Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”)
today reported financial results for the quarter and year ended
December 31, 2020.
ET reported net income attributable to partners for the three
months ended December 31, 2020 of $509 million. For the three
months ended December 31, 2020, net income per limited partner unit
(basic and diluted) was $0.19 per unit.
Adjusted EBITDA for the three months ended December 31, 2020 was
$2.59 billion. Results for the quarter continued to reflect
improved efficiencies, with lower operating expenses in all of the
Partnership’s core operating segments compared to the same period
in the prior year.
Distributable Cash Flow attributable to partners, as adjusted,
for the three months ended December 31, 2020 was $1.36 billion.
Key accomplishments and recent developments:
Operational
- In January 2021, the first Very Large Ethane Carrier (“VLEC”)
was loaded under ET’s joint venture with Satellite Petrochemical
USA Corp., Orbit Gulf Coast NGL Exports, LLC. The Seri Everest, the
world’s largest VLEC, departed from Orbit’s newly constructed
export facility at our Nederland Terminal in Nederland, Texas, as
the largest single shipment of ethane to date.
- In December 2020, the Partnership completed the expansion of
its Nederland Terminal LPG facilities to increase its export
capabilities.
- Also during the fourth quarter of 2020, the Partnership
completed a new 20-inch pipeline directly linking its fractionation
and storage facilities in Mont Belvieu, Texas to its Nederland
Terminal.
- In October 2020, the Partnership released its Community
Engagement Report, which highlights ET’s business achievements and
safety programs, as well as its stakeholder outreach and community
investment initiatives.
Strategic
- In February 2021, the Partnership announced the acquisition of
Enable Midstream Partners, LP (“Enable”) in a $7.2 billion,
all-equity transaction.
- In November 2020, the Partnership announced its first-ever
dedicated solar power contract, which will reduce the Partnership’s
environmental footprint by integrating alternative energy sources
when economically beneficial. The Partnership continues to increase
its focus on near and long-term alternative energy projects aimed
at reducing its environmental footprint throughout its
operations.
- In February 2021, the Partnership announced the creation of a
new group that will focus on alternative energy initiatives.
- With the addition of ethane export facilities at our Nederland
Terminal, the Partnership now owns two of the three U.S. ethane
export terminals, and is the only company with export facilities on
the Gulf Coast and East Coast.
Financial
- In January 2021, ET announced a quarterly distribution of
$0.1525 per unit ($0.61 annualized) on ET common units for the
quarter ended December 31, 2020. The distribution coverage ratio
for the fourth quarter of 2020 was 3.30x.
- As of December 31, 2020, Energy Transfer Operating, L.P.’s
(“ETO’s”) $6.00 billion revolving credit facilities had an
aggregate $2.79 billion of available capacity, and the leverage
ratio, as defined by its credit agreements, was 4.31x.
- Energy Transfer completed 2020 with full-year Adjusted EBITDA
of $10.53 billion, which was above the high end of estimates
provided in August 2020.
- For 2021, the Partnership expects Adjusted EBITDA to be $10.6
billion to $11.0 billion, excluding any contribution from the
recently announced Enable acquisition.
- For the year ended December 31, 2020, the Partnership spent
approximately $3.05 billion on growth capital expenditures. The
Partnership expects to spend approximately $1.45 billion on growth
capital expenditures in 2021, including approximately $250 million
of 2020 growth capital that was deferred into 2021.
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 or full year ended December
31, 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/5:00 p.m. Eastern Time on Wednesday, February 17, 2021
to discuss its fourth quarter 2020 results and provide an update on
the Partnership, including its outlook for 2021. 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, natural gas liquids (NGL) and refined product
transportation and terminalling assets; NGL fractionation; and
various acquisition and marketing assets. ET, through its ownership
of Energy Transfer Operating, L.P., 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 wholly owned 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. USA
Compression partners with a broad customer base composed of
producers, processors, gatherers and transporters of natural gas
and crude oil. USA Compression 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, 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 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)
December 31, 2020
December 31, 2019
ASSETS
Current assets (1)
$
6,317
$
7,464
Property, plant and equipment, net
75,107
74,193
Advances to and investments in
unconsolidated affiliates
3,060
3,460
Lease right-of-use assets, net
866
964
Other non-current assets, net (1)
1,657
1,571
Intangible assets, net
5,746
6,154
Goodwill
2,391
5,167
Total assets
$
95,144
$
98,973
LIABILITIES AND EQUITY
Current liabilities
$
5,923
$
7,724
Long-term debt, less current
maturities
51,417
51,028
Non-current derivative liabilities
237
273
Non-current operating lease
liabilities
837
901
Deferred income taxes
3,428
3,208
Other non-current liabilities
1,152
1,162
Commitments and contingencies
Redeemable noncontrolling interests
762
739
Equity:
Total partners’ capital
18,529
21,920
Noncontrolling interest
12,859
12,018
Total equity
31,388
33,938
Total liabilities and equity
$
95,144
$
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 December
31,
Year Ended December 31,
2020
2019 (1)
2020
2019 (1)
REVENUES
$
10,034
$
13,720
$
38,954
$
54,213
COSTS AND EXPENSES:
Cost of products sold
6,703
10,159
25,487
39,801
Operating expenses
796
888
3,218
3,294
Depreciation, depletion and
amortization
963
804
3,678
3,147
Selling, general and administrative
156
195
711
694
Impairment losses
77
12
2,880
74
Total costs and expenses
8,695
12,058
35,974
47,010
OPERATING INCOME
1,339
1,662
2,980
7,203
OTHER INCOME (EXPENSE):
Interest expense, net of interest
capitalized
(577)
(584)
(2,327)
(2,331)
Equity in earnings of unconsolidated
affiliates
73
78
119
302
Impairment of investments in
unconsolidated affiliates
—
—
(129)
—
Losses on extinguishments of debt
(13)
—
(75)
(18)
Gains (losses) on interest rate
derivatives
74
130
(203)
(241)
Other, net
6
6
12
105
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE (BENEFIT)
902
1,292
377
5,020
Income tax expense (benefit) from
continuing operations
69
(19)
237
195
NET INCOME
833
1,311
140
4,825
Less: Net income attributable to
noncontrolling interest
312
325
739
1,256
Less: Net income attributable to
redeemable noncontrolling interests
12
13
49
51
NET INCOME (LOSS) ATTRIBUTABLE TO
PARTNERS
509
973
(648)
3,518
General Partner’s interest in net income
(loss)
—
1
(1)
4
Limited Partners’ interest in net income
(loss)
$
509
$
972
$
(647)
$
3,514
NET INCOME (LOSS) PER LIMITED PARTNER
UNIT:
Basic
$
0.19
$
0.37
$
(0.24)
$
1.34
Diluted
$
0.19
$
0.37
$
(0.24)
$
1.33
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic
2,699.1
2,646.2
2,695.6
2,628.0
Diluted
2,699.1
2,653.3
2,695.6
2,637.6
(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 months and full year ended December 31,
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 December
31,
Year Ended December 31,
2020
2019 (a)
2020
2019 (a)
Reconciliation of net income to
Adjusted EBITDA and Distributable Cash Flow (b):
Net income
$
833
$
1,311
$
140
$
4,825
Interest expense, net of interest
capitalized
577
584
2,327
2,331
Impairment losses
77
12
2,880
74
Income tax expense (benefit) from
continuing operations
69
(19)
237
195
Depreciation, depletion and
amortization
963
804
3,678
3,147
Non-cash compensation expense
28
28
121
113
(Gains) losses on interest rate
derivatives
(74)
(130)
203
241
Unrealized losses on commodity risk
management activities
44
95
71
5
Losses on extinguishments of debt
13
—
75
18
Inventory valuation adjustments (Sunoco
LP)
(44)
(8)
82
(79)
Impairment of investment in an
unconsolidated affiliate
—
—
129
—
Equity in earnings of unconsolidated
affiliates
(73)
(78)
(119)
(302)
Adjusted EBITDA related to unconsolidated
affiliates
148
156
628
626
Other, net
31
13
79
(54)
Adjusted EBITDA (consolidated)
2,592
2,768
10,531
11,140
Adjusted EBITDA related to unconsolidated
affiliates
(148)
(156)
(628)
(626)
Distributable Cash Flow from
unconsolidated affiliates
99
108
452
415
Interest expense, net of interest
capitalized
(577)
(584)
(2,327)
(2,331)
Preferred unitholders’ distributions
(96)
(68)
(378)
(253)
Current income tax (expense) benefit
(19)
45
(27)
22
Transaction-related income taxes
—
(31)
—
(31)
Maintenance capital expenditures
(152)
(215)
(520)
(655)
Other, net
17
30
74
85
Distributable Cash Flow (consolidated)
1,716
1,897
7,177
7,766
Distributable Cash Flow attributable to
Sunoco LP (100%)
(97)
(120)
(516)
(450)
Distributions from Sunoco LP
42
42
165
165
Distributable Cash Flow attributable to
USAC (100%)
(51)
(58)
(221)
(222)
Distributions from USAC
25
24
97
90
Distributable Cash Flow attributable to
noncontrolling interest in other non-wholly-owned consolidated
subsidiaries
(282)
(286)
(1,015)
(1,113)
Distributable Cash Flow attributable to
the partners of ET
1,353
1,499
5,687
6,236
Transaction-related adjustments
9
8
55
14
Distributable Cash Flow attributable to
the partners of ET, as adjusted
$
1,362
$
1,507
$
5,742
$
6,250
Distributions to partners:
Limited Partners
$
412
$
820
$
2,468
$
3,221
General Partner
1
1
3
4
Total distributions to be paid to
partners
$
413
$
821
$
2,471
$
3,225
Common Units outstanding – end of
period
2,702.3
2,689.6
2,702.3
2,689.6
Distribution coverage ratio
3.30x
1.84x
2.32x
1.94x
(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 twelve months
ended December 31, 2020 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
an internal measure 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 December
31,
2020
2019
Segment Adjusted EBITDA:
Intrastate transportation and storage
$
233
$
222
Interstate transportation and storage
448
434
Midstream
390
397
NGL and refined products transportation
and services
703
743
Crude oil transportation and services
517
676
Investment in Sunoco LP
159
168
Investment in USAC
99
110
All other
43
18
Total Segment Adjusted EBITDA
$
2,592
$
2,768
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,
2020
2019
Natural gas transported (BBtu/d)
12,363
13,098
Revenues
$
781
$
714
Cost of products sold
493
436
Segment margin
288
278
Unrealized gains on commodity risk
management activities
(9)
(1)
Operating expenses, excluding non-cash
compensation expense
(46)
(53)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(6)
(9)
Adjusted EBITDA related to unconsolidated
affiliates
6
7
Segment Adjusted EBITDA
$
233
$
222
For the three months ended December 31, 2020 compared to the
same period last year, transported volumes decreased primarily due
to the bankruptcy filing of a transportation customer.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 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 $17 million in realized storage margin due to
higher physical storage margin from withdrawals and higher realized
gains from financial derivatives used to hedge physical storage
gas;
- a decrease of $8 million in operating expenses primarily due to
a $4 million decrease in maintenance project costs, a $3 million
decrease in ad valorem taxes and a $1 million decrease in outside
services;
- an increase of $3 million in retained fuel revenue primarily
due to higher natural gas prices; and
- a decrease of $2 million in selling, general and administrative
expenses due to lower allocated overhead costs; partially offset
by
- a decrease of $15 million in realized natural gas sales and
other primarily due to lower realized gains from pipeline
optimization activity; and
- a decrease of $3 million in transportation fees due to the
expiration of certain contracts on our Regency Intrastate Gas
System, partially offset by volume ramp-ups from the Permian
region.
Interstate Transportation and
Storage
Three Months Ended December
31,
2020
2019
Natural gas transported (BBtu/d)
10,037
11,620
Natural gas sold (BBtu/d)
18
17
Revenues
$
481
$
493
Operating expenses, excluding non-cash
compensation, amortization and accretion expenses
(138)
(144)
Selling, general and administrative
expenses, excluding non-cash compensation, amortization and
accretion expenses
(2)
(23)
Adjusted EBITDA related to unconsolidated
affiliates
108
109
Other
(1)
(1)
Segment Adjusted EBITDA
$
448
$
434
For the three months ended December 31, 2020 compared to the
same period last year, transported volumes decreased primarily due
to lower crude production resulting in lower associated gas
production and lower volumes on our Tiger Pipeline due to contract
expirations, as well as multiple weather events and maintenance of
third-party facilities impacting our assets along the Gulf
Coast.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our interstate transportation and storage segment
increased due to the net impacts of the following:
- a decrease of $6 million in operating expense primarily due to
an $18 million settlement related to a property tax appeal with the
state of Arizona, a $5 million decrease in maintenance project
costs, and a $1 million decrease in storage and transportation
expense, partially offset by $14 million in bad debt expense
associated with a shipper bankruptcy and the write-off of $4
million of obsolete inventory; and
- a decrease of $21 million in selling, general and
administrative expense primarily resulting from a $17 million
favorable settlement related to excise taxes on Rover and a $5
million decrease in allocated overhead and employee costs due to
cost-cutting initiatives, partially offset by a $2 million increase
in legal and consulting fees related to an ongoing rate case and
shipper bankruptcies; partially offset by
- a decrease of $12 million in revenues primarily due to a
decrease of $16 million from a contractual rate adjustment on
commitments at our Lake Charles LNG facility effective January
2020, a decrease of $9 million resulting from contract expirations
on Tiger and a decrease of $8 million in transportation fees as a
result of multiple weather events and maintenance on third-party
facilities connected to our systems. These decreases were partially
offset by increased revenues from short-term firm contracts on our
Transwestern, Panhandle and Rover systems due to increased demand
and higher parking revenues; and
- a decrease of $1 million in Adjusted EBITDA related to
unconsolidated affiliates primarily due to lower earnings from
Midcontinent Express Pipeline as a result of lower rates received
following the expiration of certain contracts.
Midstream
Three Months Ended December
31,
2020
2019
Gathered volumes (BBtu/d)
12,634
14,034
NGLs produced (MBbls/d)
596
583
Equity NGLs (MBbls/d)
32
29
Revenues
$
1,461
$
1,535
Cost of products sold
882
899
Segment margin
579
636
Operating expenses, excluding non-cash
compensation expense
(177)
(217)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(20)
(27)
Adjusted EBITDA related to unconsolidated
affiliates
8
6
Other
—
(1)
Segment Adjusted EBITDA
$
390
$
397
For the three months ended December 31, 2020 compared to the
same period last year, gathered volumes decreased primarily in the
South Texas and Northeast regions, partially offset by the impact
of the SemGroup acquisition in the Mid-Continent/Panhandle region
and volume growth in the Ark-La-Tex and Permian regions. NGL
production increased due to the impact of the SemGroup acquisition
in the Mid-Continent/Panhandle region and increased ethane
recoveries in the Permian, South Texas and North Texas regions.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 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 $11 million in non fee-based margin due to
unfavorable NGL prices of $14 million, partially offset by the
impact of favorable natural gas prices of $3 million;
- a decrease of $10 million in non fee-based margin due to
decreased throughput volumes, primarily in the South Texas region;
and
- a decrease of $36 million in fee-based margin due to volume
declines in the South Texas region; partially offset by
- a decrease of $40 million in operating expenses due to
cost-saving initiatives, including a decrease of $13 million in
maintenance project costs, $13 million in materials and $11 million
in outside services; and
- a decrease of $7 million in selling, general and administrative
expenses primarily due to a decrease in allocated overhead costs
resulting from overall corporate cost reductions.
NGL and Refined Products Transportation
and Services
Three Months Ended December
31,
2020
2019
NGL transportation volumes (MBbls/d)
1,449
1,338
Refined products transportation volumes
(MBbls/d)
463
535
NGL and refined products terminal volumes
(MBbls/d)
859
833
NGL fractionation volumes (MBbls/d)
825
734
Revenues
$
3,056
$
3,120
Cost of products sold
2,223
2,257
Segment margin
833
863
Unrealized losses on commodity risk
management activities
44
66
Operating expenses, excluding non-cash
compensation expense
(175)
(185)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(18)
(26)
Adjusted EBITDA related to unconsolidated
affiliates
19
23
Other
—
2
Segment Adjusted EBITDA
$
703
$
743
For the three months ended December 31, 2020 compared to the
same period last year, 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 primarily due to higher export volumes feeding into our
Nederland Terminal resulting from the initiation of service on our
propane export pipeline in the fourth quarter 2020.
Refined products transportation volumes decreased for the three
months ended December 31, 2020 compared to the same period last
year due to less domestic demand for jet fuel and other refined
products. This decrease in volume was partially offset by the
impact from Midwest refinery turnarounds in the prior period.
NGL and refined products terminal volumes increased for the
three months ended December 31, 2020 compared to the same period
last year primarily due to higher volumes from our Mariner East
system and an increase in loaded vessels at our Nederland
Terminal.
Average fractionated volumes at our Mont Belvieu, Texas
fractionation facility increased for the three months ended
December 31, 2020 compared to the same period last year primarily
due to the commissioning of our seventh fractionator in February
2020.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our NGL and refined products transportation and services
segment decreased due to net impacts of the following:
- a decrease of $74 million in marketing margin primarily due to
a $50 million decrease resulting from lower optimization gains from
the sale of NGL component products at our Mont Belvieu facility, a
$41 million decrease due to lower margin from our butane blending
business, and a $33 million decrease in gasoline blending and
optimization due to unfavorable market conditions primarily
attributable to the COVID-19 pandemic. These decreases were
partially offset by a $28 million increase in NGL export and rack
volumes, a $17 million increase due to lower capacity lease fees
incurred by our marketing affiliate, and a $4 million increase due
to the timing of the settlement of financial derivative contracts;
and
- a decrease of $22 million in terminal services margin primarily
due to a $27 million decrease resulting from the expiration of a
third-party contract at our Nederland Terminal in the second
quarter of 2020, a $7 million decrease due to lower third party and
intercompany volumes feeding our Marcus Hook Terminal, and a $6
million decrease due to less domestic demand for jet fuel and other
refined products. These decreases were partially offset by a $14
million increase due to higher throughput on our Mariner East
system and a $4 million increase from higher storage tank rental
revenues in the fourth quarter of 2020; partially offset by
- an increase of $20 million in transportation margin primarily
due to a $13 million increase from higher throughput volumes on our
Mariner East pipeline system, a $7 million increase due to higher
export volumes feeding into our Nederland Terminal resulting from
the initiation of service on our propane export pipeline in the
fourth quarter of 2020, a $4 million increase due to the impact
from Midwest refinery turnarounds in the prior period, and a $3
million increase resulting from higher throughput volumes received
from the Southwest Texas region. These increases were partially
offset by an $8 million decrease due to lower throughput volumes
received from the Eagle Ford region;
- an increase of $12 million in storage margin primarily due to a
$6 million increase from component product storage revenues and a
$6 million increase from throughput fees generated from exported
volumes;
- an increase of $11 million in fractionators and refinery
services margin primarily due to the commissioning of our seventh
fractionator in February 2020 and higher NGL volumes at our Mont
Belvieu fractionation facility; and
- a decrease of $8 million in selling, general and administrative
expenses primarily due to lower allocated overhead costs, lower
employee costs resulting from cost-cutting initiatives, and a
decrease in insurance expenses.
Crude Oil Transportation and
Services
Three Months Ended December
31,
2020
2019
Crude transportation volumes (MBbls/d)
3,532
4,329
Crude terminals volumes (MBbls/d)
2,223
2,328
Revenues
$
2,802
$
4,762
Cost of products sold
2,134
3,940
Segment margin
668
822
Unrealized losses on commodity risk
management activities
3
31
Operating expenses, excluding non-cash
compensation expense
(125)
(160)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(36)
(24)
Adjusted EBITDA related to unconsolidated
affiliates
5
8
Other
2
(1)
Segment Adjusted EBITDA
$
517
$
676
For the three months ended December 31, 2020 compared to the
same period last year, crude transportation volumes were lower on
our Texas pipeline system and our Bakken pipeline, driven by lower
production in these regions due to lower crude oil prices as well
as lower refinery utilization caused by COVID-19 demand
destruction, partially offset by contributions from assets acquired
in 2019. Crude terminal volumes were lower primarily due to lower
Permian and Bakken pipeline volumes, reduced refinery utilization,
and reduced export demand at our Nederland Terminal, partially
offset by contributions from assets acquired in 2019.
Adjusted EBITDA. For the three months ended December 31, 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 $182 million in segment margin (excluding
unrealized gains and losses on commodity risk management
activities) primarily due to a $106 million decrease from our Texas
crude pipeline system due to lower utilization and lower average
tariff rates realized, a $48 million decrease (excluding a net
change of $25 million in unrealized gains and losses on commodity
risk management activities) from our crude oil acquisition and
marketing business primarily due to less favorable pricing
conditions impacting our Permian to Gulf Coast and Bakken to Gulf
Coast trading operations, a $43 million decrease due to lower
volumes on our Bakken Pipeline resulting from lower basin
production, an $18 million decrease in throughput at our crude
terminals primarily driven by lower Permian and Bakken pipeline
volumes, reduced refinery utilization from COVID-19 demand
destruction, and reduced export demand, and an $11 million decrease
due to lower volumes on our Bayou Bridge pipeline; partially offset
by an increase of $45 million related to assets acquired in
2019;
- an increase of $11 million in selling, general and
administrative expenses primarily due to legal expenses; and
- a decrease of $4 million in Adjusted EBITDA related to
unconsolidated affiliates due to lower margin from jet fuel sales
by our joint ventures; partially offset by
- a net decrease of $35 million in operating expenses primarily
due to lower volume-driven pipeline expenses and corporate
cost-cutting initiatives, partially offset by increased costs
related to assets acquired in 2019.
Investment in Sunoco LP
Three Months Ended December
31,
2020
2019
Revenues
$
2,553
$
4,098
Cost of products sold
2,271
3,813
Segment margin
282
285
Unrealized (gains) losses on commodity
risk management activities
6
(1)
Operating expenses, excluding non-cash
compensation expense
(71)
(84)
Selling, general and administrative,
excluding non-cash compensation expense
(22)
(32)
Adjusted EBITDA related to unconsolidated
affiliates
3
3
Inventory fair value adjustments
(44)
(8)
Other, net
5
5
Segment Adjusted EBITDA
$
159
$
168
The Investment in Sunoco LP segment reflects the consolidated
results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 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 $32 million in margin (excluding changes in
inventory fair value adjustments and unrealized losses on commodity
risk management activities) due to a 12% decrease in volume
primarily resulting from the COVID-19 pandemic, as well as an
approximately 7% decrease in gross profit per gallon sold, offset
by
- a decrease of $13 million in operating expenses and $10 million
in selling, general and administrative expenses, primarily
attributable to lower employee costs, professional fees, credit
card processing fees and advertising costs.
Investment in USAC
Three Months Ended December
31,
2020
2019
Revenues
$
158
$
178
Cost of products sold
20
22
Segment margin
138
156
Operating expenses, excluding non-cash
compensation expense
(30)
(32)
Selling, general and administrative,
excluding non-cash compensation expense
(10)
(14)
Other, net
1
—
Segment Adjusted EBITDA
$
99
$
110
The Investment in USAC segment reflects the consolidated results
of operations for USAC.
Segment Adjusted EBITDA. For the three months ended December 31,
2020 compared to the same period last year, Segment Adjusted EBITDA
related to our investment in USAC decreased primarily due to a
decrease in demand for compression services driven by a decline in
U.S. crude oil and natural gas activity resulting in a decrease in
average revenue generating horsepower per month.
All Other
Three Months Ended December
31,
2020
2019
Revenues
$
466
$
413
Cost of products sold
417
366
Segment margin
49
47
Unrealized losses on commodity risk
management activities
1
—
Operating expenses, excluding non-cash
compensation expense
(33)
(25)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(21)
(21)
Adjusted EBITDA related to unconsolidated
affiliates
1
1
Other and eliminations
46
16
Segment Adjusted EBITDA
$
43
$
18
Segment Adjusted EBITDA. For the three months ended December 31,
2020 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 $21 million from the acquisition of Energy
Transfer Canada (formerly SemCAMS);
- an increase of $6 million primarily due to insurance proceeds
received on settled claims related to our MTBE litigation;
- an increase of $6 million from lower power and operating costs
at our compression services business; and
- an increase of $3 million from power trading activities;
partially offset by
- a decrease of $4 million due to lower revenue from our
compressor equipment business; and
- a decrease of $3 million due to lower royalties and producer
demand at our natural resources 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,
2020
Maturity Date
ETO Five-Year Revolving Credit
Facility
$
5,000
$
1,788
December 1, 2023
ETO 364-Day facility
1,000
1,000
November 26, 2021
$
6,000
$
2,788
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,
2020
2019
Equity in earnings (losses) of
unconsolidated affiliates:
Citrus
$
35
$
33
FEP
19
16
MEP
(3)
—
White Cliffs
1
4
Other
21
25
Total equity in earnings of unconsolidated
affiliates
$
73
$
78
Adjusted EBITDA related to
unconsolidated affiliates:
Citrus
$
83
$
82
FEP
19
19
MEP
5
8
White Cliffs
6
—
Other
35
47
Total Adjusted EBITDA related to
unconsolidated affiliates
$
148
$
156
Distributions received from
unconsolidated affiliates:
Citrus
$
36
$
50
FEP
20
20
MEP
4
3
White Cliffs
4
—
Other
23
21
Total distributions received from
unconsolidated affiliates
$
87
$
94
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,
2020
2019
Adjusted EBITDA of non-wholly-owned
subsidiaries (100%) (a)
$
584
$
642
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries (b)
288
335
Distributable Cash Flow of
non-wholly-owned subsidiaries (100%) (c)
$
543
$
601
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries (d)
270
315
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
%
Maurepas
51.0
%
Ohio River System
75.0
%
Permian Express Partners
87.7
%
Red Bluff Express
70.0
%
Rover
32.6
%
Energy Transfer Canada (formerly
“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 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/20210217005979/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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