Gains and Losses on Divestitures, Impairments and Other Write-downs (Notes)

12 Months Ended

Dec. 31, 2023

Impairments, Divestitures And Other Write-downs

4. Losses and Gains on Divestitures, Impairments and Other Write-downs

During the years ended December 31, 2023, 2022, and 2021, we recorded net pre-tax losses (gains) of $52 million, $(32) million and $1,535 million, respectively, reflecting net losses (gains) on divestitures, impairments and other write downs as detailed further below. The year ended December 31, 2021 amount primarily includes pre-tax long-lived asset impairments of $1,634 million.

We recognized the following non-cash pre-tax losses (gains) on divestitures, impairments or other write-downs on assets and equity investments during the years ended December 31, 2023, 2022, and 2021:


	Year Ended December 31,
	2023		2022		2021
	(In millions)
Natural Gas Pipelines
Impairments of long-lived assets(a)	$	—	$	—	$	1,600

Gain on sale of interest in NGPL Holdings(b)	—		—		(206)
Loss on write-down of related party note receivable(c)	—		—		117
Gains on divestitures of long-lived assets	(10)		(10)		(1)


Products Pipelines

Impairment of equity investment(d)	67		—		—
Gain on divestiture of long-lived asset	—		(12)		—

Terminals
Impairments of long-lived assets	—		—		34
(Gains) losses on divestitures of long-lived assets	(1)		(9)		2

CO2


Gains on divestitures of long-lived assets	(1)		(1)		(8)

Other gains on divestitures of long-lived assets	(3)		—		(3)
Pre-tax losses (gains) on divestitures, impairments and other write-downs, net	$	52	$	(32)	$	1,535

(a)2021 amount represents non-cash impairments associated with our South Texas gathering and processing assets.

(b)See Note 3.

(c)See “—Investment in Ruby” below for a further discussion.

(d)See “—Investments” below for a further discussion.

Impairments

Investments

During the first quarter of 2023, we recognized an impairment of $67 million related to our investment in Double Eagle Pipeline LLC (Double Eagle). The impairment was driven by lower expected renewal rates on contracts that expired in the second half of 2023. The impairment is recognized on our accompanying consolidated statement of income for the year ended December 31, 2023 within “Earnings from equity investments.” Our investment in Double Eagle and associated earnings is included within our Products Pipelines business segment.

Long-lived Assets

During the second quarter of 2021, we evaluated our South Texas gathering and processing assets within our Natural Gas Pipeline business segment for impairment, which was driven by lower expectations regarding the volumes and rates associated with the re-contracting of contracts expiring through 2024. To compute the estimated undiscounted future cash flows we used the forecast of expected revenues adjusted for upcoming contract expirations. This analysis indicated that our South Texas gathering and processing assets failed step one. In step two, we utilized an income approach to estimate fair value and compared it to the carrying value. The significant assumptions made in calculating fair value include estimates of future cash flows and discount rates. We applied an approximate 8.5% discount rate, a Level 3 input, which we believed represented the estimated weighted average cost of capital of a theoretical market participant. As a result of our evaluation, we recognized a non-cash, long-lived asset impairment of $1,600 million during the year ended December 31, 2021.

Investment in Ruby

During the first quarter of 2021, we recognized a pre-tax charge of $117 million related to a write-down of our subordinated note receivable from our former equity investee, Ruby, which is included within “Earnings from equity investments” in our accompanying consolidated statement of income for the year ended December 31, 2021. The write-down was driven by the impairment recognized by Ruby of its assets.

Ruby Chapter 11 Bankruptcy Filing

The balance of Ruby Pipeline, L.L.C.’s 2022 unsecured notes matured on April 1, 2022 in the principal amount of $475 million. Although Ruby had sufficient liquidity to operate its business, it lacked sufficient liquidity to satisfy its obligations under the 2022 unsecured notes on the maturity date of April 1, 2022. Accordingly, on March 31, 2022, Ruby filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Ruby, as the debtor, continued to operate in the ordinary course as a debtor in possession under the jurisdiction of the United States Bankruptcy Court. We fully impaired our equity investment in Ruby in the fourth quarter of 2019 and fully impaired our investment in Ruby’s subordinated notes in the first quarter of 2021. We had no amounts included in our “Investments” on our accompanying consolidated balance sheet associated with Ruby as of December 31, 2022.

On January 13, 2023, the bankruptcy court confirmed a plan of reorganization satisfactory to all interested parties regarding Ruby, which involved payment of Ruby’s outstanding senior notes with the proceeds from the sale of Ruby to Tallgrass, a settlement by KMI and Pembina of certain potential causes of action relating to the bankruptcy, and cash on hand. Our payment to the bankruptcy estate, net of payments it received in respect of a long-term subordinated note receivable from Ruby, was approximately $28.5 million which was accrued for as of December 31, 2022 and included within “Other, net” in our accompanying consolidated statement of income for the year ended December 31, 2022. Consummation of the settlement and the sale of Ruby to Tallgrass occurred on January 13, 2023.