Energy Transfer Partners Reports Third Quarter Results
In
ETP’s other recent key accomplishments include the following:
-
In
August 2014 ,ETP and Susser Holdings Corporation (“Susser”) completed the previously announced merger of an indirectly wholly-owned subsidiary of ETP, with and into Susser, with Susser surviving the merger as a subsidiary of ETP for total consideration valued at$1.8 billion . -
In
October 2014 ,Sunoco LP (previously namedSusser Petroleum Partners LP ) acquiredMid-Atlantic Convenience Stores, LLC (“MACS”) from ETP in a transaction valued at approximately $768 million. The transaction included approximately 110 company-operated retail convenience stores and 200 dealer-operated and consignment sites from MACS. -
In
October 2014 ,Energy Transfer Equity, L.P. (“ETE”), ETP and Phillips 66 announced that they have formed two joint ventures to develop the previously announced Dakota Access Pipeline (“DAPL”) and Energy Transfer Crude Oil Pipeline (“ETCOP”) projects. ETP and ETE will hold an aggregate interest of 75% in each joint venture and will operate both pipeline systems. Phillips 66 owns the remaining 25% interests and will fund its proportionate share of the construction costs. The DAPL and ETCOP projects are expected to begin commercial operations in the fourth quarter of 2016. -
In
October 2014 , ETP announced it has secured additional long-term binding shipper agreements on its Rover natural gas pipeline project to connect Marcellus andUtica Shale supplies to markets in the Midwest,Great Lakes andGulf Coast regions ofthe United States andCanada . As a result of the additional agreements, the pipeline is fully subscribed with 15 and 20 year fee-based contracts to transport 3.25 billion cubic feet per day of capacity. -
On
November 5, 2014 , ETP announced its plans to construct two new 200 million cubic feet per day cryogenic gas processing plants and associated gathering systems in the Eagle Ford and Eaglebine production areas. ETP expects to have the first plant online byJune 2015 and the second plant by the fourth quarter of 2015. -
On
November 5, 2014 ,ETP andRegency Energy Partners LP (“Regency”) announced thatLone Star NGL LLC (“Lone Star”) will construct a third natural gas liquids fractionator at its facility inMont Belvieu, Texas , which will bring Lone Star’s total fractionation capacity atMont Belvieu to 300,000 Bbls/d. Lone Star’s third fractionator is scheduled to be operational byDecember 2015 . -
As of September 30, 2014, ETP’s
$2.5 billion revolving credit facility had $800 million of outstanding borrowings, and the leverage ratio, as defined by the credit agreement, was 4.13x.
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
Forward-Looking Statements
This press 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 Reports on Form 10-K and other
documents filed from time to time with the
The information contained in this press release is available on our web site at www.energytransfer.com.
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In millions) | ||||||||
(unaudited) | ||||||||
September 30, 2014 |
December 31, 2013 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS | $ | 7,444 | $ | 6,239 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 28,545 | 25,947 | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,820 | 4,436 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | — | 17 | ||||||
GOODWILL | 6,116 | 4,729 | ||||||
INTANGIBLE ASSETS, net | 1,974 | 1,568 | ||||||
OTHER NON-CURRENT ASSETS, net | 672 | 766 | ||||||
Total assets | $ | 48,571 | $ | 43,702 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES | $ | 7,621 | $ | 6,067 | ||||
LONG-TERM DEBT, less current maturities | 17,540 | 16,451 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 82 | 54 | ||||||
DEFERRED INCOME TAXES | 4,128 | 3,762 | ||||||
OTHER NON-CURRENT LIABILITIES | 1,071 | 1,080 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE NONCONTROLLING INTERESTS | 15 | — | ||||||
EQUITY: | ||||||||
Total partners’ capital | 12,301 | 11,540 | ||||||
Noncontrolling interest | 5,813 | 4,748 | ||||||
Total equity | 18,114 | 16,288 | ||||||
Total liabilities and equity | $ | 48,571 | $ | 43,702 | ||||
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
|||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||||||||
(In millions, except per unit data) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
REVENUES | $ | 13,618 | $ | 11,902 | $ | 38,879 | $ | 34,307 | |||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||
Cost of products sold | 12,124 | 10,654 | 34,626 | 30,477 | |||||||||||||||||
Operating expenses | 401 | 347 | 1,028 | 1,001 | |||||||||||||||||
Depreciation and amortization | 289 | 253 | 823 | 764 | |||||||||||||||||
Selling, general and administrative | 136 | 122 | 310 | 373 | |||||||||||||||||
Total costs and expenses | 12,950 | 11,376 | 36,787 | 32,615 | |||||||||||||||||
OPERATING INCOME | 668 | 526 | 2,092 | 1,692 | |||||||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||||
Interest expense, net of interest capitalized | (212 | ) | (210 | ) | (648 | ) | (632 | ) | |||||||||||||
Equity in earnings of unconsolidated affiliates | 69 | 28 | 205 | 137 | |||||||||||||||||
Gain on sale of AmeriGas common units | 14 | 87 | 177 | 87 | |||||||||||||||||
Gains (losses) on interest rate derivatives | (25 | ) | — | (73 | ) | 46 | |||||||||||||||
Other, net | (15 | ) | 7 | (32 | ) | 6 | |||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 499 | 438 | 1,721 | 1,336 | |||||||||||||||||
Income tax expense from continuing operations | 52 | 47 | 268 | 139 | |||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 447 | 391 | 1,453 | 1,197 | |||||||||||||||||
Income from discontinued operations | — | 13 | 66 | 44 | |||||||||||||||||
NET INCOME | 447 | 404 | 1,519 | 1,241 | |||||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 105 | 49 | 291 | 244 | |||||||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 342 | 355 | 1,228 | 997 | |||||||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 135 | 146 | 373 | 429 | |||||||||||||||||
CLASS H UNITHOLDER’S INTEREST IN NET INCOME | 59 | — | 159 | — | |||||||||||||||||
COMMON UNITHOLDERS’ INTEREST IN NET INCOME | $ | 148 | $ | 209 | $ | 696 | $ | 568 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT: | |||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.51 | $ | 1.91 | $ | 1.55 | |||||||||||||
Diluted | $ | 0.44 | $ | 0.51 | $ | 1.90 | $ | 1.55 | |||||||||||||
NET INCOME PER COMMON UNIT: | |||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.55 | $ | 2.11 | $ | 1.63 | |||||||||||||
Diluted | $ | 0.44 | $ | 0.55 | $ | 2.10 | $ | 1.63 | |||||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | |||||||||||||||||||||
Basic | 331.4 | 374.1 | 324.8 | 342.8 | |||||||||||||||||
Diluted | 333.1 | 375.5 | 326.4 | 344.1 | |||||||||||||||||
SUPPLEMENTAL INFORMATION |
|||||||||||||||||||||
(Tabular dollar amounts in millions) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (a): | |||||||||||||||||||||
Net income | $ | 447 | $ | 404 | $ | 1,519 | $ | 1,241 | |||||||||||||
Interest expense, net of interest capitalized | 212 | 210 | 648 | 632 | |||||||||||||||||
Gain on sale of AmeriGas common units | (14 | ) | (87 | ) | (177 | ) | (87 | ) | |||||||||||||
Income tax expense from continuing operations | 52 | 47 | 268 | 139 | |||||||||||||||||
Depreciation and amortization | 289 | 253 | 823 | 764 | |||||||||||||||||
Non-cash compensation expense | 15 | 12 | 42 | 36 | |||||||||||||||||
(Gains) losses on interest rate derivatives | 25 | — | 73 | (46 | ) | ||||||||||||||||
Unrealized (gains) losses on commodity risk management activities | (16 | ) | (8 | ) | 14 | (45 | ) | ||||||||||||||
LIFO valuation adjustments | 51 | (6 | ) | 17 | (22 | ) | |||||||||||||||
Equity in earnings of unconsolidated affiliates | (69 | ) | (28 | ) | (205 | ) | (137 | ) | |||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 163 | 151 | 529 | 474 | |||||||||||||||||
Other, net | 17 | (6 | ) | (4 | ) | 18 | |||||||||||||||
Adjusted EBITDA (consolidated) | 1,172 | 942 | 3,547 | 2,967 | |||||||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (163 | ) | (151 | ) | (529 | ) | (474 | ) | |||||||||||||
Distributions from unconsolidated affiliates | 91 | 144 | 264 | 341 | |||||||||||||||||
Interest expense, net of interest capitalized | (212 | ) | (210 | ) | (648 | ) | (632 | ) | |||||||||||||
Amortization included in interest expense | (14 | ) | (16 | ) | (48 | ) | (63 | ) | |||||||||||||
Current income tax expense from continuing operations | (6 | ) | (26 | ) | (333 | ) | (45 | ) | |||||||||||||
Income tax expense related to the Lake Charles LNG Transaction | — | — | 277 | — | |||||||||||||||||
Maintenance capital expenditures | (98 | ) | (62 | ) | (196 | ) | (234 | ) | |||||||||||||
Other, net | (1 | ) | 2 | 2 | 4 | ||||||||||||||||
Distributable Cash Flow (consolidated) | 769 | 623 | 2,336 | 1,864 | |||||||||||||||||
Distributable Cash Flow attributable to Sunoco Logistics Partners L.P. (“Sunoco Logistics”) (100%) | (194 | ) | (120 | ) | (573 | ) | (503 | ) | |||||||||||||
Distributions from Sunoco Logistics to ETP | 74 | 53 | 204 | 147 | |||||||||||||||||
Distributable Cash Flow attributable to Sunoco LP (100%) | (4 | ) | — | (4 | ) | — | |||||||||||||||
Distributions from Sunoco LP to ETP | 8 | — | 8 | — | |||||||||||||||||
Distributions to ETE in respect of ETP Holdco Corporation (“Holdco”) | — | — | — | (50 | ) | ||||||||||||||||
Distributions to Regency in respect of Lone Star (b) | (43 | ) | (23 | ) | (113 | ) | (62 | ) | |||||||||||||
Distributable Cash Flow attributable to the partners of ETP | $ | 610 | $ | 533 | $ | 1,858 | $ | 1,396 | |||||||||||||
Distributions to the partners of ETP: | |||||||||||||||||||||
Limited Partners: | |||||||||||||||||||||
Common Units held by public | $ | 314 | $ | 253 | $ | 864 | $ | 740 | |||||||||||||
Common Units held by ETE | 30 | 45 | 88 | 223 | |||||||||||||||||
Class H Units held by ETE Common Holdings, LLC (“ETE Holdings”) (c) | 56 | 51 | 159 | 51 | |||||||||||||||||
General Partner interests held by ETE | 6 | 5 | 16 | 15 | |||||||||||||||||
Incentive Distribution Rights (“IDRs”) held by ETE | 200 | 165 | 546 | 528 | |||||||||||||||||
IDR relinquishment related to previous transactions | (67 | ) | (21 | ) | (182 | ) | (107 | ) | |||||||||||||
Total distributions to be paid to the partners of ETP | $ | 539 | $ | 498 | $ | 1,491 | $ | 1,450 | |||||||||||||
Distributions credited to Holdco transactions (d) | — | — | — | (68 | ) | ||||||||||||||||
Net distributions to the partners of ETP | $ | 539 | $ | 498 | $ | 1,491 | $ | 1,382 | |||||||||||||
Distribution coverage ratio (e) |
1.13 |
x |
1.07 |
x |
1.25 |
x |
1.01 |
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, 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 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 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 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). Distributable Cash Flow reflects earnings from unconsolidated affiliates on a cash basis.
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. Currently,
Lone Star is such a subsidiary, as it is 30% owned by Regency, which is an unconsolidated affiliate. Prior toApril 30, 2013 , Holdco was also such a subsidiary, as ETE held a noncontrolling interest in Holdco.
The Partnership has presented Distributable Cash Flow in previous communications; however, the Partnership changed its calculation of this non-GAAP measure in recent periods and has revised amounts in prior periods to be consistent with the Partnership’s updated calculation of this measure.
Following is a summary of these changes:
- Previously, the Partnership’s calculation of Distributable Cash Flow reflected the impact of amortization included in interest expense. Such amortization includes amortization of deferred financing costs, premiums or discounts on the issuance of long-term debt, and fair value adjustments on long-term debt assumed in acquisitions. The Partnership revised its calculation of Distributable Cash Flow to exclude the impact of such amortization. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions.
- Previously, the Partnership’s calculation of Distributable Cash Flow reflected income tax expense from continuing operations, which included current and deferred income taxes. Current income tax expense represents the estimated taxes that will be payable or refundable for the current period, while deferred income taxes represent the estimated tax effects of tax carryforwards and the reversal of temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. The Partnership revised its calculation of Distributable Cash Flow to reflect current income tax expense from continuing operations, rather than total income tax expense from continuing operations. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions.
Distributable Cash Flow previously reported for the three and nine months ended September 30, 2013 has been revised to reflect these changes.
(b) Cash distributions to Regency in respect of
(c) Distributions on the Class H Units for the three and nine months ended September 30, 2014 and 2013 were calculated as follows:
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
General partner distributions and incentive distributions from Sunoco Logistics | $ | 49 | $ | 32 | $ | 131 | $ | 32 | |||||||||||||
50.05 | % | 50.05 | % | 50.05 | % | 50.05 | % | ||||||||||||||
Share of Sunoco Logistics general partner and incentive distributions payable to Class H Unitholder | 25 | 16 | 66 | 16 | |||||||||||||||||
Incremental distributions payable to Class H Unitholder | 31 | 35 | 93 | 35 | |||||||||||||||||
Total Class H Unit distributions | $ | 56 | $ | 51 | $ | 159 | $ | 51 | |||||||||||||
Incremental distributions to the Class H Unitholder is based on the scheduled amounts through the first quarter of 2017, as set forth in Amendment No. 5 to ETP’s Amended and Restated Agreement of Limited Partnership.
(d) For the nine months ended
(e) Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to the partners of ETP 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 were 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. 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 LIFO 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 Ended September 30, |
|||||||||||||
2014 | 2013 | Change | |||||||||||
Segment Adjusted EBITDA: | |||||||||||||
Midstream | $ | 159 | $ | 136 | $ | 23 | |||||||
Liquids transportation and services | 163 | 100 | 63 | ||||||||||
Interstate transportation and storage | 264 | 310 | (46 | ) | |||||||||
Intrastate transportation and storage | 108 | 108 | — | ||||||||||
Investment in Sunoco Logistics | 246 | 181 | 65 | ||||||||||
Retail marketing | 191 | 100 | 91 | ||||||||||
All other | 41 | 7 | 34 | ||||||||||
$ | 1,172 | $ | 942 | $ | 230 | ||||||||
Midstream
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Gathered volumes (MMBtu/d) | 3,054,054 | 2,534,945 | 519,109 | ||||||||||||
NGLs produced (Bbls/d) | 191,286 | 114,968 | 76,318 | ||||||||||||
Equity NGLs produced (Bbls/d) | 13,747 | 11,777 | 1,970 | ||||||||||||
Revenues | $ | 827 | $ | 509 | $ | 318 | |||||||||
Cost of products sold | 633 | 340 | 293 | ||||||||||||
Gross margin | 194 | 169 | 25 | ||||||||||||
Unrealized gains on commodity risk management activities | — | (3 | ) | 3 | |||||||||||
Operating expenses, excluding non-cash compensation expense | (31 | ) | (30 | ) | (1 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | — | (4 | ) | ||||||||||
Segment Adjusted EBITDA | $ | 159 | $ | 136 | $ | 23 | |||||||||
Gathered volumes, NGLs produced and equity NGLs produced increased
primarily due to increased production by our customers in the
Segment Adjusted EBITDA for the midstream segment reflected an increase in gross margin as follows:
Three Months Ended September 30, |
||||||||||||||
2014 | 2013 | Change | ||||||||||||
Gathering and processing fee-based revenues | $ | 153 | $ | 116 | $ | 37 | ||||||||
Non fee-based contracts and processing | 43 | 52 | (9 | ) | ||||||||||
Other | (2 | ) | 1 | (3 | ) | |||||||||
Total gross margin | $ | 194 | $ | 169 | $ | 25 | ||||||||
Midstream gross margin reflected an increase in fee-based revenues of
$37 million primarily due to increased production and increased capacity
from assets recently placed in service in the
Segment Adjusted EBITDA for the midstream segment also reflected higher
selling, general and administrative expenses primarily due to a
reimbursement of legal fees of
Liquids Transportation and Services
Our liquids transportation and services segment, previously named “NGL
transportation and services,” includes crude oil pipeline projects
(other than those owned by
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
NGL transportation volumes (Bbls/d) | 418,932 | 274,051 | 144,881 | ||||||||||||
NGL fractionation volumes (Bbls/d) | 226,847 | 96,608 | 130,239 | ||||||||||||
Revenues | $ | 1,196 | $ | 548 | $ | 648 | |||||||||
Cost of products sold | 994 | 426 | 568 | ||||||||||||
Gross margin | 202 | 122 | 80 | ||||||||||||
Unrealized (gains) losses on commodity risk management activities | (2 | ) | 1 | (3 | ) | ||||||||||
Operating expenses, excluding non-cash compensation expense | (33 | ) | (22 | ) | (11 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (6 | ) | (3 | ) | (3 | ) | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 2 | — | ||||||||||||
Segment Adjusted EBITDA | $ | 163 | $ | 100 | $ | 63 | |||||||||
The increase in NGL transportation volumes reflected an increase of
approximately 93,000 Bbls/d in volumes transported on our wholly-owned
pipelines, primarily due to an increase in NGL production from our
Jackson processing plant and volumes transported to our
Segment Adjusted EBITDA for the liquids transportation and services segment reflected an increase in gross margin as follows:
Three Months Ended September 30, |
||||||||||||
2014 | 2013 | Change | ||||||||||
Transportation margin | $ | 84 | $ | 49 | $ | 35 | ||||||
Processing and fractionation margin | 75 | 38 | 37 | |||||||||
Storage margin | 36 | 33 | 3 | |||||||||
Other margin | 7 | 2 | 5 | |||||||||
Total gross margin | $ | 202 | $ | 122 | $ | 80 | ||||||
Transportation margin increased
Processing and fractionation margin increased
Storage margin increased due to increased throughput activity.
Other margin increased as a result of increased commercial optimization
activities related to our fractionators, primarily due to the recent
commissioning of the second fractionator at
Segment Adjusted EBITDA for the liquids transportation and services
segment also reflected an increase in operating expenses due to the
start-up of Lone Star’s second fractionator in
Interstate Transportation and Storage
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Natural gas transported (MMBtu/d) | 5,591,903 | 6,081,246 | (489,343 | ) | |||||||||||
Natural gas sold (MMBtu/d) | 18,697 | 22,467 | (3,770 | ) | |||||||||||
Revenues | $ | 258 | $ | 311 | $ | (53 | ) | ||||||||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (81 | ) | (88 | ) | 7 | ||||||||||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (16 | ) | (18 | ) | 2 | ||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 103 | 105 | (2 | ) | |||||||||||
Segment Adjusted EBITDA | $ | 264 | $ | 310 | $ | (46 | ) | ||||||||
Distributions from unconsolidated affiliates | $ | 69 | $ | 65 | $ | 4 | |||||||||
Transported volumes decreased due to system outages for scheduled
maintenance on the Trunkline and Panhandle pipelines, lower volumes on
the Tiger pipeline due to decreased production from the
Segment Adjusted EBITDA for the interstate transportation and storage
segment decreased due to the deconsolidation of Lake Charles LNG
effective
Intrastate Transportation and Storage
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Natural gas transported (MMBtu/d) | 8,799,708 | 9,438,372 | (638,664 | ) | |||||||||||
Revenues | $ | 601 | $ | 553 | $ | 48 | |||||||||
Cost of products sold | 438 | 385 | 53 | ||||||||||||
Gross margin | 163 | 168 | (5 | ) | |||||||||||
Unrealized (gains) losses on commodity risk management activities | 1 | (6 | ) | 7 | |||||||||||
Operating expenses, excluding non-cash compensation expense | (46 | ) | (48 | ) | 2 | ||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (9 | ) | (6 | ) | (3 | ) | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | (1 | ) | — | (1 | ) | ||||||||||
Segment Adjusted EBITDA | $ | 108 | $ | 108 | $ | — | |||||||||
Transported volumes decreased primarily due to the reduction of volumes under certain long-term transportation contracts offset by increased volumes due to a more favorable pricing environment.
Intrastate transportation and storage gross margin decreased due to a
$5 million decrease in transportation margin from reduced volumes and a
$6 million decrease in storage margin principally driven by a decline in
the spreads between the spot and forward prices on natural gas we own in
the
Investment in
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Revenues | $ | 4,915 | $ | 4,528 | $ | 387 | |||||||||
Cost of products sold | 4,581 | 4,287 | 294 | ||||||||||||
Gross margin | 334 | 241 | 93 | ||||||||||||
Unrealized gains on commodity risk management activities | (21 | ) | (8 | ) | (13 | ) | |||||||||
Operating expenses, excluding non-cash compensation expense | (48 | ) | (36 | ) | (12 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (33 | ) | (29 | ) | (4 | ) | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 14 | 13 | 1 | ||||||||||||
Segment Adjusted EBITDA | $ | 246 | $ | 181 | $ | 65 | |||||||||
Distributions from unconsolidated affiliates | $ | 4 | $ | 3 | $ | 1 | |||||||||
Segment Adjusted EBITDA related to
-
an increase of
$48 million from crude oil acquisition and marketing activities, primarily due to an increase of$43 million in crude margins driven by expanded crude differentials and a$5 million increase in crude volumes resulting from higher market demand and expansion of the crude oil trucking fleet; -
an increase of
$14 million from terminal facilities, primarily due to improved contributions from Sunoco Logistics’ bulk marine terminals of$8 million and higher volumes and increased margins from refined products and NGL acquisition and marketing activities of$6 million ; and -
an increase of
$6 million from refined products pipelines, primarily due to operating results from Sunoco Logistics’ Mariner West project; partially offset by -
a decrease of
$3 million from crude oil pipelines, primarily due to a decrease of$11 million from lower average pipeline revenue per barrel and a decrease of$6 million due to higher operating expenses, which included higher pipeline operating losses and contract services costs, partially offset by higher throughput volumes largely attributable to expansion projects placed in service.
Retail Marketing
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Retail gasoline outlets, end of period: | |||||||||||||||
Total | 6,497 | 4,972 | 1,525 | ||||||||||||
Company-operated | 1,210 | 443 | 767 | ||||||||||||
Motor fuel sales: | |||||||||||||||
Total gallons (in millions) | 1,622 | 1,399 | 223 | ||||||||||||
Company-operated (gallons/month per site) | 184,594 | 202,500 | (17,906 | ) | |||||||||||
Motor fuel gross profit (cents/gallon): | |||||||||||||||
Total | 14.7 | 11.2 | 3.5 | ||||||||||||
Company-operated | 30.8 | 28.3 | 2.5 | ||||||||||||
Merchandise sales | $ | 287 | $ | 141 | $ | 146 | |||||||||
Revenues | $ | 5,988 | $ | 5,298 | $ | 690 | |||||||||
Cost of products sold | 5,645 | 5,066 | 579 | ||||||||||||
Gross margin | 343 | 232 | 111 | ||||||||||||
Unrealized losses on commodity risk management activities | 4 | 1 | 3 | ||||||||||||
Operating expenses, excluding non-cash compensation expense | (173 | ) | (103 | ) | (70 | ) | |||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (34 | ) | (25 | ) | (9 | ) | |||||||||
LIFO valuation adjustment | 51 | (6 | ) | 57 | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | — | 1 | (1 | ) | |||||||||||
Segment Adjusted EBITDA | $ | 191 | $ | 100 | $ | 91 | |||||||||
Retail marketing gross margin increased due to the net impacts of the following:
-
an increase of $66 million from the acquisition of Susser in
August 2014 ; -
favorable impacts of $52 million from other recent acquisitions,
including the MACS acquisition in
October 2013 ; -
an increase of
$21 million from strong retail gasoline and diesel margins; and -
an increase of
$29 million due to favorable results in non-retail margins; partially offset by -
unfavorable impacts of
$57 million related to non-cash LIFO valuation adjustments.
Segment Adjusted EBITDA for the retail marketing segment also reflected an increase in operating expenses and in selling, general and administrative expenses primarily due to recent acquisitions.
All Other
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Revenues | $ | 570 | $ | 526 | $ | 44 | |||||||||
Cost of products sold | 560 | 525 | 35 | ||||||||||||
Gross margin | 10 | 1 | 9 | ||||||||||||
Unrealized gains on commodity risk management activities | 2 | 7 | (5 | ) | |||||||||||
Operating expenses, excluding non-cash compensation expense | — | (11 | ) | 11 | |||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (35 | ) | (32 | ) | (3 | ) | |||||||||
Adjusted EBITDA related to discontinued operations | — | 12 | (12 | ) | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | 47 | 31 | 16 | ||||||||||||
Other | 18 | — | 18 | ||||||||||||
Elimination | (1 | ) | (1 | ) | — | ||||||||||
Segment Adjusted EBITDA | $ | 41 | $ | 7 | $ | 34 | |||||||||
Distributions from unconsolidated affiliates | $ | 16 | $ | 73 | $ | (57 | ) | ||||||||
Amounts reflected in our all other segment primarily include:
- our natural gas marketing and compression operations;
- an approximate 33% non-operating interest in PES, a refining joint venture;
-
our investment in Regency related to the Regency common and Class F
units received by
Southern Union (now Panhandle) in exchange for the contribution of its interest inSouthern Union Gathering Company, LLC to Regency onApril 30, 2013 ; and -
our investment in
AmeriGas untilAugust 2014 .
Segment Adjusted EBITDA increased primarily due to higher management fees, as further discussed below, and higher earnings from our investment in PES. Segment Adjusted EBITDA for the three months ended September 30, 2014 also reflected $24 million in merger related costs related to the Susser Merger.
In connection with the Lake Charles LNG Transaction, ETP agreed to
continue to provide management services for ETE through 2015 in relation
to both Lake Charles LNG’s regasification facility and the development
of a liquefaction project at Lake Charles LNG’s facility, for which ETE
has agreed to pay incremental management fees to ETP of $75 million per
year for the years ending
The decrease in cash distributions from unconsolidated affiliates was
primarily due to a decrease of $40 million in cash distribution from our
ownership in PES. Additionally, cash distribution from our ownership in
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 nine months ended
Growth | Maintenance | Total | |||||||||||
Direct(1): | |||||||||||||
Midstream | $ | 462 | $ | 12 | $ | 474 | |||||||
Liquids transportation and services(2) | 278 | 14 | 292 | ||||||||||
Interstate transportation and storage | 71 | 61 | 132 | ||||||||||
Intrastate transportation and storage | 99 | 27 | 126 | ||||||||||
Retail marketing(3) | 67 | 37 | 104 | ||||||||||
All other (including eliminations) | 19 | (2 | ) | 17 | |||||||||
Total direct capital expenditures | 996 | 149 | 1,145 | ||||||||||
Indirect(1): | |||||||||||||
Investment in Sunoco Logistics | 1,840 | 47 | 1,887 | ||||||||||
Investment in Sunoco LP(3) | 13 | — | 13 | ||||||||||
Total indirect capital expenditures | 1,853 | 47 | 1,900 | ||||||||||
Total capital expenditures | $ | 2,849 | $ | 196 | $ | 3,045 | |||||||
(1) Indirect capital expenditures comprise those funded by our publicly traded subsidiaries; all other capital expenditures are reflected as direct capital expenditures.
(2) Includes 100% of Lone Star’s capital expenditures, a portion of
which are funded through capital contributions from Regency related to
its 30% interest in
(3) The retail marketing segment includes the investment in
We currently expect capital expenditures (net of contributions in aid of construction costs) for the full year 2014 to be within the following ranges:
Growth | Maintenance | ||||||||||||||||
Low | High | Low | High | ||||||||||||||
Direct(1): | |||||||||||||||||
Midstream | $ | 750 | $ | 850 | $ | 10 | $ | 15 | |||||||||
Liquids transportation and services(2) | 400 | 450 | 20 | 25 | |||||||||||||
Interstate transportation and storage | 110 | 130 | 110 | 115 | |||||||||||||
Intrastate transportation and storage | 150 | 160 | 30 | 35 | |||||||||||||
Retail marketing(3) | 150 | 185 | 60 | 70 | |||||||||||||
All other (including eliminations) | 70 | 80 | 10 | 20 | |||||||||||||
Total direct capital expenditures | 1,630 | 1,855 | 240 | 280 | |||||||||||||
Indirect(1): | |||||||||||||||||
Investment in Sunoco Logistics | 2,400 | 2,600 | 65 | 75 | |||||||||||||
Investment in Sunoco LP(3) | 55 | 70 | — | 5 | |||||||||||||
Total indirect capital expenditures | 2,455 | 2,670 | 65 | 80 | |||||||||||||
Total projected capital expenditures | $ | 4,085 | $ | 4,525 | $ | 305 | $ | 360 | |||||||||
(1) Indirect capital expenditures comprise those funded by our publicly traded subsidiaries; all other capital expenditures are reflected as direct capital expenditures.
(2) Includes 100% of Lone Star’s capital expenditures. We expect to
receive capital contributions from Regency related to its 30% interest
in
(3) The retail marketing segment includes the investment in
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES |
|||||||||||||||
(In millions) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended September 30, |
|||||||||||||||
2014 | 2013 | Change | |||||||||||||
Equity in earnings (losses) of unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | (3 | ) | $ | (19 | ) | $ | 16 | |||||||
Citrus | 32 | 28 | 4 | ||||||||||||
FEP | 14 | 14 | — | ||||||||||||
Regency | 6 | 8 | (2 | ) | |||||||||||
PES | 14 | (11 | ) | 25 | |||||||||||
Other | 6 | 8 | (2 | ) | |||||||||||
Total equity in earnings of unconsolidated affiliates | $ | 69 | $ | 28 | $ | 41 | |||||||||
Proportionate share of interest, depreciation, amortization, non-cash items and taxes: | |||||||||||||||
AmeriGas | $ | 3 | $ | 28 | $ | (25 | ) | ||||||||
Citrus | 52 | 57 | (5 | ) | |||||||||||
FEP | 5 | 6 | (1 | ) | |||||||||||
Regency | 20 | 18 | 2 | ||||||||||||
PES | 7 | 5 | 2 | ||||||||||||
Other | 7 | 9 | (2 | ) | |||||||||||
Total proportionate share of interest, depreciation, amortization, non-cash items and taxes | $ | 94 | $ | 123 | $ | (29 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | — | $ | 9 | $ | (9 | ) | ||||||||
Citrus | 84 | 85 | (1 | ) | |||||||||||
FEP | 19 | 20 | (1 | ) | |||||||||||
Regency | 26 | 26 | — | ||||||||||||
PES | 21 | (6 | ) | 27 | |||||||||||
Other | 13 | 17 | (4 | ) | |||||||||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 163 | $ | 151 | $ | 12 | |||||||||
Distributions received from unconsolidated affiliates: | |||||||||||||||
AmeriGas | $ | — | $ | 19 | $ | (19 | ) | ||||||||
Citrus | 50 | 47 | 3 | ||||||||||||
FEP | 19 | 18 | 1 | ||||||||||||
Regency | 15 | 14 | 1 | ||||||||||||
PES | — | 40 | (40 | ) | |||||||||||
Other | 7 | 6 | 1 | ||||||||||||
Total distributions received from unconsolidated affiliates | $ | 91 | $ | 144 | $ | (53 | ) | ||||||||
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
Cell:
214-498-9272