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SEC Filings
8-K
SOUTHERN UNION CO filed this Form 8-K on 05/08/2013
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NGL Transportation and Services
 
Three Months Ended March 31,
 
2013
 
2012
NGL transportation volumes (Bbls/d)
274,030

 
150,881

NGL fractionation volumes (Bbls/d)
86,703

 
20,006

Revenues
$
365

 
$
167

Cost of products sold
257

 
98

Gross margin
108

 
69

Operating expenses, excluding non-cash compensation expense
(19
)
 
(14
)
Selling, general and administrative expenses, excluding non-cash compensation expense
(10
)
 
(5
)
Adjusted EBITDA related to unconsolidated affiliates
1

 

Segment Adjusted EBITDA
$
80

 
$
50

 
 
 
 
Distributions from unconsolidated affiliates
$
1

 
$

Segment Adjusted EBITDA for the NGL transportation and services segment reflected higher gross margin, as discussed below, offset by higher operating expenses due to increased ad valorem taxes and other expenses related to the start-up of Lone Star’s fractionator and higher selling, general and administrative expenses due to increased employee-related costs and allocated overhead expenses resulting from overall asset growth on the system.
Segment Adjusted EBITDA for the NGL transportation and services segment reflected increases in gross margin as follows:
 
Three Months Ended March 31,
 
2013
 
2012
Storage margin
$
32

 
$
32

Transportation margin
41

 
13

Processing and fractionation margin
34

 
24

Other margin
1

 

Total gross margin
$
108

 
$
69

Transportation margin increased due to an increase in volumes transported out of West Texas due to the commissioning of Lone Star’s Gateway pipeline during the fourth quarter of 2012. A higher concentration of volumes sourced from transportation contracts originating in West Texas and renegotiated contracts on the East side of the legacy Lone Star pipeline system increased our average realized rate. These volume and rate factors increases on our Lone Star pipeline system accounted for $21 million of the increase in transportation margin between the periods. The completion of our Justice pipeline connection to Mont Belvieu, Texas and additional NGL production from our processing plants accounted for the remainder of the increase in transportation margin.
Processing and fractionation margin increased due to the startup of Lone Star’s fractionator at Mont Belvieu, Texas in December 2012, which contributed $16 million during the three months ended March 31, 2013. The increase in margin related to our fractionator was offset by a decrease in margin attributable to our fractionator in Geismar, Louisiana due to a less favorable pricing environment and contract mix.

11

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