revolving credit facilities had an aggregate $2.90
billion of available capacity, and the leverage ratio, as defined
by the credit agreement, was 4.29x.
ET benefits from a portfolio of assets with exceptional product
and geographic diversity. The Partnership’s multiple segments
generate high-quality, balanced earnings with no single segment
contributing more than 30% of the Partnership’s consolidated
Adjusted EBITDA for the three months ended June 30, 2020. 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, Wednesday, August 5, 2020 to discuss its second
quarter 2020 results and provide a partnership update. 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 compression services in
terms of total compression fleet horsepower. USAC partners with a
broad customer base composed of producers, processors, gatherers
and transporters of natural gas and crude oil. USAC focuses on
providing compression services to infrastructure applications
primarily in high-volume gathering systems, processing facilities
and transportation applications. For more information, visit the
USAC website at www.usacompression.com.
Forward-Looking Statements
This news release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
management’s control. An extensive list of factors that can affect
future results are discussed in the Partnership’s Annual Report on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission, including the Partnership’s
Quarterly Report on Form 10-Q to be filed for the current period.
In addition to the risks and uncertainties previously disclosed,
the Partnership has also been, or may in the future be, impacted by
new or heightened risks related to the COVID-19 pandemic and the
recent sharp decline in commodity prices, and we cannot predict the
length and ultimate impact of those risks. 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)
June 30, 2020
December 31, 2019
ASSETS
Current assets (1)
$
5,156
$
7,464
Property, plant and equipment, net
74,941
74,193
Advances to and investments in
unconsolidated affiliates
3,311
3,460
Lease right-of-use assets, net
1,112
964
Other non-current assets, net (1)
1,512
1,571
Intangible assets, net
6,007
6,154
Goodwill
3,868
5,167
Total assets
$
95,907
$
98,973
LIABILITIES AND EQUITY
Current liabilities
$
5,003
$
7,724
Long-term debt, less current
maturities
51,251
51,028
Non-current derivative liabilities
577
273
Non-current operating lease
liabilities
903
901
Deferred income taxes
3,313
3,208
Other non-current liabilities
1,218
1,162
Commitments and contingencies
Redeemable noncontrolling interests
750
739
Equity:
Total partners’ capital
19,815
21,920
Noncontrolling interests
13,077
12,018
Total equity
32,892
33,938
Total liabilities and equity
$
95,907
$
98,973
(1)
Effective January 1, 2020, the Partnership
elected to change its accounting policy related to certain barrels
of crude oil that were previously accounted for as inventory. Under
the revised accounting policy, certain amounts of crude oil that
are not available for sale have been reclassified from inventory to
non-current assets. The balances as of December 31, 2019 have been
adjusted to reflect this change in accounting policy.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per unit
data)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019(1)
2020
2019(1)
REVENUES
$
7,338
$
13,877
$
18,965
$
26,998
COSTS AND EXPENSES:
Cost of products sold
4,117
10,301
12,408
19,778
Operating expenses
770
792
1,649
1,600
Depreciation, depletion and
amortization
936
785
1,803
1,559
Selling, general and administrative
175
179
379
326
Impairment losses
4
—
1,329
50
Total costs and expenses
6,002
12,057
17,568
23,313
OPERATING INCOME
1,336
1,820
1,397
3,685
OTHER INCOME (EXPENSE):
Interest expense, net of interest
capitalized
(579
)
(578
)
(1,181
)
(1,168
)
Equity in earnings of unconsolidated
affiliates
85
77
78
142
Losses on extinguishments of debt
—
—
(62
)
(18
)
Losses on interest rate derivatives
(3
)
(122
)
(332
)
(196
)
Other, net
(68
)
46
(65
)
42
INCOME (LOSS) BEFORE INCOME TAX
EXPENSE
771
1,243
(165
)
2,487
Income tax expense from continuing
operations
99
34
127
160
NET INCOME (LOSS)
672
1,209
(292
)
2,327
Less: Net income attributable to
noncontrolling interests
306
317
185
614
Less: Net income attributable to
redeemable noncontrolling interests
13
13
25
26
NET INCOME (LOSS) ATTRIBUTABLE TO
PARTNERS
353
879
(502
)
1,687
General Partner’s interest in net income
(loss)
—
1
(1
)
2
Limited Partners’ interest in net income
(loss)
$
353
$
878
$
(501
)
$
1,685
NET INCOME (LOSS) PER LIMITED PARTNER
UNIT:
Basic
$
0.13
$
0.33
$
(0.19
)
$
0.64
Diluted
$
0.13
$
0.33
$
(0.19
)
$
0.64
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic
2,694.9
2,621.2
2,693.3
2,620.3
Diluted
2,695.8
2,631.0
2,693.3
2,630.1
(1)
Effective January 1, 2020, the Partnership
elected to change its accounting policy related to certain barrels
of crude oil that were previously accounted for as inventory. Under
the revised accounting policy, certain amounts of crude oil that
are not available for sale have been reclassified from inventory to
non-current assets. The condensed consolidated statement of
operations for the three and six months ended June 30, 2019 has
been adjusted to reflect this change in accounting policy.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Dollars and units in
millions)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019(a)
2020
2019(a)
Reconciliation of net income (loss) to
Adjusted EBITDA and Distributable Cash Flow(b):
Net income (loss)
$
672
$
1,209
$
(292
)
$
2,327
Interest expense, net of interest
capitalized
579
578
1,181
1,168
Impairment losses
4
—
1,329
50
Income tax expense
99
34
127
160
Depreciation, depletion and
amortization
936
785
1,803
1,559
Non-cash compensation expense
41
29
63
58
Losses on interest rate derivatives
3
122
332
196
Unrealized (gains) losses on commodity
risk management activities
48
23
(3
)
(26
)
Losses on extinguishments of debt
—
—
62
18
Inventory valuation adjustments (Sunoco
LP)
(90
)
(4
)
137
(97
)
Equity in earnings of unconsolidated
affiliates
(85
)
(77
)
(78
)
(142
)
Adjusted EBITDA related to unconsolidated
affiliates
157
163
311
309
Other, net
74
(37
)
101
(20
)
Adjusted EBITDA (consolidated)
2,438
2,825
5,073
5,560
Adjusted EBITDA related to unconsolidated
affiliates
(157
)
(163
)
(311
)
(309
)
Distributable cash flow from
unconsolidated affiliates
112
107
225
200
Interest expense, net of interest
capitalized
(579
)
(578
)
(1,181
)
(1,168
)
Preferred unitholders’ distributions
(96
)
(64
)
(185
)
(117
)
Current income tax (expense) benefit
(15
)
7
(1
)
(21
)
Maintenance capital expenditures
(136
)
(170
)
(239
)
(262
)
Other, net
18
19
40
37
Distributable Cash Flow (consolidated)
1,585
1,983
3,421
3,920
Distributable Cash Flow attributable to
Sunoco LP (100%)
(122
)
(101
)
(281
)
(198
)
Distributions from Sunoco LP
41
41
82
82
Distributable Cash Flow attributable to
USAC (100%)
(58
)
(54
)
(113
)
(109
)
Distributions from USAC
24
21
48
42
Distributable Cash Flow attributable to
noncontrolling interests in other non-wholly-owned consolidated
subsidiaries
(209
)
(293
)
(499
)
(544
)
Distributable Cash Flow attributable to
the partners of ET
1,261
1,597
2,658
3,193
Transaction-related adjustments
10
5
30
3
Distributable Cash Flow attributable to
the partners of ET, as adjusted
$
1,271
$
1,602
$
2,688
$
3,196
Distributions to partners:
Limited Partners
$
822
$
800
$
1,644
$
1,599
General Partner
1
1
2
2
Total distributions to be paid to
partners
$
823
$
801
$
1,646
$
1,601
Common Units outstanding – end of
period
2,695.6
2,623.2
2,695.6
2,623.2
Distribution coverage ratio
1.54x
2.00x
1.63x
2.00x
(a)
Effective January 1, 2020, the Partnership elected to change its
accounting policy related to certain barrels of crude oil that were
previously accounted for as inventory. Under the revised accounting
policy, certain amounts of crude oil that are not available for
sale have been reclassified from inventory to non-current assets.
The results for the three and six months ended June 30, 2019 have
been adjusted to reflect this change in accounting policy.
(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. Inventory adjustments that are excluded from the calculation
of Adjusted EBITDA represent only the changes in lower of cost or
market reserves on inventory that is carried at last-in, first-out
(“LIFO”). These amounts are unrealized valuation adjustments
applied to Sunoco LP’s fuel volumes remaining in inventory at the
end of the period.
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. The use of Adjusted EBITDA or Adjusted EBITDA
related to unconsolidated affiliates as an analytical tool should
be limited accordingly.
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.
- 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 adjustments
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.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUMMARY
ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
(Tabular dollar amounts in
millions)
(unaudited)
Three Months Ended June 30,
2020
2019
Segment Adjusted EBITDA:
Intrastate transportation and storage
$
187
$
290
Interstate transportation and storage
403
460
Midstream
367
412
NGL and refined products transportation
and services
674
644
Crude oil transportation and services
519
752
Investment in Sunoco LP
182
152
Investment in USAC
105
105
All other
1
10
Total Segment Adjusted EBITDA
$
2,438
$
2,825
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 June 30,
2020
2019
Natural gas transported (BBtu/d)
12,921
12,115
Withdrawals from storage natural gas
inventory (BBtu)
(1,910
)
—
Revenues
$
516
$
765
Cost of products sold
248
400
Segment margin
268
365
Unrealized gains on commodity risk
management activities
(33
)
(26
)
Operating expenses, excluding non-cash
compensation expense
(48
)
(47
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(6
)
(7
)
Adjusted EBITDA related to unconsolidated
affiliates
6
5
Segment Adjusted EBITDA
$
187
$
290
Transported volumes increased primarily due to increased
utilization of our Texas pipelines.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 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 $105 million in realized natural gas sales and
other primarily due to lower realized gains from pipeline
optimization activity; and
- an increase of $1 million in operating expenses primarily due
to higher maintenance project costs and higher cost of fuel
consumption; partially offset by
- an increase of $3 million in realized storage margin primarily
due to higher storage optimization and fees.
Interstate Transportation and Storage
Three Months Ended June 30,
2020
2019
Natural gas transported (BBtu/d)
10,152
10,825
Natural gas sold (BBtu/d)
17
17
Revenues
$
445
$
493
Operating expenses, excluding non-cash
compensation, amortization and accretion expenses
(139
)
(138
)
Selling, general and administrative
expenses, excluding non-cash compensation, amortization and
accretion expenses
(16
)
(18
)
Adjusted EBITDA related to unconsolidated
affiliates
115
125
Other
(2
)
(2
)
Segment Adjusted EBITDA
$
403
$
460
Transported volumes decreased 0.7 Bcf/d primarily due to
shut-ins of crude production resulting in lower associated gas and
a decrease in demand for LNG export.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 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:
- a decrease of $43 million in reservation fees primarily due to
a decrease of $18 million from additional revenue recognized in
2019 associated with a shipper bankruptcy, a decrease of $16
million from lower rates on Lake Charles LNG effective January 2020
and a decrease of $12 million due to less capacity sold on our
Panhandle and Trunkline systems as well as lower rates on the sale
of uncommitted capacity on our Rover pipeline. These decreases were
partially offset by increased margin from our Transwestern system
due to increased demand in firm transportation;
- a decrease of $4 million in interruptible transportation due to
lower rates and lower short-term customer demand on our Sea Robin
and Transwestern systems; and
- a decrease of $10 million in Adjusted EBITDA related to
unconsolidated affiliates primarily due to lower earnings of $12
million from our Midcontinent Express Pipeline joint venture as a
result of less capacity sold and lower rates received following the
expiration of certain contracts, partially offset by a $2 million
increase from Citrus primarily due to higher margins and lower
operating expenses.
Midstream
Three Months Ended June 30,
2020
2019
Gathered volumes (BBtu/d)
12,964
13,148
NGLs produced (MBbls/d)
602
565
Equity NGLs (MBbls/d)
37
30
Revenues
$
1,018
$
1,198
Cost of products sold
473
584
Segment margin
545
614
Operating expenses, excluding non-cash
compensation expense
(166
)
(189
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(20
)
(23
)
Adjusted EBITDA related to unconsolidated
affiliates
7
9
Other
1
1
Segment Adjusted EBITDA
$
367
$
412
Gathered volumes decreased compared to the same period last year
primarily due to decreases in the South Texas and North Texas
regions, partially offset by the impact of the SemGroup acquisition
in the Mid-Continent/Panhandle region. NGL production increased due
to the impact of the SemGroup acquisition in the
Mid-Continent/Panhandle region and increased ethane recovery in the
Permian, South Texas and North Texas regions.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our midstream segment decreased slightly due to the net
impacts of the following:
- a decrease $39 million in non fee-based margin due to lower NGL
prices;
- a decrease of $3 million in non-fee based margin due to
decreased throughput volume in the South Texas region; and
- a decrease of $27 million in fee-based margin due to volume
declines in the South Texas and North Texas regions; partially
offset by
- a decrease of $23 million in operating expenses due to
decreases of $11 million in outside services, $8 million in
employee costs and $3 million in materials; and
- a decrease of $3 million in selling, general and administrative
expenses due to a decrease in allocated overhead costs.
NGL and Refined Products Transportation and Services
Three Months Ended June 30,
2020
2019
NGL transportation volumes (MBbls/d)
1,401
1,305
Refined products transportation volumes
(MBbls/d)
377
628
NGL and refined products terminal volumes
(MBbls/d)
748
885
NGL fractionation volumes (MBbls/d)
836
701
Revenues
$
2,119
$
2,612
Cost of products sold
1,368
1,848
Segment margin
751
764
Unrealized losses on commodity risk
management activities
78
39
Operating expenses, excluding non-cash
compensation expense
(154
)
(155
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(19
)
(26
)
Adjusted EBITDA related to unconsolidated
affiliates
18
21
Other
—
1
Segment Adjusted EBITDA
$
674
$
644
NGL transportation volumes increased due to higher throughput
volumes on our Mariner East pipeline system. In addition,
throughput barrels 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.
Refined products transportation volumes decreased due to the
closure of a third-party refinery during the third quarter of 2019,
which negatively impacted supply to our refined products
transportation system, and less domestic demand for jet fuel and
other refined products. These decreases in volumes are partially
offset by the initiation of service on our JC Nolan diesel fuel
pipeline in the third quarter of 2019.
NGL and refined products terminal volumes decreased primarily
due to the closure of a third-party refinery during the third
quarter of 2019, and less domestic demand for jet fuel and other
refined products. These decreases were partially offset by higher
volumes from our Mariner East system, and the initiation of service
on our JC Nolan diesel fuel pipeline and natural gasoline export
project, both of which commenced service in the third quarter of
2019.
Average fractionated volumes at our Mont Belvieu, Texas
fractionation facility increased 20% primarily due to the
commissioning of our sixth and seventh fractionators in February
2019 and February 2020, respectively.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 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 $27 million in transportation margin primarily
due to a $28 million increase from higher throughput volumes on our
Mariner East pipeline system, an $11 million increase from higher
throughput volumes received from the Permian region on our Texas
NGL pipelines, a $6 million increase due to the initiation of
service on our JC Nolan diesel fuel pipeline in the third quarter
of 2019, and a $4 million increase due to higher throughput volumes
from the Southeast Texas region. These increases were partially
offset by an $8 million decrease due to a reclassification between
our transportation and fractionators margins, a $7 million decrease
due to less domestic demand for jet fuel and other refined
products, a $5 million decrease resulting from the closure of a
third-party refinery during the third quarter of 2019, and a $2
million decrease due to lower third-party volumes on our Mariner
West pipeline;
- an increase of $15 million in marketing margin primarily due to
a $50 million increase due to higher optimization gains from the
sale of NGL component products at our Mont Belvieu facility and a
$10 million increase due to write-downs of NGL inventory in the
second quarter of 2019. These increases were partially offset by
lower gains from our butane blending business during the second
quarter of 2020 due to unfavorable market conditions; and
- an increase of $19 million in fractionators and refinery
services margin primarily due to a $15 million increase resulting
from the commissioning of our seventh fractionator in February 2020
and higher NGL volumes from the Permian and Barnett regions feeding
our Mont Belvieu fractionation facility, and an increase of $8
million due to a reclassification between our transportation and
fractionators margins. These increases were partially offset by a
$4 million decrease due to the expiration of a third-party blending
contract during the second quarter of 2020; partially offset
by
- a decrease of $37 million in terminal services margin primarily
due to a $25 million decrease resulting from the expiration of a
third party contract at our Nederland export facility in the second
quarter of 2020, a $9 million decrease due to lower third-party and
intercompany volumes feeding our Marcus Hook Industrial Complex, a
$6 million decrease due to less domestic demand for jet fuel and
other refined products, and a $4 million decrease due to the
closure of a third-party refinery. These decreases were partially
offset by a $6 million increase due to higher throughput on our
Mariner East system.
Crude Oil Transportation and Services
Three Months Ended June 30,
2020
2019
Crude transportation volumes (MBbls/d)
3,590
4,266
Crude terminals volumes (MBbls/d)
2,716
2,846
Revenues
$
1,839
$
5,046
Cost of products sold
1,175
4,136
Segment margin
664
910
Unrealized losses on commodity risk
management activities
—
11
Operating expenses, excluding non-cash
compensation expense
(131
)
(150
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(26
)
(20
)
Adjusted EBITDA related to unconsolidated
affiliates
11
1
Other
1
—
Segment Adjusted EBITDA
$
519
$
752
Crude transportation and terminal volumes were lower due to
decreased demand on our Texas pipeline system and our Bakken
pipeline, driven by lower production in these regions as well as
lower refinery utilization, partly offset by contributions from
assets acquired in 2019.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our crude oil transportation and services segment
decreased due to the net impacts of the following:
- a decrease of $257 million in segment margin (excluding
unrealized gains and losses on commodity risk management
activities) primarily due to a $62 million decrease (excluding a
net change of $11 million in unrealized gains and losses on
commodity risk management activities) from our crude oil
acquisition and marketing business due to well shut-ins resulting
in unfulfilled producer supply commitments, as well as unfavorable
pricing conditions impacting our Permian to Gulf Coast and Bakken
to Gulf Coast trading operations, a $123 million decrease from our
Texas crude pipeline system due to lower utilization due in part to
well shut-ins, as well as lower average tariff rates realized, a
$117 million decrease due to lower volumes on our Bakken Pipeline
resulting from well shut-ins, a $10 million decrease in marine
throughput at our crude terminals, and a $7 million decrease due to
lower volumes on our Bayou Bridge Pipeline, partially offset by an
increase of $74 million related to assets acquired in 2019;
and
- an increase of $6 million in selling, general and
administrative expenses primarily due to a $3 million increase in
legal expenses, and a $2 million increase in insurance expenses,
partially offset by a $1 million decrease in allocated overhead
costs; offset by
- a decrease of $19 million in operating expenses primarily due
to lower volume-driven pipeline expenses, partially offset by
increased costs related to assets acquired in 2019; and
- an increase of $10 million in Adjusted EBITDA related to
unconsolidated affiliates due to assets acquired in 2019.
Investment in Sunoco LP
Three Months Ended June 30,
2020
2019
Revenues
$
2,080
$
4,475
Cost of products sold
1,722
4,206
Segment margin
358
269
Unrealized losses on commodity risk
management activities
—
3
Operating expenses, excluding non-cash
compensation expense
(72
)
(89
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(22
)
(31
)
Adjusted EBITDA related to unconsolidated
affiliates
3
—
Inventory valuation adjustments
(90
)
(4
)
Other
5
4
Segment Adjusted EBITDA
$
182
$
152
The Investment in Sunoco LP segment reflects the consolidated
results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our investment in Sunoco LP segment increased due to the
net impacts of the following:
- an increase of $16 million in motor fuel sales as a result of
an increase in gross profit per gallon sold, partially offset by a
decrease in gallons sold;
- a decrease of $26 million in operating expenses and selling,
general and administrative expenses, excluding non-cash
compensation expense, primarily attributable to lower employee
costs, maintenance, advertising, credit card fees and utilities;
and
- an increase of $3 million in Adjusted EBITDA related to
unconsolidated affiliates which was attributable to the JC Nolan
joint venture entered into in 2019; partially offset by
- a decrease of $15 million in non-motor fuel sales gross margin
as a result of reduced credit card transactions related to the
COVID-19 pandemic.
Investment in USAC
Three Months Ended June 30,
2020
2019
Revenues
$
169
$
174
Cost of products sold
18
24
Segment margin
151
150
Operating expenses, excluding non-cash
compensation expense
(30
)
(32
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(16
)
(13
)
Segment Adjusted EBITDA
$
105
$
105
The Investment in USAC segment reflects the consolidated results
of USAC.
Segment Adjusted EBITDA. For the three months ended June 30,
2020 Segment Adjusted EBITDA related to our investment in USAC
segment was consistent with the same period last year primarily due
to the offsetting impacts of the following:
- an increase of $3 million in selling, general and
administrative expenses primarily due to an increase in the
provision for expected credit losses; offset by
- a decrease of $2 million in operating expenses, as well as an
increase of $1 million in segment margin primarily due to a
decrease in cost of products sold offset by a decrease in revenues
as a result of a decrease in average revenue generating
horsepower.
All Other
Three Months Ended June 30,
2020
2019
Revenues
$
492
$
391
Cost of products sold
377
343
Segment margin
115
48
Unrealized (gains) losses on commodity
risk management activities
2
(4
)
Operating expenses, excluding non-cash
compensation expense
(27
)
(6
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(22
)
(23
)
Adjusted EBITDA related to unconsolidated
affiliates
—
2
Other and eliminations
(67
)
(7
)
Segment Adjusted EBITDA
$
1
$
10
Segment Adjusted EBITDA. For the three months ended June 30,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our all other segment decreased due to the net impacts
of the following:
- a decrease of $7 million due to lower sales of residue
gas;
- a decrease of $11 million due to lower revenues from our
compression equipment business;
- a decrease of $7 million due to power trading activities;
- a decrease of $5 million due to lower demand and operator
production at our natural resources business;
- a decrease of $4 million due to storage gains; and
- a decrease of $3 million from increased power costs at our
compression services business; partially offset by
- an increase of $25 million from the acquisition of SemCAMS;
and
- an increase of $6 million in settled derivatives.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON LIQUIDITY
(In millions)
(unaudited)
The following table is a summary of ETO’s
revolving credit facilities. We also have other consolidated
subsidiaries with revolving credit facilities which are not
included in this table.
Facility Size
Funds Available at June 30,
2020
Maturity Date
ETO Five-Year Revolving Credit
Facility
$
5,000
$
1,904
December 1, 2023
ETO 364-Day Revolving Credit Facility
1,000
1,000
November 27, 2020
$
6,000
$
2,904
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 June 30,
2020
2019
Equity in earnings (losses) of
unconsolidated affiliates:
Citrus
$
42
$
39
FEP
18
14
MEP
(2
)
7
White Cliffs
9
—
Other
18
17
Total equity in earnings (losses) of
unconsolidated affiliates
$
85
$
77
Adjusted EBITDA related to
unconsolidated affiliates:
Citrus
$
89
$
87
FEP
19
18
MEP
7
20
White Cliffs
13
—
Other
29
38
Total Adjusted EBITDA related to
unconsolidated affiliates
$
157
$
163
Distributions received from
unconsolidated affiliates:
Citrus
$
58
$
39
FEP
17
16
MEP
7
15
White Cliffs
10
—
Other
20
42
Total distributions received from
unconsolidated affiliates
$
112
$
112
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT
VENTURE SUBSIDIARIES
(Dollars in millions)
(unaudited)
The table below provides information on an
aggregated basis for our non-wholly-owned joint venture
subsidiaries, which are reflected on a consolidated basis in our
financial statements. The table below excludes Sunoco LP and USAC,
our non-wholly-owned subsidiaries that are publicly traded.
Three Months Ended June 30,
2020
2019
Adjusted EBITDA of non-wholly-owned
subsidiaries (100%) (a)
$
494
$
695
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries (b)
264
380
Distributable Cash Flow of
non-wholly-owned subsidiaries (100%) (c)
$
456
$
657
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries (d)
247
364
Below is our current ownership percentage
of certain non-wholly-owned subsidiaries:
Non-wholly-owned subsidiary:
ET Percentage Ownership (e)
Bakken Pipeline
36.4%
Bayou Bridge
60.0%
Maurepas
51.0%
Ohio River System
75.0%
Permian Express Partners
87.7%
Red Bluff Express
70.0%
Rover
32.6%
SemCAMS
51.0%
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 Adjusted 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/20200805005971/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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