February 21, 2018 | ||
Date of Report (Date of earliest event reported) | ||
ENERGY TRANSFER PARTNERS, L.P. | ||
(Exact name of Registrant as specified in its charter) | ||
Delaware | 1-31219 | 73-1493906 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
8111 Westchester Drive, Suite 600, Dallas, Texas 75225 |
(Address of principal executive offices) (Zip Code) |
(214) 981-0700 |
(Registrant’s telephone number, including area code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description of the Exhibit | |
ENERGY TRANSFER PARTNERS, L.P. | |||
By: | Energy Transfer Partners GP, L.P. | ||
its General Partner | |||
By: | Energy Transfer Partners, L.L.C. | ||
its General Partner | |||
Date: | February 21, 2018 | By: | /s/ Thomas E. Long |
Thomas E. Long | |||
Chief Financial Officer |
• | On February 14, 2018, ETP paid a quarterly distribution of $0.565 per unit ($2.26 annualized) on ETP Common Units for the quarter ended December 31, 2017. The Partnership’s distribution coverage ratio for the fourth quarter of 2017 was 1.30x. |
• | ETP announced that Phase 1A and Phase 1B of the Rover pipeline were placed in service in August 2017 and December 2017, respectively. |
• | In January 2018, ETP announced the entry into an agreement pursuant to which ETP will contribute certain compression assets to USA Compression Partners, LP for an aggregate consideration of $1.7 billion, consisting of $447 million in equity and $1.225 billion in cash. The transaction is subject to customary closing conditions and is expected to close in the first half of 2018. |
• | In February 2018, after the record date for Sunoco LP’s fourth quarter 2017 cash distributions, Sunoco LP repurchased 17,286,859 Sunoco LP common units owned by ETP for aggregate cash consideration of approximately $540 million. |
• | As of December 31, 2017, ETP’s $5.00 billion revolving credit facilities had $2.34 billion of outstanding borrowings, and its leverage ratio, as defined by the credit agreement, was 3.96x. |
December 31, | |||||||
2017 | 2016* | ||||||
ASSETS | |||||||
Current assets | $ | 6,528 | $ | 5,643 | |||
Property, plant and equipment, net | 58,437 | 50,917 | |||||
Advances to and investments in unconsolidated affiliates | 3,816 | 4,280 | |||||
Other non-current assets, net | 758 | 672 | |||||
Intangible assets, net | 5,311 | 4,696 | |||||
Goodwill | 3,115 | 3,897 | |||||
Total assets | $ | 77,965 | $ | 70,105 |
LIABILITIES AND EQUITY | |||||||
Current liabilities | $ | 6,994 | $ | 6,203 | |||
Long-term debt, less current maturities | 32,687 | 31,741 | |||||
Long-term notes payable – related party | — | 250 | |||||
Non-current derivative liabilities | 145 | 76 | |||||
Deferred income taxes | 2,883 | 4,394 | |||||
Other non-current liabilities | 1,084 | 952 | |||||
Commitments and contingencies | |||||||
Series A Preferred Units | — | 33 | |||||
Redeemable noncontrolling interests | 21 | 15 | |||||
Equity: | |||||||
Total partners’ capital | 28,269 | 18,621 | |||||
Noncontrolling interest | 5,882 | 7,820 | |||||
Total equity | 34,151 | 26,441 | |||||
Total liabilities and equity | $ | 77,965 | $ | 70,105 |
* | During the fourth quarter of 2017, the Partnership changed its accounting policy related to certain inventories. Certain crude oil, refined product and NGL inventories associated with the legacy Sunoco Logistics business were changed from the last-in, first-out (“LIFO”) method to the weighted average cost method. These changes have been applied retrospectively to all periods presented, and the prior period amounts reflected below have been adjusted from those amounts previously reported. |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2017 | 2016* | 2017 | 2016* | ||||||||||||
REVENUES | $ | 8,610 | $ | 6,526 | $ | 29,054 | $ | 21,827 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of products sold | 6,206 | 4,733 | 20,801 | 15,080 | |||||||||||
Operating expenses | 567 | 480 | 2,170 | 1,839 | |||||||||||
Depreciation, depletion and amortization | 619 | 517 | 2,332 | 1,986 | |||||||||||
Selling, general and administrative | 99 | 122 | 434 | 348 | |||||||||||
Impairment losses | 920 | 813 | 920 | 813 | |||||||||||
Total costs and expenses | 8,411 | 6,665 | 26,657 | 20,066 | |||||||||||
OPERATING INCOME (LOSS) | 199 | (139 | ) | 2,397 | 1,761 | ||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net | (345 | ) | (336 | ) | (1,365 | ) | (1,317 | ) | |||||||
Equity in earnings (losses) from unconsolidated affiliates | 17 | (201 | ) | 156 | 59 | ||||||||||
Impairment of investment in an unconsolidated affiliate | (313 | ) | — | (313 | ) | (308 | ) | ||||||||
Gains on acquisitions | — | 83 | — | 83 | |||||||||||
Losses on extinguishments of debt | (42 | ) | — | (42 | ) | — | |||||||||
Gains (losses) on interest rate derivatives | (9 | ) | 167 | (37 | ) | (12 | ) | ||||||||
Other, net | 72 | 35 | 209 | 131 | |||||||||||
INCOME (LOSS) BEFORE INCOME TAX BENEFIT | (421 | ) | (391 | ) | 1,005 | 397 | |||||||||
Income tax benefit | (1,518 | ) | (55 | ) | (1,496 | ) | (186 | ) | |||||||
NET INCOME (LOSS) | 1,097 | (336 | ) | 2,501 | 583 | ||||||||||
Less: Net income attributable to noncontrolling interest | 154 | 114 | 420 | 295 | |||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS | 943 | (450 | ) | 2,081 | 288 | ||||||||||
General Partner’s interest in net income | 263 | 208 | 990 | 948 | |||||||||||
Preferred Unitholders’ interest in net income | 12 | — | 12 | — | |||||||||||
Class H Unitholder’s interest in net income | — | 94 | 93 | 351 | |||||||||||
Class I Unitholder’s interest in net income | — | 2 | — | 8 | |||||||||||
Common Unitholders’ interest in net income (loss) | $ | 668 | $ | (754 | ) | $ | 986 | $ | (1,019 | ) | |||||
NET INCOME (LOSS) PER COMMON UNIT: | |||||||||||||||
Basic | $ | 0.57 | $ | (0.97 | ) | $ | 0.94 | $ | (1.38 | ) | |||||
Diluted | $ | 0.57 | $ | (0.97 | ) | $ | 0.93 | $ | (1.38 | ) | |||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | |||||||||||||||
Basic | 1,159.6 | 783.7 | 1,032.7 | 758.2 | |||||||||||
Diluted | 1,162.9 | 783.7 | 1,037.8 | 758.2 |
* | During the fourth quarter of 2017, the Partnership changed its accounting policy related to certain inventories. Certain crude oil, refined product and NGL inventories associated with the legacy Sunoco Logistics business were changed from the LIFO method to the weighted average cost method. These changes have been applied retrospectively to all periods presented, and the prior period amounts reflected below have been adjusted from those amounts previously reported. |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2017 | 2016 (a)(b) | 2017 (a) | 2016 (a)(b) | ||||||||||||
Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow (c): | |||||||||||||||
Net income (loss) | $ | 1,097 | $ | (336 | ) | $ | 2,501 | $ | 583 | ||||||
Interest expense, net | 345 | 336 | 1,365 | 1,317 | |||||||||||
Gains on acquisitions | — | (83 | ) | — | (83 | ) | |||||||||
Impairment losses (d) | 920 | 813 | 920 | 813 | |||||||||||
Income tax benefit | (1,518 | ) | (55 | ) | (1,496 | ) | (186 | ) | |||||||
Depreciation, depletion and amortization | 619 | 517 | 2,332 | 1,986 | |||||||||||
Non-cash compensation expense | 17 | 20 | 74 | 80 | |||||||||||
(Gains) losses on interest rate derivatives | 9 | (167 | ) | 37 | 12 | ||||||||||
Unrealized (gains) losses on commodity risk management activities | (39 | ) | 35 | (56 | ) | 131 | |||||||||
Losses on extinguishments of debt | 42 | — | 42 | — | |||||||||||
Impairment of investments in unconsolidated affiliates (e) | 313 | — | 313 | 308 | |||||||||||
Equity in (earnings) losses of unconsolidated affiliates (e) | (17 | ) | 201 | (156 | ) | (59 | ) | ||||||||
Adjusted EBITDA related to unconsolidated affiliates | 219 | 235 | 984 | 946 | |||||||||||
Other, net | (69 | ) | (31 | ) | (148 | ) | (115 | ) | |||||||
Adjusted EBITDA (consolidated) | 1,938 | 1,485 | 6,712 | 5,733 | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (219 | ) | (235 | ) | (984 | ) | (946 | ) | |||||||
Distributable cash flow from unconsolidated affiliates | 138 | 134 | 574 | 518 | |||||||||||
Interest expense, net | (345 | ) | (336 | ) | (1,365 | ) | (1,317 | ) | |||||||
Preferred Unitholders’ distributions | (12 | ) | — | (12 | ) | — | |||||||||
Current income tax (expense) benefit | (13 | ) | 40 | (35 | ) | 17 | |||||||||
Maintenance capital expenditures | (143 | ) | (134 | ) | (429 | ) | (368 | ) | |||||||
Other, net | (1 | ) | 4 | 42 | 1 | ||||||||||
Distributable Cash Flow (consolidated) | 1,343 | 958 | 4,503 | 3,638 | |||||||||||
Distributable Cash Flow attributable to PennTex (100%) (f) | — | (11 | ) | (19 | ) | (11 | ) | ||||||||
Distributions from PennTex to ETP (f) | — | 8 | 8 | 16 | |||||||||||
Distributable cash flow attributable to noncontrolling interest in other consolidated subsidiaries | (151 | ) | (12 | ) | (350 | ) | (40 | ) | |||||||
Distributable Cash Flow attributable to the partners of ETP | 1,192 | 943 | 4,142 | 3,603 | |||||||||||
Transaction-related expenses | 3 | 12 | 48 | 16 | |||||||||||
Distributable Cash Flow attributable to the partners of ETP, as adjusted | $ | 1,195 | $ | 955 | $ | 4,190 | $ | 3,619 | |||||||
Distributions to the partners of ETP (g): | |||||||||||||||
Limited Partners: | |||||||||||||||
Common Units held by public | $ | 641 | $ | 547 | $ | 2,435 | $ | 2,042 | |||||||
Common Units held by parent | 16 | 14 | 61 | 20 | |||||||||||
General Partner interests | 4 | 4 | 16 | 14 | |||||||||||
Incentive Distribution Rights (“IDRs”) held by parent | 434 | 359 | 1,638 | 1,327 | |||||||||||
IDR relinquishments | (174 | ) | (145 | ) | (656 | ) | (423 | ) | |||||||
Total distributions to be paid to partners | $ | 921 | $ | 779 | $ | 3,494 | $ | 2,980 | |||||||
Common Units outstanding – end of period (g)(h) | 1,164.1 | 1,050.1 | 1,164.1 | 1,050.1 | |||||||||||
Distribution coverage ratio (i) | 1.30x | 1.23x | 1.20x | 1.21x |
(a) | For the years ended December 31, 2017 and 2016, the calculation of Distributable Cash Flow and the amounts reflected for distributions to partners and common units outstanding reflect the pro forma impacts of the Sunoco Logistics Merger as though the merger had occurred on January 1, 2016. As a result, the prior period amounts reported above differ from information previously reported by legacy ETP, as follows: |
• | Distributable cash flow attributable to the partners of ETP includes amounts attributable to the partners of both legacy ETP and legacy Sunoco Logistics. Previously, the calculation of distributable cash flow attributable to the partners of ETP (as previously reported by legacy ETP) excluded the distributable cash flow attributable to Sunoco Logistics and only included distributions from legacy Sunoco Logistics to legacy ETP. |
• | Distributable cash flow attributable to noncontrolling interest in other consolidated subsidiaries includes amounts attributable to the noncontrolling interests in the other consolidated subsidiaries of both legacy ETP and legacy Sunoco Logistics. |
• | The transaction-related expenses adjustment in distributable cash flow attributable to the partners of ETP, as adjusted, includes amounts incurred by both legacy ETP and legacy Sunoco Logistics. |
• | Distributions to limited partners include distributions paid on the common units of both legacy ETP and legacy Sunoco Logistics but exclude the following distributions in the prior periods on units that were cancelled in the merger, which comprise the following: (i) distributions paid by legacy Sunoco Logistics on its common units held legacy ETP and (ii) distributions paid by legacy ETP on its Class H units held by ETE. |
• | Distributions on General Partner interests and incentive distribution rights are reflected on a pro forma basis, based on the pro forma cash distributions to limited partners and the current distribution waterfall per the limited partnership agreement (i.e., the legacy Sunoco Logistics distribution waterfall). |
• | Common units outstanding for the pre-merger periods reflect (i) the legacy ETP common units outstanding at the end of the period multiplied by a factor of 1.5x and (ii) the legacy Sunoco Logistics common units outstanding at the end of the period minus 67.1 million legacy Sunoco Logistics common units held by ETP, which were cancelled in connection with the closing of the merger. |
(b) | During the fourth quarter of 2017, the Partnership changed its accounting policy related to certain inventories. Certain crude oil, refined product and NGL inventories associated with the legacy Sunoco Logistics business were changed from the LIFO method to the weighted average cost method. These changes have been applied retrospectively to all periods presented, and the prior period amounts reflected below have been adjusted from those amounts previously reported. Certain other prior period amounts have also been reclassified to conform to the current period presentation, including a reclassification between capitalized interest and AFUDC from the nine months ended September 30, 2017. |
(c) | 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. |
• | 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 our partners 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 partners is net of distributions to be paid by the subsidiary to the noncontrolling interests. |
(d) | During the three months ended December 31, 2017, we recorded goodwill impairments of $223 million related to the compression business, $229 million related to the entity that owns the general partner of Panhandle, $262 million related to the interstate transportation and storage segment, and $79 million related to the NGL and refined products transportation and services segment. In addition, impairment losses for the three months ended December 31, 2017 also include a $127 million impairment to the property, plant and equipment related to Sea Robin. |
(e) | For the three months ended December 31, 2017, impairment of investments in unconsolidated affiliates includes non-cash impairments of the Partnership’s investments in FEP and HPC of $141 million and $172 million, respectively, and equity in losses of affiliates includes the impact of non-cash impairments recorded by HPC, which reduced the Partnership’s equity in earnings by $185 million. |
(f) | Beginning with the second quarter of 2017, PennTex became a wholly-owned subsidiary of ETP. The amounts reflected above for PennTex relate only to the first quarter of 2017, and no distributable cash flow has been attributed to noncontrolling interests in PennTex subsequent to March 31, 2017. |
(g) | Distributions on ETP Common Units and the number of ETP Common Units outstanding at the end of the period, both as reflected above, exclude amounts related to ETP Common Units held by subsidiaries of ETP. |
(h) | Reflects the sum of (i) the ETP Common Units outstanding at the end of period multiplied by a factor of 1.5x and (ii) the Sunoco Logistics Common Units outstanding at end of period minus 67.1 million Sunoco Logistics Common Units held by ETP, which units were cancelled in connection with the closing of the merger. |
(i) | Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by net distributions expected to be paid to the partners of ETP in respect of such period. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Segment Adjusted EBITDA: | |||||||
Intrastate transportation and storage | $ | 146 | $ | 152 | |||
Interstate transportation and storage | 298 | 269 | |||||
Midstream | 393 | 258 | |||||
NGL and refined products transportation and services (1) | 433 | 424 | |||||
Crude oil transportation and services (1) | 544 | 237 | |||||
All other | 124 | 145 | |||||
$ | 1,938 | $ | 1,485 |
(1) | Subsequent to the Sunoco Logistics Merger, the Partnership’s reportable segments were revised. Amounts reflected in prior periods have been retrospectively adjusted to conform to the current reportable segment presentation for NGL and refined products transportation and services and crude oil transportation and services. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Intrastate transportation and storage | $ | 205 | $ | 191 | |||
Interstate transportation and storage | 268 | 240 | |||||
Midstream | 568 | 448 | |||||
NGL and refined products transportation and services | 582 | 530 | |||||
Crude oil transportation and services | 683 | 307 | |||||
All other | 102 | 72 | |||||
Intersegment eliminations | (4 | ) | 5 | ||||
Total segment margin | 2,404 | 1,793 | |||||
Less: | |||||||
Operating expenses | 567 | 480 | |||||
Depreciation, depletion and amortization | 619 | 517 | |||||
Selling, general and administrative | 99 | 122 | |||||
Impairment losses | 920 | 813 | |||||
Operating income (loss) | $ | 199 | $ | (139 | ) |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Natural gas transported (BBtu/d) | 8,944 | 8,134 | |||||
Revenues | $ | 741 | $ | 756 | |||
Cost of products sold | 536 | 565 | |||||
Segment margin | 205 | 191 | |||||
Unrealized gains on commodity risk management activities | (21 | ) | (5 | ) | |||
Operating expenses, excluding non-cash compensation expense | (44 | ) | (45 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (5 | ) | (5 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 11 | 16 | |||||
Segment Adjusted EBITDA | $ | 146 | $ | 152 |
• | a decrease of $13 million in transportation fees due to renegotiated contracts resulting in lower billed volumes. This decrease was offset by increased margin from optimization activity recorded in natural gas sales and other; and |
• | a decrease of $5 million in adjusted EBITDA related to unconsolidated affiliates primarily due to a decrease of $7 million due to a reserve recorded pursuant to the bankruptcy filing of a transport customer on our Louisiana intrastate system and a decrease of $2 million due to lower demand volumes related to renegotiation of a contract on our Louisiana intrastate pipeline system, offset by an increase of $4 million related to two new joint venture pipelines placed in service in 2017; offset by |
• | an increase of $9 million in natural gas sales and other (excluding net changes in unrealized gains and losses of $12 million) primarily due to higher realized gains from pipeline optimization activity; and |
• | an increase of $2 million in storage margin (excluding net changes in unrealized gains and losses of $4 million related to fair value inventory adjustments and unrealized gains and losses on derivatives). |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Natural gas transported (BBtu/d) | 7,185 | 5,322 | |||||
Natural gas sold (BBtu/d) | 18 | 17 | |||||
Revenues | $ | 268 | $ | 240 | |||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (76 | ) | (79 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (13 | ) | (11 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 115 | 118 | |||||
Other | 4 | 1 | |||||
Segment Adjusted EBITDA | $ | 298 | $ | 269 |
• | a net increase of $28 million in revenues primarily due to additional revenues of $44 million from the placement in partial service of the Rover pipeline. This increase was partially offset by a decrease in reservation and gas parking and storage revenues of $13 million on the Panhandle and Trunkline pipelines due to lack of customer demand as a result of weak spreads. In addition, revenues on the Tiger pipeline decreased $3 million due to contract restructuring; |
• | a decrease in operating expenses of $3 million primarily due to lower maintenance expense and lower leased storage expense due to expiration of a lease; and |
• | an increase in other of $3 million primarily due to higher tax gross up income from reimbursable projects; offset by |
• | a decrease in adjusted EBITDA from unconsolidated affiliates of $3 million primarily due to higher maintenance expense on Citrus and lower earnings from Midcontinent Express resulting from lower margins and higher ad valorem taxes. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Gathered volumes (BBtu/d) | 11,525 | 9,694 | |||||
NGLs produced (MBbls/d) | 502 | 431 | |||||
Equity NGLs produced (MBbls/d) | 27 | 29 | |||||
Revenues | $ | 1,926 | $ | 1,414 | |||
Cost of products sold | 1,358 | 966 | |||||
Segment margin | 568 | 448 | |||||
Unrealized losses on commodity risk management activities | 3 | 15 | |||||
Operating expenses, excluding non-cash compensation expense | (168 | ) | (168 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (18 | ) | (42 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 8 | 5 | |||||
Segment Adjusted EBITDA | $ | 393 | $ | 258 |
• | an increase of $61 million (excluding net changes in unrealized gains and losses of $12 million) in non-fee based margin due to higher crude oil and NGL prices; |
• | an increase of $40 million in fee-based revenue due to minimum volume commitments in the South Texas region as well as volume increases in the Permian, Northeast and South Texas regions. These increases were partially offset by volume declines in North Texas and the Mid-Continent/Panhandle regions; |
• | an increase of $7 million in fee-based revenue due to recent acquisitions, including PennTex; and |
• | a decrease of $24 million in selling, general and administrative expenses primarily due to certain reserves that were recorded in the fourth quarter of 2016. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
NGL transportation volumes (MBbls/d) | 963 | 791 | |||||
Refined products transportation volumes (MBbls/d) | 618 | 627 | |||||
NGL and refined products terminal volumes (MBbls/d) | 792 | 818 | |||||
NGL fractionation volumes (MBbls/d) | 455 | 394 | |||||
Revenues | $ | 2,533 | $ | 2,080 | |||
Cost of products sold | 1,951 | 1,550 | |||||
Segment margin | 582 | 530 | |||||
Unrealized (gains) losses on commodity risk management activities | (28 | ) | 16 | ||||
Operating expenses, excluding non-cash compensation expense | (120 | ) | (122 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (15 | ) | (15 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 14 | 14 | |||||
Other | — | 1 | |||||
Segment Adjusted EBITDA | $ | 433 | $ | 424 |
• | an increase in transportation margin of $33 million primarily due to increased throughput on our Texas NGL pipelines resulting from increased producer volumes as noted above and the ramp up of volumes on our Mariner East system; |
• | an increase in fractionation and refinery services margin of $27 million (excluding changes in unrealized gains and losses of $1 million) primarily due to higher NGL volumes from most major producing regions feeding our Mont Belvieu fractionation facility as well as the placing in service of our fourth fractionator at Mont Belvieu, Texas, as noted above; and |
• | an increase in terminal services margin of $10 million due to higher throughput volumes at our Marcus Hook and Nederland NGL terminals; offset by |
• | a decrease in marketing margin of $56 million (excluding changes in unrealized gains and losses of $43 million) primarily due to the timing of the recognition of margin from optimization activities; and |
• | a decrease in storage margin of $6 million primarily due to fewer stored volumes as a result of the expiration of various contracts. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Crude Transportation Volumes (MBbls/d) | 3,816 | 2,784 | |||||
Crude Terminals Volumes (MBbls/d) | 2,059 | 1,573 | |||||
Revenues | $ | 3,938 | $ | 2,393 | |||
Cost of products sold | 3,255 | 2,086 | |||||
Segment margin | 683 | 307 | |||||
Unrealized losses on commodity risk management activities | 4 | 2 | |||||
Operating expenses, excluding non-cash compensation expense | (125 | ) | (62 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (20 | ) | (14 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 4 | |||||
Segment Adjusted EBITDA | $ | 544 | $ | 237 |
• | an increase of $247 million resulting primarily from placing our Bakken Pipeline in service in the second quarter of 2017, as well as the acquisition of a crude oil gathering system in West Texas and the addition of certain joint venture crude transportation assets; |
• | an increase of $57 million from existing transport assets due to increased volumes throughout the system; |
• | an increase of $61 million in margin from our crude oil acquisition and marketing business; and |
• | an increase of $12 million from Nederland terminal due to increased crude throughput fees and tank rentals; offset by |
• | an increase of $63 million in operating expenses primarily due to an increase of $38 million resulting primarily from placing the Bakken Pipeline, as well as certain joint venture crude transportation assets in service in the first and second quarter of 2017, and an increase of $22 million from existing transport assets mainly due to higher utilities, line testing, environmental costs and maintenance dredging; and |
• | an increase of $6 million in selling, general and administrative expenses primarily due to merger costs and legal fees. |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Revenue | $ | 652 | $ | 751 | |||
Cost of products sold | 550 | 679 | |||||
Segment margin | 102 | 72 | |||||
Unrealized losses on commodity risk management activities | 3 | 7 | |||||
Operating expenses, excluding non-cash compensation expense | (31 | ) | (22 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (21 | ) | (26 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 69 | 77 | |||||
Other | — | 24 | |||||
Elimination | 2 | 13 | |||||
Segment Adjusted EBITDA | $ | 124 | $ | 145 |
• | our equity method investment in limited partnership units of Sunoco LP. As of December 31, 2017, our investment consisted of 43.5 million units, representing 43.6% of Sunoco LP’s total outstanding common units. Subsequent to Sunoco LP’s repurchase of a portion of its common units on February 7, 2018, our investment consists of 26.2 million units, representing 31.8% of Sunoco LP’s total outstanding common units; |
• | our natural gas marketing and compression operations; |
• | a non-controlling interest in PES, comprising 33% of PES’ outstanding common units; and |
• | our investment in coal handling facilities. |
• | a decrease of $24 million related to the termination of management fees paid by ETE that ended in 2016; |
• | a decrease of $6 million in Adjusted EBITDA related to our investment in Sunoco LP; and |
• | a decrease of $10 million in the mark-to-market of physical system gas and settled derivatives related to our marketing operation; partially offset by |
• | an increase of $6 million in packaging and technical services revenue in the compression business; and |
• | an increase of $6 million in power trading activities and increased trading margin from the liquidation of crude inventories. |
Facility Size | Funds Available at December 31, 2017 | Maturity Date | |||||||
ETP Five-Year Revolving Credit Facility | $ | 4,000 | $ | 1,558 | December 1, 2022 | ||||
ETP 364-Day Revolving Credit Facility | 1,000 | 950 | November 30, 2018 | ||||||
$ | 5,000 | $ | 2,508 |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Equity in earnings (losses) of unconsolidated affiliates: | |||||||
Citrus | $ | 58 | $ | 22 | |||
FEP | 14 | 13 | |||||
MEP | 9 | 9 | |||||
HPC(1) | (185 | ) | 8 | ||||
Sunoco LP(2) | 101 | (265 | ) | ||||
Other | 20 | 12 | |||||
Total equity in earnings (losses) of unconsolidated affiliates | $ | 17 | $ | (201 | ) | ||
Adjusted EBITDA related to unconsolidated affiliates: | |||||||
Citrus | $ | 74 | $ | 78 | |||
FEP | 19 | 19 | |||||
MEP | 22 | 21 | |||||
HPC | 6 | 16 | |||||
Sunoco LP | 57 | 63 | |||||
Other | 41 | 38 | |||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 219 | $ | 235 | |||
Distributions received from unconsolidated affiliates: | |||||||
Citrus | $ | 43 | $ | 32 | |||
FEP | 19 | 18 | |||||
MEP | 8 | 18 | |||||
HPC | 13 | 13 | |||||
Sunoco LP | 36 | 36 | |||||
Other | 22 | 20 | |||||
Total distributions received from unconsolidated affiliates | $ | 141 | $ | 137 |
(1) | For the three months ended December 31, 2017, equity in earnings (losses) of unconsolidated affiliates includes the impact of non-cash impairments recorded by HPC, which reduced the Partnership’s equity in earnings by $185 million. |
(2) | For the three months ended December 31, 2017 and 2016, equity in earnings (losses) of unconsolidated affiliates includes the impact of non-cash impairments recorded by Sunoco LP, which reduced the Partnership’s equity in earnings by $17 million and $277 million, respectively. |