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.

Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:



Three Months Ended September 30, 2018	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total
	(Thousands of dollars)
NGL and condensate sales	$	501,163		$	2,861,896		$	—		$	3,363,059
Residue natural gas sales	245,474			—			763			246,237
Gathering, processing and exchange services revenue	41,101			116,833			—			157,934
Transportation and storage revenue	—			45,251			98,031			143,282
Other	3,517			2,308			6,400			12,225
Total revenues (c)	791,255			3,026,288			105,194			3,922,737
Cost of sales and fuel (exclusive of depreciation and operating costs)	(542,463		)	(2,544,854		)	(2,384		)	(3,089,701		)
Operating costs	(90,970		)	(101,126		)	(36,543		)	(228,639		)
Equity in net earnings from investments	74			16,450			22,789			39,313
Noncash compensation expense and other	1,703			2,268			1,050			5,021
Segment adjusted EBITDA	$	159,599		$	399,026		$	90,106		$	648,731

Depreciation and amortization	$	(49,223	)	$	(43,688	)	$	(13,625	)	$	(106,536	)
Capital expenditures	$	213,034		$	444,780		$	31,522		$	689,336

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $316.0 million, of which $276.4 million related to sales within the segment, and cost of sales and fuel of $132.7 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $65.9 million and cost of sales and fuel of $5.5 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $519.7 million, $7.4 million and $2.4 million, respectively.



Three Months Ended September 30, 2018	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	3,363,059		$	(526,398	)	$	2,836,661
Residue natural gas sales	246,237			—			246,237
Gathering, processing and exchange services revenue	157,934			—			157,934
Transportation and storage revenue	143,282			(2,370		)	140,912
Other	12,225			(79		)	12,146
Total revenues (a)	$	3,922,737		$	(528,847	)	$	3,393,890

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(3,089,701	)	$	528,936		$	(2,560,765	)
Operating costs	$	(228,639	)	$	(1,732	)	$	(230,371	)
Depreciation and amortization	$	(106,536	)	$	(847	)	$	(107,383	)
Equity in net earnings from investments	$	39,313		$	—		$	39,313
Capital expenditures	$	689,336		$	4,967		$	694,303

(a) - Noncustomer revenue for the three months ended September 30, 2018, totaled $(17.7) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.



Three Months Ended September 30, 2017	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	453,432		$	2,348,052		$	104,340		$	2,905,824
Intersegment revenues	329,496			153,927			2,098			485,521
Total revenues	782,928			2,501,979			106,438			3,391,345
Cost of sales and fuel (exclusive of depreciation and operating costs)	(566,988		)	(2,136,207		)	(10,614		)	(2,713,809		)
Operating costs	(79,559		)	(89,803		)	(29,568		)	(198,930		)
Equity in net earnings from investments	3,433			15,287			21,338			40,058
Other	2,136			2,663			(67		)	4,732
Segment adjusted EBITDA	$	141,950		$	293,919		$	87,527		$	523,396

Depreciation and amortization	$	(46,842	)	$	(41,929	)	$	(12,765	)	$	(101,536	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	—		$	(20,240	)
Capital expenditures	$	85,542		$	27,024		$	18,811		$	131,377

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $293.1 million, of which $250.2 million related to sales within the segment, and cost of sales and fuel of $124.2 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $65.6 million and cost of sales and fuel of $10.5 million.



Three Months Ended September 30, 2017	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
Sales to unaffiliated customers	$	2,905,824		$	542		$	2,906,366
Intersegment revenues	485,521			(485,521		)	—
Total revenues	$	3,391,345		$	(484,979	)	$	2,906,366

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(2,713,809	)	$	484,393		$	(2,229,416	)
Operating costs	$	(198,930	)	$	(5,404	)	$	(204,334	)
Depreciation and amortization	$	(101,536	)	$	(762	)	$	(102,298	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	(20,240	)
Equity in net earnings from investments	$	40,058		$	—		$	40,058
Capital expenditures	$	131,377		$	3,822		$	135,199



Nine Months Ended September 30, 2018	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total
	(Thousands of dollars)
NGL and condensate sales	$	1,362,159		$	7,884,183		$	—		$	9,246,342
Residue natural gas sales	709,089			—			5,861			714,950
Gathering, processing and exchange services revenue	122,331			296,561			—			418,892
Transportation and storage revenue	—			143,741			289,646			433,387
Other	6,596			8,202			19,390			34,188
Total revenues (c)	2,200,175			8,332,687			314,897			10,847,759
Cost of sales and fuel (exclusive of depreciation and operating costs)	(1,478,044		)	(7,009,438		)	(10,475		)	(8,497,957		)
Operating costs	(272,931		)	(289,328		)	(104,692		)	(666,951		)
Equity in net earnings from investments	948			49,456			65,666			116,070
Noncash compensation expense and other	6,868			9,789			3,701			20,358
Segment adjusted EBITDA	$	457,016		$	1,093,166		$	269,097		$	1,819,279

Depreciation and amortization	$	(145,120	)	$	(128,993	)	$	(41,320	)	$	(315,433	)
Total assets	$	5,811,140		$	9,632,212		$	2,109,897		$	17,553,249
Capital expenditures	$	433,605		$	786,635		$	71,897		$	1,292,137

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $910.3 million, of which $784.8 million related to sales within the segment, and cost of sales and fuel of $379.5 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $198.4 million and cost of sales and fuel of $20.4 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $1,366.0 million, $20.1 million and $7.0 million, respectively.



Nine Months Ended September 30, 2018	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	9,246,342		$	(1,383,864	)	$	7,862,478
Residue natural gas sales	714,950			(778		)	714,172
Gathering, processing and exchange services revenue	418,892			(21		)	418,871
Transportation and storage revenue	433,387			(6,959		)	426,428
Other	34,188			359			34,547
Total revenues (a)	$	10,847,759		$	(1,391,263	)	$	9,456,496

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(8,497,957	)	$	1,393,348		$	(7,104,609	)
Operating costs	$	(666,951	)	$	(3,777	)	$	(670,728	)
Depreciation and amortization	$	(315,433	)	$	(2,475	)	$	(317,908	)
Equity in net earnings from investments	$	116,070		$	—		$	116,070
Total assets	$	17,553,249		$	358,065		$	17,911,314
Capital expenditures	$	1,292,137		$	17,518		$	1,309,655

(a) - Noncustomer revenue for the nine months ended September 30, 2018, totaled $(32.1) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.



Nine Months Ended September 30, 2017	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	1,286,669		$	6,788,451		$	305,019		$	8,380,139
Intersegment revenues	843,350			455,197			6,086			1,304,633
Total revenues	2,130,019			7,243,648			311,105			9,684,772
Cost of sales and fuel (exclusive of depreciation and operating costs)	(1,544,263		)	(6,188,501		)	(33,990		)	(7,766,754		)
Operating costs	(223,546		)	(255,220		)	(91,813		)	(570,579		)
Equity in net earnings from investments	9,843			44,071			65,071			118,985
Other	2,125			1,459			772			4,356
Segment adjusted EBITDA	$	374,178		$	845,457		$	251,145		$	1,470,780

Depreciation and amortization	$	(137,843	)	$	(124,471	)	$	(37,906	)	$	(300,220	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	—		$	(20,240	)
Total assets	$	5,385,778		$	8,515,535		$	2,040,445		$	15,941,758
Capital expenditures	$	185,713		$	59,813		$	70,671		$	316,197

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $878.8 million, of which $752.5 million related to sales within the segment, and cost of sales and fuel of $359.6 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $197.3 million and cost of sales and fuel of $32.9 million.



Nine Months Ended September 30, 2017	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
Sales to unaffiliated customers	$	8,380,139		$	1,610		$	8,381,749
Intersegment revenues	1,304,633			(1,304,633		)	—
Total revenues	$	9,684,772		$	(1,303,023	)	$	8,381,749

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(7,766,754	)	$	1,302,473		$	(6,464,281	)
Operating costs	$	(570,579	)	$	(38,048	)	$	(608,627	)
Depreciation and amortization	$	(300,220	)	$	(2,346	)	$	(302,566	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	(20,240	)
Equity in net earnings from investments	$	118,985		$	—		$	118,985
Total assets	$	15,941,758		$	823,083		$	16,764,841
Capital expenditures	$	316,197		$	14,234		$	330,431



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
	(Thousands of dollars)
Reconciliation of net income to total segment adjusted EBITDA
Net income	$	313,916		$	166,531	$	862,144		$	528,707
Add:
Interest expense, net of capitalized interest	121,910			126,533		351,131			361,468
Depreciation and amortization	107,383			102,298		317,908			302,566
Income taxes	102,983			97,128		266,285			195,913
Impairment charges	—			20,240		—			20,240
Noncash compensation expense	5,829			4,883		27,195			9,790
Other corporate costs and noncash items (a)	(3,290		)	5,783		(5,384		)	52,096
Total segment adjusted EBITDA	$	648,731		$	523,396	$	1,819,279		$	1,470,780

(a) - The nine months ended September 30, 2017, includes our April 2017 $20 million contribution of Series E Preferred Stock to the Foundation and costs related to the Merger Transaction of $29.5 million.