Energy Transfer Reports Third Quarter 2018 Results with Record Financial and Operational Performance DALLAS
Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”),
formerly named Energy Transfer Equity, L.P. and also referred to herein
as “ETE,” today reported financial results for the quarter ended
September 30, 2018.
For the three months ended September 30, 2018, net income attributable
to partners was $371 million, up 47 percent with an increase of
$119 million compared to the three months ended September 30, 2017. For
the three months ended September 30, 2018, net income attributable to
partners continues to reflect only the amount of net income attributable
to the legacy ETE partners prior to the Merger (discussed below).
Adjusted EBITDA for the three months ended September 30, 2018 was a
record $2.58 billion, up more than 30 percent with an increase of
$628 million compared to the three months ended September 30, 2017.
Results were supported by increases in all of the Partnership’s core
operations, with record operating performance in its crude, NGL,
interstate and midstream businesses.
On a pro forma basis for the Merger (discussed below), Distributable
Cash Flow attributable to partners, as adjusted, for the three months
ended September 30, 2018 was a record $1.38 billion, up 27 percent with
an increase of $296 million compared to the three months ended
September 30, 2017. The significant increase was primarily due to the
increase in Adjusted EBITDA.
The Partnership’s recent key accomplishments and other developments
include the following:
-
On October 19, 2018, ET and Energy Transfer Operating, L.P. (formerly
named Energy Transfer Partners, L.P. and referred to herein as “ETP”)
completed a merger transaction (the “Merger”) whereby the publicly
held common units of ETP were exchanged for 1.28 common units of ET.
Consequently, the former common unitholders of ETP, along with the
existing common unitholders of ETE, now comprise the current common
unitholders of ET. The financial results of ETP have been included
separately as supplemental information in this release.
-
In October 2018, ET announced a quarterly distribution of $0.305 per
unit ($1.220 annualized) on ET common units for the quarter ended
September 30, 2018.
-
In September 2018, the Partnership, along with Magellan Midstream,
MPLX and Delek announced it had received sufficient commitments to
proceed with plans to construct the Permian Gulf Coast Pipeline
(“PGC”), a new 30-inch diameter, 600-mile common carrier pipeline to
transport crude oil from the Permian Basin to the Texas Gulf Coast
region, including the Partnership’s Nederland, Texas terminal. The
project is subject to receipt of customary regulatory and Board
approvals.
-
In August 2018, the Partnership received approval to commence service
on the Burgettstown and Majorsville supply laterals which allowed for
100 percent of the long-haul contractual commitments on Rover to
begin September 1, 2018, and on November 2, 2018, the Partnership
announced that it received approval to commence service on the final
laterals needed to complete the Rover pipeline project.
-
As of September 30, 2018, the Partnership’s $6.50 billion revolving
credit facilities had an aggregate $3.66 billion of available
capacity, and ETP’s leverage ratio, as defined by its credit
agreement, was 3.53x.
The Partnership has scheduled a conference call for 8:00 a.m. Central
Time, Thursday, November 8, 2018 to discuss its third quarter 2018
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 the Partnership’s website for a
limited time.
Prior to the Merger, the Partnership’s principal sources of cash flow
were derived from distributions related to its direct and indirect
investments in the limited and general partner interests in ETP,
including 100% of ETP’s incentive distribution rights, limited and
general partner interests in Sunoco LP, the Partnership’s ownership of
Lake Charles LNG Company, LLC (“Lake Charles LNG”), and subsequent to
the acquisition on April 2, 2018, the Partnership’s limited partner
interests in USA Compression Partners, LP (“USAC”). In conjunction with
the Merger, the Partnership contributed its ownership in Sunoco LP, Lake
Charles LNG and USAC to ETP and eliminated the economic benefits
associated with the general partner interest and incentive distribution
rights in ETP; therefore, the Partnership’s principal source of cash
flow subsequent to the Merger is its ownership of limited partner
interests in ETP. The Partnership’s primary cash requirements are for
general and administrative expenses, debt service requirements and
distributions to its partners.
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 U.S. 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.,
formerly known as Energy Transfer Partners, L.P., also owns 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 39.7 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 that
distributes motor fuel to approximately 9,900 convenience stores,
independent dealers, commercial customers and distributors located in
more than 30 states. 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. 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)
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
$
|
7,527
|
|
|
|
$
|
10,683
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
65,643
|
|
|
|
|
61,088
|
|
|
|
|
|
|
|
|
Advances to and investments in unconsolidated affiliates
|
|
|
|
2,656
|
|
|
|
|
2,705
|
|
Other non-current assets, net
|
|
|
|
1,106
|
|
|
|
|
886
|
|
Intangible assets, net
|
|
|
|
6,013
|
|
|
|
|
6,116
|
|
Goodwill
|
|
|
|
5,242
|
|
|
|
|
4,768
|
|
Total assets
|
|
|
$
|
88,187
|
|
|
|
$
|
86,246
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
$
|
10,219
|
|
|
|
$
|
7,897
|
|
|
|
|
|
|
|
|
Long-term debt, less current maturities
|
|
|
|
42,117
|
|
|
|
|
43,671
|
|
Non-current derivative liabilities
|
|
|
|
58
|
|
|
|
|
145
|
|
Deferred income taxes
|
|
|
|
3,008
|
|
|
|
|
3,315
|
|
Other non-current liabilities
|
|
|
|
1,253
|
|
|
|
|
1,217
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
|
|
499
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total partners’ deficit
|
|
|
|
(1,103
|
)
|
|
|
|
(1,196
|
)
|
Noncontrolling interest
|
|
|
|
32,136
|
|
|
|
|
31,176
|
|
Total equity
|
|
|
|
31,033
|
|
|
|
|
29,980
|
|
Total liabilities and equity
|
|
|
$
|
88,187
|
|
|
|
$
|
86,246
|
|
Amounts above reflect the historical financial statements of Energy
Transfer LP for dates preceding the Merger; therefore, these financial
statements do not reflect any impacts from the Merger.
|
|
ENERGY TRANSFER LP AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
(In millions, except per unit data)
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017 (a)
|
|
|
2018
|
|
|
2017 (a)
|
REVENUES
|
|
|
$
|
14,514
|
|
|
|
$
|
9,984
|
|
|
|
$
|
40,514
|
|
|
|
$
|
29,072
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
|
|
|
11,093
|
|
|
|
|
7,341
|
|
|
|
|
31,681
|
|
|
|
|
22,018
|
|
Operating expenses
|
|
|
|
784
|
|
|
|
|
918
|
|
|
|
|
2,280
|
|
|
|
|
2,167
|
|
Depreciation, depletion and amortization
|
|
|
|
750
|
|
|
|
|
642
|
|
|
|
|
2,109
|
|
|
|
|
1,877
|
|
Selling, general and administrative
|
|
|
|
184
|
|
|
|
|
142
|
|
|
|
|
515
|
|
|
|
|
480
|
|
Impairment losses
|
|
|
|
—
|
|
|
|
|
10
|
|
|
|
|
—
|
|
|
|
|
99
|
|
Total costs and expenses
|
|
|
|
12,811
|
|
|
|
|
9,053
|
|
|
|
|
36,585
|
|
|
|
|
26,641
|
|
OPERATING INCOME
|
|
|
|
1,703
|
|
|
|
|
931
|
|
|
|
|
3,929
|
|
|
|
|
2,431
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of interest capitalized
|
|
|
|
(535
|
)
|
|
|
|
(490
|
)
|
|
|
|
(1,511
|
)
|
|
|
|
(1,440
|
)
|
Equity in earnings of unconsolidated affiliates
|
|
|
|
87
|
|
|
|
|
92
|
|
|
|
|
258
|
|
|
|
|
228
|
|
Gains on disposal of assets
|
|
|
|
18
|
|
|
|
|
5
|
|
|
|
|
14
|
|
|
|
|
—
|
|
Losses on extinguishments of debt
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(106
|
)
|
|
|
|
(25
|
)
|
Gains (losses) on interest rate derivatives
|
|
|
|
45
|
|
|
|
|
(8
|
)
|
|
|
|
117
|
|
|
|
|
(28
|
)
|
Other, net
|
|
|
|
23
|
|
|
|
|
54
|
|
|
|
|
83
|
|
|
|
|
133
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE (BENEFIT)
|
|
|
|
1,341
|
|
|
|
|
584
|
|
|
|
|
2,784
|
|
|
|
|
1,299
|
|
Income tax expense (benefit) from continuing operations
|
|
|
|
(52
|
)
|
|
|
|
(157
|
)
|
|
|
|
6
|
|
|
|
|
(86
|
)
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
|
1,393
|
|
|
|
|
741
|
|
|
|
|
2,778
|
|
|
|
|
1,385
|
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
|
(2
|
)
|
|
|
|
17
|
|
|
|
|
(265
|
)
|
|
|
|
(187
|
)
|
NET INCOME
|
|
|
|
1,391
|
|
|
|
|
758
|
|
|
|
|
2,513
|
|
|
|
|
1,198
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
1,008
|
|
|
|
|
506
|
|
|
|
|
1,412
|
|
|
|
|
495
|
|
Less: Net income attributable to redeemable noncontrolling interests
|
|
|
|
12
|
|
|
|
|
—
|
|
|
|
|
24
|
|
|
|
|
—
|
|
NET INCOME ATTRIBUTABLE TO PARTNERS
|
|
|
|
371
|
|
|
|
|
252
|
|
|
|
|
1,077
|
|
|
|
|
703
|
|
Convertible Unitholders’ interest in income
|
|
|
|
—
|
|
|
|
|
11
|
|
|
|
|
33
|
|
|
|
|
25
|
|
General Partner’s interest in net income
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
2
|
|
Limited Partners’ interest in net income
|
|
|
$
|
370
|
|
|
|
$
|
240
|
|
|
|
$
|
1,041
|
|
|
|
$
|
676
|
|
NET INCOME PER LIMITED PARTNER UNIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.32
|
|
|
|
$
|
0.22
|
|
|
|
$
|
0.93
|
|
|
|
$
|
0.62
|
|
Diluted
|
|
|
$
|
0.32
|
|
|
|
$
|
0.22
|
|
|
|
$
|
0.93
|
|
|
|
$
|
0.61
|
|
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
1,158.2
|
|
|
|
|
1,079.1
|
|
|
|
|
1,117.7
|
|
|
|
|
1,077.9
|
|
Diluted
|
|
|
|
1,158.2
|
|
|
|
|
1,148.3
|
|
|
|
|
1,158.2
|
|
|
|
|
1,147.4
|
|
Amounts above reflect the historical financial statements of
Energy Transfer LP for dates preceding the Merger; therefore,
these financial statements do not reflect any impacts from the
Merger.
|
|
|
|
(a)
|
|
During the fourth quarter of 2017, ETP changed its accounting policy
related to certain inventories. Certain crude oil, refined product
and NGL inventories associated with the legacy Sunoco Logistics
business were changed from the LIFO method to the weighted average
cost method. These changes have been applied retrospectively to all
periods presented, and the prior period amounts reflected below have
been adjusted from those amounts previously reported. Certain other
prior period amounts have also been reclassified to conform to the
current period presentation, including a reclassification between
capitalized interest and AFUDC from the three months and nine months
ended September 30, 2017.
|
|
|
ENERGY TRANSFER LP AND SUBSIDIARIES
|
SUPPLEMENTAL INFORMATION
|
(Dollars and units in millions)
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018 (a)
|
|
|
2017 (a)(b)
|
|
|
2018 (a)
|
|
|
2017 (a)(b)
|
Reconciliation of net income to Adjusted EBITDA and Distributable
Cash Flow (c):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
1,391
|
|
|
|
$
|
758
|
|
|
|
$
|
2,513
|
|
|
|
$
|
1,198
|
|
(Income) loss from discontinued operations
|
|
|
|
2
|
|
|
|
|
(17
|
)
|
|
|
|
265
|
|
|
|
|
187
|
|
Interest expense, net
|
|
|
|
535
|
|
|
|
|
490
|
|
|
|
|
1,511
|
|
|
|
|
1,440
|
|
Impairment losses
|
|
|
|
—
|
|
|
|
|
10
|
|
|
|
|
—
|
|
|
|
|
99
|
|
Income tax expense (benefit)
|
|
|
|
(52
|
)
|
|
|
|
(157
|
)
|
|
|
|
6
|
|
|
|
|
(86
|
)
|
Depreciation, depletion and amortization
|
|
|
|
750
|
|
|
|
|
642
|
|
|
|
|
2,109
|
|
|
|
|
1,877
|
|
Non-cash compensation expense
|
|
|
|
27
|
|
|
|
|
29
|
|
|
|
|
82
|
|
|
|
|
76
|
|
(Gains) losses on interest rate derivatives
|
|
|
|
(45
|
)
|
|
|
|
8
|
|
|
|
|
(117
|
)
|
|
|
|
28
|
|
Unrealized (gains) losses on commodity risk management activities
|
|
|
|
(97
|
)
|
|
|
|
76
|
|
|
|
|
255
|
|
|
|
|
(22
|
)
|
Gains on disposal of assets
|
|
|
|
(18
|
)
|
|
|
|
(5
|
)
|
|
|
|
(14
|
)
|
|
|
|
—
|
|
Losses on extinguishments of debt
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
106
|
|
|
|
|
25
|
|
Inventory valuation adjustments
|
|
|
|
7
|
|
|
|
|
(50
|
)
|
|
|
|
(50
|
)
|
|
|
|
(8
|
)
|
Equity in earnings of unconsolidated affiliates
|
|
|
|
(87
|
)
|
|
|
|
(92
|
)
|
|
|
|
(258
|
)
|
|
|
|
(228
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
179
|
|
|
|
|
205
|
|
|
|
|
503
|
|
|
|
|
554
|
|
Adjusted EBITDA from discontinued operations
|
|
|
|
—
|
|
|
|
|
76
|
|
|
|
|
(25
|
)
|
|
|
|
179
|
|
Other, net
|
|
|
|
(15
|
)
|
|
|
|
(24
|
)
|
|
|
|
(45
|
)
|
|
|
|
(76
|
)
|
Adjusted EBITDA (consolidated)
|
|
|
|
2,577
|
|
|
|
|
1,949
|
|
|
|
|
6,841
|
|
|
|
|
5,243
|
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
(179
|
)
|
|
|
|
(205
|
)
|
|
|
|
(503
|
)
|
|
|
|
(554
|
)
|
Distributable cash flow from unconsolidated affiliates
|
|
|
|
109
|
|
|
|
|
133
|
|
|
|
|
312
|
|
|
|
|
329
|
|
Interest expense, net
|
|
|
|
(535
|
)
|
|
|
|
(503
|
)
|
|
|
|
(1,513
|
)
|
|
|
|
(1,461
|
)
|
Preferred unitholders’ distributions
|
|
|
|
(51
|
)
|
|
|
|
—
|
|
|
|
|
(116
|
)
|
|
|
|
—
|
|
Current income tax expense
|
|
|
|
(24
|
)
|
|
|
|
(15
|
)
|
|
|
|
(465
|
)
|
|
|
|
(29
|
)
|
Transaction-related income taxes
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
470
|
|
|
|
|
—
|
|
Maintenance capital expenditures
|
|
|
|
(156
|
)
|
|
|
|
(130
|
)
|
|
|
|
(373
|
)
|
|
|
|
(322
|
)
|
Other, net
|
|
|
|
16
|
|
|
|
|
23
|
|
|
|
|
29
|
|
|
|
|
62
|
|
Distributable Cash Flow (consolidated)
|
|
|
|
1,757
|
|
|
|
|
1,252
|
|
|
|
|
4,682
|
|
|
|
|
3,268
|
|
Distributable Cash Flow attributable to Sunoco LP (100%)
|
|
|
|
(147
|
)
|
|
|
|
(125
|
)
|
|
|
|
(330
|
)
|
|
|
|
(360
|
)
|
Distributions from Sunoco LP
|
|
|
|
41
|
|
|
|
|
66
|
|
|
|
|
123
|
|
|
|
|
191
|
|
Distributable Cash Flow attributable to USAC (100%)
|
|
|
|
(47
|
)
|
|
|
|
—
|
|
|
|
|
(93
|
)
|
|
|
|
—
|
|
Distributions from USAC
|
|
|
|
21
|
|
|
|
|
—
|
|
|
|
|
52
|
|
|
|
|
—
|
|
Distributable Cash Flow attributable to PennTex Midstream Partners,
LP (“PennTex”) (100%) (d)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(19
|
)
|
Distributions from PennTex to ETP (d)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8
|
|
Distributable Cash Flow attributable to noncontrolling interest in
other non-wholly-owned consolidated subsidiaries
|
|
|
|
(253
|
)
|
|
|
|
(119
|
)
|
|
|
|
(580
|
)
|
|
|
|
(199
|
)
|
Distributable Cash Flow attributable to the partners of ET – pro
forma for the Merger (a)
|
|
|
|
1,372
|
|
|
|
|
1,074
|
|
|
|
|
3,854
|
|
|
|
|
2,889
|
|
Transaction-related expenses
|
|
|
|
12
|
|
|
|
|
14
|
|
|
|
|
25
|
|
|
|
|
53
|
|
Distributable Cash Flow attributable to the partners of ET, as
adjusted – pro forma for the Merger (a)
|
|
|
$
|
1,384
|
|
|
|
$
|
1,088
|
|
|
|
$
|
3,879
|
|
|
|
$
|
2,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to partners – pro forma for the Merger (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partners (e)
|
|
|
$
|
798
|
|
|
|
$
|
683
|
|
|
|
$
|
2,305
|
|
|
|
$
|
1,961
|
|
General Partner
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
3
|
|
Total distributions to be paid to partners
|
|
|
$
|
799
|
|
|
|
$
|
684
|
|
|
|
$
|
2,308
|
|
|
|
$
|
1,964
|
|
Common Units outstanding – end of period – pro forma for the Merger
(a)
|
|
|
|
2,617.1
|
|
|
|
|
2,523.0
|
|
|
|
|
2,617.1
|
|
|
|
|
2,523.0
|
|
Distribution coverage ratio – pro forma for the Merger (a)(f)
|
|
|
1.73x
|
|
|
1.59x
|
|
|
1.68x
|
|
|
1.50x
|
(a) The closing of the Merger (as discussed above) has impacted the
Partnership’s calculation of Distributable Cash Flow attributable to
partners, as well as the number of ET Common Units outstanding and the
amount of distributions to be paid to partners. In order to provide
information on a comparable basis for pre-Merger and post-Merger
periods, the Partnership has included certain pro forma information.
Pro forma Distributable Cash Flow attributable to partners reflects the
following post-merger impacts:
-
ETP is reflected as a wholly owned subsidiary and pro forma
Distributable Cash Flow attributable to partners reflects ETP’s
consolidated Distributable Cash Flow (less certain other adjustments,
as follows).
-
Distributions from Sunoco LP include distributions to both ET and ETP.
-
Distributions from PennTex are separately included in Distributable
Cash Flow attributable to partners.
-
Distributable Cash Flow attributable to noncontrolling interest in
ETP’s other non-wholly-owned subsidiaries is subtracted from
consolidated Distributable Cash Flow to calculate Distributable Cash
Flow attributable to partners.
Pro forma distributions to partners include actual distributions to
legacy ET partners, as well as pro forma distributions to legacy ETP
partners. Pro forma distributions to ETP partners are calculated
assuming (i) historical ETP common units converted under the terms of
the Merger and (ii) distributions on such converted common units were
paid at the historical rate paid on ET Common Units.
Pro forma Common Units outstanding include actual Common Units
outstanding, in addition to Common Units assumed to be issued in the
Merger, which are based on historical ETP common units converted under
the terms of the Merger.
For the nine months ended September 30, 2017, the calculation of
Distributable Cash Flow and the amounts reflected for distributions to
partners and common units outstanding also reflect the pro forma impacts
of the Sunoco Logistics Merger as though the merger had occurred on
January 1, 2017.
(b) During the fourth quarter of 2017, ETP changed its accounting policy
related to certain inventories. Certain crude oil, refined product and
NGL inventories associated with the legacy Sunoco Logistics business
were changed from the LIFO method to the weighted average cost method.
These changes have been applied retrospectively to all periods
presented, and the prior period amounts reflected above have been
adjusted from those amounts previously reported. Certain other prior
period amounts have also been reclassified to conform to the current
period presentation, including a reclassification between capitalized
interest and AFUDC from the three months and nine months ended September
30, 2017.
(c) 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 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
and Distributable Cash Flow, including the difficulty associated with
using either as the sole measure to compare the results of one company
to another, and the inability to analyze certain significant items that
directly affect a company’s net income or loss or cash flows. In
addition, our calculations of Adjusted EBITDA and Distributable Cash
Flow may not be consistent with similarly titled measures of other
companies and should be viewed in conjunction with measurements that are
computed in accordance with GAAP, such as segment margin, operating
income, net income, and cash flow from operating activities.
Definition of Adjusted EBITDA
We define Adjusted EBITDA as total partnership earnings before interest,
taxes, depreciation, depletion, amortization and other non-cash items,
such as non-cash compensation expense, gains and losses on disposals of
assets, the allowance for equity funds used during construction,
unrealized gains and losses on commodity risk management activities,
non-cash impairment charges, losses on extinguishments of debt and other
non-operating income or expense items. Unrealized gains and losses on
commodity risk management activities include unrealized gains and losses
on commodity derivatives and inventory fair value adjustments. Adjusted
EBITDA reflects amounts for less than wholly-owned subsidiaries based on
100% of the subsidiaries’ results of operations and for unconsolidated
affiliates based on our proportionate ownership.
Adjusted EBITDA is used by management to determine our operating
performance and, along with other financial and volumetric data, as
internal measures for setting annual operating budgets, assessing
financial performance of our numerous business locations, as a measure
for evaluating targeted businesses for acquisition and as a measurement
component of incentive compensation.
Definition of Distributable Cash Flow
We define Distributable Cash Flow as net income, adjusted for certain
non-cash items, less 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, 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 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, Distributable
Cash Flow (consolidated) includes 100% of Distributable Cash Flow
attributable to such subsidiary, and Distributable Cash Flow
attributable to our partners includes distributions to be received by
the parent company with respect to the periods presented.
-
For consolidated joint ventures or similar entities, where the
noncontrolling interest is not publicly traded, Distributable Cash
Flow (consolidated) includes 100% of Distributable Cash Flow
attributable to such subsidiary, but Distributable Cash Flow
attributable to partners is net of distributions to be paid by the
subsidiary to the noncontrolling interests.
For Distributable Cash Flow attributable to partners, as adjusted,
certain transaction-related and non-recurring expenses that are included
in net income are excluded.
(d) Beginning with the second quarter of 2017, PennTex became a
wholly-owned subsidiary of ETP. The amounts reflected above for PennTex
relate only to the first quarter of 2017, and no distributable cash flow
has been attributed to noncontrolling interests in PennTex subsequent to
March 31, 2017.
(e) Includes distributions to unitholders who elected to participate in
a plan to forgo a portion of their future potential cash distributions
on common units and reinvest those distributions in ETE Series A
convertible preferred units representing limited partner interests in
the Partnership. The quarter ended March 31, 2018 was the final quarter
of participation in the plan.
(f) Distribution coverage ratio for a period is calculated as
Distributable Cash Flow attributable to partners, as adjusted, divided
by net distributions expected to be paid to the partners of ET in
respect of such period.
|
|
ENERGY TRANSFER LP AND SUBSIDIARIES
|
SUPPLEMENTAL INFORMATION ON LIQUIDITY
|
(In millions)
|
(unaudited)
|
The following table is a summary of our and ETP’s revolving credit
facilities which incurred certain changes in connection with the Merger.
We also have consolidated subsidiaries with revolving credit facilities
which are not included.
|
|
|
|
|
|
Funds Available at
|
|
|
|
|
|
|
Facility Size
|
|
|
September 30, 2018
|
|
|
Maturity Date
|
ETE Revolving Credit Facility (1)
|
|
|
$
|
1,500
|
|
|
$
|
602
|
|
|
March 24, 2022
|
ETP Five-Year Revolving Credit Facility (2)
|
|
|
|
4,000
|
|
|
|
2,057
|
|
|
December 1, 2022
|
ETP 364-Day Revolving Credit Facility (3)
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
November 30, 2018
|
|
|
|
$
|
6,500
|
|
|
$
|
3,659
|
|
|
|
(1)
|
|
In connection with the closing of the Merger, on October 19, 2018,
all of the outstanding borrowings under the ETE revolving credit
facility were repaid in full and the facility was terminated.
|
(2)
|
|
In connection with the closing of the Merger, on October 19, 2018,
the ETP Five-Year Credit Facility was amended to increase the
borrowing capacity by $1.00 billion, to $5.00 billion, and to extend
the maturity date to December 1, 2023.
|
(3)
|
|
In connection with the closing of the Merger, on October 19, 2018,
the ETP 364-Day Facility was amended to extend the maturity date to
November 29, 2019.
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION OF A SUBSIDIARY
Following are condensed balance sheets, statements of operations and
summary analysis of quarterly results of the Partnership's subsidiary,
ETP. Subsequent to the Merger on October 19, 2018, whereby the publicly
held common units of ETP were exchanged for 1.28 common units of ET, ETP
no longer has common units outstanding.
|
|
ENERGY TRANSFER OPERATING, L.P.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(unaudited)
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
$
|
6,353
|
|
|
$
|
6,528
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
60,550
|
|
|
|
58,437
|
|
|
|
|
|
|
|
Advances to and investments in unconsolidated affiliates
|
|
|
|
3,599
|
|
|
|
3,816
|
Other non-current assets, net
|
|
|
|
863
|
|
|
|
758
|
Intangible assets, net
|
|
|
|
4,925
|
|
|
|
5,311
|
Goodwill
|
|
|
|
2,866
|
|
|
|
3,115
|
Total assets
|
|
|
$
|
79,156
|
|
|
$
|
77,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
$
|
9,258
|
|
|
$
|
6,994
|
|
|
|
|
|
|
|
Long-term debt, less current maturities
|
|
|
|
31,198
|
|
|
|
32,687
|
Non-current derivative liabilities
|
|
|
|
57
|
|
|
|
145
|
Deferred income taxes
|
|
|
|
2,845
|
|
|
|
2,883
|
Other non-current liabilities
|
|
|
|
1,100
|
|
|
|
1,084
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
|
|
22
|
|
|
|
21
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total partners’ capital
|
|
|
|
28,342
|
|
|
|
28,269
|
Noncontrolling interest
|
|
|
|
6,334
|
|
|
|
5,882
|
Total equity
|
|
|
|
34,676
|
|
|
|
34,151
|
Total liabilities and equity
|
|
|
$
|
79,156
|
|
|
$
|
77,965
|
|
|
ENERGY TRANSFER OPERATING, L.P. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions)
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017 (a)
|
|
|
2018
|
|
|
2017 (a)
|
REVENUES
|
|
|
$
|
9,641
|
|
|
|
$
|
6,973
|
|
|
|
$
|
27,331
|
|
|
|
$
|
20,444
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
|
|
|
6,745
|
|
|
|
|
4,922
|
|
|
|
|
19,873
|
|
|
|
|
14,595
|
|
Operating expenses
|
|
|
|
632
|
|
|
|
|
571
|
|
|
|
|
1,863
|
|
|
|
|
1,603
|
|
Depreciation, depletion and amortization
|
|
|
|
636
|
|
|
|
|
596
|
|
|
|
|
1,827
|
|
|
|
|
1,713
|
|
Selling, general and administrative
|
|
|
|
123
|
|
|
|
|
105
|
|
|
|
|
347
|
|
|
|
|
335
|
|
Total costs and expenses
|
|
|
|
8,136
|
|
|
|
|
6,194
|
|
|
|
|
23,910
|
|
|
|
|
18,246
|
|
OPERATING INCOME
|
|
|
|
1,505
|
|
|
|
|
779
|
|
|
|
|
3,421
|
|
|
|
|
2,198
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(387
|
)
|
|
|
|
(352
|
)
|
|
|
|
(1,091
|
)
|
|
|
|
(1,020
|
)
|
Equity in earnings of unconsolidated affiliates
|
|
|
|
113
|
|
|
|
|
127
|
|
|
|
|
147
|
|
|
|
|
139
|
|
Gain on Sunoco LP common unit repurchase
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
172
|
|
|
|
|
—
|
|
Loss on deconsolidation of CDM
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(86
|
)
|
|
|
|
—
|
|
Gains (losses) on interest rate derivatives
|
|
|
|
45
|
|
|
|
|
(8
|
)
|
|
|
|
117
|
|
|
|
|
(28
|
)
|
Other, net
|
|
|
|
21
|
|
|
|
|
57
|
|
|
|
|
127
|
|
|
|
|
137
|
|
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)
|
|
|
|
1,297
|
|
|
|
|
603
|
|
|
|
|
2,807
|
|
|
|
|
1,426
|
|
Income tax expense (benefit)
|
|
|
|
(61
|
)
|
|
|
|
(112
|
)
|
|
|
|
(32
|
)
|
|
|
|
22
|
|
NET INCOME
|
|
|
|
1,358
|
|
|
|
|
715
|
|
|
|
|
2,839
|
|
|
|
|
1,404
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
223
|
|
|
|
|
110
|
|
|
|
|
557
|
|
|
|
|
266
|
|
NET INCOME ATTRIBUTABLE TO PARTNERS
|
|
|
$
|
1,135
|
|
|
|
$
|
605
|
|
|
|
$
|
2,282
|
|
|
|
$
|
1,138
|
|
(a)
|
|
During the fourth quarter of 2017, ETP changed its accounting policy
related to certain inventories. Certain crude oil, refined product
and NGL inventories associated with the legacy Sunoco Logistics
business were changed from the LIFO method to the weighted average
cost method. These changes have been applied retrospectively to all
periods presented, and the prior period amounts reflected above have
been adjusted from those amounts previously reported. Certain other
prior period amounts have also been reclassified to conform to the
current period presentation, including a reclassification between
capitalized interest and AFUDC from the three months and nine months
ended September 30, 2017.
|
|
|
ENERGY TRANSFER OPERATING, L.P. AND SUBSIDIARIES
|
SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
|
(Tabular dollar amounts in millions)
|
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
Segment Adjusted EBITDA:
|
|
|
|
|
|
|
Intrastate transportation and storage
|
|
|
$
|
221
|
|
|
$
|
163
|
Interstate transportation and storage
|
|
|
|
416
|
|
|
|
273
|
Midstream
|
|
|
|
434
|
|
|
|
356
|
NGL and refined products transportation and services
|
|
|
|
498
|
|
|
|
439
|
Crude oil transportation and services
|
|
|
|
682
|
|
|
|
420
|
All other
|
|
|
|
78
|
|
|
|
133
|
Total Segment Adjusted EBITDA
|
|
|
$
|
2,329
|
|
|
$
|
1,784
|
In the following analysis of segment operating results, a measure of
segment margin is reported for segments with sales revenues. Segment
margin is a non-GAAP financial measure and is presented herein to assist
in the analysis of segment operating results and particularly to
facilitate an understanding of the impacts that changes in sales
revenues have on the segment performance measure of Segment Adjusted
EBITDA. Segment margin is similar to the GAAP measure of gross margin,
except that segment margin excludes charges for depreciation, depletion
and amortization.
In addition, for certain segments, the sections below include
information on the components of segment margin by sales type, which
components are included in order to provide additional disaggregated
information to facilitate the analysis of segment margin and Segment
Adjusted EBITDA. For example, these components include transportation
margin, storage margin, and other margin. These components of segment
margin are calculated consistent with the calculation of segment margin;
therefore, these components also exclude charges for depreciation,
depletion and amortization.
Following is a reconciliation of ETP’s segment margin to operating
income, as reported in its consolidated statements of operations:
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Segment Margin:
|
|
|
|
|
|
|
Intrastate transportation and storage
|
|
|
$
|
284
|
|
|
|
$
|
167
|
|
Interstate transportation and storage
|
|
|
|
395
|
|
|
|
|
224
|
|
Midstream
|
|
|
|
622
|
|
|
|
|
530
|
|
NGL and refined products transportation and services
|
|
|
|
634
|
|
|
|
|
483
|
|
Crude oil transportation and services
|
|
|
|
944
|
|
|
|
|
548
|
|
All other
|
|
|
|
25
|
|
|
|
|
112
|
|
Intersegment eliminations
|
|
|
|
(8
|
)
|
|
|
|
(13
|
)
|
Total segment margin
|
|
|
|
2,896
|
|
|
|
|
2,051
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
632
|
|
|
|
|
571
|
|
Depreciation, depletion and amortization
|
|
|
|
636
|
|
|
|
|
596
|
|
Selling, general and administrative
|
|
|
|
123
|
|
|
|
|
105
|
|
Operating income
|
|
|
$
|
1,505
|
|
|
|
$
|
779
|
|
|
|
Intrastate Transportation and Storage
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Natural gas transported (BBtu/d)
|
|
|
|
12,146
|
|
|
|
|
8,951
|
|
Revenues
|
|
|
$
|
922
|
|
|
|
$
|
773
|
|
Cost of products sold
|
|
|
|
638
|
|
|
|
|
606
|
|
Segment margin
|
|
|
|
284
|
|
|
|
|
167
|
|
Unrealized (gains) losses on commodity risk management activities
|
|
|
|
(12
|
)
|
|
|
|
22
|
|
Operating expenses, excluding non-cash compensation expense
|
|
|
|
(51
|
)
|
|
|
|
(40
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation expense
|
|
|
|
(7
|
)
|
|
|
|
(6
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
6
|
|
|
|
|
19
|
|
Other
|
|
|
|
1
|
|
|
|
|
1
|
|
Segment Adjusted EBITDA
|
|
|
$
|
221
|
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
Transported volumes increased primarily due to favorable market pricing.
In addition, beginning in April 2018, transported volumes also reflected
Regency Intrastate Gas LP (“RIGS”) as a consolidated subsidiary. RIGS
was previously reflected as an unconsolidated affiliate until ETP
acquired the remaining interest in April 2018.
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s intrastate transportation and storage segment increased
due to the net impacts of the following:
-
an increase of $55 million in realized natural gas sales and other
margin due to higher realized gains from pipeline optimization
activity;
-
an increase of $7 million in transportation fees, excluding the
incremental transportation fees related to the RIGS consolidation
discussed above, primarily due to new contracts and the impact of the
Red Bluff Express pipeline coming online in May 2018; and
-
a net increase of $6 million due to the consolidation of RIGS
beginning in April 2018, resulting in increases in transportation
fees, operating expenses, and selling, general and administrative
expenses of $25 million, $5 million and $2 million, respectively, and
a decrease of $12 million in Adjusted EBITDA related to unconsolidated
affiliates; partially offset by
-
a decrease of $5 million in realized storage margin primarily due to
lower realized derivative gains.
|
|
Interstate Transportation and Storage
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Natural gas transported (BBtu/d)
|
|
|
|
10,155
|
|
|
|
|
6,075
|
|
Natural gas sold (BBtu/d)
|
|
|
|
18
|
|
|
|
|
19
|
|
Revenues
|
|
|
$
|
395
|
|
|
|
$
|
224
|
|
Operating expenses, excluding non-cash compensation, amortization
and accretion expenses
|
|
|
|
(97
|
)
|
|
|
|
(79
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation, amortization and accretion expenses
|
|
|
|
(19
|
)
|
|
|
|
(14
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
135
|
|
|
|
|
140
|
|
Other
|
|
|
|
2
|
|
|
|
|
2
|
|
Segment Adjusted EBITDA
|
|
|
$
|
416
|
|
|
|
$
|
273
|
|
|
|
|
|
|
|
|
|
|
|
|
Transported volumes reflected an increase of 2,225 BBtu/d as a result of
the initiation of service on the Rover pipeline; increases of 772 BBtu/d
and 625 BBtu/d on the Panhandle and Trunkline pipelines, respectively,
due to increased utilization of higher contracted capacity; and an
increase of 398 BBtu/d on the Tiger pipeline as a result of production
increases in the Haynesville Shale and deliveries into intrastate
markets.
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s interstate transportation and storage segment increased
due to the net impacts of the following:
-
an increase of $128 million associated with the Rover pipeline with
increases of $149 million in revenues, $14 million in net operating
expenses and $7 million in selling, general and administrative
expenses; and
-
an aggregate increase of $22 million in revenues, excluding the
incremental revenue related to the Rover pipeline discussed above,
primarily due to capacity sold at higher rates on the Transwestern and
Panhandle pipelines; partially offset by
-
an increase of $4 million in operating expenses, excluding the
incremental expenses related to the Rover pipeline discussed above,
primarily due to slightly higher system gas expense and higher
maintenance project costs due to scope and level of activity, offset
by lower ad valorem taxes due to favorable valuations; and
-
a decrease of $5 million in Adjusted EBITDA related to unconsolidated
affiliates primarily related to sale of capacity on MEP at lower rates
and lower sales of short term firm capacity on Citrus.
|
|
Midstream
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Gathered volumes (BBtu/d)
|
|
|
|
12,774
|
|
|
|
|
11,090
|
|
NGLs produced (MBbls/d)
|
|
|
|
583
|
|
|
|
|
453
|
|
Equity NGLs (MBbls/d)
|
|
|
|
32
|
|
|
|
|
27
|
|
Revenues
|
|
|
$
|
2,253
|
|
|
|
$
|
1,765
|
|
Cost of products sold
|
|
|
|
1,631
|
|
|
|
|
1,235
|
|
Segment margin
|
|
|
|
622
|
|
|
|
|
530
|
|
Unrealized losses on commodity risk management activities
|
|
|
|
—
|
|
|
|
|
1
|
|
Operating expenses, excluding non-cash compensation expense
|
|
|
|
(179
|
)
|
|
|
|
(157
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation expense
|
|
|
|
(19
|
)
|
|
|
|
(26
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
9
|
|
|
|
|
6
|
|
Other
|
|
|
|
1
|
|
|
|
|
2
|
|
Segment Adjusted EBITDA
|
|
|
$
|
434
|
|
|
|
$
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathered volumes and NGL production increased primarily due to increases
in the North Texas, Permian and Northeast regions, partially offset by
smaller declines in other regions.
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s midstream segment increased due to the net effects of
the following:
-
an increase of $38 million in fee-based margin due to growth in the
North Texas, Permian and Northeast regions, offset by declines in the
Ark-La-Tex and midcontinent/Panhandle regions;
-
an increase of $27 million in non-fee-based margin due to increased
throughput volume in the South Texas and Permian regions;
-
an increase of $26 million in non-fee-based margin primarily due to
higher crude oil and NGL prices;
-
a decrease of $7 million in selling, general and administrative
expenses primarily due to a decrease of $3 million in merger and
acquisition costs and a $3 million change in capitalized overhead; and
-
an increase of $3 million in Adjusted EBITDA related to unconsolidated
affiliates due to higher earnings from ETP’s Aqua, Mi Vida and Ranch
joint ventures; partially offset by
-
an increase of $22 million in operating expenses due to increases of
$6 million in materials, $5 million in outside services and $4 million
in maintenance project costs, as well as a $7 million change in
capitalized overhead.
|
|
NGL and Refined Products Transportation and Services
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
NGL transportation volumes (MBbls/d)
|
|
|
|
1,086
|
|
|
|
|
836
|
|
Refined products transportation volumes (MBbls/d)
|
|
|
|
627
|
|
|
|
|
612
|
|
NGL and refined products terminal volumes (MBbls/d)
|
|
|
|
858
|
|
|
|
|
782
|
|
NGL fractionation volumes (MBbls/d)
|
|
|
|
567
|
|
|
|
|
390
|
|
Revenues
|
|
|
$
|
3,063
|
|
|
|
$
|
2,070
|
|
Cost of products sold
|
|
|
|
2,429
|
|
|
|
|
1,587
|
|
Segment margin
|
|
|
|
634
|
|
|
|
|
483
|
|
Unrealized losses on commodity risk management activities
|
|
|
|
26
|
|
|
|
|
56
|
|
Operating expenses, excluding non-cash compensation expense
|
|
|
|
(168
|
)
|
|
|
|
(106
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation expense
|
|
|
|
(17
|
)
|
|
|
|
(13
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
23
|
|
|
|
|
19
|
|
Segment Adjusted EBITDA
|
|
|
$
|
498
|
|
|
|
$
|
439
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL transportation volumes increased primarily from the Permian region
resulting from a ramp up in production from existing customers, higher
throughput volumes on Mariner West driven by end user facility
constraints in the prior period and higher throughput from Mariner
South. Refined products transportation volumes increased primarily due
to higher throughput volumes from the Northeast and Southwest regions,
partially offset by decreased throughput volumes from the Midwest region.
NGL and refined products terminal volumes increased primarily due to
more volumes loaded at ETP’s Nederland terminal as propane export demand
increased, as well as higher throughput volumes at ETP’s Marcus Hook
Industrial Complex primarily due to increased production from the
Marcellus region.
Average fractionated volumes at ETP’s Mont Belvieu, Texas fractionation
facility increased primarily due to the commissioning of ETP’s fifth
fractionator in July 2018 as well as increased volumes from Permian
producers.
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s NGL and refined products transportation and services
segment increased due to net impacts of the following:
-
an increase of $76 million in transportation margin due to a $63
million increase resulting from higher producer volumes from the
Permian region on ETP’s Texas NGL pipelines, an $11 million increase
due to higher throughput volumes on Mariner West driven by end user
facility constraints in the prior period, an $8 million increase due
to higher throughput volumes from the Eagle Ford and Barnett regions,
a $3 million increase due to higher throughput volumes in ETP’s
Northeast refined products system and a $3 million increase due to
higher throughput volumes on Mariner South and Mariner East 1 NGL
systems. These increases were partially offset by a $7 million
decrease resulting from the timing of deficiency revenue recognition
and a $5 million decrease from lower volumes from the Southeast Texas
region;
-
an increase of $47 million in fractionation and refinery services
margin due to a $40 million increase resulting from the commissioning
of ETP’s fifth fractionator in July 2018 and higher NGL volumes from
the Permian region feeding ETP’s Mont Belvieu fractionation facility,
a $4 million increase from Mariner South as more cargoes were loaded
due to increased demand for export and a $3 million increase from
blending gains as a result of improved market pricing; and
-
an increase of $19 million in terminal services margin due to a
$9 million increase resulting from a change in the classification of
certain customer reimbursements previously recorded in operating
expenses, a $6 million increase at ETP’s Nederland terminal due to
increased demand for propane exports and a $6 million increase due to
higher throughput at ETP’s Marcus Hook Industrial Complex. These
increases were partially offset by a $2 million decrease due to
reduced rental fees at ETP’s Eagle Point facility; partially offset by
-
an increase of $62 million in operating expenses due to increases of
$25 million from higher throughput on ETP’s fractionator, pipeline and
terminal assets and the commissioning of ETP’s fifth fractionator in
July 2018, $10 million due to a legal settlement in the prior period,
$9 million resulting from a change in the classification of certain
customer reimbursements previously recorded as a reduction to
operating expenses that are now classified as revenue following the
adoption of ASC 606 on January 1, 2018, $7 million due to the timing
of maintenance projects and higher overhead allocations, $6 million
due to environmental reserves and $5 million due to ad valorem tax
expense; and
-
a decrease of $21 million in marketing margin primarily due to a
$13 million decrease in optimization gains from ETP’s Mont Belvieu
marketing activities, a $4 million decrease from sales of propane and
other products at ETP’s Marcus Hook Industrial Complex and a
$2 million decrease from ETP’s butane blending operations resulting
from a decrease in blending volumes.
|
|
Crude Oil Transportation and Services
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Crude transportation volumes (MBbls/d)
|
|
|
|
4,276
|
|
|
|
|
3,773
|
|
Crude terminals volumes (MBbls/d)
|
|
|
|
2,134
|
|
|
|
|
1,923
|
|
Revenues
|
|
|
$
|
4,438
|
|
|
|
$
|
2,725
|
|
Cost of products sold
|
|
|
|
3,494
|
|
|
|
|
2,177
|
|
Segment margin
|
|
|
|
944
|
|
|
|
|
548
|
|
Unrealized gains on commodity risk management activities
|
|
|
|
(118
|
)
|
|
|
|
(1
|
)
|
Operating expenses, excluding non-cash compensation expense
|
|
|
|
(126
|
)
|
|
|
|
(119
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation expense
|
|
|
|
(22
|
)
|
|
|
|
(13
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
4
|
|
|
|
|
5
|
|
Segment Adjusted EBITDA
|
|
|
$
|
682
|
|
|
|
$
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude transportation volumes increased due to placing the Bakken
pipeline in service in June 2017 as well as higher throughput on
existing pipelines due to increased production in West Texas. Crude
terminal volumes benefited from an increase in barrels delivered to
ETP’s Nederland crude terminal from the Bakken pipeline and from
increased West Texas production.
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s crude oil transportation and services segment increased
due to the net impacts of the following:
-
an increase of $279 million in segment margin (excluding unrealized
losses on commodity risk management activities) due to the following:
a $131 million increase resulting from higher throughput, primarily
from ETP’s Bakken pipeline and from Permian producers on existing
pipeline assets, as well as a $30 million increase resulting primarily
from placing ETP’s Permian Express 3 pipeline in service in the fourth
quarter of 2017; a $108 million increase (excluding a net change of
$117 million in unrealized gains and losses) from ETP’s crude oil
acquisition and marketing business primarily resulting from more
favorable market price differentials between the West Texas and Gulf
Coast markets; and a $10 million increase from higher throughput and
ship loading fees at ETP’s Nederland terminal; partially offset by
-
an increase of $9 million in selling, general and administrative
expenses primarily due to increases of $4 million in overhead
allocations, $2 million in employee costs and $2 million in insurance
costs; and
-
an increase of $7 million in operating expenses due to a $5 million
increase due to higher throughput related expenses on existing assets
and a $2 million increase from placing ETP’s Permian Express 3
pipeline in service in the fourth quarter of 2017.
|
|
All Other
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
Revenues
|
|
|
$
|
525
|
|
|
|
$
|
683
|
|
Cost of products sold
|
|
|
|
500
|
|
|
|
|
571
|
|
Segment margin
|
|
|
|
25
|
|
|
|
|
112
|
|
Unrealized losses on commodity risk management activities
|
|
|
|
7
|
|
|
|
|
3
|
|
Operating expenses, excluding non-cash compensation expense
|
|
|
|
(9
|
)
|
|
|
|
(34
|
)
|
Selling, general and administrative expenses, excluding non-cash
compensation expense
|
|
|
|
(26
|
)
|
|
|
|
(34
|
)
|
Adjusted EBITDA related to unconsolidated affiliates
|
|
|
|
80
|
|
|
|
|
88
|
|
Other and eliminations
|
|
|
|
1
|
|
|
|
|
(2
|
)
|
Segment Adjusted EBITDA
|
|
|
$
|
78
|
|
|
|
$
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA. For the three months ended September 30,
2018 compared to the same period last year, Segment Adjusted EBITDA
related to ETP’s all other segment decreased due to the net impacts of
the following:
-
a decrease of $16 million in Adjusted EBITDA related to unconsolidated
affiliates from ETP’s investment in Sunoco LP resulting from ETP’s
lower ownership in Sunoco LP and lower operating results of Sunoco LP
due to the sale of the majority of its retail assets in January 2018;
-
a decrease of $12 million due to ETP’s contribution of CDM to USAC in
April 2018, which decrease reflects the impact of deconsolidating CDM,
partially offset by an increase in Adjusted EBITDA related to
unconsolidated affiliates due to the equity method investment in USAC
held by ETP subsequent to the CDM contribution;
-
a decrease of $12 million in Adjusted EBITDA related to unconsolidated
affiliates from ETP’s investment in PES primarily due to ETP’s lower
ownership in PES subsequent to its reorganization, which resulted in
PES no longer being reflected as an affiliate beginning in the third
quarter of 2018;
-
an increase of $7 million in general and administrative expenses from
higher professional expenses;
-
a decrease of $6 million due to losses from commodity trading and risk
management activities; and
-
a decrease of $3 million primarily due to lower margin from ETP’s
compression equipment business.
|
|
ENERGY TRANSFER OPERATING, L.P. AND SUBSIDIARIES
|
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES
|
(In millions)
|
(unaudited)
|
The table below provides information on an aggregated basis for ETP’s
unconsolidated affiliates, which are accounted for as equity method
investments in ETP’s financial statements for the periods presented.
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
Equity in earnings (losses) of unconsolidated affiliates:
|
|
|
|
|
|
|
Citrus
|
|
|
$
|
42
|
|
|
|
$
|
35
|
FEP
|
|
|
|
14
|
|
|
|
|
14
|
MEP
|
|
|
|
7
|
|
|
|
|
9
|
Sunoco LP
|
|
|
|
29
|
|
|
|
|
35
|
USAC
|
|
|
|
(4
|
)
|
|
|
|
—
|
Other
|
|
|
|
25
|
|
|
|
|
34
|
Total equity in earnings of unconsolidated affiliates
|
|
|
$
|
113
|
|
|
|
$
|
127
|
|
|
|
|
|
|
|
Adjusted EBITDA related to unconsolidated affiliates:
|
|
|
|
|
|
|
Citrus
|
|
|
$
|
96
|
|
|
|
$
|
99
|
FEP
|
|
|
|
19
|
|
|
|
|
18
|
MEP
|
|
|
|
20
|
|
|
|
|
23
|
Sunoco LP
|
|
|
|
58
|
|
|
|
|
74
|
USAC
|
|
|
|
20
|
|
|
|
|
—
|
Other
|
|
|
|
44
|
|
|
|
|
65
|
Total Adjusted EBITDA related to unconsolidated affiliates
|
|
|
$
|
257
|
|
|
|
$
|
279
|
|
|
|
|
|
|
|
Distributions received from unconsolidated affiliates:
|
|
|
|
|
|
|
Citrus
|
|
|
$
|
52
|
|
|
|
$
|
50
|
FEP
|
|
|
|
18
|
|
|
|
|
18
|
MEP
|
|
|
|
9
|
|
|
|
|
13
|
Sunoco LP
|
|
|
|
21
|
|
|
|
|
36
|
USAC
|
|
|
|
10
|
|
|
|
|
—
|
Other
|
|
|
|
34
|
|
|
|
|
27
|
Total distributions received from unconsolidated affiliates
|
|
|
$
|
144
|
|
|
|
$
|
144
|
|
|
ENERGY TRANSFER OPERATING, L.P. AND SUBSIDIARIES
|
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT VENTURE
SUBSIDIARIES
|
(In millions)
|
(unaudited)
|
The table below provides information on an aggregated basis for ETP’s
non-wholly-owned joint venture subsidiaries, which are reflected on a
consolidated basis in ETP’s financial statements.
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
Adjusted EBITDA of non-wholly-owned subsidiaries (100%) (a)
|
|
|
$
|
565
|
|
|
$
|
325
|
ETP’s proportionate share of Adjusted EBITDA of non-wholly-owned
subsidiaries (b)
|
|
|
|
291
|
|
|
|
192
|
|
|
|
|
|
|
|
Distributable Cash Flow of non-wholly-owned subsidiaries (100%) (c)
|
|
|
$
|
531
|
|
|
$
|
289
|
ETP’s proportionate share of Distributable Cash Flow of
non-wholly-owned subsidiaries (d)
|
|
|
|
277
|
|
|
|
173
|
|
|
|
|
|
|
|
|
|
Below is ETP’s ownership percentage of certain non-wholly-owned
subsidiaries:
Non-wholly-owned subsidiary:
|
|
|
|
ETP Percentage Ownership (e)
|
Bakken Pipeline
|
|
|
|
36.4%
|
Bayou Bridge
|
|
|
|
60.0%
|
Ohio River System
|
|
|
|
75.0%
|
Permian Express Partners
|
|
|
|
87.7%
|
Rover
|
|
|
|
32.6%
|
Others
|
|
|
|
various
|
|
|
|
|
|
(a)
|
|
Adjusted EBITDA of non-wholly-owned subsidiaries reflects the total
Adjusted EBITDA of ETP’s non-wholly-owned subsidiaries on an
aggregated basis. This is the amount of EBITDA included in ETP’s
consolidated non-GAAP measure of Adjusted EBITDA.
|
(b)
|
|
ETP’s 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 ETP’s
ownership interest.
|
(c)
|
|
Distributable Cash Flow of non-wholly-owned subsidiaries reflects
the total Distributable Cash Flow of ETP’s non-wholly-owned
subsidiaries on an aggregated basis.
|
(d)
|
|
ETP’s 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 ETP’s ownership interest. This is the amount of
Distributable Cash Flow included in ETP’s consolidated non-GAAP
measure of Distributable Cash Flow attributable to the partners of
ETP.
|
(e)
|
|
ETP ownership reflects the total economic interest held by ETP and
its 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/20181107005927/en/ Copyright Business Wire 2018
Source: Business Wire
(November 7, 2018 - 4:30 PM EST)
News by QuoteMedia
www.quotemedia.com
|