Energy Transfer Partners, L.P. (NYSE: ETP) today reported
its financial results for the quarter ended December 31, 2016.
For the three months ended December 31, 2016 Energy Transfer
Partners, L.P. (“ETP” or the “Partnership”) reported a net loss of
$362 million, a decrease of $383 million compared to net
income of $21 million for the same period last year, primarily
due to non-cash impairments of $813 million recorded in the
current period. Adjusted EBITDA for the three months ended
December 31, 2016 totaled $1.43 billion, an increase of
$73 million over the same period last year. Distributable Cash
Flow attributable to the partners of ETP, as adjusted, for the
three months ended December 31, 2016 totaled $796 million, a
decrease of $83 million compared to the same period last year,
primarily due to a current tax benefit that was recorded in the
prior year. Excluding the impact of the change in current tax
benefit between periods, Distributable Cash Flow attributable to
the partners of ETP, as adjusted, increased approximately $100
million compared to the fourth quarter of 2015.
In January 2017, ETP announced a quarterly distribution of
$1.055 per unit ($4.22 annualized) on ETP Common Units for the
quarter ended December 31, 2016.
ETP’s other recent key accomplishments include the
following:
- In November 2016, ETP and Sunoco
Logistics Partners L.P. (“Sunoco Logistics”) entered into a merger
agreement providing for the acquisition of ETP by Sunoco Logistics
in a unit-for-unit transaction. Under the terms of the transaction,
ETP unitholders will receive 1.5 common units of Sunoco Logistics
for each common unit of ETP they own.
- On November 1, 2016, ETP acquired
certain interests in PennTex Midstream Partners, LP (“PennTex”)
from various parties for total consideration of approximately $640
million in ETP units and cash.
- In February 2017, ETP announced that
the Federal Energy Regulatory Commission (“FERC”) approved Rover
Pipeline LLC’s (“Rover”) application to construct and operate the
Rover Pipeline project, allowing Rover to move forward with its
targeted in-service goals of July 2017 for Phase I and November
2017 for Phase II.
- On February 8, 2017, ETP announced that
Dakota Access, LLC had received an easement from the U.S. Army
Corps of Engineers (“Army Corps”) to construct a pipeline across
land owned by the Army Corps on both sides of Lake Oahe in North
Dakota. With the receipt of the easement, ETP expects to commence
commercial operations on the Dakota Access Pipeline and the
adjoining Energy Transfer Crude Oil Pipeline (collectively, the
“Bakken Pipeline”) in the second quarter of 2017. In addition, the
previously announced project financing for the Bakken Pipeline and
the sale of a 36.75% interest in the Bakken Pipeline were completed
in February 2017.
- In January 2017, the previously
announced Comanche Trail Pipeline, which transports natural gas
from the Permian Basin to Mexico, was placed into service.
- In the fourth quarter of 2016, ETP
issued 6.5 million common units through its at-the-market
equity program, generating net proceeds of $236 million. In
addition, in January 2017, ETP raised $568 million through a
private placement of its common units and $1.48 billion through a
senior notes offering.
- As of December 31, 2016, ETP’s
$3.75 billion revolving credit facility had $2.78 billion of
outstanding borrowings, and its leverage ratio, as defined by the
credit agreement, was 4.32x.
An analysis of ETP’s segment results and other supplementary
data is provided after the financial tables shown below. ETP has
scheduled a conference call for 8:00 a.m. Central Time, Thursday,
February 23, 2017 to discuss the fourth quarter 2016 results.
The conference call will be broadcast live via an internet webcast,
which can be accessed through www.energytransfer.com and will also be available
for replay on ETP’s website for a limited time.
Energy Transfer Partners, L.P. (NYSE: ETP)
is a master limited partnership that owns and operates
one of the largest and most diversified portfolios of energy assets
in the United States. ETP’s subsidiaries
include Panhandle Eastern Pipe Line Company, LP (the
successor of Southern Union Company) and Lone Star NGL
LLC, which owns and operates natural gas liquids storage,
fractionation and transportation assets. In total, ETP currently
owns and operates more than 62,500 miles of natural gas and natural
gas liquids pipelines. ETP also owns the general partner, 100% of
the incentive distribution rights, and approximately 67.1 million
common units of Sunoco Logistics Partners L.P. (NYSE:
SXL), which operates a geographically diverse portfolio of
pipelines, terminalling and acquisition and marketing assets. ETP
recently acquired the general partner, 100% of the incentive
distribution rights, and an approximate 65% limited partnership
interest in PennTex Midstream Partners, LP (NASDAQ:
PTXP), which is a growth-oriented master limited partnership that
provides natural gas gathering and processing and residue gas and
natural gas liquids transportation services to producers in
northern Louisiana. ETP’s general partner is owned
by Energy Transfer Equity, L.P. For more information, visit
the Energy Transfer Partners, L.P. website at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master
limited partnership that owns the general partner and 100% of the
incentive distribution rights of Energy Transfer Partners,
L.P. and Sunoco LP. ETE also owns approximately 18.4
million ETP Common Units and approximately 81.0 million ETP Class H
Units, which track 90% of the underlying economics of the general
partner interest and the IDRs of Sunoco Logistics Partners
L.P. (NYSE: SXL). On a consolidated basis, ETE’s family of
companies owns and operates approximately 71,000 miles of natural
gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer Equity,
L.P. website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master
limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary
pipeline, terminalling and acquisition and marketing assets which
are used to facilitate the purchase and sale of crude oil, natural
gas liquids, and refined products. Sunoco Logistics’ general
partner is a consolidated subsidiary of Energy Transfer Partners,
L.P. (NYSE: ETP). For more information, visit the Sunoco Logistics
Partners L.P. website at www.sunocologistics.com.
PennTex Midstream Partners, LP (NASDAQ: PTXP) is a
growth-oriented master limited partnership focused on owning,
operating, acquiring and developing midstream energy infrastructure
assets in North America. PTXP provides natural gas gathering and
processing and residue gas and natural gas liquids transportation
services to producers in the Terryville Complex in northern
Louisiana. PennTex Midstream Partners, LP’s general partner is a
consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the PennTex Midstream Partners,
LP website at www.penntex.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 SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS(In millions)(unaudited)
December 31, 2016 2015
ASSETS Current
assets $ 5,729 $ 4,698 Property, plant and equipment, net
50,917 45,087 Advances to and investments in unconsolidated
affiliates 4,280 5,003 Other non-current assets, net 672 536
Intangible assets, net 4,696 4,421 Goodwill 3,897
5,428 Total assets $ 70,191 $ 65,173
LIABILITIES
AND EQUITY Current liabilities $ 6,203 $ 4,121 Long-term
debt, less current maturities 31,741 28,553 Long-term notes payable
– related party 250 233 Non-current derivative liabilities 76 137
Deferred income taxes 4,394 4,082 Other non-current liabilities 952
968 Commitments and contingencies Series A Preferred Units
33 33 Redeemable noncontrolling interests 15 15 Equity:
Total partners’ capital 18,642 20,836 Noncontrolling interest
7,885 6,195 Total equity 26,527 27,031
Total liabilities and equity $ 70,191 $ 65,173
ENERGY TRANSFER
PARTNERS, L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except per unit
data)(unaudited)
Three Months Ended December 31, Years Ended December 31,
2016 2015 2016 2015 REVENUES $ 6,526 $
5,825 $ 21,827 $ 34,292 COSTS AND EXPENSES: Cost of products sold
4,865 4,237 15,394 27,029 Operating expenses 374 498 1,484 2,261
Depreciation, depletion and amortization 517 478 1,986 1,929
Selling, general and administrative 122 86 348 475 Impairment
losses 813 339 813
339 Total costs and expenses 6,691
5,638 20,025 32,033 OPERATING
INCOME (LOSS) (165 ) 187 1,802 2,259 OTHER INCOME (EXPENSE):
Interest expense, net (336 ) (312 ) (1,317 ) (1,291 ) Equity in
earnings (losses) from unconsolidated affiliates (201 ) 81 59 469
Impairment of investment in an unconsolidated affiliate — — (308 )
— Gains on acquisitions 83 — 83 — Losses on extinguishments of debt
— — — (43 ) Gains (losses) on interest rate derivatives 167 (4 )
(12 ) (18 ) Other, net 35 (34 ) 131
22 INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(417 ) (82 ) 438 1,398 Income tax benefit (55 ) (103
) (186 ) (123 ) NET INCOME (LOSS) (362 ) 21 624 1,521
Less: Net income (loss) attributable to noncontrolling interest 96
(25 ) 327 157 Less: Net loss attributable to predecessor —
— — (34 ) NET INCOME
(LOSS) ATTRIBUTABLE TO PARTNERS (458 ) 46 297 1,398 General
Partner’s interest in net income 208 285 948 1,064 Class H
Unitholder’s interest in net income 94 74 351 258 Class I
Unitholder’s interest in net income 2 14
8 94 Common Unitholders’
interest in net loss $ (762 ) $ (327 ) $ (1,010 ) $ (18 ) NET LOSS
PER COMMON UNIT: Basic $ (1.47 ) $ (0.68 ) $ (2.06 ) $ (0.09 )
Diluted $ (1.47 ) $ (0.68 ) $ (2.06 ) $ (0.10 ) WEIGHTED AVERAGE
NUMBER OF COMMON UNITS OUTSTANDING: Basic 522.5 485.1 505.5 432.8
Diluted 522.5 485.5 505.5 433.5
SUPPLEMENTAL
INFORMATION(Dollars and units in millions, except per
unit amounts)(unaudited)
Three Months Ended December 31, Years Ended December 31,
2016 2015 2016 2015
Reconciliation
of net income (loss) to Adjusted EBITDA and Distributable Cash Flow
(a): Net income (loss) $ (362 ) $ 21 $ 624 $ 1,521 Interest
expense, net 336 312 1,317 1,291 Gains on acquisitions (83 ) — (83
) — Impairment losses (b) 813 339 813 339 Income tax benefit (55 )
(103 ) (186 ) (123 ) Depreciation, depletion and amortization 517
478 1,986 1,929 Non-cash compensation expense 20 20 80 79 (Gains)
losses on interest rate derivatives (167 ) 4 12 18 Unrealized
(gains) losses on commodity risk management activities 35 (7 ) 131
65 Inventory valuation adjustments (27 ) 120 (170 ) 104 Impairment
of investment in an unconsolidated affiliate — — 308 — Losses on
extinguishments of debt — — — 43 Equity in (earnings) losses of
unconsolidated affiliates 201 (81 ) (59 ) (469 ) Adjusted EBITDA
related to unconsolidated affiliates 235 226 946 937 Other, net
(30 ) 31 (114 ) (20 ) Adjusted
EBITDA (consolidated) 1,433 1,360 5,605 5,714 Adjusted EBITDA
related to unconsolidated affiliates (235 ) (226 ) (946 ) (937 )
Distributable cash flow from unconsolidated affiliates 134 129 518
646 Interest expense, net of interest capitalized (336 ) (312 )
(1,317 ) (1,291 ) Amortization included in interest expense (4 ) (6
) (20 ) (36 ) Current income tax benefit (c) 40 283 17 325
Transaction-related income taxes (c) — (51 ) — (51 ) Maintenance
capital expenditures (134 ) (177 ) (368 ) (485 ) Other, net
8 1 21 12
Distributable Cash Flow (consolidated) 906 1,001 3,510 3,897
Distributable Cash Flow attributable to Sunoco Logistics (100%)
(247 ) (240 ) (943 ) (874 ) Distributions from Sunoco Logistics to
ETP 139 118 532 413 Distributable Cash Flow attributable to PennTex
(100%) (11 ) — (11 ) — Distributions from PennTex to ETP 8 — 16 —
Distributable Cash Flow attributable to Sunoco LP (100%) (d) — — —
(68 ) Distributions from Sunoco LP to ETP (d) — — — 24
Distributable cash flow attributable to noncontrolling interest in
other consolidated subsidiaries (11 ) (5 ) (37
) (20 ) Distributable Cash Flow attributable to the partners
of ETP 784 874 3,067 3,372 Transaction-related expenses 12
5 16 42
Distributable Cash Flow attributable to the partners of ETP, as
adjusted $ 796 $ 879 $ 3,083 $ 3,414
Distributions to the partners of ETP (e): Limited
Partners: Common units held by public $ 561 $ 512 $ 2,168 $ 1,970
Common units held by ETE 20 3 28 54 Class H Units held by ETE (f)
94 77 357 263 General Partner interests held by ETE 8 8 32 31
Incentive Distribution Rights (“IDRs”) held by ETE 351 324 1,363
1,261 IDR relinquishments net of Class I Unit distributions (g)
(138 ) (28 ) (409 ) (111 ) Total
distributions to be paid to the partners of ETP $ 896 $ 896
$ 3,539 $ 3,468 Common Units outstanding – end
of period (e) 529.9 505.6 529.9
505.6 Distribution coverage ratio (h)
0.89
x
0.98
x
0.87
x
0.98
x
(a) Adjusted EBITDA and Distributable Cash Flow are non-GAAP
financial measures used by industry analysts, investors, lenders,
and rating agencies to assess the financial performance and the
operating results of ETP’s fundamental business activities and
should not be considered in isolation or as a substitute for net
income, income from operations, cash flows from operating
activities, or other GAAP measures.
There are material limitations to using measures such as
Adjusted EBITDA and Distributable Cash Flow, including the
difficulty associated with using either as the sole measure to
compare the results of one company to another, and the inability to
analyze certain significant items that directly affect a company’s
net income or loss or cash flows. In addition, our calculations of
Adjusted EBITDA and Distributable Cash Flow may not be consistent
with similarly titled measures of other companies and should be
viewed in conjunction with measurements that are computed in
accordance with GAAP, such as gross margin, operating income, net
income, and cash flow from operating activities.
Definition of Adjusted EBITDA
ETP defines Adjusted EBITDA as total partnership earnings before
interest, taxes, depreciation, depletion, amortization and other
non-cash items, such as non-cash compensation expense, gains and
losses on disposals of assets, the allowance for equity funds used
during construction, unrealized gains and losses on commodity risk
management activities, non-cash impairment charges, losses on
extinguishments of debt and other non-operating income or expense
items. Unrealized gains and losses on commodity risk management
activities include unrealized gains and losses on commodity
derivatives and inventory fair value adjustments (excluding lower
of cost or market adjustments). Adjusted EBITDA reflects amounts
for less than wholly-owned subsidiaries based on 100% of the
subsidiaries’ results of operations and for unconsolidated
affiliates based on ETP’s proportionate ownership.
Adjusted EBITDA is used by management to determine our operating
performance and, along with other financial and volumetric data, as
internal measures for setting annual operating budgets, assessing
financial performance of our numerous business locations, as a
measure for evaluating targeted businesses for acquisition and as a
measurement component of incentive compensation.
Definition of Distributable Cash Flow
ETP defines Distributable Cash Flow as net income, adjusted for
certain non-cash items, less maintenance capital expenditures.
Non-cash items include depreciation, depletion and amortization,
non-cash compensation expense, gains and losses on disposals of
assets, the allowance for equity funds used during construction,
unrealized gains and losses on commodity risk management
activities, non-cash impairment charges, losses on extinguishments
of debt and deferred income taxes. Unrealized gains and losses on
commodity risk management activities includes unrealized gains and
losses on commodity derivatives and inventory fair value
adjustments (excluding lower of cost or market adjustments). For
unconsolidated affiliates, Distributable Cash Flow reflects the
Partnership’s proportionate share of the investee’s distributable
cash flow.
Distributable Cash Flow is used by management to evaluate our
overall performance. Our partnership agreement requires us to
distribute all available cash, and Distributable Cash Flow is
calculated to evaluate our ability to fund distributions through
cash generated by our operations.
On a consolidated basis, Distributable Cash Flow includes 100%
of the Distributable Cash Flow of ETP’s consolidated subsidiaries.
However, to the extent that noncontrolling interests exist among
ETP’s subsidiaries, the Distributable Cash Flow generated by ETP’s
subsidiaries may not be available to be distributed to the partners
of ETP. In order to reflect the cash flows available for
distributions to the partners of ETP, ETP has reported
Distributable Cash Flow attributable to the partners of ETP, which
is calculated by adjusting Distributable Cash Flow (consolidated),
as follows:
- For subsidiaries with publicly traded
equity interests, Distributable Cash Flow (consolidated) includes
100% of Distributable Cash Flow attributable to such subsidiary,
and Distributable Cash Flow attributable to the partners of ETP
includes distributions to be received by the parent company with
respect to the periods presented.
- For consolidated joint ventures or
similar entities, where the noncontrolling interest is not publicly
traded, Distributable Cash Flow (consolidated) includes 100% of
Distributable Cash Flow attributable to such subsidiary, but
Distributable Cash Flow attributable to the partners of ETP is net
of distributions to be paid by the subsidiary to the noncontrolling
interests.
For Distributable Cash Flow attributable to the partners of ETP,
as adjusted, certain transaction-related and non-recurring expenses
that are included in net income are excluded.
(b) During the three months ended December 31, 2016, we recorded
goodwill impairments of $638 million in the interstate
transportation and storage segment and $32 million in the
midstream segment. These goodwill impairments were primarily due to
decreases in projected future revenues and cash flows driven by
declines in commodity prices and changes in the markets that these
assets serve. In addition, impairment losses for the three months
ended December 31, 2016 also include a $133 million impairment
to property, plant and equipment in the interstate transportation
and storage segment due to a decrease in projected future cash
flows as well as a $10 million impairment to property, plant
and equipment in the midstream segment. During the three months
ended December 31, 2015, we recorded goodwill impairments of (i)
$99 million related to Transwestern due primarily to the
market declines in current and expected future commodity prices in
the fourth quarter of 2015, (ii) $106 million related to Lone
Star Refinery Services due primarily to changes in assumptions
related to potential future revenues as well as the market declines
in current and expected future commodity prices, (iii) $110 million
of fixed asset impairments related to Lone Star NGL Refinery
Services primarily due to the economic obsolescence identified as a
result of low utilization and expected decrease in future cash
flows, and (iv) $24 million of intangible asset impairments related
to Lone Star NGL Refinery Services primarily due to the economic
obsolescence identified as a result of expected decrease in future
cash flows.
(c) The three months ended December 31, 2015 reflect
current income tax benefits of $80 million due to lower earnings
among the Partnership’s consolidated corporate subsidiaries, $120
million due to the retroactive re-enactment of bonus depreciation,
and $24 million attributable to the reversal of an income tax
reserve for certain amended tax returns that had been filed
claiming previously disallowed Pennsylvania net operating loss
deductions. Additionally, the three months ended December 31,
2015 also reflect a $51 million current income tax benefit
related to the funding of Sunoco, Inc.’s pension plan obligations,
which benefit has been excluded from Distributable Cash Flow.
(d) Amounts related to Sunoco LP reflect the periods through
June 30, 2015, subsequent to which Sunoco LP was deconsolidated and
is now reflected as an equity method investment.
(e) 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.
(f) Distributions on the Class H Units for the three months and
years ended December 31, 2016 and 2015 were calculated as
follows:
Three Months EndedDecember 31,
Years EndedDecember 31,
2016 2015 2016 2015 General partner
distributions and incentive distributions from Sunoco Logistics $
105 $ 86 $ 397 $ 293 90.05 % 90.05 % 90.05 %
90.05 % Total Class H Unit distributions $ 94 $ 77
$ 357 $ 263
* Incremental distributions previously paid to the Class H
Unitholder were eliminated in Amendment No. 9 to ETP’s Amended and
Restated Agreement of Limited Partnership effective in the first
quarter of 2015.
(g) IDR relinquishments for the three and twelve months ended
December 31, 2016 include the impact of $95 million and
$255 million, respectively, of incentive distribution
reductions beginning with respect to the second quarter 2016
distributions, as agreed to between ETE and ETP in July 2016.
Additionally, the three and twelve months ended December 31,
2016 include the impact of $8 million and $17 million,
respectively, of incentive distribution reductions beginning with
respect to the third quarter of 2016 distributions, as agreed to
between ETE and ETP in November 2016 related to ETP’s acquisition
of PennTex.
(h) Distribution coverage ratio for a period is calculated as
Distributable Cash Flow attributable to the partners of ETP, as
adjusted, divided by net distributions expected to be paid to the
partners of ETP in respect of such period.
SUMMARY ANALYSIS OF
QUARTERLY RESULTS BY SEGMENT(Tabular dollar amounts in
millions)(unaudited)
Our segment results are presented based on the measure of
Segment Adjusted EBITDA. The tables below identify the components
of Segment Adjusted EBITDA, which was calculated as follows:
- Gross margin, operating expenses, and
selling, general and administrative expenses. These amounts
represent the amounts included in our consolidated financial
statements that are attributable to each segment.
- Unrealized gains or losses on commodity
risk management activities and inventory valuation adjustments.
These are the unrealized amounts that are included in cost of
products sold to calculate gross margin. These amounts are not
included in Segment Adjusted EBITDA; therefore, the unrealized
losses are added back and the unrealized gains are subtracted to
calculate the segment measure.
- Non-cash compensation expense. These
amounts represent the total non-cash compensation recorded in
operating expenses and selling, general and administrative
expenses. This expense is not included in Segment Adjusted EBITDA
and therefore is added back to calculate the segment measure.
- Adjusted EBITDA related to
unconsolidated affiliates. These amounts represent our
proportionate share of the Adjusted EBITDA of our unconsolidated
affiliates. Amounts reflected are calculated consistently with our
definition of Adjusted EBITDA.
Three Months EndedDecember 31,
2016 2015
Segment Adjusted EBITDA: Midstream $
258 $ 260 Liquids transportation and services 281 226 Interstate
transportation and storage 269 283 Intrastate transportation and
storage 152 122 Investment in Sunoco Logistics 327 317 All other
146 152 $ 1,433 $ 1,360
Midstream
Three Months EndedDecember 31,
2016 2015 Gathered volumes (MMBtu/d): 9,693,728
10,051,593 NGLs produced (Bbls/d): 430,603 443,741 Equity NGLs
produced (Bbls/d): 29,001 29,437 Revenues $ 1,414 $ 1,286 Cost of
products sold 966 841 Gross margin 448
445 Unrealized losses on commodity risk management activities 15 —
Operating expenses, excluding non-cash compensation expense (168 )
(183 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (42 ) (8 ) Adjusted EBITDA related to
unconsolidated affiliates 5 6 Segment
Adjusted EBITDA $ 258 $ 260
For the three months ended December 31, 2016 compared to
the same period last year, gathered volumes decreased during the
three months ended December 31, 2016 compared to the same period
last year primarily due to basin declines in the South Texas, North
Texas, and Mid-Continent/Panhandle regions, partially offset by
gains in the Permian, Northeast and the impact of recent
acquisitions, including PennTex. NGL production declined primarily
due to basin declines in the South Texas, North Texas, and
Mid-Continent/Panhandle regions, partially offset by increased
gathering and processing capacities in the Permian and Cotton
Valley regions.
For the three months ended December 31, 2016 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 $2 million in non-fee
based margin due to volume declines in the South Texas, North
Texas, and Mid-Continent/Panhandle regions;
- a decrease of $4 million in fee-based
revenue due to declines in South Texas, North Texas and the
Mid-Continent/Panhandle regions offset by growth in the Permian,
Northeast and the impact of acquisitions, including PennTex;
- a decrease of $3 million (excluding
unrealized losses of $13 million) due to lower benefit from settled
derivatives used to hedge commodity margins; and
- an increase in general and
administrative expenses of $34 million primarily due to
year-end accruals and costs associated with the acquisition of
PennTex; partially offset by
- an increase of $31 million in non-fee
based margins due to higher crude oil and NGL prices; and
- a decrease in operating expenses of
$15 million primarily due to lower ad valorem taxes and lower
employee costs.
Liquids Transportation and Services
Three Months EndedDecember 31,
2016 2015 Liquids transportation volumes (Bbls/d)
669,694 523,285 NGL fractionation volumes (Bbls/d) 393,663 249,566
Revenues $ 1,561 $ 975 Cost of products sold 1,235
715 Gross margin 326 260 Unrealized losses on
commodity risk management activities 12 6 Operating expenses,
excluding non-cash compensation expense (51 ) (38 ) Selling,
general and administrative expenses, excluding non-cash
compensation expense (6 ) (4 ) Adjusted EBITDA related to
unconsolidated affiliates (1 ) 2 Other 1 —
Segment Adjusted EBITDA $ 281 $ 226
For the three months ended December 31, 2016 compared to
the same period last year, NGL transportation volumes increased in
several of the major producing regions including the Permian, North
Texas and Louisiana. Crude transportation volumes increased as we
placed Phase I of the Bayou Bridge crude pipeline in service in the
second quarter of 2016 and transported approximately 72,000 Bbls/d
during the three months ended December 31, 2016. In addition, we
placed certain West Texas crude assets into service in 2016, which
collectively resulted in an increase of 23,000 Bbls/d during the
three months ended December 31, 2016.
Average daily fractionated volumes increased approximately
144,000 Bbls/d for the three months ended December 31, 2016
compared to the same period last year primarily due to the ramp-up
of our third 100,000 Bbls/d fractionator at Mont Belvieu, Texas,
which was commissioned in late December 2015, as well as increased
producer volumes as mentioned above. In addition, we placed a
fourth fractionator in-service in the fourth quarter of 2016.
For the three months ended December 31, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to our
liquids transportation and services segment increased due to the
net impacts of the following:
- an increase of $40 million in
transportation margin due to higher NGL and crude transportation
volumes. NGL volumes were higher from several major producing
regions, with the increases from the Permian region being the most
significant. These increases in NGL transportation volumes resulted
in a $22 million increase in transportation fees. In addition,
crude transportation fees increased $8 million due to new assets
being placed in-service, including the first phase of the Bayou
Bridge pipeline in April 2016 and crude gathering assets in West
Texas during 2016;
- an increase of $38 million in
processing and fractionation margin (excluding changes in
unrealized losses of $9 million) primarily due to increased
producer volumes, primarily from the West Texas region along with
an increase in our fractionation capacity due to the placing in
service of our third fractionator in December 2015 and our fourth
fractionator in October 2016; and
- an increase of $12 million in storage
margin due to an increase in volumes from our Mont Belvieu
fractionators. Throughput volumes, on which we earn a fee in our
storage assets, increased 26%, which resulted in an increase in
margin of $6 million. We also realized an increase of $2 million
due to increased demand for our leased storage capacity as a result
of more favorable market conditions. In addition, we realized
increased terminal and pipeline fees revenue of $4 million compared
to the prior year; partially offset by
- a decrease of $14 million in other
margin (excluding changes in unrealized losses of $3 million)
primarily due to the timing of the withdrawal and sale of NGL
component inventory;
- an increase of $13 million in
operating expenses primarily due to increased costs associated with
our third fractionator at Mont Belvieu; and
- an increase of $2 million in
selling, general and administrative expenses due to lower
capitalized overhead as a result of reduced capital spending.
Interstate Transportation and Storage
Three Months EndedDecember 31,
2016 2015 Natural gas transported (MMBtu/d) 5,322,091
5,739,157 Natural gas sold (MMBtu/d) 17,190 18,665 Revenues $ 240 $
258 Operating expenses, excluding non-cash compensation,
amortization and accretion expenses (79 ) (83 ) Selling, general
and administrative expenses, excluding non-cash compensation,
amortization and accretion expenses (11 ) (9 ) Adjusted EBITDA
related to unconsolidated affiliates 118 117 Other 1
— Segment Adjusted EBITDA $ 269 $ 283
Distributions from unconsolidated affiliates $ 68 $ 75
For the three months ended December 31, 2016 compared to
the same period last year, transported volumes decreased 222,289
MMBtu/d on the Trunkline pipeline and 171,369 MMBtu/d in the West
and San Juan areas on the Transwestern pipeline primarily due to
lower utilization resulting from lower customer demand with
declines in volumes on the Transwestern pipeline partially offset
by opportunities in the Texas Intrastate markets. Transported
volumes on the Tiger pipeline increased 127,974 MMBtu/d due to
increased demand in the upper Midwest due to gas prices and
weather.
For the three months ended December 31, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to our
interstate transportation and storage segment decreased due to the
net effect of the following:
- a decrease of $11 million in revenues
due to lower contracted capacity and rates on the Panhandle and
Trunkline pipelines due to weak transportation spreads and lower
contracted capacity on the Transwestern pipeline due to mild
weather, a decrease of $9 million in revenues due to contract
restructuring on the Tiger pipeline, and a decrease of $2 million
on the Sea Robin pipeline due to declines in production and third
party maintenance. These decreases were partially offset by higher
reservation revenues on the Transwestern pipeline of $4 million
from a growth project; partially offset by
- a decrease of $4 million in
operating expenses primarily due to lower maintenance
projects.
The decrease in cash distributions from unconsolidated
affiliates is due to higher Citrus cash taxes.
Intrastate Transportation and Storage
Three Months EndedDecember 31,
2016 2015 Natural gas transported (MMBtu/d) 7,913,134
7,926,907 Revenues $ 756 $ 503 Cost of products sold 565
327 Gross margin 191 176 Unrealized gains on
commodity risk management activities (5 ) (23 ) Operating expenses,
excluding non-cash compensation expense (45 ) (42 ) Selling,
general and administrative expenses, excluding non-cash
compensation expense (5 ) (4 ) Adjusted EBITDA related to
unconsolidated affiliates 16 15 Segment
Adjusted EBITDA $ 152 $ 122
For the three months ended December 31, 2016 compared to
the same period last year, transported volumes decreased compared
to the same period last year primarily due to lower production
volumes, primarily in the Barnett Shale region, partially offset by
increased volumes related to significant new long-term
transportation contracts, as well as the addition of a new
short-haul transport pipeline delivering volumes into our Houston
Pipeline system.
For the three months ended December 31, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to our
intrastate transportation and storage segment increased due to the
net impacts of the following:
- an increase of $17 million (excluding
unrealized losses of $9 million) due to higher realized gains from
the buying and selling of gas along our system;
- an increase of $2 million from the sale
of retained fuel as a fee along our system, primarily due to higher
rates in the current period, which was partially offset by lower
throughput volumes; and
- an increase of $11 million in storage
margin (excluding unrealized losses of $8 million) due to the
timing of withdrawals and sales of natural gas from our Bammel
storage cavern.
Investment in Sunoco Logistics
Three Months EndedDecember 31,
2016 2015 Revenue $ 2,917 $ 2,305 Cost of products
sold 2,542 2,067 Gross margin 375 238
Unrealized losses on commodity risk management activities 6 13
Operating expenses, excluding non-cash compensation expense (23 )
(42 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (24 ) (24 ) Inventory valuation
adjustments (27 ) 118 Adjusted EBITDA related to unconsolidated
affiliates 20 14 Segment Adjusted
EBITDA $ 327 $ 317
For the three months ended December 31, 2016 compared to
the same period last year, Segment Adjusted EBITDA related to
Sunoco Logistics increased due to the following:
- an increase of $30 million from Sunoco
Logistics’ crude oil operations, primarily due to improved results
from Sunoco Logistics’ crude oil pipelines which benefited from the
Delaware Basin Extension and Permian Longview and Louisiana
Extension pipelines that commenced operations in the third quarter
2016. Also contributing to the increase were higher contributions
from Sunoco Logistics’ crude oil terminals, and increased earnings
attributable to the acquisition from Vitol, Inc. and Sunoco
Logistics’ joint venture interests. These positive factors were
partially offset by lower operating results from Sunoco Logistics’
crude oil acquisition and marketing activities, which includes
transportation and storage fees related to Sunoco Logistics’ crude
oil pipelines and terminal facilities, resulting from lower crude
oil differentials compared to the prior year period; and
- an increase of $2 million from Sunoco
Logistics’ refined products operations, primarily due to improved
operating results from Sunoco Logistics’ refined products pipelines
which benefited from higher volumes on Sunoco Logistics’ Allegheny
Access pipeline; offset by
- a decrease of $22 million from Sunoco
Logistics’ NGL operations, primarily due to lower operating results
from Sunoco Logistics’ NGLs acquisition and marketing activities
driven by decreased volumes and margins. These factors were
partially offset by increased volumes and fees from Sunoco
Logistics’ Mariner NGLs projects, which includes Sunoco Logistics’
NGLs pipelines and Marcus Hook and Nederland facilities.
All Other
Three Months EndedDecember 31,
2016 2015 Revenue $ 750 $ 1,630 Cost of products sold
679 1,403 Gross margin 71 227
Unrealized (gains) losses on commodity risk management activities 7
(3 ) Operating expenses, excluding non-cash compensation expense
(22 ) (116 ) Selling, general and administrative expenses,
excluding non-cash compensation expense (26 ) (43 ) Adjusted EBITDA
related to unconsolidated affiliates 77 74 Inventory valuation
adjustments — 2 Other 24 24 Elimination 15 (13
) Segment Adjusted EBITDA $ 146 $ 152
Distributions from unconsolidated affiliates $ 39 $ 85
Amounts reflected in our all other segment primarily
include:
- our retail marketing operations prior
to the transfer of the general partner interest of Sunoco LP from
ETP to ETE in 2015 and completion of the dropdown of remaining
Retail Marketing interests from ETP to Sunoco LP in March
2016;
- our equity method investment in limited
partnership units of Sunoco LP consisting of 43.5 million
units, representing 44.3% 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
December 31, 2016 compared to the same period last year,
Segment Adjusted EBITDA decreased primarily due to the net impact
of the following:
- a decrease of $156 million in
gross margin primarily resulting from a decrease in
revenue-generating horsepower and lower project revenue from our
compression operations and unfavorable results from our natural
resources operations. This decrease in margin was partially offset
by a decrease in operating expenses of $94 million; and
- a decrease of $17 million in
selling, general and administrative expenses resulting from lower
transaction-related expenses.
SUPPLEMENTAL
INFORMATION ON CAPITAL EXPENDITURES(Tabular amounts in
millions)(unaudited)
The following is a summary of capital expenditures (net of
contributions in aid of construction costs) during the year ended
December 31, 2016:
Growth Maintenance Total
Direct(1): Midstream $ 1,133 $ 122 $ 1,255 Liquids transportation
and services(2) 2,296 20 2,316 Interstate transportation and
storage(2) 191 89 280 Intrastate transportation and storage 53 23
76 All other (including eliminations) 93 51
144 Total direct capital expenditures 3,766 305 4,071 Indirect(1):
Investment in Sunoco Logistics 1,676 63 1,739
Total capital expenditures $ 5,442 $ 368 $ 5,810
(1)
Indirect capital expenditures comprise those funded by our
publicly traded subsidiary; all other capital expenditures are
reflected as direct capital expenditures.
(2)
Includes capital expenditures related to the Bakken, Rover and
Bayou Bridge pipeline projects, which includes $572 million related
to Sunoco Logistics’ proportionate ownership in the Bakken and
Bayou Bridge projects. Capital expenditures include $961 million
funded to the Bakken pipeline project by ETP and Sunoco Logistics
under a promissory note, which amount was repaid to ETP and Sunoco
Logistics in 2017.
We currently expect capital expenditures for the full year 2017
to be within the following ranges:
Growth Maintenance Low
High Low High Direct(1): Midstream $ 935 $ 985
$ 120 $ 130 Liquids transportation and services: NGL 370 390 20 25
Crude (2) 200 230 — 5 Interstate transportation and storage (2)
1,750 1,790 100 110 Intrastate transportation and storage 30 40 20
25 All other (including eliminations) 70 80
65 70 Total direct capital expenditures 3,355
3,515 325 365 Less: Project level non-recourse financing
(600 ) (600 ) — — Partnership level capital
funding $ 2,755 $ 2,915 $ 325 $ 365
(1)
Direct capital expenditures exclude those
funded by our publicly traded subsidiary.
(2)
Includes capital expenditures related to our proportionate
ownership of the Bakken, Rover and Bayou Bridge pipeline projects.
SUPPLEMENTAL
INFORMATION ON UNCONSOLIDATED AFFILIATES(In
millions)(unaudited)
Three Months EndedDecember 31,
2016 2015
Equity in earnings (losses) of
unconsolidated affiliates: Citrus $ 22 $ 20 FEP 13 14 PES (1 )
(25 ) MEP 9 12 HPC 8 8 AmeriGas (1 ) (5 ) Sunoco, LLC — 3 Sunoco
LP(1) (265 ) 85 Other 14 (31 ) Total equity in
earnings (losses) of unconsolidated affiliates $ (201 ) $ 81
Adjusted EBITDA related to unconsolidated
affiliates(2)
: Citrus $ 78 $ 73 FEP 19 19 PES 8 (16 )
MEP 21 25 HPC 16 15 Sunoco, LLC — 38 Sunoco LP 63 56 Other
30 16 Total Adjusted EBITDA related to
unconsolidated affiliates $ 235 $ 226
Distributions received from unconsolidated affiliates:
Citrus $ 32 $ 37 FEP 18 18 PES — 42 MEP 18 20 HPC 13 11 AmeriGas 3
3 Sunoco LP 36 39 Other 17 12 Total
distributions received from unconsolidated affiliates $ 137
$ 182
(1)
For the three months ended December 31, 2016, equity in
earnings (losses) of unconsolidated affiliates includes the impact
of non-cash impairments recorded by Sunoco LP, which reduced the
Partnership’s equity in earnings by $277 million.
(2)
These amounts represent our proportionate share of the Adjusted
EBITDA of our unconsolidated affiliates and are based on our equity
in earnings or losses of our unconsolidated affiliates adjusted for
our proportionate share of the unconsolidated affiliates’ interest,
depreciation, depletion, amortization, non-cash items and taxes.
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version on businesswire.com: http://www.businesswire.com/news/home/20170222006656/en/
Investor Relations:Energy TransferHelen Ryoo, Lyndsay
Hannah or Brent Ratliff, 214-981-0795orMedia
Relations:Granado Communications GroupVicki Granado,
214-599-8785Cell: 214-498-9272
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