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SEGMENTS (Notes) | 6 Months Ended
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Jun. 30, 2018
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] |
SEGMENTS | SEGMENTS Segment Descriptions - Our operations are divided into three reportable business segments, as follows:
• | our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas;
• | our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes NGL products; and
• | our Natural Gas Pipelines segment operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities.
Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements. Accounting Policies - The accounting policies of the segments are described in Note A of the Notes to Consolidated Financial Statements in our Annual Report, updated as described in Note A of this Quarterly Report. Our chief operating decision-maker reviews the financial performance of each of our three segments, as well as our financial performance as a whole, on a regular basis. Adjusted EBITDA by segment is utilized in this evaluation. We believe this financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA for each segment is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and other noncash items. This calculation may not be comparable with similarly titled measures of other companies. Customers - Our Natural Gas Gathering and Processing segment derives services revenue primarily from crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. The downstream commodity sales customers of our Natural Gas Gathering and Processing segment are primarily utilities, large industrial companies, marketing companies and our NGL affiliate. Our Natural Gas Liquids segment’s customers are primarily NGL and natural gas gathering and processing companies; large integrated and independent crude oil and natural gas production companies; propane distributors; ethanol producers; and petrochemical, refining and NGL marketing companies. Our Natural Gas Pipelines segment’s customers are primarily local natural gas distribution companies, electric-generation companies, large industrial companies, municipalities, producers and marketing companies. For the three and six months ended June 30, 2018 and 2017, we had no single customer from which we received 10 percent or more of our consolidated revenues. Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:
Three Months Ended June 30, 2018 | Natural Gas Gathering and Processing |  | Natural Gas Liquids (a) |  | Natural Gas Pipelines (b) |  | Total
| (Thousands of dollars)
NGL and condensate sales | $ | 447,839 |  |  | $ | 2,469,517 |  |  | $ | — |  |  | $ | 2,917,356 |
Residue natural gas sales | 208,618 |  |  | — |  |  | 179 |  |  | 208,797 |
Gathering, processing and exchange services revenue | 42,801 |  |  | 96,470 |  |  | — |  |  | 139,271 |
Transportation and storage revenue | — |  |  | 45,012 |  |  | 93,277 |  |  | 138,289 |
Other | 1,671 |  |  | 2,931 |  |  | 6,336 |  |  | 10,938 |
Total revenues (c) | 700,929 |  |  | 2,613,930 |  |  | 99,792 |  |  | 3,414,651 |
Cost of sales and fuel (exclusive of depreciation and operating costs) | (442,959 | ) |  | (2,183,512 | ) |  | (2,637 | ) |  | (2,629,108 | )
Operating costs | (93,602 | ) |  | (99,610 | ) |  | (34,959 | ) |  | (228,171 | )
Equity in net earnings (loss) from investments | (794 | ) |  | 16,582 |  |  | 20,782 |  |  | 36,570 |
Noncash compensation expense and other | 3,292 |  |  | 4,671 |  |  | 2,388 |  |  | 10,351 |
Segment adjusted EBITDA | $ | 166,866 |  |  | $ | 352,061 |  |  | $ | 85,366 |  |  | $ | 604,293 |
Depreciation and amortization | $ | (48,149 | ) |  | $ | (42,878 | ) |  | $ | (14,426 | ) |  | $ | (105,453 | )
Capital expenditures | $ | 108,842 |  |  | $ | 216,934 |  |  | $ | 20,477 |  |  | $ | 346,253 |
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $294.3 million, of which $255.0 million related to sales within the segment, and cost of sales and fuel of $124.0 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $64.5 million and cost of sales and fuel of $5.8 million. (c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $448.5 million, $3.7 million and $2.5 million, respectively.
Three Months Ended June 30, 2018 |  | Total Segments |  | Other and Eliminations |  | Total
|  | (Thousands of dollars)
Reconciliations of total segments to consolidated |  |  |  |  |  |
NGL and condensate sales |  | $ | 2,917,356 |  |  | $ | (448,556 | ) |  | $ | 2,468,800 |
Residue natural gas sales |  | 208,797 |  |  | (3,028 | ) |  | 205,769 |
Gathering, processing and exchange services revenue |  | 139,271 |  |  | — |  |  | 139,271 |
Transportation and storage revenue |  | 138,289 |  |  | (2,495 | ) |  | 135,794 |
Other |  | 10,938 |  |  | (43 | ) |  | 10,895 |
Total revenues (a) |  | $ | 3,414,651 |  |  | $ | (454,122 | ) |  | $ | 2,960,529 |
Cost of sales and fuel (exclusive of depreciation and operating costs) |  | $ | (2,629,108 | ) |  | $ | 453,290 |  |  | $ | (2,175,818 | )
Operating costs |  | $ | (228,171 | ) |  | $ | (1,982 | ) |  | $ | (230,153 | )
Depreciation and amortization |  | $ | (105,453 | ) |  | $ | (835 | ) |  | $ | (106,288 | )
Equity in net earnings from investments |  | $ | 36,570 |  |  | $ | — |  |  | $ | 36,570 |
Capital expenditures |  | $ | 346,253 |  |  | $ | 4,632 |  |  | $ | 350,885 |
(a) - Noncustomer revenue for the three months ended June 30, 2018, totaled $(5.4) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.
Three Months Ended June 30, 2017 | Natural Gas Gathering and Processing |  | Natural Gas Liquids (a) |  | Natural Gas Pipelines (b) |  | Total
| (Thousands of dollars)
Sales to unaffiliated customers | $ | 433,088 |  |  | $ | 2,196,399 |  |  | $ | 95,755 |  |  | $ | 2,725,242 |
Intersegment revenues | 252,727 |  |  | 153,286 |  |  | 2,094 |  |  | 408,107 |
Total revenues | 685,815 |  |  | 2,349,685 |  |  | 97,849 |  |  | 3,133,349 |
Cost of sales and fuel (exclusive of depreciation and operating costs) | (488,891 | ) |  | (2,003,601 | ) |  | (6,773 | ) |  | (2,499,265 | )
Operating costs | (72,659 | ) |  | (86,977 | ) |  | (30,682 | ) |  | (190,318 | )
Equity in net earnings from investments | 3,780 |  |  | 15,062 |  |  | 20,521 |  |  | 39,363 |
Other | 216 |  |  | (860 | ) |  | (255 | ) |  | (899 | )
Segment adjusted EBITDA | $ | 128,261 |  |  | $ | 273,309 |  |  | $ | 80,660 |  |  | $ | 482,230 |
Depreciation and amortization | $ | (46,033 | ) |  | $ | (41,427 | ) |  | $ | (12,598 | ) |  | $ | (100,058 | )
Capital expenditures | $ | 37,020 |  |  | $ | 12,336 |  |  | $ | 26,846 |  |  | $ | 76,202 |
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $289.4 million, of which $249.4 million related to sales within the segment, and cost of sales and fuel of $118.9 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $62.8 million and cost of sales and fuel of $8.3 million.
Three Months Ended June 30, 2017 |  | Total Segments |  | Other and Eliminations |  | Total
|  | (Thousands of dollars)
Reconciliations of total segments to consolidated |  |  |  |  |  |
Sales to unaffiliated customers |  | $ | 2,725,242 |  |  | $ | 530 |  |  | $ | 2,725,772 |
Intersegment revenues |  | 408,107 |  |  | (408,107 | ) |  | — |
Total revenues |  | $ | 3,133,349 |  |  | $ | (407,577 | ) |  | $ | 2,725,772 |
Cost of sales and fuel (exclusive of depreciation and operating costs) |  | $ | (2,499,265 | ) |  | $ | 408,243 |  |  | $ | (2,091,022 | )
Operating costs |  | $ | (190,318 | ) |  | $ | (24,770 | ) |  | $ | (215,088 | )
Depreciation and amortization |  | $ | (100,058 | ) |  | $ | (791 | ) |  | $ | (100,849 | )
Equity in net earnings from investments |  | $ | 39,363 |  |  | $ | — |  |  | $ | 39,363 |
Capital expenditures |  | $ | 76,202 |  |  | $ | 6,293 |  |  | $ | 82,495 |
Six Months Ended June 30, 2018 | Natural Gas Gathering and Processing |  | Natural Gas Liquids (a) |  | Natural Gas Pipelines (b) |  | Total
| (Thousands of dollars)
NGL and condensate sales | $ | 860,996 |  |  | $ | 5,022,287 |  |  | $ | — |  |  | $ | 5,883,283 |
Residue natural gas sales | 463,615 |  |  | — |  |  | 5,098 |  |  | 468,713 |
Gathering, processing and exchange services revenue | 81,230 |  |  | 179,728 |  |  | — |  |  | 260,958 |
Transportation and storage revenue | — |  |  | 98,490 |  |  | 191,615 |  |  | 290,105 |
Other | 3,079 |  |  | 5,894 |  |  | 12,990 |  |  | 21,963 |
Total revenues (c) | 1,408,920 |  |  | 5,306,399 |  |  | 209,703 |  |  | 6,925,022 |
Cost of sales and fuel (exclusive of depreciation and operating costs) | (935,581 | ) |  | (4,464,584 | ) |  | (8,091 | ) |  | (5,408,256 | )
Operating costs | (181,961 | ) |  | (188,202 | ) |  | (68,149 | ) |  | (438,312 | )
Equity in net earnings from investments | 874 |  |  | 33,006 |  |  | 42,877 |  |  | 76,757 |
Noncash compensation expense and other | 5,165 |  |  | 7,521 |  |  | 2,651 |  |  | 15,337 |
Segment adjusted EBITDA | $ | 297,417 |  |  | $ | 694,140 |  |  | $ | 178,991 |  |  | $ | 1,170,548 |
Depreciation and amortization | $ | (95,897 | ) |  | $ | (85,305 | ) |  | $ | (27,695 | ) |  | $ | (208,897 | )
Total assets | $ | 5,585,519 |  |  | $ | 8,898,255 |  |  | $ | 2,073,043 |  |  | $ | 16,556,817 |
Capital expenditures | $ | 220,571 |  |  | $ | 341,855 |  |  | $ | 40,375 |  |  | $ | 602,801 |
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $594.3 million, of which $508.4 million related to sales within the segment, and cost of sales and fuel of $246.8 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $132.5 million and cost of sales and fuel of $14.9 million. (c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $846.3 million, $12.7 million and $4.6 million, respectively.
Six Months Ended June 30, 2018 |  | Total Segments |  | Other and Eliminations |  | Total
|  | (Thousands of dollars)
Reconciliations of total segments to consolidated |  |  |  |  |  |
NGL and condensate sales |  | $ | 5,883,283 |  |  | $ | (857,466 | ) |  | $ | 5,025,817 |
Residue natural gas sales |  | 468,713 |  |  | (778 | ) |  | 467,935 |
Gathering, processing and exchange services revenue |  | 260,958 |  |  | (21 | ) |  | 260,937 |
Transportation and storage revenue |  | 290,105 |  |  | (4,589 | ) |  | 285,516 |
Other |  | 21,963 |  |  | 438 |  |  | 22,401 |
Total revenues (a) |  | $ | 6,925,022 |  |  | $ | (862,416 | ) |  | $ | 6,062,606 |
Cost of sales and fuel (exclusive of depreciation and operating costs) |  | $ | (5,408,256 | ) |  | $ | 864,412 |  |  | $ | (4,543,844 | )
Operating costs |  | $ | (438,312 | ) |  | $ | (2,045 | ) |  | $ | (440,357 | )
Depreciation and amortization |  | $ | (208,897 | ) |  | $ | (1,628 | ) |  | $ | (210,525 | )
Equity in net earnings from investments |  | $ | 76,757 |  |  | $ | — |  |  | $ | 76,757 |
Total assets |  | $ | 16,556,817 |  |  | $ | 356,903 |  |  | $ | 16,913,720 |
Capital expenditures |  | $ | 602,801 |  |  | $ | 12,551 |  |  | $ | 615,352 |
(a) - Noncustomer revenue for the six months ended June 30, 2018, totaled $(14.4) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.
Six Months Ended June 30, 2017 | Natural Gas Gathering and Processing |  | Natural Gas Liquids (a) |  | Natural Gas Pipelines (b) |  | Total
| (Thousands of dollars)
Sales to unaffiliated customers | $ | 833,237 |  |  | $ | 4,440,399 |  |  | $ | 200,679 |  |  | $ | 5,474,315 |
Intersegment revenues | 513,854 |  |  | 301,270 |  |  | 3,988 |  |  | 819,112 |
Total revenues | 1,347,091 |  |  | 4,741,669 |  |  | 204,667 |  |  | 6,293,427 |
Cost of sales and fuel (exclusive of depreciation and operating costs) | (977,275 | ) |  | (4,052,294 | ) |  | (23,376 | ) |  | (5,052,945 | )
Operating costs | (143,987 | ) |  | (165,417 | ) |  | (62,245 | ) |  | (371,649 | )
Equity in net earnings from investments | 6,410 |  |  | 28,784 |  |  | 43,733 |  |  | 78,927 |
Other | (11 | ) |  | (1,204 | ) |  | 839 |  |  | (376 | )
Segment adjusted EBITDA | $ | 232,228 |  |  | $ | 551,538 |  |  | $ | 163,618 |  |  | $ | 947,384 |
Depreciation and amortization | $ | (91,001 | ) |  | $ | (82,542 | ) |  | $ | (25,141 | ) |  | $ | (198,684 | )
Total assets | $ | 5,310,946 |  |  | $ | 8,168,567 |  |  | $ | 1,951,423 |  |  | $ | 15,430,936 |
Capital expenditures | $ | 100,171 |  |  | $ | 32,789 |  |  | $ | 51,860 |  |  | $ | 184,820 |
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $585.7 million, of which $502.3 million related to sales within the segment, and cost of sales and fuel of $235.4 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $131.7 million and cost of sales and fuel of $22.4 million.
Six Months Ended June 30, 2017 |  | Total Segments |  | Other and Eliminations |  | Total
|  | (Thousands of dollars)
Reconciliations of total segments to consolidated |  |  |  |  |  |
Sales to unaffiliated customers |  | $ | 5,474,315 |  |  | $ | 1,068 |  |  | $ | 5,475,383 |
Intersegment revenues |  | 819,112 |  |  | (819,112 | ) |  | — |
Total revenues |  | $ | 6,293,427 |  |  | $ | (818,044 | ) |  | $ | 5,475,383 |
Cost of sales and fuel (exclusive of depreciation and operating costs) |  | $ | (5,052,945 | ) |  | $ | 818,080 |  |  | $ | (4,234,865 | )
Operating costs |  | $ | (371,649 | ) |  | $ | (32,644 | ) |  | $ | (404,293 | )
Depreciation and amortization |  | $ | (198,684 | ) |  | $ | (1,584 | ) |  | $ | (200,268 | )
Equity in net earnings from investments |  | $ | 78,927 |  |  | $ | — |  |  | $ | 78,927 |
Total assets |  | $ | 15,430,936 |  |  | $ | 1,241,987 |  |  | $ | 16,672,923 |
Capital expenditures |  | $ | 184,820 |  |  | $ | 10,412 |  |  | $ | 195,232 |
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (Thousands of dollars)
Reconciliation of net income to total segment adjusted EBITDA |  |  |  |  |  |  |
Net income | $ | 282,179 |  |  | $ | 175,991 |  |  | $ | 548,228 |  |  | $ | 362,176 |
Add: |  |  |  |  |  |  |
Interest expense, net of capitalized interest | 113,496 |  |  | 118,473 |  |  | 229,221 |  |  | 234,935 |
Depreciation and amortization | 106,288 |  |  | 100,849 |  |  | 210,525 |  |  | 200,268 |
Income taxes | 87,531 |  |  | 43,844 |  |  | 163,302 |  |  | 98,785 |
Noncash compensation expense | 12,140 |  |  | 3,260 |  |  | 21,366 |  |  | 4,907 |
Other corporate costs and noncash items (a) | 2,659 |  |  | 39,813 |  |  | (2,094 | ) |  | 46,313 |
Total segment adjusted EBITDA | $ | 604,293 |  |  | $ | 482,230 |  |  | $ | 1,170,548 |  |  | $ | 947,384 |
(a) - Includes our April 2017 $20 million contribution of Series E Preferred Stock to the Foundation and costs related to the Merger Transaction of $22.8 million and $29.5 million for the three and six months ended June 30, 2017, respectively.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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