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SEC Filings
10-Q
SOUTHERN UNION CO filed this Form 10-Q on 05/09/2013
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provides, SUGS’ business is not generally seasonal in nature; however, SUGS’ operations and the operations of its natural gas producers can be adversely impacted by severe weather.

The majority of SUGS’ gross margin is derived from the sale of NGL and natural gas equity volumes and fee-based services.  The prices of NGL and natural gas are subject to fluctuations in response to changes in supply, demand, market uncertainty and a variety of factors beyond the Company’s control.  The Company monitors these risks and manages the associated commodity price risk using both economic and accounting hedge derivative instruments.  For additional information related to the Company’s commodity price risk management, see Note 9 to our consolidated financial statements.

The following table presents the results of operations applicable to the Company’s Gathering and Processing segment for the periods presented.
 
 
Successor
 
 
Predecessor
 
 
Three Months Ended
March 31, 2013
 
Period from Acquisition
(March 26, 2012) to March 31,
2012
 
 
Period from
January 1, 2012 to
March 25,
2012
Operating revenues
 
$
190

 
$
20

 
 
$
246

Cost of natural gas and other energy (1)
 
(157
)
 
(14
)
 
 
(196
)
Gross margin (2)
 
33

 
6

 
 
50

Operating, maintenance and general, excluding non-cash compensation expense and accretion
 
(37
)
 
(17
)
 
 
(23
)
Taxes other than on income and revenues
 
(2
)
 

 
 
(2
)
Segment Adjusted EBITDA
 
$
(6
)
 
$
(11
)
 
 
$
25

 
 
 
 
 
 
 
 
Operating Information:
 
 
 
 
 
 
 
Volumes:
 
 
 
 
 
 
 
Avg natural gas processed (MMBtu/d)
 
461,847

 
453,614

 
 
451,893

Avg NGL produced (gallons/d)
 
1,666,592

 
1,650,345

 
 
1,624,666

Avg natural gas wellhead volumes (MMBtu/d)
 
480,549

 
481,881

 
 
504,822

Natural gas sales (MMBtu)  
 
19,148,879

 
1,324,080

 
 
18,537,127

NGL sales (gallons)  
 
142,438,132

 
11,827,811

 
 
165,589,355

Average Pricing:
 
 
 
 
 
 
 
Realized natural gas ($/MMBtu)  (3)
 
$
3.40

 
$
2.44

 
 
$
2.44

Realized NGL ($/gallon)  (3)
 
0.85

 
1.17

 
 
1.17

Natural Gas Daily Waha ($/MMBtu)
 
3.42

 
2.40

 
 
2.43

Natural Gas Daily El Paso ($/MMBtu)
 
3.42

 
2.39

 
 
2.42

Estimated plant processing spread ($/gallon)
 
0.54

 
0.99

 
 
0.96


(1) 
Cost of natural gas and other energy consists of natural gas and NGL purchase costs, fractionation and other fees.
(2) 
Gross margin consists of operating revenues less cost of natural gas and other energy.  The Company believes that this measurement is meaningful for understanding and analyzing the Gathering and Processing segment’s operating results for the periods presented because commodity costs are a significant factor in the determination of the segment’s revenues.
(3) 
Excludes impact of realized and unrealized commodity derivative gains and losses.
Following is a discussion of the significant items and variances impacting Segment Adjusted EBITDA for the Company’s Gathering and Processing segment.
Gross Margin. Gross margin for the three months ended March 31, 2013 decreased compared to the predecessor and successor periods in 2012 due to decreases in natural gas and NGL sales volumes and a decrease in market-driven realized average NGL prices. Realized average natural gas and NGL prices were $3.40 per MMBtu and $0.85 per gallon for the three months ended March 31, 2013, compared to $2.44 per MMBtu and $1.17 per gallon for the period from March 26, 2012 to March 31, 2012 and $2.44 per MMBtu and $1.17 per gallon for the period from January 1, 2012 to March 25, 2012.

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