Energy Transfer Partners Reports Fourth Quarter Results
In
ETP’s other recent key accomplishments include the following:
-
In
January 2015 ,ETP andRegency Energy Partners LP (“Regency”) announced their entry into a definitive merger agreement pursuant to which ETP will acquire Regency. Under the terms of the definitive merger agreement, holders of Regency common units will receive 0.4066 ETP Common Units for each Regency common unit. Regency unitholders will also receive at closing an additional$0.32 per common unit in the form of ETP Common Units (based on the price for ETP Common Units prior to the merger closing). The transaction is expected to close in the second quarter of 2015. -
In
January 2015 , ETP’s affiliateRover Pipeline LLC (“Rover”) signed a contract with Vector Pipeline (“Vector”) and its affiliates for firm transportation capacity to deliver gas to markets inMichigan and the Union Gas Dawn Hub inOntario, Canada as part of the Rover pipeline project. The capacity arrangement with Vector eliminates the need to build 110 miles of pipeline throughMichigan and will eliminate the Canadian construction entirely. - As a result of AE–Midco Rover, LLC’s (“AE–Midco”) recent exercise of its option to increase its equity ownership interest in Rover, AE–Midco (and an affiliate of AE–Midco) will own 35% of Rover and ETP will own 65%.
-
In
December 2014 ,ETP andEnergy Transfer Equity, L.P. (“ETE”) announced the final terms of a transaction, whereby ETE will transfer 30.8 million ETP Common Units, ETE’s 45% interest in the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline (collectively, the “Bakken pipeline project”), and$879 million in cash (less amounts funded prior to closing by ETE for capital expenditures for the Bakken pipeline project) in exchange for 30.8 million newly issued Class H Units of ETP that, when combined with the 50.2 million previously issued Class H Units, generally entitle ETE to receive 90.05% of the cash distributions and other economic attributes of the general partner interest and IDRs ofSunoco Logistics . In addition, ETE and ETP agreed to reduce the IDR subsidies that ETE previously agreed to provide to ETP, with such reductions occurring in 2015 and 2016. This transaction is expected to close inMarch 2015 . -
In
November 2014 , ETP and Regency announced thatLone Star NGL LLC (“Lone Star”) will construct a 533 mile, 24- and 30-inch NGL pipeline from thePermian Basin toMont Belvieu, Texas and convert Lone Star’s existingWest Texas 12-inch NGL pipeline into crude oil/condensate service. The new pipeline and conversion projects, estimated to cost between$1 .5 billion and$1 .8 billion, are expected to be operational by the third quarter of 2016 and the first quarter of 2017, respectively. -
As of December 31, 2014, ETP’s
$2.5 billion revolving credit facility had$570 million of outstanding borrowings, and its leverage ratio, as defined by the credit agreement, was 3.87x. InFebruary 2015 , ETP amended its revolving credit facility to increase the capacity to$3 .75 billion.
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 Partnerships’ 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 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions) |
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(unaudited) |
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December 31, | |||||
2014 | 2013 | ||||
ASSETS |
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CURRENT ASSETS | $ | 5,439 | $ | 6,239 | |
PROPERTY, PLANT AND EQUIPMENT, net | 29,743 | 25,947 | |||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,840 | 4,436 | |||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | — | 17 | |||
GOODWILL | 6,419 | 4,729 | |||
INTANGIBLE ASSETS, net | 2,087 | 1,568 | |||
OTHER NON-CURRENT ASSETS, net | 693 | 766 | |||
Total assets | $ | 48,221 | $ | 43,702 | |
LIABILITIES AND EQUITY |
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CURRENT LIABILITIES | $ | 6,040 | $ | 6,067 | |
LONG-TERM DEBT, less current maturities | 18,332 | 16,451 | |||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 138 | 54 | |||
DEFERRED INCOME TAXES | 4,226 | 3,762 | |||
OTHER NON-CURRENT LIABILITIES | 1,206 | 1,080 | |||
COMMITMENTS AND CONTINGENCIES | |||||
REDEEMABLE NONCONTROLLING INTERESTS | 15 | — | |||
EQUITY: | |||||
Total partners’ capital | 12,070 | 11,540 | |||
Noncontrolling interest | 6,194 | 4,748 | |||
Total equity | 18,264 | 16,288 | |||
Total liabilities and equity | $ | 48,221 | $ | 43,702 |
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In millions, except per unit data) |
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(unaudited) |
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Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
REVENUES | $ | 12,279 | $ | 12,032 | $ | 51,158 | $ | 46,339 | ||||||||
COSTS AND EXPENSES: | ||||||||||||||||
Cost of products sold | 10,914 | 10,727 | 45,540 | 41,204 | ||||||||||||
Operating expenses | 558 | 384 | 1,636 | 1,441 | ||||||||||||
Depreciation and amortization | 307 | 268 | 1,130 | 1,032 | ||||||||||||
Selling, general and administrative | 117 | 115 | 377 | 432 | ||||||||||||
Goodwill impairment | — | 689 | — | 689 | ||||||||||||
Total costs and expenses | 11,896 | 12,183 | 48,683 | 44,798 | ||||||||||||
OPERATING INCOME (LOSS) | 383 | (151 | ) | 2,475 | 1,541 | |||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest expense, net of interest capitalized | (212 | ) | (217 | ) | (860 | ) | (849 | ) | ||||||||
Equity in earnings of unconsolidated affiliates | 29 | 35 | 234 | 172 | ||||||||||||
Gain on sale of AmeriGas common units | — | — | 177 | 87 | ||||||||||||
Gains (losses) on interest rate derivatives | (84 | ) | (2 | ) | (157 | ) | 44 | |||||||||
Non-operating environmental remediation | — | (168 | ) | — | (168 | ) | ||||||||||
Other, net | 7 | (1 | ) | (25 | ) | 5 | ||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 123 | (504 | ) | 1,844 | 832 | |||||||||||
Income tax expense (benefit) from continuing operations | 87 | (42 | ) | 355 | 97 | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 36 | (462 | ) | 1,489 | 735 | |||||||||||
Income (loss) from discontinued operations | (2 | ) | (11 | ) | 64 | 33 | ||||||||||
NET INCOME (LOSS) | 34 | (473 | ) | 1,553 | 768 | |||||||||||
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | (74 | ) | 68 | 217 | 312 | |||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS | 108 | (541 | ) | 1,336 | 456 | |||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 140 | 77 | 513 | 506 | ||||||||||||
CLASS H UNITHOLDER’S INTEREST IN NET INCOME | 58 | 48 | 217 | 48 | ||||||||||||
COMMON UNITHOLDERS’ INTEREST IN NET INCOME (LOSS) | $ | (90 | ) | $ | (666 | ) | $ | 606 | $ | (98 | ) | |||||
INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON UNIT: | ||||||||||||||||
Basic | $ | (0.27 | ) | $ | (1.87 | ) | $ | 1.58 | $ | (0.23 | ) | |||||
Diluted | $ | (0.27 | ) | $ | (1.87 | ) | $ | 1.58 | $ | (0.23 | ) | |||||
NET INCOME (LOSS) PER COMMON UNIT: | ||||||||||||||||
Basic | $ | (0.28 | ) | $ | (1.90 | ) | $ | 1.77 | $ | (0.18 | ) | |||||
Diluted | $ | (0.28 | ) | $ | (1.90 | ) | $ | 1.77 | $ | (0.18 | ) | |||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | ||||||||||||||||
Basic | 351.2 | 345.1 | 331.5 | 343.4 | ||||||||||||
Diluted | 351.2 | 345.1 | 332.8 | 343.4 |
SUPPLEMENTAL INFORMATION |
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(Tabular dollar amounts in millions) |
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(unaudited) |
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Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow (a): | ||||||||||||||||
Net income (loss) | $ | 34 | $ | (473 | ) | $ | 1,553 | $ | 768 | |||||||
Interest expense, net of interest capitalized | 212 | 217 | 860 | 849 | ||||||||||||
Gain on sale of AmeriGas common units | — | — | (177 | ) | (87 | ) | ||||||||||
Goodwill impairment | — | 689 | — | 689 | ||||||||||||
Income tax expense (benefit) from continuing operations (b) | 87 | (42 | ) | 355 | 97 | |||||||||||
Depreciation and amortization | 307 | 268 | 1,130 | 1,032 | ||||||||||||
Non-cash compensation expense | 16 | 11 | 58 | 47 | ||||||||||||
(Gains) losses on interest rate derivatives | 84 | 2 | 157 | (44 | ) | |||||||||||
Unrealized gains on commodity risk management activities | (37 | ) | (6 | ) | (23 | ) | (51 | ) | ||||||||
Inventory valuation adjustments | 456 | 19 | 473 | (3 | ) | |||||||||||
Non-operating environmental remediation | — | 168 | — | 168 | ||||||||||||
Equity in earnings of unconsolidated affiliates | (29 | ) | (35 | ) | (234 | ) | (172 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates | 145 | 155 | 674 | 629 | ||||||||||||
Other, net | 7 | 13 | 3 | 31 | ||||||||||||
Adjusted EBITDA (consolidated) | 1,282 | 986 | 4,829 | 3,953 | ||||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (145 | ) | (155 | ) | (674 | ) | (629 | ) | ||||||||
Distributions from unconsolidated affiliates | 84 | 123 | 348 | 464 | ||||||||||||
Interest expense, net of interest capitalized | (212 | ) | (217 | ) | (860 | ) | (849 | ) | ||||||||
Amortization included in interest expense | (13 | ) | (17 | ) | (61 | ) | (80 | ) | ||||||||
Current income tax expense from continuing operations | (69 | ) | (4 | ) | (402 | ) | (49 | ) | ||||||||
Transaction-related income taxes (c) | 15 | — | 396 | — | ||||||||||||
Maintenance capital expenditures | (147 | ) | (109 | ) | (343 | ) | (343 | ) | ||||||||
Other, net | 3 | — | 5 | 4 | ||||||||||||
Distributable Cash Flow (consolidated) | 798 | 607 | 3,238 | 2,471 | ||||||||||||
Distributable Cash Flow attributable to Sunoco Logistics Partners L.P. (“Sunoco Logistics”) (100%) | (177 | ) | (157 | ) | (750 | ) | (660 | ) | ||||||||
Distributions from Sunoco Logistics to ETP | 81 | 57 | 285 | 204 | ||||||||||||
Distributable Cash Flow attributable to Sunoco LP (100%) | (52 | ) | — | (56 | ) | — | ||||||||||
Distributions from Sunoco LP to ETP | 10 | — | 18 | — | ||||||||||||
Distributions to ETE in respect of ETP Holdco Corporation (“Holdco”) | — | — | — | (50 | ) | |||||||||||
Distributions to Regency in respect of Lone Star (d) | (37 | ) | (25 | ) | (150 | ) | (87 | ) | ||||||||
Distributable Cash Flow attributable to the partners of ETP | $ | 623 | $ | 482 | $ | 2,585 | $ | 1,878 | ||||||||
Distributions to the partners of ETP: | ||||||||||||||||
Limited Partners (e): | ||||||||||||||||
Common units held by public | $ | 321 | $ | 263 | $ | 1,179 | $ | 997 | ||||||||
Common units held by ETE | 31 | 45 | 119 | 268 | ||||||||||||
Class H Units held by ETE Common Holdings, LLC (“ETE Holdings”) (f) | 60 | 54 | 219 | 105 | ||||||||||||
General Partner interests held by ETE | 5 | 5 | 21 | 20 | ||||||||||||
Incentive Distribution Rights (“IDRs”) held by ETE | 208 | 173 | 754 | 701 | ||||||||||||
IDR relinquishment related to previous transactions | (68 | ) | (57 | ) | (250 | ) | (199 | ) | ||||||||
Total distributions to be paid to the partners of ETP | 557 | 483 | 2,042 | 1,892 | ||||||||||||
Distributions credited to Holdco transactions (g) | — | — | — | (68 | ) | |||||||||||
Net distributions to the partners of ETP | $ | 557 | $ | 483 | $ | 2,042 | $ | 1,824 | ||||||||
Distribution coverage ratio (h) |
1.12 |
x |
1.00 |
x |
1.27 |
x |
1.03 |
x |
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Distributable Cash Flow per Common Unit (i) | $ | 1.19 | $ | 0.89 | $ | 5.55 | $ | 3.64 | ||||||||
(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.
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 months and year ended December 31, 2013 has been revised to reflect this change.
(b) Income tax expense is based on the earnings of our taxable subsidiaries. For the three months ended December 31, 2014, our effective income tax rate was substantially higher primarily due to non-cash inventory valuation adjustments recognized by subsidiaries other than our taxable subsidiaries.
(c) Translation-related income taxes primarily included income tax expense related to the Lake Charles LNG Transaction. For the year ended December 31, 2014, amounts previously reported for each of the interim periods have been adjusted to reflect income taxes related to other transactions, which amounts had not previously been reflected in the calculation of Distributable Cash Flow for such interim periods.
(d) Cash distributions to Regency in respect of
(e) Distributions on ETP Common Units, as reflected above, exclude cash distributions on ETP Common Units held by subsidiaries of ETP.
(f) Distributions on the Class H Units for the three months and years ended December 31, 2014 and 2013 were calculated as follows:
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
General partner distributions and incentive distributions from Sunoco Logistics | $ | 54 | $ | 35 | $ | 185 | $ | 67 | ||||||||
50.05 | % | 50.05 | % | 50.05 | % | 50.05 | % | |||||||||
Share of Sunoco Logistics general partner and incentive distributions payable to Class H Unitholder | 27 | 18 | 93 | 34 | ||||||||||||
Incremental distributions payable to Class H Unitholder | 33 | 36 | 126 | 71 | ||||||||||||
Total Class H Unit distributions | $ | 60 | $ | 54 | $ | 219 | $ | 105 | ||||||||
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.
(g) For the three months and year ended December 31, 2013, net
distributions to the partners of ETP excluded distributions paid in
respect of the quarter ended
(h) 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.
(i) The Partnership defines Distributable Cash Flow per Common Unit for a period as the quotient of Distributable Cash Flow attributable to the partners of ETP, net of distributions related to the Class H Units and the General Partner and IDR interests, divided by the weighted average number of Common Units outstanding.
Similar to Distributable Cash Flow, as described above, Distributable Cash Flow per Common Unit is a significant liquidity measure used by the Partnership’s senior management to compare net cash flows generated by the Partnership to the distributions the Partnership expects to pay to its unitholders. Using this measure, the Partnership’s management can compare Distributable Cash Flow among different periods on a per-unit basis.
Distributable Cash Flow per Common Unit is calculated as follows:
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Distributable Cash Flow attributable to the partners of ETP | $ | 623 | $ | 482 | $ | 2,585 | $ | 1,878 | ||||||||
Less: | ||||||||||||||||
Class H Units held by ETE Holdings | (60 | ) | (54 | ) | (219 | ) | (105 | ) | ||||||||
General Partner interests held by ETE | (5 | ) | (5 | ) | (21 | ) | (20 | ) | ||||||||
IDRs held by ETE | (208 | ) | (173 | ) | (754 | ) | (701 | ) | ||||||||
IDR relinquishment related to previous transactions | 68 | 57 | 250 | 199 | ||||||||||||
$ | 418 | $ | 307 | $ | 1,841 | $ | 1,251 | |||||||||
Weighted average Common Units outstanding – basic | 351.2 | 345.1 | 331.5 | 343.4 | ||||||||||||
Distributable Cash Flow per Common Unit | $ | 1.19 | $ | 0.89 | $ | 5.55 | $ | 3.64 | ||||||||
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 expenses. 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 inventory 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 December 31, | ||||||||||
2014 | 2013 | Change | ||||||||
Segment Adjusted EBITDA: | ||||||||||
Midstream | $ | 166 | $ | 129 | $ | 37 | ||||
Liquids transportation and services | 159 | 94 | 65 | |||||||
Interstate transportation and storage | 281 | 301 | (20 | ) | ||||||
Intrastate transportation and storage | 105 | 112 | (7 | ) | ||||||
Investment in Sunoco Logistics | 237 | 210 | 27 | |||||||
Retail marketing | 295 | 91 | 204 | |||||||
All other | 39 | 49 | (10 | ) | ||||||
$ | 1,282 | $ | 986 | $ | 296 | |||||
Midstream |
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Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Gathered volumes (MMBtu/d): | 3,460,944 | 2,447,559 | 1,013,385 | |||||||||
NGLs produced (Bbls/d): | 201,620 | 119,878 | 81,742 | |||||||||
Equity NGLs produced (Bbls/d): | 15,105 | 11,036 | 4,069 | |||||||||
Revenues | $ | 723 | $ | 563 | $ | 160 | ||||||
Cost of products sold | 518 | 400 | 118 | |||||||||
Gross margin | 205 | 163 | 42 | |||||||||
Unrealized gains on commodity risk management activities | — | (2 | ) | 2 | ||||||||
Operating expenses, excluding non-cash compensation expense | (33 | ) | (31 | ) | (2 | ) | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (6 | ) | (4 | ) | (2 | ) | ||||||
Other | — | 3 | (3 | ) | ||||||||
Segment Adjusted EBITDA | $ | 166 | $ | 129 | $ | 37 | ||||||
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 December 31, | |||||||||
2014 | 2013 | Change | |||||||
Gathering and processing fee-based revenues | $ | 160 | $ | 122 | $ | 38 | |||
Non fee-based contracts and processing | 45 | 41 | 4 | ||||||
Total gross margin | $ | 205 | $ | 163 | $ | 42 | |||
Midstream gross margin reflected an increase in fee-based revenues of
$38 million primarily due to increased production and increased capacity
from assets recently placed in service in the
Liquids Transportation and Services |
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Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Liquids transportation volumes (Bbls/d) | 442,428 | 280,905 | 161,523 | |||||||||
NGL fractionation volumes (Bbls/d) | 213,710 | 125,275 | 88,435 | |||||||||
Revenues | $ | 982 | $ | 776 | $ | 206 | ||||||
Cost of products sold | 770 | 643 | 127 | |||||||||
Gross margin | 212 | 133 | 79 | |||||||||
Unrealized gains on commodity risk management activities | (11 | ) | — | (11 | ) | |||||||
Operating expenses, excluding non-cash compensation expense | (38 | ) | (37 | ) | (1 | ) | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (5 | ) | (3 | ) | (2 | ) | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 1 | 1 | — | |||||||||
Segment Adjusted EBITDA | $ | 159 | $ | 94 | $ | 65 | ||||||
The increase in liquids transportation volumes was primarily due to an
increase in NGL production from our Jackson processing plant and volumes
transported on our wholly-owned pipelines to our
Segment Adjusted EBITDA for the liquids transportation and services segment reflected an increase in gross margin as follows:
Three Months Ended December 31, | ||||||||||
2014 | 2013 | Change | ||||||||
Transportation margin | $ | 100 | $ | 52 | $ | 48 | ||||
Processing and fractionation margin | 66 | 40 | 26 | |||||||
Storage margin | 44 | 38 | 6 | |||||||
Other margin | 2 | 3 | (1 | ) | ||||||
Total gross margin | $ | 212 | $ | 133 | $ | 79 | ||||
Transportation margin increased primarily due to higher volumes
transported from west
Processing and fractionation margin increased primarily due to the
startup of Lone Star’s second fractionator at
Storage margin increased primarily due to increased throughput activity.
Interstate Transportation and Storage |
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Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Natural gas transported (MMBtu/d) | 6,171,259 | 6,405,185 | (233,926 | ) | ||||||||
Natural gas sold (MMBtu/d) | 15,643 | 19,244 | (3,601 | ) | ||||||||
Revenues | $ | 267 | $ | 317 | $ | (50 | ) | |||||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (72 | ) | (91 | ) | 19 | |||||||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (16 | ) | (14 | ) | (2 | ) | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 91 | 89 | 2 | |||||||||
Other | 11 | — | 11 | |||||||||
Segment Adjusted EBITDA | $ | 281 | $ | 301 | $ | (20 | ) | |||||
Distributions from unconsolidated affiliates | $ | 61 | $ | 83 | $ | (22 | ) | |||||
Transported volumes decreased primarily due to lower contract utilization on the Panhandle and Trunkline pipelines, which was the result of higher utilization in the prior period attributable to colder weather. The decrease in transported volumes also reflected lower gas supply into the Sea Robin pipeline due to producer maintenance related outages. These decreases in volumes transported were partially offset by higher volumes transported on the Tiger pipeline due to increased demand as a result of colder weather in the Midwest.
Segment Adjusted EBITDA for the interstate transportation and storage
segment decreased primarily due to the deconsolidation of
The decrease in cash distributions from unconsolidated affiliates reflected a decrease in cash distributions from Citrus due to slightly higher maintenance capital requirements and the timing of settlement of certain working capital items.
Intrastate Transportation and Storage |
|||||||||||
Three Months Ended December 31, | |||||||||||
2014 | 2013 | Change | |||||||||
Natural gas transported (MMBtu/d) | 8,485,823 | 8,919,220 | (433,397 | ) | |||||||
Revenues | $ | 610 | $ | 592 | $ | 18 | |||||
Cost of products sold | 446 | 415 | 31 | ||||||||
Gross margin | 164 | 177 | (13 | ) | |||||||
Unrealized gains on commodity risk management activities | (4 | ) | (9 | ) | 5 | ||||||
Operating expenses, excluding non-cash compensation expense | (49 | ) | (51 | ) | 2 | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (6 | ) | (5 | ) | (1 | ) | |||||
Segment Adjusted EBITDA | $ | 105 | $ | 112 | $ | (7 | ) | ||||
Transported volumes decreased compared to the same period last year primarily due to slightly lower production by producers connected to our pipelines partially offset by increased volumes due to a more favorable pricing environment.
Intrastate transportation and storage gross margin decreased primarily
due to a decline in the spreads between the spot and forward prices on
natural gas we own in the
Investment in
Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Revenue | $ | 3,875 | $ | 4,288 | $ | (413 | ) | |||||
Cost of products sold | 3,802 | 4,040 | (238 | ) | ||||||||
Gross margin | 73 | 248 | (175 | ) | ||||||||
Unrealized (gains) losses on commodity risk management activities | (3 | ) | 11 | (14 | ) | |||||||
Operating expenses, excluding non-cash compensation expense | (73 | ) | (31 | ) | (42 | ) | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (32 | ) | (19 | ) | (13 | ) | ||||||
Inventory valuation adjustments | 258 | — | 258 | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 13 | 10 | 3 | |||||||||
Other | 1 | (9 | ) | 10 | ||||||||
Segment Adjusted EBITDA | $ | 237 | $ | 210 | $ | 27 | ||||||
Segment Adjusted EBITDA related to
Retail Marketing |
||||||||||||
Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Retail gasoline outlets, end of period: | ||||||||||||
Total | 6,650 | 5,112 | 1,538 | |||||||||
Company-operated | 1,251 | 513 | 738 | |||||||||
Motor fuel sales: | ||||||||||||
Total gallons (in millions) | 1,912 | 1,304 | 608 | |||||||||
Company-operated (gallons/month per site) | 162,993 | 193,901 | (30,908 | ) | ||||||||
Motor fuel gross profit (cents per gallon): | ||||||||||||
Total | 20.7 | 10.2 | 10.5 | |||||||||
Company-operated | 37.4 | 25.7 | 11.7 | |||||||||
Merchandise sales | $ | 489 | $ | 152 | $ | 337 | ||||||
Revenue | $ | 5,920 | $ | 5,201 | $ | 719 | ||||||
Cost of products sold | 5,493 | 4,961 | 532 | |||||||||
Gross margin | 427 | 240 | 187 | |||||||||
Unrealized gains on commodity risk management activities | (7 | ) | (2 | ) | (5 | ) | ||||||
Operating expenses, excluding non-cash compensation expense | (283 | ) | (140 | ) | (143 | ) | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (41 | ) | (26 | ) | (15 | ) | ||||||
Inventory valuation adjustments | 198 | 19 | 179 | |||||||||
Adjusted EBITDA related to unconsolidated affiliates | 1 | — | 1 | |||||||||
Segment Adjusted EBITDA | $ | 295 | $ | 91 | $ | 204 | ||||||
The results reflected above include
Retail marketing gross margin increased due to the net impacts of the following:
-
increases of $268 million and $10 million from the acquisitions of
Susser in
August 2014 and Tigermarket inMay 2014 , respectively; - an increase of $98 million from strong retail gasoline and diesel margins; partially offset by
- a decrease of $10 million due to unfavorable results in non-retail margins; and
-
unfavorable impacts of
$179 million related to non-cash inventory 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 the recent acquisitions mentioned above.
All Other |
||||||||||||
Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Revenue | $ | 512 | $ | 725 | $ | (213 | ) | |||||
Cost of products sold | 504 | 693 | (189 | ) | ||||||||
Gross margin | 8 | 32 | (24 | ) | ||||||||
Unrealized gains on commodity risk management activities | (12 | ) | (4 | ) | (8 | ) | ||||||
Operating expenses, excluding non-cash compensation expense | (3 | ) | (9 | ) | 6 | |||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (11 | ) | (35 | ) | 24 | |||||||
Adjusted EBITDA related to discontinued operations | — | 1 | (1 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates | 40 | 57 | (17 | ) | ||||||||
Other | 18 | 7 | 11 | |||||||||
Elimination | (1 | ) | — | (1 | ) | |||||||
Segment Adjusted EBITDA | $ | 39 | $ | 49 | $ | (10 | ) | |||||
Distributions from unconsolidated affiliates | $ | 15 | $ | 34 | $ | (19 | ) | |||||
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 common and Class F units, which were
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 decreased primarily due lower earnings from our
investment in
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
The decrease in cash distributions from unconsolidated affiliates was
primarily due to a decrease of
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 year ended December 31, 2014:
Growth | Maintenance | Total | |||||||
Direct(1): | |||||||||
Midstream | $ | 652 | $ | 15 | $ | 667 | |||
Liquids transportation and services(2) | 406 | 21 | 427 | ||||||
Interstate transportation and storage | 301 | 110 | 411 | ||||||
Intrastate transportation and storage | 133 | 36 | 169 | ||||||
Retail marketing(3) | 104 | 73 | 177 | ||||||
All other (including eliminations) | 28 | 7 | 35 | ||||||
Total direct capital expenditures | 1,624 | 262 | 1,886 | ||||||
Indirect(1): | |||||||||
Investment in Sunoco Logistics | 2,434 | 76 | 2,510 | ||||||
Investment in Sunoco LP | 77 | 5 | 82 | ||||||
Total indirect capital expenditures | 2,511 | 81 | 2,592 | ||||||
Total capital expenditures | $ | 4,135 | $ | 343 | $ | 4,478 |
(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 for the full year 2015 to be within the following ranges:
Growth | Maintenance | |||||||||||
Low | High | Low | High | |||||||||
Direct(1): | ||||||||||||
Midstream | $ | 550 | $ | 650 | $ | 10 | $ | 15 | ||||
Liquids transportation and services(2)(3) | 2,500 | 2,600 | 20 | 25 | ||||||||
Interstate transportation and storage(3) | 1,000 | 1,100 | 125 | 130 | ||||||||
Intrastate transportation and storage | 30 | 40 | 30 | 35 | ||||||||
Retail marketing(4) | 185 | 235 | 80 | 100 | ||||||||
All other (including eliminations) | 20 | 25 | 10 | 20 | ||||||||
Total direct capital expenditures | 4,285 | 4,650 | 275 | 325 | ||||||||
Indirect(1): | ||||||||||||
Investment in Sunoco Logistics | 1,800 | 2,200 | 70 | 90 | ||||||||
Investment in Sunoco LP(4) | 165 | 215 | 15 | 25 | ||||||||
Total indirect capital expenditures | 1,965 | 2,415 | 85 | 115 | ||||||||
Total projected capital expenditures | $ | 6,250 | $ | 7,065 | $ | 360 | $ | 440 |
(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) Includes capital expenditures related to our proportionate ownership of the Bakken and Rover pipeline projects.
(4) The retail marketing segment includes the investment in
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES |
||||||||||||
(In millions) |
||||||||||||
(unaudited) |
||||||||||||
Three Months Ended December 31, | ||||||||||||
2014 | 2013 | Change | ||||||||||
Equity in earnings (losses) of unconsolidated affiliates: | ||||||||||||
Citrus | $ | 20 | $ | 21 | $ | (1 | ) | |||||
FEP | 14 | 14 | — | |||||||||
Regency | (19 | ) | (2 | ) | (17 | ) | ||||||
PES | 10 | (28 | ) | 38 | ||||||||
AmeriGas | (2 | ) | 26 | (28 | ) | |||||||
Other | 6 | 4 | 2 | |||||||||
Total equity in earnings of unconsolidated affiliates | $ | 29 | $ | 35 | $ | (6 | ) | |||||
Adjusted EBITDA related to unconsolidated affiliates: | ||||||||||||
Citrus | $ | 72 | $ | 70 | $ | 2 | ||||||
FEP | 19 | 18 | 1 | |||||||||
Regency | 22 | 24 | (2 | ) | ||||||||
PES | 17 | (21 | ) | 38 | ||||||||
AmeriGas | — | 53 | (53 | ) | ||||||||
Other | 15 | 11 | 4 | |||||||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 145 | $ | 155 | $ | (10 | ) | |||||
Distributions received from unconsolidated affiliates: | ||||||||||||
Citrus | $ | 42 | $ | 65 | $ | (23 | ) | |||||
FEP | 19 | 18 | 1 | |||||||||
Regency | 16 | 15 | 1 | |||||||||
AmeriGas | — | 19 | (19 | ) | ||||||||
Other | 7 | 6 | 1 | |||||||||
Total distributions received from unconsolidated affiliates | $ | 84 | $ | 123 | $ | (39 | ) |
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
214-498-9272
(cell)