August 6, 2014 | ||
Date of Report (Date of earliest event reported) | ||
ENERGY TRANSFER PARTNERS, L.P. | ||
(Exact name of Registrant as specified in its charter) | ||
Delaware | 1-11727 | 73-1493906 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3738 Oak Lawn Avenue, Dallas, Texas 75219 |
(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 | |
99.1 | Energy Transfer Partners, L.P. Press Release dated August 6, 2014 |
Exhibit Number | Description of the Exhibit | |
99.1 | Energy Transfer Partners, L.P. Press Release dated August 6, 2014 |
• | In June 2014, ETP announced that our Board of Directors approved the construction of a pipeline (“ET Rover”) to transport natural gas from the prolific Marcellus and Utica Shale areas to numerous market regions in the United States and Canada. To date, ETP has secured 2.95 billion cubic feet per day (“Bcf/d”) of binding, fee-based commitments under predominantly 20 year agreements, representing 91% of the 3.25 Bcf/d total design capacity, and is still evaluating additional bids that were received in the open season. The project is fully subscribed to the Dawn, Ontario hub at 1.3 Bcf/d, with the balance of capacity commitments delivered to interconnects with other pipelines in the Midwest. ETP has ordered the pipe for the project and expects the segment to the Midwest markets to be in-service by December 2016 and in-service to Dawn, Ontario by July 2017. |
• | In June 2014, ETP also announced that our Board of Directors approved the construction of an approximately 1,100 mile pipeline to transport crude oil supply from strategic receipt points in the Bakken/Three Forks production area in North Dakota to Patoka, Illinois, where the pipeline will interconnect with ETP’s existing Trunkline Pipeline, which is being converted from natural gas service to crude oil transportation service. ETP currently expects to build the pipeline to a capacity as high as 570,000 barrels per day based on binding commitments received to date and ongoing discussions with a number of key potential shippers. The pipeline is expected to be in-service by December 2016. |
• | In June 2014, ETP sold 8.5 million AmeriGas Partners, L.P. (“AmeriGas”) common units for net proceeds of $377 million, and sold an additional 1.2 million AmeriGas common units for net proceeds of $55 million in August 2014. |
• | The Partnership continues to make progress toward the close of its recently announced acquisition of Susser Holdings Corporation (“Susser”) with Susser’s shareholders scheduled to vote on the acquisition at a meeting to be held on August 28, 2014. |
June 30, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
CURRENT ASSETS | $ | 7,213 | $ | 6,239 | |||
PROPERTY, PLANT AND EQUIPMENT, net | 26,491 | 25,947 | |||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,850 | 4,436 | |||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | — | 17 | |||||
GOODWILL | 4,521 | 4,729 | |||||
INTANGIBLE ASSETS, net | 1,512 | 1,568 | |||||
OTHER NON-CURRENT ASSETS, net | 636 | 766 | |||||
Total assets | $ | 44,223 | $ | 43,702 |
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES | $ | 7,515 | $ | 6,067 | |||
LONG-TERM DEBT, less current maturities | 16,220 | 16,451 | |||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 69 | 54 | |||||
DEFERRED INCOME TAXES | 3,612 | 3,762 | |||||
OTHER NON-CURRENT LIABILITIES | 1,037 | 1,080 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
REDEEMABLE NONCONTROLLING INTERESTS | 15 | — | |||||
EQUITY: | |||||||
Total partners’ capital | 10,816 | 11,540 | |||||
Noncontrolling interest | 4,939 | 4,748 | |||||
Total equity | 15,755 | 16,288 | |||||
Total liabilities and equity | $ | 44,223 | $ | 43,702 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
REVENUES | $ | 13,029 | $ | 11,551 | $ | 25,261 | $ | 22,405 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of products sold | 11,636 | 10,229 | 22,502 | 19,823 | |||||||||||
Operating expenses | 308 | 327 | 627 | 654 | |||||||||||
Depreciation and amortization | 268 | 251 | 534 | 511 | |||||||||||
Selling, general and administrative | 81 | 112 | 174 | 251 | |||||||||||
Total costs and expenses | 12,293 | 10,919 | 23,837 | 21,239 | |||||||||||
OPERATING INCOME | 736 | 632 | 1,424 | 1,166 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net of interest capitalized | (217 | ) | (211 | ) | (436 | ) | (422 | ) | |||||||
Equity in earnings of unconsolidated affiliates | 57 | 37 | 136 | 109 | |||||||||||
Gain on sale of AmeriGas common units | 93 | — | 163 | — | |||||||||||
Gains (losses) on interest rate derivatives | (46 | ) | 39 | (48 | ) | 46 | |||||||||
Other, net | (14 | ) | (4 | ) | (17 | ) | (1 | ) | |||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 609 | 493 | 1,222 | 898 | |||||||||||
Income tax expense from continuing operations | 70 | 89 | 216 | 92 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 539 | 404 | 1,006 | 806 | |||||||||||
Income from discontinued operations | 42 | 9 | 66 | 31 | |||||||||||
NET INCOME | 581 | 413 | 1,072 | 837 | |||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 110 | 93 | 186 | 195 | |||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 471 | 320 | 886 | 642 | |||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 125 | 155 | 238 | 283 | |||||||||||
CLASS H UNITHOLDER’S INTEREST IN NET INCOME | 51 | — | 100 | — | |||||||||||
COMMON UNITHOLDERS’ INTEREST IN NET INCOME | $ | 295 | $ | 165 | $ | 548 | $ | 359 | |||||||
INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT: | |||||||||||||||
Basic | $ | 0.79 | $ | 0.52 | $ | 1.47 | $ | 1.04 | |||||||
Diluted | $ | 0.79 | $ | 0.52 | $ | 1.47 | $ | 1.04 | |||||||
NET INCOME PER COMMON UNIT: | |||||||||||||||
Basic | $ | 0.92 | $ | 0.53 | $ | 1.67 | $ | 1.08 | |||||||
Diluted | $ | 0.92 | $ | 0.53 | $ | 1.67 | $ | 1.08 | |||||||
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING: | |||||||||||||||
Basic | 318.5 | 352.6 | 321.4 | 326.9 | |||||||||||
Diluted | 319.5 | 353.8 | 322.4 | 328.1 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (a): | |||||||||||||||
Net income | $ | 581 | $ | 413 | $ | 1,072 | $ | 837 | |||||||
Interest expense, net of interest capitalized | 217 | 211 | 436 | 422 | |||||||||||
Gain on sale of AmeriGas common units | (93 | ) | — | (163 | ) | — | |||||||||
Income tax expense from continuing operations | 70 | 89 | 216 | 92 | |||||||||||
Depreciation and amortization | 268 | 251 | 534 | 511 | |||||||||||
Non-cash compensation expense | 13 | 10 | 27 | 24 | |||||||||||
(Gains) losses on interest rate derivatives | 46 | (39 | ) | 48 | (46 | ) | |||||||||
Unrealized (gains) losses on commodity risk management activities | 1 | (18 | ) | 30 | (37 | ) | |||||||||
LIFO valuation adjustment | (20 | ) | 22 | (34 | ) | (16 | ) | ||||||||
Equity in earnings of unconsolidated affiliates | (57 | ) | (37 | ) | (136 | ) | (109 | ) | |||||||
Adjusted EBITDA related to unconsolidated affiliates | 170 | 158 | 366 | 323 | |||||||||||
Other, net | (27 | ) | 9 | (21 | ) | 24 | |||||||||
Adjusted EBITDA (consolidated) | 1,169 | 1,069 | 2,375 | 2,025 | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (170 | ) | (158 | ) | (366 | ) | (323 | ) | |||||||
Distributions from unconsolidated affiliates | 92 | 102 | 173 | 197 | |||||||||||
Interest expense, net of interest capitalized | (217 | ) | (211 | ) | (436 | ) | (422 | ) | |||||||
Amortization included in interest expense | (18 | ) | (24 | ) | (34 | ) | (47 | ) | |||||||
Current income tax expense from continuing operations | (74 | ) | (24 | ) | (327 | ) | (19 | ) | |||||||
Income tax expense related to the Trunkline LNG Transaction | 6 | — | 277 | — | |||||||||||
Maintenance capital expenditures | (59 | ) | (121 | ) | (98 | ) | (172 | ) | |||||||
Other, net | 1 | 1 | 3 | 2 | |||||||||||
Distributable Cash Flow (consolidated) | 730 | 634 | 1,567 | 1,241 | |||||||||||
Distributable Cash Flow attributable to Sunoco Logistics Partners L.P. (“Sunoco Logistics”) (100%) | (223 | ) | (184 | ) | (381 | ) | (379 | ) | |||||||
Distributions from Sunoco Logistics to ETP | 68 | 49 | 130 | 94 | |||||||||||
Distributions to ETE in respect of ETP Holdco Corporation (“Holdco”) | — | — | — | (50 | ) | ||||||||||
Distributions to Regency Energy Partners LP (“Regency”) in respect of Lone Star (b) | (37 | ) | (16 | ) | (70 | ) | (39 | ) | |||||||
Distributable Cash Flow attributable to the partners of ETP | $ | 538 | $ | 483 | $ | 1,246 | $ | 867 | |||||||
Distributions to the partners of ETP: | |||||||||||||||
Limited Partners: | |||||||||||||||
Common Units held by public | $ | 282 | $ | 246 | $ | 550 | $ | 487 | |||||||
Common Units held by ETE | 29 | 89 | 58 | 178 | |||||||||||
Class H Units held by ETE Common Holdings, LLC (“ETE Holdings”) (c) | 53 | — | 103 | — | |||||||||||
General Partner interests held by ETE | 5 | 5 | 10 | 10 | |||||||||||
Incentive Distribution Rights (“IDRs”) held by ETE | 178 | 183 | 346 | 363 | |||||||||||
IDR relinquishment related to previous transactions | (58 | ) | (55 | ) | (115 | ) | (86 | ) | |||||||
Total distributions to be paid to the partners of ETP | $ | 489 | $ | 468 | $ | 952 | $ | 952 | |||||||
Distributions credited to Holdco transactions (d) | — | — | — | (68 | ) | ||||||||||
Net distributions to the partners of ETP | $ | 489 | $ | 468 | $ | 952 | $ | 884 | |||||||
Distribution coverage ratio (e) | 1.10x | 1.03x | 1.31x | 0.98x |
(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. |
• | 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. Currently, Sunoco Logistics is the only such subsidiary. |
• | For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, but Distributable Cash Flow attributable to the partners of ETP is net of distributions to be paid by the subsidiary to the noncontrolling interests. Currently, Lone Star is such a subsidiary, as it is 30% owned by Regency, which is an unconsolidated affiliate. Prior to April 30, 2013, Holdco was also such a subsidiary, as ETE held a noncontrolling interest in Holdco. |
• | Previously, the Partnership’s calculation of Distributable Cash Flow reflected the impact of amortization included in interest expense. Such amortization includes amortization of deferred financing costs, premiums or discounts on the issuance of long-term debt, and fair value adjustments on long-term debt assumed in acquisitions. The Partnership revised its calculation of Distributable Cash Flow to exclude the impact of such amortization. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions. |
• | Previously, the Partnership’s calculation of Distributable Cash Flow reflected income tax expense from continuing operations, which included current and deferred income taxes. Current income tax expense represents the estimated taxes that will be payable or refundable for the current period, while deferred income taxes represent the estimated tax effects of tax carryforwards and the reversal of temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. The Partnership revised its calculation of Distributable Cash Flow to reflect current income tax expense from continuing operations, rather than total income tax expense from continuing operations. Management believes that this revised calculation is more useful and more accurately reflects the cash flows of the Partnership that are available for payment of distributions. |
(b) | Cash distributions to Regency in respect of Lone Star consist of cash distributions paid in arrears on a quarterly basis. These amounts are in respect of the periods then ended, including payments made in arrears subsequent to period end. |
(c) | Distributions on the Class H Units for the three and six months ended June 30, 2014 were calculated as follows: |
Three Months Ended | Six Months Ended | ||||||
June 30, 2014 | June 30, 2014 | ||||||
General partner distributions and incentive distributions from Sunoco Logistics | $ | 43 | $ | 82 | |||
50.05 | % | 50.05 | % | ||||
Share of Sunoco Logistics general partner and incentive distributions payable to Class H Unitholder | 21 | 41 | |||||
Incremental distributions payable to Class H Unitholder | 32 | 62 | |||||
Total Class H Unit distributions | $ | 53 | $ | 103 |
(d) | For the six months ended June 30, 2013, net distributions to the partners of ETP excluded distributions paid in respect of the quarter ended March 31, 2013 on 49.5 million ETP Common Units issued to ETE as a portion of the consideration for ETP’s acquisition of ETE’s interest in Holdco on April 30, 2013. These newly issued ETP Common Units received cash distributions on May 15, 2013; however, such distributions were reduced from the total cash portion of the consideration paid to ETE in connection with the April 30, 2013 Holdco transaction. |
(e) | Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to the partners of ETP divided by net distributions expected to be paid to the partners of ETP in respect of such period. |
• | Gross margin, operating expenses, and selling, general and administrative. These amounts represent the amounts included in our consolidated financial statements that are attributable to each segment. |
• | Unrealized gains or losses on commodity risk management activities and LIFO valuation adjustments. These are the unrealized amounts that are included in cost of products sold to calculate gross margin. These amounts are not included in Segment Adjusted EBITDA; therefore, the unrealized losses are added back and the unrealized gains are subtracted to calculate the segment measure. |
• | Non-cash compensation expense. These amounts represent the total non-cash compensation recorded in operating expenses and selling, general and administrative expenses. This expense is not included in Segment Adjusted EBITDA and therefore is added back to calculate the segment measure. |
• | Adjusted EBITDA related to unconsolidated affiliates. These amounts represent our proportionate share of the Adjusted EBITDA of our unconsolidated affiliates. Amounts reflected are calculated consistently with our definition of Adjusted EBITDA. |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Segment Adjusted EBITDA: | |||||||||||
Midstream | $ | 157 | $ | 127 | $ | 30 | |||||
NGL transportation and services | 141 | 77 | 64 | ||||||||
Interstate transportation and storage | 265 | 361 | (96 | ) | |||||||
Intrastate transportation and storage | 110 | 112 | (2 | ) | |||||||
Investment in Sunoco Logistics | 280 | 244 | 36 | ||||||||
Retail marketing | 136 | 97 | 39 | ||||||||
All other | 80 | 51 | 29 | ||||||||
$ | 1,169 | $ | 1,069 | $ | 100 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Gathered volumes (MMBtu/d): | |||||||||||
ETP legacy assets | 2,851,414 | 2,531,076 | 320,338 | ||||||||
Southern Union gathering and processing(1) | — | 529,327 | (529,327 | ) | |||||||
NGLs produced (Bbls/d): | |||||||||||
ETP legacy assets | 163,780 | 112,951 | 50,829 | ||||||||
Southern Union gathering and processing(1) | — | 43,777 | (43,777 | ) | |||||||
Equity NGLs produced (Bbls/d): | |||||||||||
ETP legacy assets | 14,968 | 14,854 | 114 | ||||||||
Southern Union gathering and processing(1) | — | 8,216 | (8,216 | ) | |||||||
Revenues | $ | 720 | $ | 577 | $ | 143 | |||||
Cost of products sold | 530 | 402 | 128 | ||||||||
Gross margin | 190 | 175 | 15 | ||||||||
Unrealized gains on commodity risk management activities | — | (2 | ) | 2 | |||||||
Operating expenses, excluding non-cash compensation expense | (29 | ) | (41 | ) | 12 | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (5 | ) | 1 | ||||||
Segment Adjusted EBITDA | $ | 157 | $ | 127 | $ | 30 |
(1) | Southern Union contributed its gathering and processing operations to Regency, resulting in the deconsolidation of those operations on April 30, 2013. |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Gathering and processing fee-based revenues | $ | 134 | $ | 114 | $ | 20 | |||||
Non fee-based contracts and processing | 59 | 64 | (5 | ) | |||||||
Other | (3 | ) | (3 | ) | — | ||||||
Total gross margin | $ | 190 | $ | 175 | $ | 15 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
NGL transportation volumes (Bbls/d) | 367,564 | 274,022 | 93,542 | ||||||||
NGL fractionation volumes (Bbls/d) | 191,255 | 98,915 | 92,340 | ||||||||
Revenues | $ | 903 | $ | 438 | $ | 465 | |||||
Cost of products sold | 731 | 329 | 402 | ||||||||
Gross margin | 172 | 109 | 63 | ||||||||
Unrealized gains on commodity risk management activities | — | (2 | ) | 2 | |||||||
Operating expenses, excluding non-cash compensation expense | (29 | ) | (28 | ) | (1 | ) | |||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (4 | ) | (3 | ) | (1 | ) | |||||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 1 | 1 | ||||||||
Segment Adjusted EBITDA | $ | 141 | $ | 77 | $ | 64 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Transportation margin | $ | 69 | $ | 45 | $ | 24 | |||||
Processing and fractionation margin | 57 | 30 | 27 | ||||||||
Storage margin | 37 | 34 | 3 | ||||||||
Other margin | 9 | — | 9 | ||||||||
Total gross margin | $ | 172 | $ | 109 | $ | 63 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Natural gas transported (MMBtu/d) | 5,594,099 | 6,204,788 | (610,689 | ) | |||||||
Natural gas sold (MMBtu/d) | 15,733 | 16,795 | (1,062 | ) | |||||||
Revenues | $ | 249 | $ | 357 | $ | (108 | ) | ||||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (67 | ) | (75 | ) | 8 | ||||||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (16 | ) | (19 | ) | 3 | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 99 | 98 | 1 | ||||||||
Segment Adjusted EBITDA | $ | 265 | $ | 361 | $ | (96 | ) | ||||
Distributions from unconsolidated affiliates | $ | 58 | $ | 55 | $ | 3 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Natural gas transported (MMBtu/d) | 9,069,215 | 9,654,524 | (585,309 | ) | |||||||
Revenues | $ | 712 | $ | 623 | $ | 89 | |||||
Cost of products sold | 551 | 447 | 104 | ||||||||
Gross margin | 161 | 176 | (15 | ) | |||||||
Unrealized gains on commodity risk management activities | (3 | ) | (12 | ) | 9 | ||||||
Operating expenses, excluding non-cash compensation expense | (43 | ) | (47 | ) | 4 | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (5 | ) | (5 | ) | — | ||||||
Segment Adjusted EBITDA | $ | 110 | $ | 112 | $ | (2 | ) |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Revenues | $ | 4,821 | $ | 4,311 | $ | 510 | |||||
Cost of products sold | 4,517 | 4,023 | 494 | ||||||||
Gross margin | 304 | 288 | 16 | ||||||||
Unrealized (gains) losses on commodity risk management activities | 8 | (1 | ) | 9 | |||||||
Operating expenses, excluding non-cash compensation expense | (21 | ) | (25 | ) | 4 | ||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (25 | ) | (29 | ) | 4 | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 14 | 11 | 3 | ||||||||
Segment Adjusted EBITDA | $ | 280 | $ | 244 | $ | 36 | |||||
Distributions from unconsolidated affiliates | $ | 4 | $ | 4 | $ | — |
• | An increase of $16 million from crude oil pipelines, primarily due to higher throughput; |
• | An increase of $27 million from terminal facilities, primarily due to higher volumes and increased margins from refined products acquisition and marketing activities; and |
• | An increase of $10 million from refined products pipelines, primarily due to operating results from Sunoco Logistics’ Mariner West project; partially offset by |
• | A decrease of $17 million from crude oil acquisition and marketing activities, primarily due to lower crude margins, the impact from which was partially offset by $5 million from increased crude volumes resulting from higher market demand and expansion in the crude oil trucking fleet. |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Total retail gasoline outlets, end of period | 5,152 | 4,974 | 178 | ||||||||
Total company-operated outlets, end of period | 568 | 440 | 128 | ||||||||
Gasoline and diesel throughput per company-operated site (gallons/month) | 197,824 | 204,320 | (6,496 | ) | |||||||
Revenues | $ | 5,568 | $ | 5,291 | $ | 277 | |||||
Cost of products sold | 5,260 | 5,087 | 173 | ||||||||
Gross margin | 308 | 204 | 104 | ||||||||
Unrealized gains on commodity risk management activities | (1 | ) | — | (1 | ) | ||||||
Operating expenses, excluding non-cash compensation expense | (124 | ) | (106 | ) | (18 | ) | |||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (28 | ) | (23 | ) | (5 | ) | |||||
LIFO valuation adjustment | (20 | ) | 22 | (42 | ) | ||||||
Adjusted EBITDA related to unconsolidated affiliates | 1 | 1 | — | ||||||||
Other | — | (1 | ) | 1 | |||||||
Segment Adjusted EBITDA | $ | 136 | $ | 97 | $ | 39 |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Revenues | $ | 721 | $ | 485 | $ | 236 | |||||
Cost of products sold | 710 | 466 | 244 | ||||||||
Gross margin | 11 | 19 | (8 | ) | |||||||
Unrealized gains on commodity risk management activities | (3 | ) | (1 | ) | (2 | ) | |||||
Operating expenses, excluding non-cash compensation expense | 3 | (5 | ) | 8 | |||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (2 | ) | (20 | ) | 18 | ||||||
Adjusted EBITDA related to discontinued operations | — | 23 | (23 | ) | |||||||
Adjusted EBITDA related to unconsolidated affiliates | 55 | 49 | 6 | ||||||||
Other | 19 | (11 | ) | 30 | |||||||
Elimination | (3 | ) | (3 | ) | — | ||||||
Segment Adjusted EBITDA | $ | 80 | $ | 51 | $ | 29 | |||||
Distributions from unconsolidated affiliates | $ | 28 | $ | 40 | $ | (12 | ) |
• | our investment in AmeriGas; |
• | our natural gas compression operations; |
• | an approximate 33% non-operating interest in PES, a refining joint venture; |
• | our investment in Regency related to the Regency common and Class F units received by Southern Union in exchange for the contribution of its interest in Southern Union Gathering Company, LLC to Regency on April 30, 2013; and |
• | our natural gas marketing operations. |
• | an increase of $19 million in management fees, as further described below; |
• | a favorable impact of approximately $10 million due to costs associated with certain Sunoco activities that were included in the all other Segment Adjusted EBITDA in the prior year; |
• | favorable results from our commodity marketing business of $5 million; |
• | an increase of $6 million in Adjusted EBITDA related to unconsolidated affiliates, primarily due to higher earnings from our investments in PES and Regency, including the impact of only recording a partial period of earnings from Regency beginning on April 30, 2013; |
• | a refund of insurance premiums of $6 million included in the three months ended June 30, 2014; |
• | Southern Union corporate expenses of $3 million that were no longer included in the all other segment subsequent to the merger of Southern Union, PEPL Holdings and Panhandle in January 2014; offset by |
• | Adjusted EBITDA related to discontinued operations of $23 million in the prior period related to Southern Union’s local distribution operations that were sold in 2013. |
Growth | Maintenance | Total | |||||||||
Midstream | $ | 297 | $ | 9 | $ | 306 | |||||
NGL transportation and services(1) | 175 | 8 | 183 | ||||||||
Interstate transportation and storage | 20 | 27 | 47 | ||||||||
Intrastate transportation and storage | 67 | 14 | 81 | ||||||||
Investment in Sunoco Logistics | 1,092 | 31 | 1,123 | ||||||||
Retail marketing | 34 | 18 | 52 | ||||||||
All other (including eliminations) | 5 | (9 | ) | (4 | ) | ||||||
Total capital expenditures | $ | 1,690 | $ | 98 | $ | 1,788 |
(1) | Includes 100% of Lone Star’s capital expenditures, a portion of which are funded through capital contributions from Regency related to its 30% interest in Lone Star. |
Growth | Maintenance | ||||||||||||||
Low | High | Low | High | ||||||||||||
Midstream | $ | 600 | $ | 650 | $ | 10 | $ | 15 | |||||||
NGL transportation and services(1) | 360 | 380 | 20 | 25 | |||||||||||
Interstate transportation and storage | 80 | 100 | 100 | 110 | |||||||||||
Intrastate transportation and storage | 150 | 160 | 25 | 30 | |||||||||||
Investment in Sunoco Logistics | 1,900 | 2,100 | 65 | 75 | |||||||||||
Retail marketing | 130 | 150 | 50 | 60 | |||||||||||
All other (including eliminations) | 110 | 120 | 10 | 20 | |||||||||||
Total capital expenditures | $ | 3,330 | $ | 3,660 | $ | 280 | $ | 335 |
(1) | Includes 100% of Lone Star’s capital expenditures. We expect to receive capital contributions from Regency related to its 30% interest in Lone Star of between $85 million and $110 million. |
Three Months Ended June 30, | |||||||||||
2014 | 2013 | Change | |||||||||
Equity in earnings (losses) of unconsolidated affiliates: | |||||||||||
AmeriGas | $ | (8 | ) | $ | (20 | ) | $ | 12 | |||
Citrus | 26 | 24 | 2 | ||||||||
FEP | 13 | 14 | (1 | ) | |||||||
Regency | 1 | 2 | (1 | ) | |||||||
PES | 18 | 13 | 5 | ||||||||
Other | 7 | 4 | 3 | ||||||||
Total equity in earnings of unconsolidated affiliates | $ | 57 | $ | 37 | $ | 20 | |||||
Proportionate share of interest, depreciation, amortization, non-cash items and taxes: | |||||||||||
AmeriGas | $ | 13 | $ | 36 | $ | (23 | ) | ||||
Citrus | 55 | 55 | — | ||||||||
FEP | 5 | 5 | — | ||||||||
Regency | 24 | 14 | 10 | ||||||||
PES | 7 | 5 | 2 | ||||||||
Other | 9 | 6 | 3 | ||||||||
Total proportionate share of interest, depreciation, amortization, non-cash items and taxes | $ | 113 | $ | 121 | $ | (8 | ) | ||||
Adjusted EBITDA related to unconsolidated affiliates: | |||||||||||
AmeriGas | $ | 5 | $ | 16 | $ | (11 | ) | ||||
Citrus | 81 | 79 | 2 | ||||||||
FEP | 18 | 19 | (1 | ) | |||||||
Regency | 25 | 16 | 9 | ||||||||
PES | 25 | 18 | 7 | ||||||||
Other | 16 | 10 | 6 | ||||||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 170 | $ | 158 | $ | 12 | |||||
Distributions received from unconsolidated affiliates: | |||||||||||
AmeriGas | $ | 11 | $ | 24 | $ | (13 | ) | ||||
Citrus | 41 | 39 | 2 | ||||||||
FEP | 16 | 16 | — | ||||||||
Regency | 15 | 15 | — | ||||||||
Other | 9 | 8 | 1 | ||||||||
Total distributions received from unconsolidated affiliates | $ | 92 | $ | 102 | $ | (10 | ) |
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