Energy Transfer Partners, L.P. (NYSE: ETP) (“ETP” or the
“Partnership”) today reported its financial results for the quarter
ended March 31, 2016. Adjusted EBITDA for ETP for the three
months ended March 31, 2016 totaled $1.41 billion, an increase
of $46 million compared to the same period last year.
Distributable Cash Flow attributable to the partners of ETP, as
adjusted, for the three months ended March 31, 2016 totaled $793
million, a decrease of $51 million compared to the same period
last year. Net income for the three months ended March 31, 2016 was
$376 million, an increase of $108 million compared to the
same period last year.
In April 2016, ETP announced a quarterly distribution of $1.055
per unit ($4.22 annualized) on ETP Common Units for the quarter
ended March 31, 2016.
ETP’s other recent key accomplishments include the
following:
- In March 2016, ETP contributed to
Sunoco LP its remaining 68.42% interest in Sunoco, LLC and 100%
interest in the legacy Sunoco, Inc. retail business for
$2.23 billion. Sunoco LP paid $2.20 billion in cash,
including a working capital adjustment, and issued 5.7 million
Sunoco LP common units to ETP Retail Holdings, LLC, a wholly-owned
subsidiary of the Partnership. The transaction was effective
January 1, 2016.
- In April 2016, Bayou Bridge Pipeline,
LLC (“Bayou Bridge”), a joint venture among ETP, Sunoco Logistics
Partners L.P. (“Sunoco Logistics”) and Phillips 66 Partners LP,
began commercial operations on the 30-inch segment of its pipeline
from Nederland, Texas to Lake Charles, Louisiana. ETP and Sunoco
Logistics each hold a 30% interest in the entity and Sunoco
Logistics will be the operator of the system.
- As of March 31, 2016, ETP’s $3.75
billion credit facility had $4 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 4.27x.
- In the first quarter of 2016, ETP
issued 11.2 million common units through its at-the-market
equity program, generating net proceeds of $324 million.
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 8:00 a.m. Central Time, Thursday,
May 5, 2016 to discuss the first quarter 2016 results. The
conference call will be broadcast live via an internet webcast,
which can be accessed through www.energytransfer.com and will also be available
for replay on ETP’s website for a limited time.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master
limited partnership that owns and operates one of the largest and
most diversified portfolios of energy assets in the United States.
ETP’s subsidiaries include Panhandle Eastern Pipe Line Company, LP
(the successor of Southern Union Company) and Lone Star NGL LLC,
which owns and operates natural gas liquids storage, fractionation
and transportation assets. In total, ETP currently owns and
operates more than 62,500 miles of natural gas and natural gas
liquids pipelines. ETP also owns the general partner, 100% of the
incentive distribution rights, and 67.1 million common units in
Sunoco Logistics Partners L.P. (NYSE: SXL), which operates a
geographically diverse portfolio of complementary crude oil,
refined products, and natural gas liquids pipeline, terminalling
and acquisition and marketing assets which are used to facilitate
the purchase and sale of crude oil, natural gas liquids, and
refined products. ETP’s general partner is owned by Energy Transfer
Equity, L.P. For more information, visit the Energy Transfer
Partners, L.P. website at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE: ETE) is a master
limited partnership that owns the general partner and 100% of the
incentive distribution rights of Energy Transfer Partners, L.P.
(NYSE: ETP) and Sunoco LP (NYSE: SUN). ETE also owns approximately
2.6 million ETP Common Units and approximately 81.0 million ETP
Class H Units, which track 90% of the underlying economics of the
general partner interest and the IDRs of Sunoco Logistics Partners
L.P. (NYSE: SXL). On a consolidated basis, ETE’s family of
companies owns and operates approximately 71,000 miles of natural
gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit Energy Transfer Equity,
L.P.’s website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master
limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary
crude oil, refined products, and natural gas liquids pipeline,
terminalling and acquisition and marketing assets which are used to
facilitate the purchase and sale of crude oil, natural gas liquids,
and refined products. Sunoco Logistics’ general partner is a
consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the Sunoco Logistics Partners
L.P. website at www.sunocologistics.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
PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
March 31,2016 December 31,2015
ASSETS Current
assets $ 4,759 $ 4,698 Property, plant and equipment, net
45,787 45,087 Advances to and investments in unconsolidated
affiliates 5,020 5,003 Non-current derivative assets 16 — Other
non-current assets, net 514 536 Intangible assets, net 4,080 4,421
Goodwill 4,139 5,428 Total assets $ 64,315 $ 65,173
LIABILITIES AND EQUITY Current
liabilities $ 4,911 $ 4,121 Long-term debt, less current
maturities 26,769 28,553 Long-term notes payable – related party
223 233 Non-current derivative liabilities 213 137 Deferred income
taxes 4,495 4,082 Other non-current liabilities 939 968
Commitments and contingencies Series A Preferred Units 33 33
Redeemable noncontrolling interests 15 15 Equity: Total
partners’ capital 20,120 20,836 Noncontrolling interest
6,597 6,195 Total equity 26,717 27,031 Total
liabilities and equity $ 64,315 $ 65,173
ENERGY TRANSFER
PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months EndedMarch 31, 2016 2015 REVENUES
$ 4,481 $ 10,326 COSTS AND EXPENSES: Cost of products sold 2,968
8,496 Operating expenses 348 610 Depreciation, depletion and
amortization 470 479 Selling, general and administrative 81
133 Total costs and expenses 3,867
9,718 OPERATING INCOME 614 608 OTHER INCOME
(EXPENSE): Interest expense, net (319 ) (310 ) Equity in earnings
of unconsolidated affiliates 76 57 Losses on interest rate
derivatives (70 ) (77 ) Other, net 17 7
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) 318 285 Income tax
expense (benefit) (58 ) 17 NET INCOME 376 268
Less: Net income (loss) attributable to noncontrolling interest 65
(6 ) Less: Net loss attributable to predecessor —
(7 ) NET INCOME ATTRIBUTABLE TO PARTNERS 311 281 General
Partner’s interest in net income 297 242 Class H Unitholder’s
interest in net income 79 54 Class I Unitholder’s interest in net
income 2 33 Common Unitholders’
interest in net loss $ (67 ) $ (48 ) NET LOSS PER COMMON UNIT:
Basic $ (0.15 ) $ (0.17 ) Diluted $ (0.15 ) $ (0.17 ) WEIGHTED
AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: Basic 490.2 323.8
Diluted 490.2 323.8
SUPPLEMENTAL
INFORMATION
(Dollars and units in millions, except per
unit amounts)
(unaudited)
Three Months EndedMarch 31, 2016 2015
Reconciliation of net income to Adjusted EBITDA and
Distributable Cash Flow (a): Net income $ 376 $ 268 Interest
expense, net of interest capitalized 319 310 Income tax expense
(benefit) (b) (58 ) 17 Depreciation, depletion and amortization 470
479 Non-cash compensation expense 19 20 Losses on interest rate
derivatives 70 77 Unrealized losses on commodity risk management
activities 63 77 Inventory valuation adjustments 26 34 Equity in
earnings of unconsolidated affiliates (76 ) (57 ) Adjusted EBITDA
related to unconsolidated affiliates 219 146 Other, net (16
) (5 ) Adjusted EBITDA (consolidated) 1,412 1,366 Adjusted
EBITDA related to unconsolidated affiliates (219 ) (146 )
Distributable cash flow from unconsolidated affiliates 144
101
Interest expense, net of interest capitalized (319 ) (310 )
Amortization included in interest expense (7 ) (13 ) Current income
tax benefit 1 9 Maintenance capital expenditures (59 ) (84 ) Other,
net 3 4 Distributable Cash Flow
(consolidated) 956
927
Distributable Cash Flow attributable to Sunoco Logistics (100%)
(283 ) (158 ) Distributions from Sunoco Logistics to ETP 125 90
Distributable Cash Flow attributable to Sunoco LP (100%) (c) — (33
) Distributions from Sunoco LP to ETP (c) — 12 Distributable cash
flow attributable to noncontrolling interest in other consolidated
subsidiaries (7 ) (5 ) Distributable Cash Flow
attributable to the partners of ETP 791
833
Transaction-related expenses 2 11
Distributable Cash Flow attributable to the partners of ETP, as
adjusted $ 793 $
844
Distributions to the partners of ETP (d):
Limited Partners: Common Units held by public $ 526 $ 465 Common
Units held by ETE 3 24 Class H Units held by ETE (e) 83 56 General
Partner interests held by ETE 8 8 Incentive Distribution Rights
(“IDRs”) held by ETE 331 300 IDR relinquishments net of Class I
Unit distributions (34 ) (27 ) Total distributions to
be paid to the partners of ETP $ 917 $ 826 Common
Units outstanding – end of period (d) 500.9
481.4 Distribution coverage ratio (f) 0.86x
1.02x
Distributable Cash Flow per Common Unit (g) $ 0.83 $
1.57
(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). 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 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.
For Distributable Cash Flow attributable to the partners of ETP,
as adjusted, certain transaction-related and non-recurring expenses
that are included in net income are excluded.
(b) For the three months ended March 31, 2016, the
Partnership’s effective income tax rate decreased from the prior
year primarily due to lower earnings among the Partnership’s
consolidated corporate subsidiaries. The three months ended
March 31, 2016 also reflected a benefit of $20 million of
net state tax benefit attributable to statutory state rate changes
resulting from the contribution by ETP to Sunoco LP of its
remaining 68.42% interest in Sunoco, LLC and 100% interest in the
legacy Sunoco, Inc. retail business.
(c) Amounts related to Sunoco LP reflect the periods through
June 30, 2015, subsequent to which Sunoco LP was deconsolidated and
is now reflected as an unconsolidated affiliate.
(d) 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. For the three months ended March 31, 2015,
ETP Common Units outstanding at the end of the period includes ETP
Common Units issued in connection with the Regency Merger.
(e) Distributions on the Class H Units for the three months
ended March 31, 2016 and 2015 were calculated as follows:
Three Months EndedMarch 31, 2016 2015
General partner distributions and incentive distributions from
Sunoco Logistics $ 92 $ 62 90.05 % 90.05 % Total
Class H Unit distributions $ 83 $ 56
(f) Distribution coverage ratio for a period is calculated as
Distributable Cash Flow attributable to the partners of ETP, as
adjusted, divided by net distributions expected to be paid to the
partners of ETP in respect of such period.
(g) 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, as adjusted, net of
distributions related to the Class H Units, Class I 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
attributable to the partners of ETP, as adjusted, among different
periods on a per-unit basis.
Distributable Cash Flow per Common Unit is calculated as
follows:
Three Months EndedMarch 31, 2016 2015
Distributable Cash Flow attributable to the partners of ETP, as
adjusted $ 793 $
844
Less: Class H Units held by ETE (83 ) (56 ) General Partner
interests held by ETE (8 ) (8 ) IDRs held by ETE (331 ) (300 ) IDR
relinquishments net of Class I Unit distributions 34
27 $ 405 $
507
Weighted average Common Units outstanding – basic
490.2 323.8 Distributable Cash Flow per Common
Unit $ 0.83 $
1.57
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 EndedMarch 31, 2016 2015
Segment Adjusted EBITDA: Midstream $ 263 $ 310 Liquids
transportation and services 227 169 Interstate transportation and
storage 292 301 Intrastate transportation and storage 179 177
Investment in Sunoco Logistics 349 221 Retail marketing 57 129 All
other 45 59 $ 1,412 $ 1,366
Midstream
Three Months EndedMarch 31, 2016 2015 Gathered
volumes (MMBtu/d) 9,851,105 9,514,586 NGLs produced (Bbls/d)
427,923 367,382 Equity NGLs (Bbls/d) 29,533 28,090 Revenues $ 1,092
$ 1,151 Cost of products sold 678 712
Gross margin 414 439 Unrealized losses on commodity risk management
activities — 11 Operating expenses, excluding non-cash compensation
expense (145 ) (138 ) Selling, general and administrative expenses,
excluding non-cash compensation expense (12 ) (3 ) Adjusted EBITDA
related to unconsolidated affiliates 6 1
Segment Adjusted EBITDA $ 263 $ 310
Gathered volumes and NGLs produced increased primarily due to
the King Ranch acquisition as well as increased gathering and
processing capacities in the Eagle Ford, Permian Basin and Cotton
Valley regions, partially offset by declines in the
Panhandle/Mid-Con, North Texas, and North East regions.
Segment Adjusted EBITDA for the midstream segment reflected a
decrease in gross margin as follows:
Three Months EndedMarch 31, 2016 2015
Gathering and processing fee-based revenues $ 374 $ 370 Non
fee-based contracts and processing 40 69 Total gross
margin $ 414 $ 439
For the three months ended March 31, 2016 compared to the
same period last year, Segment Adjusted EBITDA related to our
midstream segment decreased due to the net effects of the
following:
- a decrease of $9 million in non-fee
based margins for natural gas due to lower natural gas prices and a
$20 million decrease in non-fee based margins for crude oil and NGL
due to lower crude oil and NGL prices;
- a decrease in gross margin of $22
million from realized gains and losses on derivatives;
- an increase of $7 million in operating
expenses primarily due to assets that are recently placed in
service, including the King Ranch and Eagle Ford systems in south
Texas; and
- an increase of $9 million in general
and administrative expenses primarily due to a higher allocation of
costs to the midstream segment; partially offset by
- an increase of $4 million in fee-based
revenues due to increased production and increased capacity from
assets placed in service in the Eagle Ford Shale, Permian Basin and
Cotton Valley regions partially offset by volume declines in the
North Texas, Mid-Continent/Panhandle and North East regions;
and
- an increase of $5 million in adjusted
EBITDA related to unconsolidated affiliates due to increased
volumes through unconsolidated joint ventures.
Liquids Transportation and
Services
Three Months EndedMarch 31, 2016 2015 Liquids
transportation volumes (Bbls/d) 486,907 408,504 NGL fractionation
volumes (Bbls/d) 362,906 218,325 Revenues $ 919 $ 835 Cost of
products sold 661 638 Gross margin 258
197 Unrealized losses on commodity risk management activities 9 9
Operating expenses, excluding non-cash compensation expense (37 )
(35 ) Selling, general and administrative expenses, excluding
non-cash compensation expense (5 ) (4 ) Adjusted EBITDA related to
unconsolidated affiliates 2 2 Segment
Adjusted EBITDA $ 227 $ 169
NGL transportation volumes increased in all major producing
regions, including the Permian, North Texas, Southeast Texas, Eagle
Ford, and Louisiana. Additionally, our crude transportation
pipeline in the Eagle Ford region transported approximately 44,000
Bbls/d for the three months ended March 31, 2016 compared to
38,000 Bbls/d for the three months ended March 31, 2015.
Average daily fractionated volumes increased for the three
months ended March 31, 2016 compared to the same period last
year due to the ramp-up of our third 100,000 Bbls/d fractionator at
Mont Belvieu, Texas, which was commissioned in late December 2015,
as well as increased producer volumes as mentioned above.
Segment Adjusted EBITDA for the liquids transportation and
services segment reflected an increase in gross margin as
follows:
Three Months EndedMarch 31, 2016 2015
Transportation margin $ 108 $ 84 Processing and fractionation
margin 100 65 Storage margin 49 44 Other margin 1 4
Total gross margin $ 258 $ 197
For the three months ended March 31, 2016 compared to the
same period last year, Segment Adjusted EBITDA related to our
liquids transportation and services segment increased due to the
following:
- an increase of $24 million in
transportation fees due to higher volumes transported out of all of
our producing regions and higher average rates. The increase in
average rates was primarily due to a higher proportion of the
volumes originating from West Texas where transport rates are
higher. Higher volumes from the West Texas region resulted in an
increase in margin of $20 million between periods;
- an increase of $40 million in
processing and fractionation margin (excluding changes in
unrealized losses of $5 million) due to a $27 million increase in
margin from our fractionators due to the ramp-up of our third
100,000 Bbls/d fractionator at Mont Belvieu, Texas, and additional
producer volumes, primarily from West Texas. Additionally, the
commissioning of the Mariner South LPG export project during
February 2015 contributed an additional $15 million for the three
months ended March 31, 2016. Margin associated with our off-gas
fractionator in Geismar, Louisiana decreased by $2 million, as NGL
and olefins market prices decreased significantly for the
comparable periods; and
- an increase of $5 million in storage
margin due to an increase in demand for leased storage capacity as
a result of favorable market conditions, which increased fee-based
storage revenues by $6 million. This increase in fee-based storage
revenues was partially offset by lower non-fee based revenues of $2
million due to lower commodity prices; partially offset by
- a decrease of $7 million in other
margin (excluding changes in unrealized losses of $4 million)
primarily due to less favorable commodity prices;
- an increase of $2 million in operating
expenses primarily due to increased utilities costs offset by lower
project related expenses; and
- an increase of $1 million in general
and administrative expenses due to higher employee related
expenses.
Interstate Transportation and
Storage
Three Months EndedMarch 31, 2016 2015 Natural
gas transported (MMBtu/d) 5,835,046 6,794,740 Natural gas sold
(MMBtu/d) 16,946 16,656 Revenues $ 259 $ 276 Operating expenses,
excluding non-cash compensation, amortization and accretion
expenses (72 ) (72 ) Selling, general and administrative expenses,
excluding non-cash compensation, amortization and accretion
expenses (12 ) (15 ) Adjusted EBITDA related to unconsolidated
affiliates 117 112 Segment Adjusted
EBITDA $ 292 $ 301 Distributions from
unconsolidated affiliates $ 73 $ 69
Transported volumes decreased 790,206 MMBtu/d on the Trunkline
pipeline due to the transfer of one of the pipelines at Trunkline
which was repurposed from natural gas service to crude oil service.
The remainder of the decrease in transported volumes was primarily
due to the impacts of milder weather, including a decrease of
93,958 MMBtu/d on the Tiger pipeline.
For the three months ended March 31, 2016 compared to the
same period last year, Segment Adjusted EBITDA related to our
interstate transportation and storage segment decreased due to the
net effects of the following:
- a decrease of approximately $10 million
in revenues due to the transfer and conversion from crude oil
service to natural gas service of one of the Trunkline pipelines,
and $11 million on the Transwestern pipeline from the expiration of
a transportation rate schedule and lower sales of gas due to lower
prices. The decreases on the Transwestern pipeline were offset by a
$7 million increase primarily from sales of capacity at higher
rates and new transportation services; partially offset by
- a decrease of $3 million in selling,
general and administrative expenses primarily due to a reduction in
allocations and lower employee related expenses for the three
months ended March 31, 2016; and
- an increase of $5 million in adjusted
EBITDA related to unconsolidated affiliates due to higher equity
from Citrus as a result of higher revenues from one additional
operating day and Phase VIII related revenues and lower maintenance
related expenses.
The increase in cash distributions from unconsolidated
affiliates is due to higher earnings from Citrus for the three
months ended March 31, 2016, as discussed above.
Intrastate Transportation and
Storage
Three Months EndedMarch 31, 2016 2015 Natural
gas transported (MMBtu/d) 7,994,473 8,809,018 Revenues $ 558 $ 586
Cost of products sold 393 416 Gross
margin 165 170 Unrealized losses on commodity risk management
activities 38 35 Operating expenses, excluding non-cash
compensation expense (33 ) (36 ) Selling, general and
administrative expenses, excluding non-cash compensation expense (6
) (7 ) Adjusted EBITDA related to unconsolidated affiliates
15 15 Segment Adjusted EBITDA $ 179 $
177 Distributions from unconsolidated affiliates $ 15
$ 14
Transported volumes decreased primarily due to lower production
volumes, primarily in the Barnett Shale region, partially offset by
increased volumes related to significant new long-term
transportation contracts.
For the three months ended March 31, 2016 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 $7 million in
transportation fees, despite the decrease in transported volumes,
primarily due to increased revenue from renegotiated and newly
initiated long-term, fixed capacity fee contracts on our Houston
Pipeline system;
- an increase of $7 million in natural
gas sales and other primarily due to higher realized gains from the
buying and selling of gas along our system, as well as lower fuel
losses;
- a decrease of $2 million in operating
expenses due to lower pipeline maintenance related costs, as well
as lower costs for electricity used to run compressors on our
pipelines; and
- a decrease of $1 million in general and
administrative expenses resulting from lower overhead allocation
costs due to shared services cost savings; partially offset by
- a decrease of $8 million in storage
margin (excluding changes in unrealized losses of $2 million and
inventory fair value adjustments of $5 million), primarily driven
by the timing of the movement of market prices during both periods;
and
- a decrease of $7 million from the sale
of retained fuel (excluding changes in unrealized gains of $1
million) primarily due to significantly lower market prices. The
average spot price at the Houston Ship Channel location for the
three months ended March 31, 2016 decreased by $0.83/MMBtu, or 30%,
to $1.93/MMBtu, compared to $2.76/MMBtu for the same period in the
prior year.
Investment in Sunoco Logistics
Three Months EndedMarch 31, 2016 2015 Revenues
$ 1,777 $ 2,572 Cost of products sold 1,439
2,359 Gross margin 338 213 Unrealized losses on commodity
risk management activities 13 15 Operating expenses, excluding
non-cash compensation expense (21 ) (39 ) Selling, general and
administrative expenses, excluding non-cash compensation expense
(23 ) (22 ) Inventory valuation adjustments 26 41 Adjusted EBITDA
related to unconsolidated affiliates 16 13
Segment Adjusted EBITDA $ 349 $ 221
Distributions from unconsolidated affiliates $ 5 $ 5
Segment Adjusted EBITDA related to Sunoco Logistics increased
due to the following:
- an increase of $64 million from
Sunoco Logistics’ crude oil operations. During the quarter, Sunoco
Logistics continued to utilize its storage capabilities to capture
the contango market structure. The impact of last-in, first-out
(“LIFO”) method of accounting in an environment where commodity
prices are falling resulted in approximately $60 million of
positive earnings in the quarter. This favorable LIFO timing is
expected to be reversed in future periods as commodity prices rise
or those inventory positions are liquidated. Excluding this
favorable inventory timing, the Sunoco Logistics’ crude oil
operations increased $4 million compared to the same period last
year. This increase was primarily attributable to improved results
from Sunoco Logistics’ crude oil pipelines which benefited from the
Permian Express 2 pipeline that commenced operations in July 2015
and higher results from Sunoco Logistics’ crude oil terminals
largely related to Sunoco Logistics’ Nederland facility. These
increases were largely offset by a decrease in operating results
from Sunoco Logistics’ crude oil acquisition and marketing
activities resulting from narrowing crude oil differentials;
- an increase of $46 million from Sunoco
Logistics’ NGLs operations, primarily due to increased volumes and
fees from Sunoco Logistics’ Mariner NGLs projects, which includes
Sunoco Logistics’ Nederland and Marcus Hook facilities. Higher
volumes related to Sunoco Logistics’ NGLs acquisition and marketing
activities and the absence of unfavorable LIFO inventory accounting
also contributed to the increase; and
- an increase of $18 million from Sunoco
Logistics’ refined products operations, primarily due to increased
operating results from Sunoco Logistics’ refined products
pipelines, which was largely attributable to the commencement of
operations on Sunoco Logistics’ Allegheny Access project in 2015.
Improved earnings from Sunoco Logistics’ refined products
acquisition and marketing activities and increased contributions
from Sunoco Logistics’ refined products joint ventures also
contributed to the improvement.
Retail Marketing
Three Months EndedMarch 31, 2016 2015 Revenues
$ — $ 4,805 Cost of products sold — 4,367
Gross margin — 438 Unrealized losses on commodity risk management
activities — 2 Operating expenses, excluding non-cash compensation
expense — (271 ) Selling, general and administrative expenses,
excluding non-cash compensation expense — (34 ) Inventory valuation
adjustments — (7 ) Adjusted EBITDA related to unconsolidated
affiliates 57 1 Segment Adjusted EBITDA $ 57 $
129 Distributions from unconsolidated affiliates $ 30
$ —
Due to the transfer of the general partnership interest of
Sunoco LP from ETP to ETE in 2015 and completion of the dropdown of
remaining Retail Marketing interests from ETP to Sunoco LP in March
2016, the Partnership’s retail marketing segment has been
deconsolidated, and the segment results now reflect an equity
method investment in limited partnership units of Sunoco LP. As of
March 31, 2016, the Partnership owns 43.5 million Sunoco LP
common units, representing 45.6% of Sunoco LP’s total outstanding
common units.
For the three months ended March 31, 2016, distributions
from unconsolidated affiliates reflect the distributions to be
received from Sunoco LP for the period. No comparable amounts are
reflected in the prior period, because Sunoco LP was a consolidated
subsidiary at that time.
All Other
Three Months EndedMarch 31, 2016 2015 Revenues
$ 854 $ 742 Cost of products sold 761 635
Gross margin 93 107 Unrealized losses on commodity risk
management activities 3 5 Operating expenses, excluding non-cash
compensation expense (21 ) (23 ) Selling, general and
administrative expenses, excluding non-cash compensation expense
(27 ) (49 ) Adjusted EBITDA related to unconsolidated affiliates 4
3 Other 24 24 Eliminations (31 ) (8 ) Segment
Adjusted EBITDA $ 45 $ 59 Distributions from
unconsolidated affiliates $ 1 $ 2
Amounts reflected in our all other segment primarily
include:
- our natural gas marketing and
compression operations;
- a 33% non-operating interest in PES, a
refining joint venture; and
- our investment in Coal Handling, an
entity that owns and operates end-user coal handling
facilities.
For the three months ended March 31, 2016 compared to the
same period last year, Segment Adjusted EBITDA decreased primarily
due to unfavorable results from our natural resources
operations.
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) for the three months
ended March 31, 2016:
Growth Maintenance Total
Direct(1): Midstream $ 322 $ 26 $ 348 Liquids transportation and
services(2) 731 4 735 Interstate transportation and storage(2) 61 5
66 Intrastate transportation and storage 14 2 16 All other
(including eliminations) 31 9 40 Total direct
capital expenditures 1,159 46 1,205 Indirect(1): Investment in
Sunoco Logistics 467 13 480 Total capital
expenditures $ 1,626 $ 59 $ 1,685
(1)
Indirect capital expenditures comprise those funded by our
publicly traded subsidiary; all other capital expenditures are
reflected as direct capital expenditures.
(2)
Includes capital expenditures related to
the Bakken, Bayou Bridge and Rover pipeline projects, which
includes $112 million related to Sunoco Logistics’ proportionate
ownership in the Bakken and Bayou Bridge pipeline projects.
We currently expect capital expenditures for the full year 2016
to be within the following ranges:
Growth Maintenance Low
High Low High Direct(1): Midstream $ 1,050 $ 1,100 $
130 $ 140 Liquids transportation and services: NGL 975 1,025 20 25
Crude(2)
350 400 — — Interstate transportation and storage(2)(3) 200 240 110
115
Intrastate transportation and
storage(3)
25 35 30 35 All other (including eliminations) 65 75
25 30 Total direct capital expenditures $ 2,665 $
2,875 $ 315 $ 345
(1)
Direct capital expenditures exclude those
funded by our publicly traded subsidiary.
(2)
Includes capital expenditures related to
our proportionate ownership of the Bakken, Bayou Bridge and Rover
pipeline projects.
(3)
Net of amounts forecasted to be financed
at the asset level with non-recourse debt of approximately $1.21
billion.
SUPPLEMENTAL
INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)
Three Months EndedMarch 31, 2016 2015
Equity in earnings (losses) of unconsolidated affiliates:
Citrus $ 21 $ 19 FEP 14 14 PES (6 ) (9 ) MEP 11 12 HPC 8 9 AmeriGas
(2 ) 6 Sunoco LP 15 — Other 15 6 Total
equity in earnings of unconsolidated affiliates $ 76 $ 57
Adjusted EBITDA related to unconsolidated
affiliates: Citrus $ 74 $ 69 FEP 19 19 PES 4 2 MEP 24 24 HPC 15
15 Sunoco LP 57 — Other 26 17 Total
Adjusted EBITDA related to unconsolidated affiliates $ 219 $
146
Distributions received from unconsolidated
affiliates: Citrus $ 35 $ 33 FEP 17 16 PES — 2 MEP 21 20 HPC 12
13 Sunoco LP 30 — Other 17 11 Total
distributions received from unconsolidated affiliates $ 132
$ 95
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160504006867/en/
Investor Relations:Energy TransferBrent Ratliff,
214-981-0700orLyndsay Hannah, 214-840-5477orMedia
Relations:Granado Communications GroupVicki Granado,
214-599-8785cell: 214-498-9272
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