- Net income attributable to partners of $832 million, reflecting
an increase over previous period primarily due to higher operating
income and the impact of the simplification transaction.
- Adjusted EBITDA of $2.79 billion, up 8 percent from the third
quarter of 2018.
- Distributable Cash Flow attributable to partners of $1.52
billion, up 10 percent from the third quarter of 2018.
- Distribution coverage ratio of 1.88x, yielding excess coverage
of $712 million of Distributable Cash Flow attributable to partners
in excess of distributions.
Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”)
today reported financial results for the quarter ended September
30, 2019.
ET reported net income attributable to partners for the three
months ended September 30, 2019 of $832 million, an increase of
$461 million compared to the three months ended September 30, 2018.
For the prior period, net income attributable to partners continues
to reflect only the amount of net income attributable to the legacy
Energy Transfer LP partners prior to the simplification merger
transaction of ET and Energy Transfer Operating, L.P. (“ETO”) on
October 19, 2018 (the “ETO Merger”).
Adjusted EBITDA for the three months ended September 30, 2019
was $2.79 billion, an increase of $209 million compared to the
three months ended September 30, 2018. Results were supported by
continued strong performance among several of the Partnership’s
core segments, with another record operating performance in the
Partnership’s NGL and refined products segment.
Distributable Cash Flow attributable to partners, as adjusted,
for the three months ended September 30, 2019 was $1.52 billion, an
increase of $137 million compared to the three months ended
September 30, 2018. The increase was primarily due to the increase
in Adjusted EBITDA.
Key accomplishments and current developments:
Operational
- The JC Nolan Pipeline joint venture successfully commissioned
its diesel fuel pipeline in West Texas during the third quarter of
2019.
- The Arrowhead III processing plant went into service in early
July 2019 and is projected to be full by year-end.
- Phase II of the Red Bluff Express pipeline was completed ahead
of schedule in August 2019.
- The Permian Express 4 expansion went into full service on
October 1, 2019.
Strategic
- On September 16, 2019, the Partnership entered into a
definitive merger agreement to acquire SemGroup Corporation
(“SemGroup”) in a unit and cash transaction (the “SemGroup
Merger”). Total consideration, including the assumption of debt is
approximately $5 billion, based on the closing price of the
Partnership’s common units on September 13, 2019. The transaction
is subject to the approval of SemGroup’s stockholders, and the
SemGroup stockholders’ meeting is scheduled for December 4, 2019.
We expect to close the transaction shortly after receipt of the
vote, and the Partnership expects to contribute the SemGroup assets
to ETO subsequent to closing the acquisition.
Financial
- In October 2019, ET announced a quarterly distribution of
$0.305 per unit ($1.220 annualized) on ET common units for the
quarter ended September 30, 2019. The distribution coverage ratio
for the third quarter of 2019 is 1.88x.
- In October 2019, ETO entered into a term loan credit agreement
providing for a $2 billion three-year term loan credit facility.
Borrowings under the term loan agreement mature on October 17,
2022.
- As of September 30, 2019, ETO’s $6.00 billion revolving credit
facilities had an aggregate $3.32 billion of available capacity,
and ETO’s leverage ratio, as defined by its credit agreement, was
3.63x.
ET benefits from a portfolio of assets with exceptional product
and geographic diversity. The Partnership’s multiple segments
generate high-quality, balanced earnings with no single segment
contributing more than 30 percent of the Partnership’s consolidated
Adjusted EBITDA for the three months ended September 30, 2019. The
vast majority of the Partnership’s segment margins are fee-based
and therefore have limited commodity price sensitivity.
Conference Call information:
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, November 7, 2019 to discuss its third
quarter 2019 results and provide a partnership update. The
conference call will be broadcast live via an internet webcast,
which can be accessed through www.energytransfer.com or ir.energytransfer.com and will also be available
for replay on the Partnership’s website for a limited time.
Energy Transfer LP (NYSE: ET) owns and operates one of
the largest and most diversified portfolios of energy assets in the
United States, with a strategic footprint in all of the major
domestic production basins. ET is a publicly traded limited
partnership with core operations that include complementary natural
gas midstream, intrastate and interstate transportation and storage
assets; crude oil, NGL and refined product transportation and
terminalling assets; NGL fractionation; and various acquisition and
marketing assets. ET, through its ownership of Energy Transfer
Operating, L.P., also owns Lake Charles LNG Company, as well as the
general partner interests, the incentive distribution rights and
28.5 million common units of Sunoco LP (NYSE: SUN), and the general
partner interests and 46.1 million common units of USA Compression
Partners, LP (NYSE: USAC). For more information, visit the Energy
Transfer LP website at www.energytransfer.com.
Sunoco LP (NYSE: SUN) is a master limited partnership
with core operations that include the distribution of motor fuel to
approximately 10,000 convenience stores, independent dealers,
commercial customers and distributors located in more than 30
states, as well as refined product transportation and terminalling
assets. SUN’s general partner is owned by Energy Transfer
Operating, L.P., a subsidiary of Energy Transfer LP (NYSE: ET). For
more information, visit the Sunoco LP website at www.sunocolp.com.
USA Compression Partners, LP (NYSE: USAC) is a
growth-oriented Delaware limited partnership that is one of the
nation’s largest independent providers of compression services in
terms of total compression fleet horsepower. USAC partners with a
broad customer base composed of producers, processors, gatherers
and transporters of natural gas and crude oil. USAC focuses on
providing compression services to infrastructure applications
primarily in high-volume gathering systems, processing facilities
and transportation applications. For more information, visit the
USAC website at www.usacompression.com.
Forward-Looking Statements
This news 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 Report on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
The information contained in this press release is available on
our website at www.energytransfer.com.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
September 30, 2019
December 31, 2018
ASSETS
Current assets
$
7,066
$
6,750
Property, plant and equipment, net
69,169
66,963
Advances to and investments in
unconsolidated affiliates
2,992
2,642
Lease right-of-use assets, net (a)
889
—
Other non-current assets, net
1,089
1,006
Intangible assets, net
5,781
6,000
Goodwill
4,870
4,885
Total assets
$
91,856
$
88,246
LIABILITIES AND EQUITY
Current liabilities
$
7,037
$
9,310
Long-term debt, less current
maturities
46,840
43,373
Non-current derivative liabilities
360
104
Non-current operating lease liabilities
(a)
807
—
Deferred income taxes
3,133
2,926
Other non-current liabilities
1,138
1,184
Commitments and contingencies
Redeemable noncontrolling interests
499
499
Equity:
Total partners’ capital
20,918
20,559
Noncontrolling interests
11,124
10,291
Total equity
32,042
30,850
Total liabilities and equity
$
91,856
$
88,246
(a)
Lease-related balances as of September 30,
2019 were recorded in connection with the required adoption of the
new lease accounting principles (referred to as ASC 842) on January
1, 2019.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per unit
data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
REVENUES
$
13,495
$
14,514
$
40,493
$
40,514
COSTS AND EXPENSES:
Cost of products sold
9,890
11,093
29,607
31,681
Operating expenses
806
784
2,406
2,280
Depreciation, depletion and
amortization
784
750
2,343
2,109
Selling, general and administrative
173
184
499
515
Impairment losses
12
—
62
—
Total costs and expenses
11,665
12,811
34,917
36,585
OPERATING INCOME
1,830
1,703
5,576
3,929
OTHER INCOME (EXPENSE):
Interest expense, net of interest
capitalized
(579
)
(535
)
(1,747
)
(1,511
)
Equity in earnings of unconsolidated
affiliates
82
87
224
258
Losses on extinguishments of debt
—
—
(18
)
(106
)
Gains (losses) on interest rate
derivatives
(175
)
45
(371
)
117
Other, net
57
41
99
97
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE (BENEFIT)
1,215
1,341
3,763
2,784
Income tax expense (benefit) from
continuing operations
54
(52
)
214
6
INCOME FROM CONTINUING OPERATIONS
1,161
1,393
3,549
2,778
Loss from discontinued operations, net of
income taxes
—
(2
)
—
(265
)
NET INCOME
1,161
1,391
3,549
2,513
Less: Net income attributable to
noncontrolling interests
317
1,008
931
1,412
Less: Net income attributable to
redeemable noncontrolling interests
12
12
38
24
NET INCOME ATTRIBUTABLE TO PARTNERS
832
371
2,580
1,077
Series A Convertible Preferred
Unitholders’ interest in income
—
—
—
33
General Partner’s interest in net
income
1
1
3
3
Limited Partners’ interest in net
income
$
831
$
370
$
2,577
$
1,041
NET INCOME PER LIMITED PARTNER UNIT:
Basic
$
0.32
$
0.32
$
0.98
$
0.93
Diluted
$
0.32
$
0.32
$
0.98
$
0.93
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic
2,624.9
1,158.2
2,621.9
1,117.7
Diluted
2,635.5
1,158.2
2,632.9
1,158.2
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Dollars and units in
millions)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Reconciliation of net income to
Adjusted EBITDA and Distributable Cash Flow (b):
Net income
$
1,161
$
1,391
$
3,549
$
2,513
Loss from discontinued
operations
—
2
—
265
Interest expense, net of capitalized
interest
579
535
1,747
1,511
Impairment losses
12
—
62
—
Income tax expense (benefit) from
continuing operations
54
(52
)
214
6
Depreciation, depletion and
amortization
784
750
2,343
2,109
Non-cash compensation expense
27
27
85
82
Losses (gains) on interest rate
derivatives
175
(45
)
371
(117
)
Unrealized losses (gains) on commodity
risk management activities
(64
)
(97
)
(90
)
255
Losses on extinguishments of debt
—
—
18
106
Inventory valuation adjustments
26
7
(71
)
(50
)
Equity in earnings of unconsolidated
affiliates
(82
)
(87
)
(224
)
(258
)
Adjusted EBITDA related to unconsolidated
affiliates
161
179
470
503
Adjusted EBITDA from discontinued
operations
—
—
—
(25
)
Other, net
(47
)
(33
)
(67
)
(59
)
Adjusted EBITDA (consolidated)
2,786
2,577
8,407
6,841
Adjusted EBITDA related to unconsolidated
affiliates
(161
)
(179
)
(470
)
(503
)
Distributable cash flow from
unconsolidated affiliates
107
109
307
312
Interest expense, net of capitalized
interest
(579
)
(535
)
(1,747
)
(1,513
)
Preferred unitholders’ distributions
(68
)
(51
)
(185
)
(116
)
Current income tax expense
(2
)
(24
)
(23
)
(465
)
Transaction-related income taxes
—
—
—
470
Maintenance capital expenditures
(178
)
(156
)
(440
)
(373
)
Other, net
19
16
56
29
Distributable Cash Flow (consolidated)
1,924
1,757
5,905
4,682
Distributable Cash Flow attributable to
Sunoco LP (100%)
(133
)
(147
)
(331
)
(330
)
Distributions from Sunoco LP
41
41
123
123
Distributable Cash Flow attributable to
USAC (100%)
(55
)
(47
)
(164
)
(93
)
Distributions from USAC
24
21
66
52
Distributable Cash Flow attributable to
noncontrolling interests in other non-wholly-owned consolidated
subsidiaries
(283
)
(253
)
(827
)
(580
)
Distributable Cash Flow attributable to
the partners of ET – pro forma for the ETO Merger (a)
1,518
1,372
4,772
3,854
Transaction-related adjustments
3
12
6
25
Distributable Cash Flow attributable to
the partners of ET, as adjusted – pro forma for the ETO Merger
(a)
$
1,521
$
1,384
$
4,778
$
3,879
Distributions to partners – pro forma
for the ETO Merger (a):
Limited Partners (c)
$
808
$
798
$
2,407
$
2,305
General Partner
1
1
3
3
Total distributions to be paid to
partners
$
809
$
799
$
2,410
$
2,308
Common Units outstanding – end of period –
pro forma for the ETO Merger (a)
2,627.0
2,617.1
2,627.0
2,617.1
Distribution coverage ratio – pro forma
for the ETO Merger (a)
1.88x
1.73x
1.98x
1.68x
(a)
The closing of the ETO Merger has impacted
the Partnership’s calculation of Distributable Cash Flow
attributable to partners, as well as the number of ET Common Units
outstanding and the amount of distributions to be paid to partners
for the three and nine months ended September 30, 2018. In order to
provide information on a comparable basis for pre-ETO Merger and
post-ETO Merger periods, the Partnership has included certain pro
forma information for the three and nine months ended September 30,
2018.
Pro forma Distributable Cash Flow
attributable to partners reflects the following merger related
impacts:
- ETO is reflected as a wholly-owned subsidiary and pro forma
Distributable Cash Flow attributable to partners reflects ETO’s
consolidated Distributable Cash Flow (less certain other
adjustments);
- Distributions from Sunoco LP and USAC include distributions to
both ET and ETO; and
- Distributable Cash Flow attributable to noncontrolling
interests in our other non-wholly-owned subsidiaries is subtracted
from consolidated Distributable Cash Flow to calculate
Distributable Cash Flow attributable to partners.
Pro forma distributions to partners
include actual distributions to legacy ET partners, as well as pro
forma distributions to legacy ETO partners. Pro forma distributions
to ETO partners are calculated assuming (i) historical ETO common
units converted under the terms of the ETO Merger and (ii)
distributions on such converted common units were paid at the
historical rate paid on ET Common Units.
Pro forma Common Units outstanding include
actual Common Units outstanding, in addition to Common Units
assumed to be issued in the ETO Merger, which are based on
historical ETO common units converted under the terms of the ETO
Merger.
(b)
Adjusted EBITDA, Distributable Cash Flow
and distribution coverage ratio are non-GAAP financial measures
used by industry analysts, investors, lenders and rating agencies
to assess the financial performance and the operating results of
ET’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, Distributable Cash Flow and
distribution coverage ratio, including the difficulty associated
with using any such measure 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, Distributable Cash Flow and distribution coverage
ratio 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 operating
income, net income and cash flow from operating activities.
Definition of Adjusted EBITDA
We define Adjusted EBITDA as total
partnership earnings before interest, taxes, depreciation,
depletion, 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, inventory
valuation adjustments, non-cash impairment charges, losses on
extinguishments of debt and other non-operating income or expense
items. Adjusted EBITDA reflects amounts for unconsolidated
affiliates based on the same recognition and measurement methods
used to record equity in earnings of unconsolidated affiliates.
Adjusted EBITDA related to unconsolidated affiliates excludes the
same items with respect to the unconsolidated affiliate as those
excluded from the calculation of Adjusted EBITDA, such as interest,
taxes, depreciation, depletion, amortization and other non-cash
items. Although these amounts are excluded from Adjusted EBITDA
related to unconsolidated affiliates, such exclusion should not be
understood to imply that we have control over the operations and
resulting revenues and expenses of such affiliates. We do not
control our unconsolidated affiliates; therefore, we do not control
the earnings or cash flows of such affiliates.
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
We define Distributable Cash Flow as net
income, adjusted for certain non-cash items, less distributions to
preferred unitholders and maintenance capital expenditures.
Non-cash items include depreciation, depletion and amortization,
non-cash compensation expense, amortization included in interest
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, inventory valuation
adjustments, non-cash impairment charges, losses on extinguishments
of debt and deferred income taxes. For unconsolidated affiliates,
Distributable Cash Flow reflects the Partnership’s proportionate
share of the investee’s distributable cash flow.
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 ET’s
consolidated subsidiaries. However, to the extent that
noncontrolling interests exist among our subsidiaries, the
Distributable Cash Flow generated by our subsidiaries may not be
available to be distributed to our partners. In order to reflect
the cash flows available for distributions to our partners, we have
reported Distributable Cash Flow attributable to partners, which is
calculated by adjusting Distributable Cash Flow (consolidated), as
follows:
- For subsidiaries with publicly traded equity interests, other
than ETO, 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 subsidiaries, but Distributable Cash Flow
attributable to partners reflects only the amount of Distributable
Cash Flow of such subsidiaries that is attributable to our
ownership interest.
For Distributable Cash Flow attributable
to partners, as adjusted, certain transaction-related adjustments
and non-recurring expenses that are included in net income are
excluded.
Definition of Distribution Coverage
Ratio
Distribution coverage ratio for a period
is calculated as Distributable Cash Flow attributable to partners,
as adjusted, divided by distributions expected to be paid to the
partners of ET in respect of such period.
(c)
The amounts reflected for the nine months
ended September 30, 2018 includes distributions to unitholders who
elected to participate in a plan to forgo a portion of their future
potential cash distributions on common units and reinvest those
distributions in ETE Series A convertible preferred units
representing limited partner interests in the Partnership for the
nine months ended September 30, 2018. The quarter ended March 31,
2018 was the final quarter of participation in the plan.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUMMARY
ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
(Tabular dollar amounts in
millions)
(unaudited)
As a result of the ETO Merger in October
2018, our reportable segments were reevaluated during the quarter
ended December 31, 2018 and currently reflect the following
segments.
Three Months Ended September
30,
2019
2018
Segment Adjusted EBITDA:
Intrastate transportation and storage
$
235
$
221
Interstate transportation and storage
442
459
Midstream
411
434
NGL and refined products transportation
and services
667
498
Crude oil transportation and services
700
682
Investment in Sunoco LP
192
208
Investment in USAC
104
90
All other
35
(15
)
Adjusted EBITDA (consolidated)
$
2,786
$
2,577
In the following analysis of segment operating results, a
measure of segment margin is reported for segments with sales
revenues. Segment margin is a non-GAAP financial measure and is
presented herein to assist in the analysis of segment operating
results and particularly to facilitate an understanding of the
impacts that changes in sales revenues have on the segment
performance measure of Segment Adjusted EBITDA. Segment margin is
similar to the GAAP measure of gross margin, except that segment
margin excludes charges for depreciation, depletion and
amortization. Among the GAAP measures reported by the Partnership,
the most directly comparable measure to segment margin is Segment
Adjusted EBITDA; a reconciliation of segment margin to Segment
Adjusted EBITDA is included in the following tables for each
segment where segment margin is presented.
Intrastate Transportation and
Storage
Three Months Ended September
30,
2019
2018
Natural gas transported (BBtu/d)
12,560
12,146
Revenues
$
764
$
922
Cost of products sold
501
638
Segment margin
263
284
Unrealized gains on commodity risk
management activities
19
(12
)
Operating expenses, excluding non-cash
compensation expense
(48
)
(51
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(7
)
(7
)
Adjusted EBITDA related to unconsolidated
affiliates
7
6
Other
1
1
Segment Adjusted EBITDA
$
235
$
221
Transported volumes increased primarily due to increased
utilization of our Texas pipelines.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our intrastate transportation and storage segment
increased due to the net impacts of the following:
- an increase of $9 million in transportation fees primarily due
to increased utilization of our Texas pipelines;
- an increase of $2 million in realized natural gas sales and
other due to higher realized gains from pipeline optimization
activity; and
- an increase of $1 million in realized storage margin primarily
due to higher storage fees; partially offset by
- a decrease of $2 million in retained fuel revenue primarily due
to lower gas prices.
Interstate Transportation and Storage
Three Months Ended September
30,
2019
2018
Natural gas transported (BBtu/d)
11,407
10,155
Natural gas sold (BBtu/d)
17
18
Revenues
$
479
$
445
Operating expenses, excluding non-cash
compensation, amortization and accretion expenses
(141
)
(104
)
Selling, general and administrative
expenses, excluding non-cash compensation, amortization and
accretion expenses
(17
)
(20
)
Adjusted EBITDA related to unconsolidated
affiliates
124
135
Other
(3
)
3
Segment Adjusted EBITDA
$
442
$
459
Transported volumes increased as a result of the following: the
Rover pipeline being placed fully in-service in November 2018;
production increases in the Haynesville Shale and deliveries to
intrastate markets resulting in increased deliveries off of our
Tiger pipeline; and increased utilization of higher contracted
capacity on the Panhandle and Trunkline pipelines.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our interstate transportation and storage segment
decreased due to the net impacts of the following:
- an increase of $37 million in operating expenses primarily due
to an increase to ad valorem expenses of $48 million on the Rover
pipeline system due to placing the final portions of this asset
into service, partially offset by $5 million in lower maintenance
expenditures and $4 million in lower storage lease expenses on our
Panhandle system due to lower leased capacity; and
- a decrease in EBITDA from unconsolidated affiliates of $11
million primarily resulting from a $7 million decrease due to lower
earnings from MEP as a result of lower capacity being re-contracted
and lower rates on expiring contracts, and a $3 million decrease
due to Citrus resulting from the Texas Brine settlement being
received in 2018; partially offset by
- an increase of $24 million in reservation fees from placing the
Rover pipeline fully in-service and $7 million from increased
utilization of our Transwestern and Trunkline pipelines; and
- an increase of $4 million in interruptible transportation
volumes due to improved market conditions on our Rover,
Transwestern, Trunkline and Panhandle pipeline systems.
Midstream
Three Months Ended September
30,
2019
2018
Gathered volumes (BBtu/d)
13,955
12,774
NGLs produced (MBbls/d)
574
583
Equity NGLs (MBbls/d)
30
32
Revenues
$
1,580
$
2,253
Cost of products sold
953
1,631
Segment margin
627
622
Operating expenses, excluding non-cash
compensation expense
(202
)
(179
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(21
)
(19
)
Adjusted EBITDA related to unconsolidated
affiliates
6
9
Other
1
1
Segment Adjusted EBITDA
$
411
$
434
Gathered volumes increased primarily due to new production in
the Northeast, South Texas and Permian regions. For the three
months ended September 30, 2019 compared to the same period last
year, NGL production decreased due to ethane rejection in the South
Texas and North Texas regions.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our midstream segment decreased slightly due to
the net effects of the following:
- a decrease of $54 million in non-fee-based margin due to lower
NGL prices of $51 million and lower gas prices of $14 million,
partially offset by an increase of $11 million from increased
throughput volumes in the Permian region;
- an increase of $2 million in selling, general and
administrative expenses due to an increase in allocated overhead
costs; and
- an increase of $23 million in operating expenses primarily due
to increases in outside services, maintenance project costs, and
employee costs; partially offset by
- an increase of $59 million in fee-based margin due to volume
growth in the Northeast, Permian and South Texas regions, offset by
declines in the Mid-Continent/Panhandle regions.
NGL and Refined Products Transportation
and Services
Three Months Ended September
30,
2019
2018
NGL transportation volumes (MBbls/d)
1,346
1,086
Refined products transportation volumes
(MBbls/d)
552
627
NGL and refined products terminal volumes
(MBbls/d)
963
858
NGL fractionation volumes (MBbls/d)
713
567
Revenues
$
2,878
$
3,063
Cost of products sold
1,962
2,429
Segment margin
916
634
Unrealized losses on commodity risk
management activities
(81
)
26
Operating expenses, excluding non-cash
compensation expense
(167
)
(168
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(22
)
(17
)
Adjusted EBITDA related to unconsolidated
affiliates
24
23
Other
(3
)
—
Segment Adjusted EBITDA
$
667
$
498
NGL transportation volumes increased as throughput barrels on
our Texas NGL pipeline system increased due to higher receipt of
liquids production from both wholly-owned and third-party gas
plants primarily in the Permian and North Texas regions. In
addition, NGL transportation volumes on our Northeast assets
increased due to the initiation of service on the Mariner East 2
pipeline system.
Refined products transportation volumes decreased primarily due
to the closure of the Philadelphia Energy Services refinery during
the third quarter of 2019.
NGL and refined products terminal volumes increased primarily
due to the initiation of service on our Mariner East 2 pipeline
which commenced operations in the fourth quarter of 2018.
Average fractionated volumes at our Mont Belvieu, Texas
fractionation facility increased primarily due to the commissioning
of our fifth and sixth fractionators in July 2018 and February
2019, respectively.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our NGL and refined products transportation and
services segment increased due to net impacts of the following:
- an increase of $152 million in transportation margin primarily
due to an $87 million increase resulting from the initiation of
service on our Mariner East 2 pipeline in the fourth quarter of
2018, a $54 million increase resulting from higher throughput
volumes received from the Permian region on our Texas NGL
pipelines, and an $11 million increase due to higher throughput
volumes received from the Barnett and Southeast Texas regions;
- an increase of $45 million in terminal services margin
primarily due to the initiation of service on our Mariner East 2
pipeline in the fourth quarter of 2018;
- an increase of $30 million in fractionation and refinery
services margin primarily resulting from the commissioning of our
sixth fractionator in February 2019 and higher NGL volumes from the
Permian region feeding our Mont Belvieu fractionation facility.
This increase was partially offset by a $3 million decrease
resulting from a reclassification between our fractionation and
storage margins; and
- an increase of $7 million in storage margin primarily due to a
$3 million increase from throughput pipeline fees collected at our
Mont Belvieu storage facility, a $3 million increase resulting from
a reclassification between our storage and fractionation margins;
partially offset by
- a decrease of $59 million in marketing margin primarily due to
lower optimization gains resulting from less favorable market
conditions and an $8 million write down on the value of stored NGL
inventory; and
- an increase of $5 million in selling, general and
administrative expenses due to a $3 million increase in allocated
overhead costs and a $2 million increase in legal fees.
Crude Oil Transportation and
Services
Three Months Ended September
30,
2019
2018
Crude transportation volumes (MBbls/d)
4,661
4,276
Crude terminals volumes (MBbls/d)
1,905
2,134
Revenues
$
4,453
$
4,438
Cost of products sold
3,620
3,494
Segment margin
833
944
Unrealized losses on commodity risk
management activities
(2
)
(118
)
Operating expenses, excluding non-cash
compensation expense
(110
)
(126
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(21
)
(22
)
Adjusted EBITDA related to unconsolidated
affiliates
1
4
Other
(1
)
—
Segment Adjusted EBITDA
$
700
$
682
Crude transportation and terminal volumes benefited from an
increase in barrels through our existing Texas pipelines and our
Bakken pipeline. Crude terminal volumes decreased for the three
month period as a result of the closure of a refinery that was the
primary customer utilizing one of our northeast crude
terminals.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our crude oil transportation and services segment
increased due to the net impacts of the following:
- an increase of $5 million in segment margin (excluding
unrealized gains and losses on commodity risk management
activities) primarily due to a $63 million increase from higher
throughput on our Texas crude pipeline system primarily due to
increased production from the Permian region, a $90 million
increase from higher throughput on the Bakken pipeline, and a $6
million increase from higher ship loading and tank rental fees at
our Nederland terminal; partially offset by a $106 million decrease
(excluding a net change of $116 million in unrealized gains and
losses on commodity risk management activities) from our crude oil
acquisition and marketing business primarily resulting from
non-cash inventory valuation adjustments and lower basis
differentials between the Permian producing region and the
Nederland terminal on the Gulf Coast, as well as a $5 million
decrease due to lower throughput volumes at our refinery terminal
in the Northeast. The remainder of the offsetting decrease was
primarily attributable to a change in the presentation of certain
intrasegment transactions, which were eliminated in the current
period presentation but were shown on a gross basis in revenues and
operating expenses in the prior period;
- a decrease of $16 million in operating expenses primarily due
to the impact of certain intrasegment transactions discussed above,
partially offset by a $17 million increase in ad valorem taxes;
and
- a decrease of $3 million in Adjusted EBITDA related to
unconsolidated affiliates due to lower margin from jet fuel sales
by our joint ventures.
Investment in Sunoco LP
Three Months Ended September
30,
2019
2018
Revenues
$
4,331
$
4,761
Cost of products sold
4,039
4,428
Segment margin
292
333
Unrealized losses on commodity risk
management activities
(1
)
—
Operating expenses, excluding non-cash
compensation expense
(94
)
(106
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(36
)
(30
)
Adjusted EBITDA related to unconsolidated
affiliates
1
—
Inventory valuation adjustments
26
7
Other
4
4
Segment Adjusted EBITDA
$
192
$
208
The Investment in Sunoco LP segment reflects the consolidated
results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our investment in Sunoco LP segment decreased due
to the net impacts of the following:
- a decrease of $23 million in segment margin, excluding
inventory valuation adjustments and unrealized gains and losses on
commodity risk management activities, primarily due to a one-time
benefit of approximately $25 million related to a cash settlement
with a fuel supplier in the prior period, partially offset by an
increase in motor fuel gallons sold; partially offset by
- a net decrease of $6 million in operating expenses and selling,
general and administrative expenses, excluding non-cash
compensation, primarily as a result of lower lease expense and
utilities.
Investment in USAC
Three Months Ended September
30,
2019
2018
Revenues
$
175
$
169
Cost of products sold
23
24
Segment margin
152
145
Operating expenses, excluding non-cash
compensation expense
(35
)
(42
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(13
)
(15
)
Other
—
2
Segment Adjusted EBITDA
$
104
$
90
The Investment in USAC segment reflects the consolidated results
of USAC.
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our investment in USAC segment increased due to
the net impacts of the following:
- an increase of $7 million in segment margin primarily due to an
increase in demand for compression services driven by increased
U.S. production of crude oil and natural gas;
- a decrease of $7 million in operating expenses primarily due to
a $3 million decrease in outside maintenance services, a $2 million
decrease in ad valorem taxes primarily due to prior year refunds
received in the current period, a $2 million decrease in direct
labor costs, and a $1 million decrease in indirect expenses, such
as transportation and freight, partially offset by a $3 million
increase in parts and fluids expenses as a result of higher revenue
generating horsepower; and
- a decrease of $2 million in selling, general and administrative
expenses primarily due to transaction related expenses as a result
of transactions completed during 2018.
All Other
Three Months Ended September
30,
2019
2018
Revenues
$
441
$
525
Cost of products sold
393
500
Segment margin
48
25
Unrealized gains on commodity risk
management activities
1
7
Operating expenses, excluding non-cash
compensation expense
(39
)
(9
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(11
)
(35
)
Adjusted EBITDA related to unconsolidated
affiliates
—
2
Other and eliminations
36
(5
)
Segment Adjusted EBITDA
$
35
$
(15
)
Segment Adjusted EBITDA. For the three months ended September
30, 2019 compared to the same period last year, Segment Adjusted
EBITDA related to our all other segment increased due to the net
impacts of the following:
- an increase of $3 million from power trading activities;
- an increase of $5 million in optimized gains on residue gas
sales;
- an increase of $5 million from settled derivatives;
- an increase of $6 million from the recognition of deferred
revenue related to a bankruptcy; and
- a decrease of $24 million in selling, general and
administrative expenses, which includes a decrease of $9 million in
merger and acquisition expenses, a decrease of $6 million in
professional fees, and a decrease of $4 million in insurance
expenses.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON LIQUIDITY
(In millions)
(unaudited)
The following table is a summary of ETO’s
revolving credit facilities. We also have other consolidated
subsidiaries with revolving credit facilities which are not
included in this table.
Facility Size
Funds Available at September 30,
2019
Maturity Date
ETO Five-Year Revolving Credit
Facility
$
5,000
$
2,315
December 1, 2023
ETO 364-Day Revolving Credit Facility
1,000
1,000
November 29, 2019
$
6,000
$
3,315
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED
AFFILIATES
(In millions)
(unaudited)
The table below provides information on an
aggregated basis for our unconsolidated affiliates, which are
accounted for as equity method investments in the Partnership’s
financial statements for the periods presented.
Three Months Ended September
30,
2019
2018
Equity in earnings of unconsolidated
affiliates:
Citrus
$
44
$
42
FEP
15
14
MEP
1
7
Other
22
24
Total equity in earnings of unconsolidated
affiliates
$
82
$
87
Adjusted EBITDA related to
unconsolidated affiliates:
Citrus
$
92
$
96
FEP
19
19
MEP
13
20
Other
37
44
Total Adjusted EBITDA related to
unconsolidated affiliates
$
161
$
179
Distributions received from
unconsolidated affiliates:
Citrus
$
54
$
52
FEP
20
18
MEP
7
9
Other
22
34
Total distributions received from
unconsolidated affiliates
$
103
$
113
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT
VENTURE SUBSIDIARIES
(Dollars in millions)
(unaudited)
The table below provides information on an
aggregated basis for our non-wholly-owned joint venture
subsidiaries, which are reflected on a consolidated basis in our
financial statements. The table below excludes Sunoco LP and USAC,
our non-wholly-owned subsidiaries that are publicly traded.
Three Months Ended September
30,
2019
2018
Adjusted EBITDA of non-wholly-owned
subsidiaries (100%) (a)
$
683
$
565
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries (b)
378
291
Distributable Cash Flow of
non-wholly-owned subsidiaries (100%) (c)
$
647
$
531
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries (d)
364
277
Below is our current ownership percentage
of certain non-wholly-owned subsidiaries:
Non-wholly-owned subsidiary:
ET Percentage Ownership (e)
Bakken Pipeline
36.4
%
Bayou Bridge
60.0
%
Ohio River System
75.0
%
Permian Express Partners
87.7
%
Red Bluff Express
70.0
%
Rover
32.6
%
Others
various
(a)
Adjusted EBITDA of non-wholly-owned
subsidiaries reflects the total Adjusted EBITDA of our
non-wholly-owned subsidiaries on an aggregated basis. This is the
amount of Adjusted EBITDA included in our consolidated non-GAAP
measure of Adjusted EBITDA.
(b)
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries reflects the amount of Adjusted
EBITDA of such subsidiaries (on an aggregated basis) that is
attributable to our ownership interest.
(c)
Distributable Cash Flow of
non-wholly-owned subsidiaries reflects the total Distributable Cash
Flow of our non-wholly-owned subsidiaries on an aggregated
basis.
(d)
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries reflects the amount of
Distributable Cash Flow of such subsidiaries (on an aggregated
basis) that is attributable to our ownership interest. This is the
amount of Distributable Cash Flow included in our consolidated
non-GAAP measure of Distributable Cash Flow attributable to the
partners of ET.
(e)
Our ownership reflects the total economic
interest held by us and our subsidiaries. In some cases, this
percentage comprises ownership interests held in (or by) multiple
entities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106006042/en/
Energy Transfer Investor Relations: Bill Baerg, Brent
Ratliff, Lyndsay Hannah, 214-981-0795 or Media Relations:
Vicki Granado, 214-840-5820
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