ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Tabular dollar amounts are in millions)
The information in Item 2 has been prepared pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q. Accordingly, this Item 2 includes only management’s narrative analysis of the results of operations and should be read in conjunction with (i) our historical consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 23, 2018.
RESULTS OF OPERATIONS
Six Months Ended
Transportation and storage of natural gas
Total operating revenues
Cost of natural gas and other energy
Operating and maintenance
General and administrative
Depreciation and amortization
Total operating expenses
OTHER INCOME (EXPENSE):
Interest expense, net
Interest expense — affiliates
Interest income — affiliates
INCOME BEFORE INCOME TAX EXPENSE
Income tax expense
Panhandle natural gas volumes transported (TBtu):
Operating Revenues. Operating revenues increased for the six months ended June 30, 2018 compared to the same period in the prior year on the Panhandle and Trunkline pipelines due to higher customer demand driven by colder weather as well as capacity sold at higher rates.
Interest expense, net. Interest expense, net decreased for the six months ended June 30, 2018 compared to the same period in the prior year due to repayment of Panhandle’s $300 million 6.20% Senior Notes in November 2017 and its $400 million 7.00% Senior Notes in June 2018.
Interest expense - affiliates. Interest expense - affiliates increased for the six months ended June 30, 2018 compared to the same period in the prior year primarily due to the issuance of notes payable to a subsidiary of ETP.
Interest income - affiliates. Interest income - affiliates decreased for the six months ended June 30, 2018 compared to the same period in the prior year primarily due to the settlement of a note receivable from a subsidiary of ETP in November 2017.