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Name | Symbol | Market | Type |
---|---|---|---|
DCP Midstream LP | NYSE:DCP | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 41.69 | 0 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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03-0567133
|
(State or other jurisdiction
of incorporation or organization)
|
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(I.R.S. Employer
Identification No.)
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|
|
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370 17th Street, Suite 2500
Denver, Colorado
|
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80202
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(Address of principal executive offices)
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|
(Zip Code)
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Large accelerated filer
|
ý
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Accelerated filer
|
¨
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Emerging growth company
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Title of each class
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Trading Symbol(s)
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|
Name of each exchange on which registered
|
Common units representing limited partner interests
|
|
DCP
|
|
New York Stock Exchange
|
7.875% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units
|
|
DCP PRB
|
|
New York Stock Exchange
|
7.95% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units
|
|
DCP PRC
|
|
New York Stock Exchange
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Item
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Page
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PART I. FINANCIAL INFORMATION
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|
1.
|
Financial Statements (unaudited):
|
|
|
Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
|
|
|
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018
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Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018
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Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2019
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Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2018
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|
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Notes to the Condensed Consolidated Financial Statements
|
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2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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|
3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
4.
|
Controls and Procedures
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|
|
PART II. OTHER INFORMATION
|
|
1.
|
Legal Proceedings
|
|
1A.
|
Risk Factors
|
|
6.
|
Exhibits
|
|
|
Signatures
|
|
|
|
Bbl
|
|
barrel
|
Bbls/d
|
|
barrels per day
|
Bcf
|
|
billion cubic feet
|
Bcf/d
|
|
billion cubic feet per day
|
Btu
|
|
British thermal unit, a measurement of energy
|
Fractionation
|
|
the process by which natural gas liquids are separated
into individual components
|
MBbls
|
|
thousand barrels
|
MBbls/d
|
|
thousand barrels per day
|
MMBtu
|
|
million Btus
|
MMBtu/d
|
|
million Btus per day
|
MMcf
|
|
million cubic feet
|
MMcf/d
|
|
million cubic feet per day
|
NGLs
|
|
natural gas liquids
|
Throughput
|
|
the volume of product transported or passing through a
pipeline or other facility
|
•
|
the extent of changes in commodity prices and the demand for our products and services, our ability to effectively limit a portion of the adverse impact of potential changes in commodity prices through derivative financial instruments, and the potential impact of price, and of producers’ access to capital on natural gas drilling, demand for our services, and the volume of NGLs and condensate extracted;
|
•
|
the demand for crude oil, residue gas and NGL products;
|
•
|
the level and success of drilling and quality of production volumes around our assets and our ability to connect supplies to our gathering and processing systems, as well as our residue gas and NGL infrastructure;
|
•
|
new, additions to, and changes in, laws and regulations, particularly with regard to taxes, safety, regulatory and protection of the environment, including, but not limited to, climate change legislation, regulation of over-the-counter derivatives market and entities, and hydraulic fracturing regulations, or the increased regulation of our industry, including additional local control over such activities, and their impact on producers and customers served by our systems;
|
•
|
volatility in the price of our common units and preferred units;
|
•
|
general economic, market and business conditions;
|
•
|
the amount of natural gas we gather, compress, treat, process, transport, store and sell, or the NGLs we produce, fractionate, transport, store and sell, may be reduced if the pipelines, storage and fractionation facilities to which we deliver the natural gas or NGLs are capacity constrained and cannot, or will not, accept the natural gas or NGLs or we may be required to find alternative markets and arrangements for our natural gas and NGLs;
|
•
|
our ability to continue the safe and reliable operation of our assets;
|
•
|
our ability to construct and start up facilities on budget and in a timely fashion, which is partially dependent on obtaining required construction, environmental and other permits issued by federal, state and municipal governments, or agencies thereof, the availability of specialized contractors and laborers, and the price of and demand for materials;
|
•
|
our ability to access the debt and equity markets and the resulting cost of capital, which will depend on general market conditions, our financial and operating results, inflation rates, interest rates, our ability to comply with the covenants in our $1.4 billion unsecured revolving credit facility or other credit facilities, and the indentures governing our notes, as well as our ability to maintain our credit ratings;
|
•
|
the creditworthiness of our customers and the counterparties to our transactions;
|
•
|
the amount of collateral we may be required to post from time to time in our transactions;
|
•
|
industry changes, including the impact of bankruptcies, consolidations, alternative energy sources, technological advances, infrastructure constraints and changes in competition;
|
•
|
our ability to grow through organic growth projects, or acquisitions, and the successful integration and future performance of such assets;
|
•
|
our ability to hire, train, and retain qualified personnel and key management to execute our business strategy;
|
•
|
weather, weather-related conditions and other natural phenomena, including, but not limited to, their potential impact on demand for the commodities we sell and the operation of company-owned and third party-owned infrastructure;
|
•
|
security threats such as terrorist attacks, and cybersecurity attacks and breaches, against, or otherwise impacting, our facilities and systems; and
|
•
|
our ability to obtain insurance on commercially reasonable terms, if at all, as well as the adequacy of insurance to cover our losses.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
(millions)
|
||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1
|
|
|
$
|
1
|
|
Accounts receivable:
|
|
|
|
||||
Trade, net of allowance for doubtful accounts of $3 and $3 million, respectively
|
732
|
|
|
860
|
|
||
Affiliates
|
176
|
|
|
166
|
|
||
Other
|
6
|
|
|
7
|
|
||
Inventories
|
52
|
|
|
79
|
|
||
Unrealized gains on derivative instruments
|
35
|
|
|
108
|
|
||
Collateral cash deposits
|
64
|
|
|
34
|
|
||
Other
|
16
|
|
|
16
|
|
||
Total current assets
|
1,082
|
|
|
1,271
|
|
||
Property, plant and equipment, net
|
9,110
|
|
|
9,135
|
|
||
Goodwill
|
194
|
|
|
231
|
|
||
Intangible assets, net
|
77
|
|
|
97
|
|
||
Investments in unconsolidated affiliates
|
3,460
|
|
|
3,340
|
|
||
Unrealized gains on derivative instruments
|
2
|
|
|
8
|
|
||
Operating lease assets
|
78
|
|
|
—
|
|
||
Other long-term assets
|
184
|
|
|
184
|
|
||
Total assets
|
$
|
14,187
|
|
|
$
|
14,266
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable:
|
|
|
|
||||
Trade
|
$
|
786
|
|
|
$
|
807
|
|
Affiliates
|
116
|
|
|
96
|
|
||
Other
|
30
|
|
|
23
|
|
||
Current debt
|
1,125
|
|
|
525
|
|
||
Unrealized losses on derivative instruments
|
61
|
|
|
91
|
|
||
Accrued interest
|
72
|
|
|
71
|
|
||
Accrued taxes
|
65
|
|
|
64
|
|
||
Accrued wages and benefits
|
25
|
|
|
64
|
|
||
Capital spending accrual
|
28
|
|
|
63
|
|
||
Other
|
96
|
|
|
100
|
|
||
Total current liabilities
|
2,404
|
|
|
1,904
|
|
||
Long-term debt
|
4,236
|
|
|
4,782
|
|
||
Unrealized losses on derivative instruments
|
5
|
|
|
8
|
|
||
Deferred income taxes
|
32
|
|
|
32
|
|
||
Operating lease liabilities
|
66
|
|
|
—
|
|
||
Other long-term liabilities
|
231
|
|
|
243
|
|
||
Total liabilities
|
6,974
|
|
|
6,969
|
|
||
Commitments and contingent liabilities (see note 18)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Series A preferred limited partners (500,000 preferred units authorized, issued and outstanding, respectively)
|
498
|
|
|
489
|
|
||
Series B preferred limited partners (6,450,000 preferred units authorized, issued and outstanding, respectively)
|
156
|
|
|
156
|
|
||
Series C preferred limited partners (4,400,000 preferred units authorized, issued and outstanding, respectively)
|
106
|
|
|
106
|
|
||
General partner
|
105
|
|
|
107
|
|
||
Limited partners (143,317,328 common units authorized, issued and outstanding, respectively)
|
6,327
|
|
|
6,418
|
|
||
Accumulated other comprehensive loss
|
(8
|
)
|
|
(8
|
)
|
||
Total partners’ equity
|
7,184
|
|
|
7,268
|
|
||
Noncontrolling interests
|
29
|
|
|
29
|
|
||
Total equity
|
7,213
|
|
|
7,297
|
|
||
Total liabilities and equity
|
$
|
14,187
|
|
|
$
|
14,266
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions, except per unit amounts)
|
|||||||
Operating revenues:
|
|
|
|
|
||||
Sales of natural gas, NGLs and condensate
|
|
$
|
1,771
|
|
|
$
|
1,744
|
|
Sales of natural gas, NGLs and condensate to affiliates
|
|
340
|
|
|
325
|
|
||
Transportation, processing and other
|
|
115
|
|
|
111
|
|
||
Trading and marketing losses, net
|
|
(27
|
)
|
|
(41
|
)
|
||
Total operating revenues
|
|
2,199
|
|
|
2,139
|
|
||
Operating costs and expenses:
|
|
|
|
|
||||
Purchases and related costs
|
|
1,533
|
|
|
1,604
|
|
||
Purchases and related costs from affiliates
|
|
271
|
|
|
165
|
|
||
Operating and maintenance expense
|
|
178
|
|
|
162
|
|
||
Depreciation and amortization expense
|
|
103
|
|
|
94
|
|
||
General and administrative expense
|
|
67
|
|
|
59
|
|
||
Other expense, net
|
|
5
|
|
|
2
|
|
||
Loss on sale of assets, net
|
|
9
|
|
|
—
|
|
||
Total operating costs and expenses
|
|
2,166
|
|
|
2,086
|
|
||
Operating income
|
|
33
|
|
|
53
|
|
||
Earnings from unconsolidated affiliates
|
|
113
|
|
|
78
|
|
||
Interest expense, net
|
|
(69
|
)
|
|
(67
|
)
|
||
Income before income taxes
|
|
77
|
|
|
64
|
|
||
Income tax expense
|
|
(1
|
)
|
|
(1
|
)
|
||
Net income
|
|
76
|
|
|
63
|
|
||
Net income attributable to noncontrolling interests
|
|
(1
|
)
|
|
(1
|
)
|
||
Net income attributable to partners
|
|
75
|
|
|
62
|
|
||
Series A preferred limited partners' interest in net income
|
|
(9
|
)
|
|
(9
|
)
|
||
Series B preferred limited partners' interest in net income
|
|
(3
|
)
|
|
—
|
|
||
Series C preferred limited partners' interest in net income
|
|
(2
|
)
|
|
—
|
|
||
General partner’s interest in net income
|
|
(41
|
)
|
|
(41
|
)
|
||
Net income allocable to limited partners
|
|
$
|
20
|
|
|
$
|
12
|
|
Net income per limited partner unit — basic and diluted
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
Weighted-average limited partner units outstanding — basic and diluted
|
|
143.3
|
|
|
143.3
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
Net income
|
|
$
|
76
|
|
|
$
|
63
|
|
Other comprehensive income:
|
|
|
|
|
||||
Total other comprehensive income
|
|
—
|
|
|
—
|
|
||
Total comprehensive income
|
|
76
|
|
|
63
|
|
||
Total comprehensive income attributable to noncontrolling interests
|
|
(1
|
)
|
|
(1
|
)
|
||
Total comprehensive income attributable to partners
|
|
$
|
75
|
|
|
$
|
62
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
76
|
|
|
$
|
63
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
103
|
|
|
94
|
|
||
Earnings from unconsolidated affiliates
|
(113
|
)
|
|
(78
|
)
|
||
Distributions from unconsolidated affiliates
|
124
|
|
|
91
|
|
||
Net unrealized losses on derivative instruments
|
54
|
|
|
29
|
|
||
Loss on sale of assets, net
|
9
|
|
|
—
|
|
||
Other, net
|
6
|
|
|
6
|
|
||
Change in operating assets and liabilities, which provided (used) cash:
|
|
|
|
||||
Accounts receivable
|
118
|
|
|
161
|
|
||
Inventories
|
14
|
|
|
17
|
|
||
Accounts payable
|
29
|
|
|
(151
|
)
|
||
Other assets and liabilities
|
(103
|
)
|
|
(110
|
)
|
||
Net cash provided by operating activities
|
317
|
|
|
122
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(182
|
)
|
|
(124
|
)
|
||
Investments in unconsolidated affiliates
|
(131
|
)
|
|
(60
|
)
|
||
Proceeds from sale of assets
|
103
|
|
|
3
|
|
||
Net cash used in investing activities
|
(210
|
)
|
|
(181
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from debt
|
1,402
|
|
|
635
|
|
||
Payments of debt
|
(1,348
|
)
|
|
(535
|
)
|
||
Distributions to preferred limited partners
|
(5
|
)
|
|
—
|
|
||
Distributions to limited partners and general partner
|
(154
|
)
|
|
(194
|
)
|
||
Distributions to noncontrolling interests
|
(1
|
)
|
|
(1
|
)
|
||
Other
|
(1
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(107
|
)
|
|
(95
|
)
|
||
Net change in cash and cash equivalents
|
—
|
|
|
(154
|
)
|
||
Cash and cash equivalents, beginning of period
|
1
|
|
|
156
|
|
||
Cash and cash equivalents, end of period
|
$
|
1
|
|
|
$
|
2
|
|
|
Partners’ Equity
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
Series A Preferred Limited Partners
|
|
Series B Preferred Limited Partners
|
|
Series C Preferred Limited Partners
|
|
Limited
Partners |
|
General
Partner
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||||||
|
(millions)
|
|||||||||||||||||||||||||||||||
Balance, January 1, 2019
|
|
$
|
489
|
|
|
$
|
156
|
|
|
$
|
106
|
|
|
$
|
6,418
|
|
|
$
|
107
|
|
|
$
|
(8
|
)
|
|
$
|
29
|
|
|
$
|
7,297
|
|
Net income
|
|
9
|
|
|
3
|
|
|
2
|
|
|
20
|
|
|
41
|
|
|
—
|
|
|
1
|
|
|
76
|
|
||||||||
Distributions to unitholders
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(111
|
)
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
(159
|
)
|
||||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Balance, March 31, 2019
|
|
$
|
498
|
|
|
$
|
156
|
|
|
$
|
106
|
|
|
$
|
6,327
|
|
|
$
|
105
|
|
|
$
|
(8
|
)
|
|
$
|
29
|
|
|
$
|
7,213
|
|
|
Partners’ Equity
|
|
|
|
|
|||||||||||||||||||
|
|
Series A Preferred Limited Partners
|
|
Limited
Partners
|
|
General
Partner
|
|
Accumulated
Other Comprehensive Loss |
|
Noncontrolling
Interests |
|
Total
Equity |
||||||||||||
|
(millions)
|
|||||||||||||||||||||||
Balance, January 1, 2018
|
|
$
|
491
|
|
|
$
|
6,772
|
|
|
$
|
154
|
|
|
$
|
(9
|
)
|
|
$
|
30
|
|
|
$
|
7,438
|
|
Cumulative-effect adjustment
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
Net income
|
|
9
|
|
|
12
|
|
|
41
|
|
|
—
|
|
|
1
|
|
|
63
|
|
||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Distributions to unitholders
|
|
—
|
|
|
(111
|
)
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
||||||
Balance, March 31, 2018
|
|
$
|
500
|
|
|
$
|
6,679
|
|
|
$
|
112
|
|
|
$
|
(9
|
)
|
|
$
|
30
|
|
|
$
|
7,312
|
|
|
|
|
Balance at
|
|
Adjustments due to Topic 842
|
|
Balance at
|
||||||
|
|
December 31, 2018
|
|
|
January 1, 2019
|
|||||||
|
|
(millions)
|
||||||||||
Balance Sheet
|
|
|
|
|
|
|
||||||
Operating lease assets
|
|
$
|
—
|
|
|
$
|
84
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
||||||
Other
|
|
$
|
100
|
|
|
$
|
25
|
|
|
$
|
125
|
|
Operating lease liabilities
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
66
|
|
Other long-term liabilities
|
|
$
|
243
|
|
|
$
|
(7
|
)
|
|
$
|
236
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Eliminations
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Sales of natural gas
|
|
$
|
637
|
|
|
$
|
557
|
|
|
$
|
(498
|
)
|
|
$
|
696
|
|
Sales of NGLs and condensate (a)
|
|
1,403
|
|
|
648
|
|
|
(636
|
)
|
|
1,415
|
|
||||
Transportation, processing and other
|
|
12
|
|
|
103
|
|
|
—
|
|
|
115
|
|
||||
Trading and marketing losses, net (b)
|
|
$
|
(7
|
)
|
|
$
|
(20
|
)
|
|
—
|
|
|
(27
|
)
|
||
Total operating revenues
|
|
$
|
2,045
|
|
|
$
|
1,288
|
|
|
$
|
(1,134
|
)
|
|
$
|
2,199
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Eliminations
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Sales of natural gas
|
|
$
|
553
|
|
|
$
|
446
|
|
|
$
|
(419
|
)
|
|
$
|
580
|
|
Sales of NGLs and condensate (a)
|
|
1,456
|
|
|
740
|
|
|
(707
|
)
|
|
1,489
|
|
||||
Transportation, processing and other
|
|
14
|
|
|
97
|
|
|
—
|
|
|
111
|
|
||||
Trading and marketing (losses) gains, net (b)
|
|
$
|
(44
|
)
|
|
$
|
3
|
|
|
—
|
|
|
(41
|
)
|
||
Total operating revenues
|
|
$
|
1,979
|
|
|
$
|
1,286
|
|
|
$
|
(1,126
|
)
|
|
$
|
2,139
|
|
|
|
March 31,
|
||
|
|
2019
|
||
|
|
(millions)
|
||
Balance, beginning of period
|
|
$
|
34
|
|
Revenue recognized (a)
|
|
—
|
|
|
Balance, end of period
|
|
$
|
34
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
Employee related costs charged by DCP Midstream, LLC
|
|
|
|
|
||||
Operating and maintenance expense
|
|
$
|
49
|
|
|
$
|
50
|
|
General and administrative expense
|
|
$
|
47
|
|
|
$
|
38
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
Phillips 66 (including its affiliates):
|
|
|
|
|
||||
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
326
|
|
|
$
|
302
|
|
Purchases and related costs from affiliates
|
|
$
|
45
|
|
|
$
|
10
|
|
Operating and maintenance and general administrative expenses
|
|
$
|
4
|
|
|
$
|
3
|
|
Enbridge (including its affiliates):
|
|
|
|
|
||||
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
—
|
|
|
$
|
12
|
|
Purchases and related costs from affiliates
|
|
$
|
7
|
|
|
$
|
10
|
|
Unconsolidated affiliates:
|
|
|
|
|
||||
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
14
|
|
|
$
|
11
|
|
Transportation, processing, and other to affiliates
|
|
$
|
1
|
|
|
$
|
1
|
|
Purchases and related costs from affiliates
|
|
$
|
219
|
|
|
$
|
145
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(millions)
|
||||||
Phillips 66 (including its affiliates):
|
|
|
|
||||
Accounts receivable
|
$
|
146
|
|
|
$
|
145
|
|
Accounts payable
|
$
|
28
|
|
|
$
|
22
|
|
Enbridge (including its affiliates):
|
|
|
|
||||
Accounts payable
|
$
|
2
|
|
|
$
|
2
|
|
Unconsolidated affiliates:
|
|
|
|
||||
Accounts receivable
|
$
|
30
|
|
|
$
|
21
|
|
Accounts payable
|
$
|
86
|
|
|
$
|
72
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(millions)
|
||||||
Natural gas
|
$
|
23
|
|
|
$
|
34
|
|
NGLs
|
29
|
|
|
45
|
|
||
Total inventories
|
$
|
52
|
|
|
$
|
79
|
|
|
Depreciable
Life |
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
(millions)
|
||||||
Gathering and transmission systems
|
20 — 50 Years
|
|
$
|
8,539
|
|
|
$
|
8,492
|
|
Processing, storage and terminal facilities
|
35 — 60 Years
|
|
5,149
|
|
|
5,194
|
|
||
Other
|
3 — 30 Years
|
|
571
|
|
|
568
|
|
||
Construction work in progress
|
|
|
527
|
|
|
470
|
|
||
Property, plant and equipment
|
|
|
14,786
|
|
|
14,724
|
|
||
Accumulated depreciation
|
|
|
(5,676
|
)
|
|
(5,589
|
)
|
||
Property, plant and equipment, net
|
|
|
$
|
9,110
|
|
|
$
|
9,135
|
|
|
|
|
||||||||||
|
March 31, 2019
|
||||||||||
|
(millions)
|
||||||||||
|
Gathering and Processing
|
|
Logistics and Marketing
|
|
Total
|
||||||
Balance, beginning of period
|
$
|
159
|
|
|
$
|
72
|
|
|
$
|
231
|
|
Dispositions
|
—
|
|
|
(37
|
)
|
|
(37
|
)
|
|||
Balance, end of period
|
$
|
159
|
|
|
$
|
35
|
|
|
$
|
194
|
|
|
|
|
Carrying Value as of
|
||||||
|
Percentage
Ownership |
|
March 31,
2019 |
|
December 31, 2018
|
||||
|
|
|
(millions)
|
||||||
DCP Sand Hills Pipeline, LLC
|
66.67%
|
|
$
|
1,787
|
|
|
$
|
1,791
|
|
DCP Southern Hills Pipeline, LLC
|
66.67%
|
|
731
|
|
|
728
|
|
||
Discovery Producer Services LLC
|
40.00%
|
|
339
|
|
|
344
|
|
||
Front Range Pipeline LLC
|
33.33%
|
|
185
|
|
|
175
|
|
||
Texas Express Pipeline LLC
|
10.00%
|
|
98
|
|
|
95
|
|
||
Gulf Coast Express Pipeline LLC
|
25.00%
|
|
257
|
|
|
146
|
|
||
Mont Belvieu Enterprise Fractionator
|
12.50%
|
|
27
|
|
|
24
|
|
||
Panola Pipeline Company, LLC
|
15.00%
|
|
22
|
|
|
23
|
|
||
Mont Belvieu 1 Fractionator
|
20.00%
|
|
10
|
|
|
10
|
|
||
Other
|
Various
|
|
4
|
|
|
4
|
|
||
Total investments in unconsolidated affiliates
|
|
|
$
|
3,460
|
|
|
$
|
3,340
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
DCP Sand Hills Pipeline, LLC
|
$
|
68
|
|
|
$
|
48
|
|
DCP Southern Hills Pipeline, LLC
|
23
|
|
|
13
|
|
||
Discovery Producer Services LLC
|
—
|
|
|
1
|
|
||
Front Range Pipeline LLC
|
7
|
|
|
5
|
|
||
Texas Express Pipeline LLC
|
5
|
|
|
2
|
|
||
Mont Belvieu Enterprise Fractionator
|
4
|
|
|
4
|
|
||
Mont Belvieu 1 Fractionator
|
4
|
|
|
4
|
|
||
Other
|
2
|
|
|
1
|
|
||
Total earnings from unconsolidated affiliates
|
$
|
113
|
|
|
$
|
78
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
Statements of operations:
|
|
|
|
||||
Operating revenue
|
$
|
421
|
|
|
$
|
334
|
|
Operating expenses
|
$
|
191
|
|
|
$
|
139
|
|
Net income
|
$
|
231
|
|
|
$
|
194
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(millions)
|
||||||
Balance sheets:
|
|
|
|
||||
Current assets
|
$
|
327
|
|
|
$
|
411
|
|
Long-term assets
|
6,941
|
|
|
6,359
|
|
||
Current liabilities
|
(450
|
)
|
|
(424
|
)
|
||
Long-term liabilities
|
(249
|
)
|
|
(221
|
)
|
||
Net assets
|
$
|
6,569
|
|
|
$
|
6,125
|
|
•
|
Level 1 — inputs are unadjusted quoted prices for
identical
assets or liabilities in active markets.
|
•
|
Level 2 — inputs include quoted prices for
similar
assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
•
|
Level 3 — inputs are unobservable and considered significant to the fair value measurement.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Carrying
Value
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity derivatives (a)
|
$
|
16
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
35
|
|
|
$
|
62
|
|
|
$
|
32
|
|
|
$
|
14
|
|
|
$
|
108
|
|
Long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity derivatives (b)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
8
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity derivatives (c)
|
$
|
(14
|
)
|
|
$
|
(46
|
)
|
|
$
|
(1
|
)
|
|
$
|
(61
|
)
|
|
$
|
(39
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(91
|
)
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity derivatives (d)
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
(8
|
)
|
(a)
|
Included in current unrealized gains on derivative instruments in our condensed consolidated balance sheets.
|
(b)
|
Included in long-term unrealized gains on derivative instruments in our condensed consolidated balance sheets.
|
(c)
|
Included in current unrealized losses on derivative instruments in our condensed consolidated balance sheets.
|
(d)
|
Included in long-term unrealized losses on derivative instruments in our condensed consolidated balance sheets.
|
|
|
Commodity Derivative Instruments
|
||||||||||||||
|
Current
Assets |
|
Long-Term
Assets |
|
Current
Liabilities |
|
Long-Term
Liabilities |
||||||||
|
(millions)
|
||||||||||||||
Three months ended March 31, 2019 (a):
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
14
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Net unrealized (losses) gains included in earnings (b)
|
(4
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
1
|
|
||||
Transfers out of Level 3 (c)
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Settlements
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Ending balance
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Net unrealized losses on derivatives still held included in earnings (b)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Three months ended March 31, 2018 (a):
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
(13
|
)
|
|
$
|
(1
|
)
|
Net unrealized (losses) gains included in earnings (b)
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
(2
|
)
|
||||
Transfers out of Level 3 (c)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Settlements
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Ending balance
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
Net unrealized (losses) gains on derivatives still held included in earnings (b)
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
(a)
|
There were no purchases, issuances or sales of derivatives or transfers into Level 3 for the
three months ended
March 31, 2019
and
2018
.
|
(b)
|
Represents the amount of unrealized gains or losses for the period, included in trading and marketing gains (losses), net.
|
(c)
|
Amounts transferred out of Level 3 are reflected at fair value at the end of the period.
|
|
March 31, 2019
|
|
|
||||
Product Group
|
Fair Value
|
|
Forward
Curve Range
|
|
|
||
|
(millions)
|
|
|
||||
Assets
|
|
|
|
|
|
||
NGLs
|
$
|
5
|
|
|
$0.24-$1.24
|
|
Per gallon
|
Natural gas
|
$
|
1
|
|
|
$1.95-$2.58
|
|
Per MMBtu
|
Liabilities
|
|
|
|
|
|
||
NGLs
|
$
|
(1
|
)
|
|
$0.13-$1.24
|
|
Per gallon
|
Natural gas
|
$
|
(1
|
)
|
|
$2.42-$2.86
|
|
Per MMBtu
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying Value (a)
|
|
Fair Value
|
|
Carrying Value (a)
|
|
Fair Value
|
||||||||
|
(millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Total debt
|
|
$
|
5,391
|
|
|
$
|
5,476
|
|
|
$
|
5,337
|
|
|
$
|
5,170
|
|
|
|
As of
|
||
|
|
March 31, 2019
|
||
|
|
(millions)
|
||
Operating lease assets
|
|
$
|
78
|
|
|
|
|
||
Operating lease liabilities
|
|
$
|
66
|
|
Other current liabilities
|
|
18
|
|
|
Total
|
|
$
|
84
|
|
|
|
Three months ended
|
||
|
|
March 31, 2019
|
||
|
|
(millions)
|
||
Operating lease cost
|
|
$
|
6
|
|
Variable lease cost
|
|
2
|
|
|
Short term lease cost
|
|
1
|
|
|
Total lease cost
|
|
$
|
9
|
|
|
|
Three months ended
|
||
|
|
March 31, 2019
|
||
|
|
(millions)
|
||
2019 - remainder
|
|
$
|
16
|
|
2020
|
|
22
|
|
|
2021
|
|
20
|
|
|
2022
|
|
15
|
|
|
2023
|
|
9
|
|
|
Thereafter
|
|
11
|
|
|
Total lease payments
|
|
$
|
93
|
|
Less imputed interest
|
|
(9
|
)
|
|
Total operating lease liabilities
|
|
$
|
84
|
|
|
|
Future Minimum Rental Payments as of December 31, 2018
|
||
|
|
(millions)
|
||
|
2019
|
$
|
22
|
|
|
2020
|
18
|
|
|
|
2021
|
14
|
|
|
|
2022
|
9
|
|
|
|
2023
|
5
|
|
|
|
Thereafter
|
7
|
|
|
|
Total minimum rental payments
|
$
|
75
|
|
|
|
Three months ended
|
||
|
|
March 31, 2019
|
||
|
|
(millions)
|
||
Cash paid for amounts included in the measurement of operating lease liabilities:
|
|
$
|
6
|
|
Right-of-use assets obtained in exchange for operating lease obligations following the adoption of Topic 842:
|
|
$
|
6
|
|
|
|
|
||
Other information related to operating leases as follows:
|
|
|
||
Weighted average remaining lease term
|
|
6 years
|
|
|
Weighted average discount rate
|
|
4.00
|
%
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(millions)
|
||||||
Senior notes:
|
|
|
|
||||
Issued March 2014, interest at 2.700% payable semi-annually, due April 2019
|
325
|
|
|
325
|
|
||
Issued March 2010, interest at 5.350% payable semiannually, due March 2020 (a)
|
600
|
|
|
600
|
|
||
Issued September 2011, interest at 4.750% payable semiannually, due September 2021
|
500
|
|
|
500
|
|
||
Issued March 2012, interest at 4.950% payable semi-annually, due April 2022
|
350
|
|
|
350
|
|
||
Issued March 2013, interest at 3.875% payable semi-annually, due March 2023
|
500
|
|
|
500
|
|
||
Issued July 2018 and January 2019, interest at 5.375% payable semi-annually, due July 2025
|
825
|
|
|
500
|
|
||
Issued August 2000, interest at 8.125% payable semi-annually, due August 2030 (a)
|
300
|
|
|
300
|
|
||
Issued October 2006, interest at 6.450% payable semi-annually, due November 2036
|
300
|
|
|
300
|
|
||
Issued September 2007, interest at 6.750% payable semi-annually, due September 2037
|
450
|
|
|
450
|
|
||
Issued March 2014, interest at 5.600% payable semi-annually, due April 2044
|
400
|
|
|
400
|
|
||
Junior subordinated notes:
|
|
|
|
||||
Issued May 2013, interest at 5.850% payable semi-annually, due May 2043
|
550
|
|
|
550
|
|
||
Credit agreement:
|
|
|
|
||||
Revolving credit facility, weighted-average variable interest rate of 3.950%, as of March 31, 2019, due December 2022
|
80
|
|
|
351
|
|
||
Accounts receivable securitization facility:
|
|
|
|
||||
Accounts receivable securitization facility, weighted-average variable interest rate of 3.290% as of March 31, 2019, due August 2019
|
200
|
|
|
200
|
|
||
Fair value adjustments related to interest rate swap fair value hedges (a)
|
20
|
|
|
21
|
|
||
Unamortized issuance costs
|
(30
|
)
|
|
(30
|
)
|
||
Unamortized discount
|
(9
|
)
|
|
(10
|
)
|
||
Total debt
|
5,361
|
|
|
5,307
|
|
||
Current debt
|
1,125
|
|
|
525
|
|
||
Total long-term debt
|
$
|
4,236
|
|
|
$
|
4,782
|
|
|
Debt
Maturities
|
||
|
(millions)
|
||
2019
|
$
|
525
|
|
2020
|
600
|
|
|
2021
|
500
|
|
|
2022
|
430
|
|
|
2023
|
500
|
|
|
Thereafter
|
2,825
|
|
|
Total debt
|
$
|
5,380
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross Amounts
of Assets and (Liabilities) Presented in the Balance Sheet |
|
Amounts Not
Offset in the Balance Sheet - Financial Instruments |
|
Net
Amount |
|
Gross Amounts
of Assets and (Liabilities) Presented in the Balance Sheet |
|
Amounts Not
Offset in the Balance Sheet - Financial Instruments |
|
Net
Amount |
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
116
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
$
|
(66
|
)
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
(99
|
)
|
|
$
|
—
|
|
|
$
|
(99
|
)
|
Balance Sheet Line Item
|
March 31,
2019 |
|
December 31,
2018 |
|
Balance Sheet Line Item
|
|
March 31,
2019 |
|
December 31,
2018 |
||||||||
|
(millions)
|
|
|
|
(millions)
|
||||||||||||
Derivative Assets Not Designated as Hedging Instruments:
|
|
Derivative Liabilities Not Designated as Hedging Instruments:
|
|||||||||||||||
Commodity derivatives:
|
|
|
|
|
Commodity derivatives:
|
|
|
|
|
||||||||
Unrealized gains on derivative instruments — current
|
$
|
35
|
|
|
$
|
108
|
|
|
Unrealized losses on derivative instruments — current
|
|
$
|
(61
|
)
|
|
$
|
(91
|
)
|
Unrealized gains on derivative instruments — long-term
|
2
|
|
|
8
|
|
|
Unrealized losses on derivative instruments — long-term
|
|
(5
|
)
|
|
(8
|
)
|
||||
Total
|
$
|
37
|
|
|
$
|
116
|
|
|
Total
|
|
$
|
(66
|
)
|
|
$
|
(99
|
)
|
|
|
Interest
Rate Cash Flow Hedges |
|
Commodity
Cash Flow Hedges |
|
Foreign
Currency Cash Flow Hedges (a) |
|
Total
|
||||||||
|
(millions)
|
||||||||||||||
Net deferred (losses) gains in AOCI (beginning balance)
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
Net deferred (losses) gains in AOCI (ending balance)
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
Deferred losses in AOCI expected to be reclassified into earnings over the next 12 months
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
|
Interest
Rate Cash Flow Hedges |
|
Commodity
Cash Flow Hedges |
|
Foreign
Currency Cash Flow Hedges (a) |
|
Total
|
||||||||
|
(millions)
|
||||||||||||||
Net deferred (losses) gains in AOCI (beginning balance)
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(9
|
)
|
Net deferred (losses) gains in AOCI (ending balance)
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(9
|
)
|
(a)
|
Relates to Discovery, an unconsolidated affiliate.
|
Commodity Derivatives: Statements of Operations Line Item
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
Realized gains (losses)
|
|
$
|
27
|
|
|
$
|
(12
|
)
|
Unrealized losses
|
|
(54
|
)
|
|
(29
|
)
|
||
Trading and marketing losses, net
|
|
$
|
(27
|
)
|
|
$
|
(41
|
)
|
|
March 31, 2019
|
||||||||||
|
Crude Oil
|
|
Natural Gas
|
|
Natural Gas
Liquids
|
|
Natural Gas
Basis Swaps
|
||||
Year of Expiration
|
Net Short
Position
(Bbls)
|
|
Net Short Position
(MMBtu)
|
|
Net Short
Position
(Bbls)
|
|
Net Long (Short)
Position
(MMBtu)
|
||||
2019
|
(1,191,000
|
)
|
|
(32,148,650
|
)
|
|
(26,987,090
|
)
|
|
2,102,500
|
|
2020
|
(283,000
|
)
|
|
(930,000
|
)
|
|
(14,388,830
|
)
|
|
3,660,000
|
|
2021
|
(100,000
|
)
|
|
—
|
|
|
(5,516,168
|
)
|
|
(3,650,000
|
)
|
2022
|
—
|
|
|
—
|
|
|
(175
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
March 31, 2018
|
||||||||||
|
Crude Oil
|
|
Natural Gas
|
|
Natural Gas
Liquids
|
|
Natural Gas
Basis Swaps
|
||||
Year of Expiration
|
Net Short
Position
(Bbls)
|
|
Net Short Position
(MMBtu)
|
|
Net (Short) Long
Position
(Bbls)
|
|
Net (Short) Long
Position
(MMBtu)
|
||||
2018
|
(2,511,000
|
)
|
|
(20,737,300
|
)
|
|
(24,473,245
|
)
|
|
(3,850,000
|
)
|
2019
|
(650,000
|
)
|
|
—
|
|
|
(3,240,167
|
)
|
|
2,402,500
|
|
2020
|
—
|
|
|
—
|
|
|
231,548
|
|
|
3,660,000
|
|
Payment Date
|
Per Unit
Distribution
|
|
Total Cash
Distribution
|
||||
|
|
|
|
(millions)
|
|||
Distributions to common unitholders
|
|
|
|
||||
February 14, 2019
|
$
|
0.7800
|
|
|
$
|
154
|
|
November 14, 2018
|
$
|
0.7800
|
|
|
$
|
155
|
|
August 14, 2018
|
$
|
0.7800
|
|
|
$
|
154
|
|
May 15, 2018
|
$
|
0.7800
|
|
|
$
|
155
|
|
February 14, 2018
|
$
|
0.7800
|
|
|
$
|
194
|
|
|
|
|
|
||||
Distributions to Series A Preferred unitholders
|
|
|
|
||||
December 17, 2018
|
$
|
36.8750
|
|
|
$
|
18
|
|
June 15, 2018
|
$
|
41.9965
|
|
|
$
|
21
|
|
|
|
|
|
||||
Distributions to Series B Preferred unitholders
|
|
|
|
||||
March 15, 2019
|
$
|
0.4922
|
|
|
$
|
3
|
|
December 17, 2018
|
$
|
0.4922
|
|
|
$
|
3
|
|
September 17, 2018
|
$
|
0.6781
|
|
|
$
|
4
|
|
|
|
|
|
||||
Distributions to Series C Preferred unitholders
|
|
|
|
||||
January 15, 2019
|
$
|
0.5576
|
|
|
$
|
2
|
|
•
|
In March 2018, the New Mexico Environment Department ("NMED") issued two separate Notices of Violation ("NOV") relating to upset and malfunction event emissions at two of our gas processing plants. Following information exchanges and discussions with NMED regarding the events and the propriety of the alleged violations, on February 14, 2019 we entered into preliminary settlement agreements to resolve the alleged violations under each NOV for administrative penalties in the amount of $
149,832
and $
142,233
, respectively. We intend to mitigate a portion of each administrative penalty through the implementation of environmentally beneficial projects.
|
•
|
In April 2018, the Colorado Department of Public Health and Environment ("CDPHE") issued a Compliance Advisory in relation to an improperly permitted facility flare and related air emissions from flare operations at one of our gas processing plants that we self-disclosed to CDPHE in December 2017. Following information exchanges and discussions with CDPHE, during the first quarter of 2019, a resolution was proposed pursuant to which the plant's air permit would be revised to include the flare and emissions limits for such flare in addition to us paying an administrative penalty as well as an economic benefit payment generally covering the period when the flare was required to be included in the facility air permit, in a combined amount expected to be between approximately
$375,000
and
$420,000
. We are still evaluating and holding discussions with CDPHE as to the foregoing amounts and proposed settlement terms.
|
|
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Other
|
|
Eliminations
|
|
Total
|
||||||||||
|
(millions)
|
||||||||||||||||||
Total operating revenue
|
$
|
2,045
|
|
|
$
|
1,288
|
|
|
$
|
—
|
|
|
$
|
(1,134
|
)
|
|
$
|
2,199
|
|
Gross margin (a)
|
$
|
58
|
|
|
$
|
337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
395
|
|
Operating and maintenance expense
|
(9
|
)
|
|
(165
|
)
|
|
(4
|
)
|
|
—
|
|
|
(178
|
)
|
|||||
Depreciation and amortization expense
|
(3
|
)
|
|
(93
|
)
|
|
(7
|
)
|
|
—
|
|
|
(103
|
)
|
|||||
General and administrative expense
|
(3
|
)
|
|
(6
|
)
|
|
(58
|
)
|
|
—
|
|
|
(67
|
)
|
|||||
Other expense, net
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Loss on sale of assets, net
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||||
Earnings from unconsolidated affiliates
|
113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(69
|
)
|
|||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss)
|
$
|
147
|
|
|
$
|
68
|
|
|
$
|
(139
|
)
|
|
$
|
—
|
|
|
$
|
76
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss) attributable to partners
|
$
|
147
|
|
|
$
|
67
|
|
|
$
|
(139
|
)
|
|
$
|
—
|
|
|
$
|
75
|
|
Non-cash derivative mark-to-market (b)
|
$
|
(18
|
)
|
|
$
|
(36
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(54
|
)
|
Non-cash lower of cost or market adjustments
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Capital expenditures
|
$
|
14
|
|
|
$
|
165
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
182
|
|
Investments in unconsolidated affiliates, net
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Other
|
|
Eliminations
|
|
Total
|
||||||||||
|
(millions)
|
||||||||||||||||||
Total operating revenue
|
$
|
1,979
|
|
|
$
|
1,286
|
|
|
$
|
—
|
|
|
$
|
(1,126
|
)
|
|
$
|
2,139
|
|
Gross margin (a)
|
$
|
18
|
|
|
$
|
352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
370
|
|
Operating and maintenance expense
|
(11
|
)
|
|
(148
|
)
|
|
(3
|
)
|
|
—
|
|
|
(162
|
)
|
|||||
Depreciation and amortization expense
|
(3
|
)
|
|
(84
|
)
|
|
(7
|
)
|
|
—
|
|
|
(94
|
)
|
|||||
General and administrative expense
|
(3
|
)
|
|
(4
|
)
|
|
(52
|
)
|
|
—
|
|
|
(59
|
)
|
|||||
Other income (expense)
|
1
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Earnings from unconsolidated affiliates
|
77
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss)
|
$
|
79
|
|
|
$
|
114
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
63
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss) attributable to partners
|
$
|
79
|
|
|
$
|
113
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
62
|
|
Non-cash derivative mark-to-market (b)
|
$
|
(43
|
)
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
Capital expenditures
|
$
|
1
|
|
|
$
|
120
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
124
|
|
Investments in unconsolidated affiliates, net
|
$
|
59
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
Segment long-term assets:
|
|
|
|
||||
Gathering and Processing
|
$
|
9,126
|
|
|
$
|
9,058
|
|
Logistics and Marketing
|
3,692
|
|
|
3,661
|
|
||
Other (c)
|
287
|
|
|
276
|
|
||
Total long-term assets
|
13,105
|
|
|
12,995
|
|
||
Current assets
|
1,082
|
|
|
1,271
|
|
||
Total assets
|
$
|
14,187
|
|
|
$
|
14,266
|
|
(a)
|
Gross margin consists of total operating revenues, including commodity derivative activity, less purchases and related costs. Gross margin is viewed as a non-GAAP financial measure under the rules of the SEC, but is included as a supplemental disclosure because it is a primary performance measure used by management as it represents the results of product sales versus product purchases. As an indicator of our operating performance, gross margin should not be considered an alternative to, or more meaningful than, net income or net cash provided by operating activities as determined in accordance with GAAP. Our gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate gross margin in the same manner.
|
(b)
|
Non-cash commodity derivative mark-to-market is included in gross margin, along with cash settlements for our commodity derivative contracts.
|
(c)
|
Other long-term assets not allocable to segments consist of corporate leasehold improvements and other long-term assets.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
Cash paid for interest:
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
65
|
|
|
$
|
84
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Property, plant and equipment acquired with accounts payable and accrued liabilities
|
$
|
40
|
|
|
$
|
54
|
|
Other non-cash activities:
|
|
|
|
||||
Operating lease assets arising from the implementation of Topic 842
|
$
|
84
|
|
|
$
|
—
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
March 31, 2019
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
914
|
|
|
—
|
|
|
914
|
|
|||||
Inventories
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|||||
Total current assets
|
—
|
|
|
—
|
|
|
1,082
|
|
|
—
|
|
|
1,082
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
9,110
|
|
|
—
|
|
|
9,110
|
|
|||||
Goodwill and intangible assets, net
|
—
|
|
|
—
|
|
|
271
|
|
|
—
|
|
|
271
|
|
|||||
Advances receivable — consolidated subsidiaries
|
2,293
|
|
|
1,870
|
|
|
—
|
|
|
(4,163
|
)
|
|
—
|
|
|||||
Investments in consolidated subsidiaries
|
4,893
|
|
|
8,255
|
|
|
—
|
|
|
(13,148
|
)
|
|
—
|
|
|||||
Investments in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
3,460
|
|
|
—
|
|
|
3,460
|
|
|||||
Other long-term assets
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
264
|
|
|||||
Total assets
|
$
|
7,186
|
|
|
$
|
10,125
|
|
|
$
|
14,187
|
|
|
$
|
(17,311
|
)
|
|
$
|
14,187
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and other current liabilities
|
$
|
2
|
|
|
$
|
71
|
|
|
$
|
1,206
|
|
|
$
|
—
|
|
|
$
|
1,279
|
|
Current maturities of long-term debt
|
—
|
|
|
925
|
|
|
200
|
|
|
—
|
|
|
1,125
|
|
|||||
Advances payable — consolidated subsidiaries
|
—
|
|
|
—
|
|
|
4,163
|
|
|
(4,163
|
)
|
|
—
|
|
|||||
Long-term debt
|
—
|
|
|
4,236
|
|
|
—
|
|
|
—
|
|
|
4,236
|
|
|||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
334
|
|
|
—
|
|
|
334
|
|
|||||
Total liabilities
|
2
|
|
|
5,232
|
|
|
5,903
|
|
|
(4,163
|
)
|
|
6,974
|
|
|||||
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Partners’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net equity
|
7,184
|
|
|
4,896
|
|
|
8,260
|
|
|
(13,148
|
)
|
|
7,192
|
|
|||||
Accumulated other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Total partners’ equity
|
7,184
|
|
|
4,893
|
|
|
8,255
|
|
|
(13,148
|
)
|
|
7,184
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|||||
Total equity
|
7,184
|
|
|
4,893
|
|
|
8,284
|
|
|
(13,148
|
)
|
|
7,213
|
|
|||||
Total liabilities and equity
|
$
|
7,186
|
|
|
$
|
10,125
|
|
|
$
|
14,187
|
|
|
$
|
(17,311
|
)
|
|
$
|
14,187
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
December 31, 2018
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,033
|
|
|
—
|
|
|
1,033
|
|
|||||
Inventories
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
79
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
|||||
Total current assets
|
—
|
|
|
—
|
|
|
1,271
|
|
|
—
|
|
|
1,271
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
9,135
|
|
|
—
|
|
|
9,135
|
|
|||||
Goodwill and intangible assets, net
|
—
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|
328
|
|
|||||
Advances receivable — consolidated subsidiaries
|
2,452
|
|
|
1,883
|
|
|
—
|
|
|
(4,335
|
)
|
|
—
|
|
|||||
Investments in consolidated subsidiaries
|
4,818
|
|
|
8,113
|
|
|
—
|
|
|
(12,931
|
)
|
|
—
|
|
|||||
Investments in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
3,340
|
|
|
—
|
|
|
3,340
|
|
|||||
Other long-term assets
|
—
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|||||
Total assets
|
$
|
7,270
|
|
|
$
|
9,996
|
|
|
$
|
14,266
|
|
|
$
|
(17,266
|
)
|
|
$
|
14,266
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and other current liabilities
|
$
|
2
|
|
|
$
|
71
|
|
|
$
|
1,306
|
|
|
$
|
—
|
|
|
$
|
1,379
|
|
Current maturities of long-term debt
|
—
|
|
|
325
|
|
|
200
|
|
|
—
|
|
|
525
|
|
|||||
Advances payable — consolidated subsidiaries
|
—
|
|
|
—
|
|
|
4,335
|
|
|
(4,335
|
)
|
|
—
|
|
|||||
Long-term debt
|
—
|
|
|
4,782
|
|
|
—
|
|
|
—
|
|
|
4,782
|
|
|||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
283
|
|
|
—
|
|
|
283
|
|
|||||
Total liabilities
|
2
|
|
|
5,178
|
|
|
6,124
|
|
|
(4,335
|
)
|
|
6,969
|
|
|||||
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Partners’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net equity
|
7,268
|
|
|
4,821
|
|
|
8,118
|
|
|
(12,931
|
)
|
|
7,276
|
|
|||||
Accumulated other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Total partners’ equity
|
7,268
|
|
|
4,818
|
|
|
8,113
|
|
|
(12,931
|
)
|
|
7,268
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|||||
Total equity
|
7,268
|
|
|
4,818
|
|
|
8,142
|
|
|
(12,931
|
)
|
|
7,297
|
|
|||||
Total liabilities and equity
|
$
|
7,270
|
|
|
$
|
9,996
|
|
|
$
|
14,266
|
|
|
$
|
(17,266
|
)
|
|
$
|
14,266
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
||||||||||||||||||
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales of natural gas, NGLs and condensate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,111
|
|
|
$
|
—
|
|
|
$
|
2,111
|
|
Transportation, processing and other
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|||||
Trading and marketing losses, net
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
|||||
Total operating revenues
|
—
|
|
|
—
|
|
|
2,199
|
|
|
—
|
|
|
2,199
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases and related costs
|
—
|
|
|
—
|
|
|
1,804
|
|
|
—
|
|
|
1,804
|
|
|||||
Operating and maintenance expense
|
—
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
178
|
|
|||||
Depreciation and amortization expense
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
|||||
General and administrative expense
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
67
|
|
|||||
Loss on sale of assets, net
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Total operating costs and expenses
|
—
|
|
|
—
|
|
|
2,166
|
|
|
—
|
|
|
2,166
|
|
|||||
Operating income
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
|||||
Interest expense, net
|
—
|
|
|
(67
|
)
|
|
(2
|
)
|
|
—
|
|
|
(69
|
)
|
|||||
Income from consolidated subsidiaries
|
75
|
|
|
142
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|||||
Earnings from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
113
|
|
|||||
Income before income taxes
|
75
|
|
|
75
|
|
|
144
|
|
|
(217
|
)
|
|
77
|
|
|||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income
|
75
|
|
|
75
|
|
|
143
|
|
|
(217
|
)
|
|
76
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income attributable to partners
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
142
|
|
|
$
|
(217
|
)
|
|
$
|
75
|
|
|
Condensed Consolidating Statement of Comprehensive Income
|
||||||||||||||||||
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
Net income
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
143
|
|
|
$
|
(217
|
)
|
|
$
|
76
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total comprehensive income
|
75
|
|
|
75
|
|
|
143
|
|
|
(217
|
)
|
|
76
|
|
|||||
Total comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Total comprehensive income attributable to partners
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
142
|
|
|
$
|
(217
|
)
|
|
$
|
75
|
|
|
Condensed Consolidating Statement of Operations
|
||||||||||||||||||
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales of natural gas, NGLs and condensate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,069
|
|
|
$
|
—
|
|
|
$
|
2,069
|
|
Transportation, processing and other
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
Trading and marketing losses, net
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
|||||
Total operating revenues
|
—
|
|
|
—
|
|
|
2,139
|
|
|
—
|
|
|
2,139
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases and related costs
|
—
|
|
|
—
|
|
|
1,769
|
|
|
—
|
|
|
1,769
|
|
|||||
Operating and maintenance expense
|
—
|
|
|
—
|
|
|
162
|
|
|
—
|
|
|
162
|
|
|||||
Depreciation and amortization expense
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||
General and administrative expense
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|||||
Other expense, net
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Total operating costs and expenses
|
—
|
|
|
—
|
|
|
2,086
|
|
|
—
|
|
|
2,086
|
|
|||||
Operating income
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
|||||
Interest expense, net
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|||||
Income from consolidated subsidiaries
|
62
|
|
|
129
|
|
|
—
|
|
|
(191
|
)
|
|
—
|
|
|||||
Earnings from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|||||
Income before income taxes
|
62
|
|
|
62
|
|
|
131
|
|
|
(191
|
)
|
|
64
|
|
|||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income
|
62
|
|
|
62
|
|
|
130
|
|
|
(191
|
)
|
|
63
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income attributable to partners
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
129
|
|
|
$
|
(191
|
)
|
|
$
|
62
|
|
|
Condensed Consolidating Statement of Comprehensive Income
|
||||||||||||||||||
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
Net income
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
130
|
|
|
$
|
(191
|
)
|
|
$
|
63
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total comprehensive income
|
62
|
|
|
62
|
|
|
130
|
|
|
(191
|
)
|
|
63
|
|
|||||
Total comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Total comprehensive income attributable to partners
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
129
|
|
|
$
|
(191
|
)
|
|
$
|
62
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows
|
||||||||||||||||||
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
383
|
|
|
$
|
—
|
|
|
$
|
317
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany transfers
|
159
|
|
|
13
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|||||
Capital expenditures
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
(182
|
)
|
|||||
Investments in unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
|||||
Proceeds from sale of assets
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
|||||
Net cash provided by (used in) investing activities
|
159
|
|
|
13
|
|
|
(210
|
)
|
|
(172
|
)
|
|
(210
|
)
|
|||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany transfers
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
172
|
|
|
—
|
|
|||||
Proceeds from debt
|
—
|
|
|
1,402
|
|
|
—
|
|
|
—
|
|
|
1,402
|
|
|||||
Payments of debt
|
—
|
|
|
(1,348
|
)
|
|
—
|
|
|
—
|
|
|
(1,348
|
)
|
|||||
Distributions to preferred limited partners
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Distributions to limited partners and general partner
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
|||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Other
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(159
|
)
|
|
53
|
|
|
(173
|
)
|
|
172
|
|
|
(107
|
)
|
|||||
Net change in cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Condensed Consolidating Statements of Cash Flows
|
||||||||||||||||||
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
|
(millions)
|
||||||||||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(84
|
)
|
|
$
|
206
|
|
|
$
|
—
|
|
|
$
|
122
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany transfers
|
194
|
|
|
(171
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|||||
Capital expenditures
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
—
|
|
|
(124
|
)
|
|||||
Investments in unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
(60
|
)
|
|||||
Proceeds from sale of assets
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Net cash provided by (used in) investing activities
|
194
|
|
|
(171
|
)
|
|
(181
|
)
|
|
(23
|
)
|
|
(181
|
)
|
|||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany transfers
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
23
|
|
|
—
|
|
|||||
Proceeds from long-term debt
|
—
|
|
|
635
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|||||
Payments of debt
|
—
|
|
|
(535
|
)
|
|
—
|
|
|
—
|
|
|
(535
|
)
|
|||||
Distributions to limited partners and general partner
|
(194
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
|||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(194
|
)
|
|
100
|
|
|
(24
|
)
|
|
23
|
|
|
(95
|
)
|
|||||
Net change in cash and cash equivalents
|
—
|
|
|
(155
|
)
|
|
1
|
|
|
—
|
|
|
(154
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
155
|
|
|
1
|
|
|
—
|
|
|
156
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
•
|
Our growing fee-based business represents a significant portion of our margins.
|
•
|
We have positive operating cash flow from our well-positioned and diversified assets.
|
•
|
We have a well-defined and targeted hedging program.
|
•
|
We manage our disciplined capital growth program with a significant focus on fee-based agreements and projects with long term volume outlooks.
|
•
|
We believe we have a solid capital structure and balance sheet.
|
•
|
We believe we have access to sufficient capital to fund our growth via excess coverage and divestitures.
|
•
|
Within our Logistics and Marketing segment, we are participating in the Front Range 100 MBbls/d and Texas Express 90 MBbls/d expansions adding NGL takeaway from the DJ Basin. Both expansions are expected to go into service in the third quarter of 2019.
|
•
|
We have a 33% ownership option in the Cheyenne Connector pipeline. The Cheyenne Connector pipeline will have an initial capacity of at least 600 MMcf/day and is expected to be in service in the fourth quarter of 2019, subject to certain conditions, including required approvals from the Federal Energy Regulatory Commission.
|
•
|
We are adding NGL takeaway to the DJ Basin with our Southern Hills pipeline extension with capacity of 90 MBbls/d, expandable to 120 MBbls/d. Expected completion is in the fourth quarter of 2019.
|
•
|
We have a 25% ownership interest in the Gulf Coast Express pipeline, or "GCX". The GCX project is designed to transport approximately 2 Bcf/d of natural gas, and is fully subscribed. The natural gas takeaway pipeline is under construction and is anticipated to be in-service in the fourth quarter of 2019.
|
•
|
We hold an option to acquire a 30% ownership interest in two 150 MBbls/d fractionators to be constructed within Phillips 66's Sweeny Hub, exercisable at the in-service date, which is expected to be in late 2020.
|
•
|
Within our Gathering and Processing Segment, construction of our up to 300 MMcf/d O'Connor 2 facility and associated gathering infrastructure, located in the DJ Basin, is progressing. O'Connor 2 is comprised of 200 MMcf/d of processing capacity and up to 100 MMcf/d of bypass. We expect to place the plant into service at the end of the second quarter of 2019, and the bypass into service in the third quarter of 2019.
|
•
|
The first phase of the Bighorn program is under development with focus on adding 200-300 MMcf/d of gas processing capacity to the DJ Basin by mid 2020.
|
|
|
Three Months Ended March 31,
|
|
Variance 2019 vs. 2018
|
|||||||||||
|
|
2019
|
|
2018
|
|
Increase
(Decrease) |
|
Percent
|
|||||||
|
(millions, except operating data)
|
||||||||||||||
Operating revenues (a):
|
|
|
|
|
|
|
|
|
|||||||
Logistics and Marketing
|
|
$
|
2,045
|
|
|
$
|
1,979
|
|
|
$
|
66
|
|
|
3
|
%
|
Gathering and Processing
|
|
1,288
|
|
|
1,286
|
|
|
2
|
|
|
—
|
%
|
|||
Inter-segment eliminations
|
|
(1,134
|
)
|
|
(1,126
|
)
|
|
8
|
|
|
1
|
%
|
|||
Total operating revenues
|
|
2,199
|
|
|
2,139
|
|
|
60
|
|
|
3
|
%
|
|||
Purchases and related costs
|
|
|
|
|
|
|
|
|
|||||||
Logistics and Marketing
|
|
(1,987
|
)
|
|
(1,961
|
)
|
|
26
|
|
|
1
|
%
|
|||
Gathering and Processing
|
|
(951
|
)
|
|
(934
|
)
|
|
17
|
|
|
2
|
%
|
|||
Inter-segment eliminations
|
|
1,134
|
|
|
1,126
|
|
|
8
|
|
|
1
|
%
|
|||
Total purchases
|
|
(1,804
|
)
|
|
(1,769
|
)
|
|
35
|
|
|
2
|
%
|
|||
Operating and maintenance expense
|
|
(178
|
)
|
|
(162
|
)
|
|
16
|
|
|
10
|
%
|
|||
Depreciation and amortization expense
|
|
(103
|
)
|
|
(94
|
)
|
|
9
|
|
|
10
|
%
|
|||
General and administrative expense
|
|
(67
|
)
|
|
(59
|
)
|
|
8
|
|
|
14
|
%
|
|||
Other expense, net
|
|
(5
|
)
|
|
(2
|
)
|
|
3
|
|
|
*
|
|
|||
Loss on sale of assets, net
|
|
(9
|
)
|
|
—
|
|
|
9
|
|
|
*
|
|
|||
Earnings from unconsolidated affiliates (b)
|
|
113
|
|
|
78
|
|
|
35
|
|
|
45
|
%
|
|||
Interest expense
|
|
(69
|
)
|
|
(67
|
)
|
|
2
|
|
|
3
|
%
|
|||
Income tax expense
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
%
|
|||
Net income attributable to noncontrolling interests
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
%
|
|||
Net income attributable to partners
|
|
$
|
75
|
|
|
$
|
62
|
|
|
$
|
13
|
|
|
21
|
%
|
Other data:
|
|
|
|
|
|
|
|
|
|
||||||
Gross margin (c):
|
|
|
|
|
|
|
|
|
|||||||
Logistics and Marketing
|
|
$
|
58
|
|
|
$
|
18
|
|
|
$
|
40
|
|
|
*
|
|
Gathering and Processing
|
|
337
|
|
|
352
|
|
|
(15
|
)
|
|
(4
|
)%
|
|||
Total gross margin
|
|
$
|
395
|
|
|
$
|
370
|
|
|
$
|
25
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Non-cash commodity derivative mark-to-market
|
|
$
|
(54
|
)
|
|
$
|
(29
|
)
|
|
$
|
(25
|
)
|
|
*
|
|
NGL pipelines throughput (MBbls/d) (d)
|
|
668
|
|
|
519
|
|
|
149
|
|
|
29
|
%
|
|||
Natural gas wellhead (MMcf/d) (d)
|
|
4,938
|
|
|
4,467
|
|
|
471
|
|
|
11
|
%
|
|||
NGL gross production (MBbls/d) (d)
|
|
436
|
|
|
384
|
|
|
52
|
|
|
14
|
%
|
(a)
|
Operating revenues include the impact of trading and marketing gains (losses), net.
|
(b)
|
Earnings for Discovery, Sand Hills, Southern Hills, Front Range, Mont Belvieu 1 and Texas Express include the amortization of the net difference between the carrying amount of the investments and the underlying equity of the entities.
|
(c)
|
Gross margin consists of total operating revenues less purchases and related costs. Segment gross margin for each segment consists of total operating revenues for that segment less purchases and related costs for that segment. Please read “Reconciliation of Non-GAAP Measures”.
|
(d)
|
For entities not wholly-owned by us, includes our share, based on our ownership percentage, of the wellhead and throughput volumes and NGL production.
|
•
|
$66 million
increase for our Logistics and Marketing segment primarily due to higher gas and NGL sales volumes, which impacted both sales and purchases, higher natural gas prices and favorable commodity derivative activity, partially offset by lower NGL and crude prices; and
|
•
|
$2 million
increase for our Gathering and Processing segment primarily due to increased volume from growth projects related to our DJ Basin system in the North region, increased volumes in the Permian region, increased drilling activity in our Eagle Ford system in the South region and higher natural gas prices, which impacted both sales and purchases, partially offset by lower NGL and crude prices and unfavorable commodity derivative activity;
|
•
|
$8 million
change in inter-segment eliminations, which relate to sales of gas and NGL volumes from our Gathering and Processing segment to our Logistics and Marketing segment, primarily due to higher gas and NGL sales volumes partially offset by lower commodity prices.
|
•
|
$26 million
increase for our Logistics and Marketing segment for the reasons discussed above.
|
•
|
$17 million
increase for our Gathering and Processing segment for the reasons discussed above;
|
•
|
$8 million
change in inter-segment eliminations, which relate to sales of gas and NGL volumes from our Gathering and Processing segment to our Logistics and Marketing segment, primarily due to higher gas and NGL sales volumes offset by lower commodity prices.
|
•
|
$
40 million
increase for our Logistics and Marketing segment primarily related to favorable commodity derivative activity and higher gas marketing margins due to favorable commodity spreads primarily associated with Guadalupe, partially offset by lower gas storage margins and a 2019 inventory valuation adjustment;
|
•
|
$15 million
decrease for our Gathering and Processing segment primarily related to unfavorable commodity derivative activity and lower commodity prices, partially offset by increased volume from growth projects related to our DJ Basin system in the North region, increased volumes in the Permian region and increased drilling activity in our Eagle Ford system in the South region.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
DCP Sand Hills Pipeline, LLC
|
|
$
|
68
|
|
|
$
|
48
|
|
DCP Southern Hills Pipeline, LLC
|
|
23
|
|
|
13
|
|
||
Front Range Pipeline LLC
|
|
7
|
|
|
5
|
|
||
Texas Express Pipeline LLC
|
|
5
|
|
|
2
|
|
||
Mont Belvieu Enterprise Fractionator
|
|
4
|
|
|
4
|
|
||
Mont Belvieu 1 Fractionator
|
|
4
|
|
|
4
|
|
||
Discovery Producer Services LLC
|
|
—
|
|
|
1
|
|
||
Other
|
|
2
|
|
|
1
|
|
||
Total earnings from unconsolidated affiliates
|
|
$
|
113
|
|
|
$
|
78
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
(millions)
|
|||||||
DCP Sand Hills Pipeline, LLC
|
|
$
|
76
|
|
|
$
|
49
|
|
DCP Southern Hills Pipeline, LLC
|
|
25
|
|
|
16
|
|
||
Front Range Pipeline LLC
|
|
6
|
|
|
6
|
|
||
Texas Express Pipeline LLC
|
|
5
|
|
|
5
|
|
||
Mont Belvieu Enterprise Fractionator
|
|
1
|
|
|
3
|
|
||
Mont Belvieu 1 Fractionator
|
|
5
|
|
|
3
|
|
||
Discovery Producer Services LLC
|
|
5
|
|
|
8
|
|
||
Other
|
|
1
|
|
|
1
|
|
||
Total distributions from unconsolidated affiliates
|
|
$
|
124
|
|
|
$
|
91
|
|
Operating Data
|
|||||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|||||||
System
|
|
Approximate
System Length (Miles) |
|
Fractionators
|
|
Approximate
Throughput Capacity (MBbls/d) (a) |
|
Pipeline Throughput
(MBbls/d) (a) |
|
Fractionator Throughput
(MBbls/d) (a) |
|||||
Sand Hills pipeline
|
|
1,500
|
|
|
—
|
|
|
334
|
|
|
330
|
|
|
—
|
|
Southern Hills pipeline
|
|
950
|
|
|
—
|
|
|
128
|
|
|
106
|
|
|
—
|
|
Front Range pipeline
|
|
450
|
|
|
—
|
|
|
50
|
|
|
47
|
|
|
—
|
|
Texas Express pipeline
|
|
600
|
|
|
—
|
|
|
28
|
|
|
22
|
|
|
—
|
|
Other NGL pipelines (a)
|
|
1,200
|
|
|
—
|
|
|
241
|
|
|
163
|
|
|
—
|
|
Pipelines total
|
|
4,700
|
|
|
—
|
|
|
781
|
|
|
668
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mont Belvieu fractionators
|
|
—
|
|
|
2
|
|
|
60
|
|
|
—
|
|
|
64
|
|
Fractionators total
|
|
—
|
|
|
2
|
|
|
60
|
|
|
—
|
|
|
64
|
|
(a)
|
Represents total capacity or total volumes allocated to our proportionate ownership share.
|
|
|
Three Months Ended March 31,
|
|
Variance 2019 vs. 2018
|
|||||||||||
|
|
2019
|
|
2018
|
|
Increase
(Decrease) |
|
Percent
|
|||||||
|
(millions, except operating data)
|
||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|||||||
Sales of natural gas, NGLs and condensate
|
|
$
|
2,040
|
|
|
$
|
2,009
|
|
|
$
|
31
|
|
|
2
|
%
|
Transportation, processing and other
|
|
12
|
|
|
14
|
|
|
(2
|
)
|
|
(14
|
)%
|
|||
Trading and marketing losses, net
|
|
(7
|
)
|
|
(44
|
)
|
|
37
|
|
|
84
|
%
|
|||
Total operating revenues
|
|
2,045
|
|
|
1,979
|
|
|
66
|
|
|
3
|
%
|
|||
Purchases and related costs
|
|
(1,987
|
)
|
|
(1,961
|
)
|
|
26
|
|
|
1
|
%
|
|||
Operating and maintenance expense
|
|
(9
|
)
|
|
(11
|
)
|
|
(2
|
)
|
|
(18
|
)%
|
|||
Depreciation and amortization expense
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
%
|
|||
General and administrative expense
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
%
|
|||
Other income, net
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
*
|
|
|||
Earnings from unconsolidated affiliates (a)
|
|
113
|
|
|
77
|
|
|
36
|
|
|
47
|
%
|
|||
Loss on sale of assets, net
|
|
(9
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
|||
Segment net income attributable to partners
|
|
$
|
147
|
|
|
$
|
79
|
|
|
$
|
68
|
|
|
86
|
%
|
Other data:
|
|
|
|
|
|
|
|
|
|||||||
Segment gross margin (b)
|
|
$
|
58
|
|
|
$
|
18
|
|
|
$
|
40
|
|
|
*
|
|
Non-cash commodity derivative mark-to-market
|
|
$
|
(18
|
)
|
|
$
|
(43
|
)
|
|
$
|
25
|
|
|
58
|
%
|
NGL pipelines throughput (MBbls/d) (c)
|
|
668
|
|
|
519
|
|
|
149
|
|
|
29
|
%
|
(a)
|
Earnings from unconsolidated affiliates for Sand Hills, Southern Hills, Front Range, Mont Belvieu 1 and Texas Express include the amortization of the net difference between the carrying amount of our investments and the underlying equity of the entities.
|
(b)
|
Segment gross margin consists of total operating revenues less purchases and related costs. Please read “Reconciliation of Non-GAAP Measures”.
|
(c)
|
For entities not wholly-owned by us, includes our share, based on our ownership percentage, of the throughput volume.
|
•
|
$351 million increase attributable to higher gas and NGL sales volumes, which impacted both sales and purchases;
|
•
|
$37 million
increase as a result of commodity derivative activity attributable to an decrease in unrealized cash settlement losses of $25 million and an increase in realized cash settlement gains of $12 million due to movements in forward prices of commodities in 2019; and
|
•
|
$320 million decrease as a result of lower NGL and crude prices, partially offset by higher natural gas prices, which impacted both sales and purchases, before the impact of derivative activity.
|
•
|
$
37 million
increase as a result of commodity derivative activity discussed above, and;
|
•
|
$20 million increase in gas marketing margins due to favorable commodity spreads primarily associated with Guadalupe;
|
•
|
$17 million decrease as a result of lower gas storage margins and a 2019 inventory valuation adjustment.
|
Operating Data
|
|||||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|||||||
Regions
|
|
Plants
|
|
Approximate
Gathering and Transmission Systems (Miles) |
|
Approximate
Net Nameplate Plant Capacity (MMcf/d) (a) |
|
Natural Gas
Wellhead Volume (MMcf/d) (a) |
|
NGL
Production (MBbls/d) (a) |
|||||
North
|
|
13
|
|
|
4,000
|
|
|
1,390
|
|
|
1,391
|
|
|
106
|
|
Permian
|
|
11
|
|
|
16,500
|
|
|
1,260
|
|
|
943
|
|
|
113
|
|
Midcontinent
|
|
10
|
|
|
29,000
|
|
|
1,625
|
|
|
1,239
|
|
|
110
|
|
South
|
|
13
|
|
|
7,500
|
|
|
2,315
|
|
|
1,365
|
|
|
107
|
|
Total
|
|
47
|
|
|
57,000
|
|
|
6,590
|
|
|
4,938
|
|
|
436
|
|
(a)
|
For entities not wholly-owned by us, includes our share, based on our ownership percentage, of the wellhead volume and NGL production.
|
|
|
Three Months Ended March 31,
|
|
Variance
2019 vs. 2018 |
|||||||||||
|
|
2019
|
|
2018
|
|
Increase
(Decrease) |
|
Percent
|
|||||||
|
(millions, except operating data)
|
||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|||||||
Sales of natural gas, NGLs and condensate
|
|
$
|
1,205
|
|
|
$
|
1,186
|
|
|
$
|
19
|
|
|
2
|
%
|
Transportation, processing and other
|
|
103
|
|
|
97
|
|
|
6
|
|
|
6
|
%
|
|||
Trading and marketing (losses) gains, net
|
|
(20
|
)
|
|
3
|
|
|
(23
|
)
|
|
*
|
|
|||
Total operating revenues
|
|
1,288
|
|
|
1,286
|
|
|
2
|
|
|
—
|
%
|
|||
Purchases and related costs
|
|
(951
|
)
|
|
(934
|
)
|
|
17
|
|
|
2
|
%
|
|||
Operating and maintenance expense
|
|
(165
|
)
|
|
(148
|
)
|
|
17
|
|
|
11
|
%
|
|||
Depreciation and amortization expense
|
|
(93
|
)
|
|
(84
|
)
|
|
9
|
|
|
11
|
%
|
|||
General and administrative expense
|
|
(6
|
)
|
|
(4
|
)
|
|
2
|
|
|
50
|
%
|
|||
Other expense, net
|
|
(5
|
)
|
|
(3
|
)
|
|
2
|
|
|
67
|
%
|
|||
Earnings from unconsolidated affiliates (a)
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(100
|
)%
|
|||
Segment net income
|
|
68
|
|
|
114
|
|
|
(46
|
)
|
|
(40
|
)%
|
|||
Segment net income attributable to noncontrolling interests
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
%
|
|||
Segment net income attributable to partners
|
|
$
|
67
|
|
|
$
|
113
|
|
|
$
|
(46
|
)
|
|
(41
|
)%
|
Other data:
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment gross margin (b)
|
|
$
|
337
|
|
|
$
|
352
|
|
|
$
|
(15
|
)
|
|
(4
|
)%
|
Non-cash commodity derivative mark-to-market
|
|
$
|
(36
|
)
|
|
$
|
14
|
|
|
$
|
(50
|
)
|
|
*
|
|
Natural gas wellhead (MMcf/d) (c)
|
|
4,938
|
|
|
4,467
|
|
|
471
|
|
|
11
|
%
|
|||
NGL gross production (MBbls/d) (c)
|
|
436
|
|
|
384
|
|
|
52
|
|
|
14
|
%
|
(a)
|
Earnings from unconsolidated affiliates includes our 40% ownership of Discovery. Earnings for Discovery include the amortization of the net difference between the carrying amount of our investment and the underlying equity of the entity.
|
(b)
|
Segment gross margin consists of total operating revenues, less purchases and related costs. Please read “Reconciliation of Non-GAAP Measures”.
|
(c)
|
For entities not wholly-owned by us, includes our share, based on our ownership percentage, of the wellhead volume and NGL production.
|
•
|
$164 million increase primarily as a result of increased volume from growth projects related to our DJ Basin system in the North region, increased volumes in the Permian region and increased drilling activity in our Eagle Ford system in the South region; and
|
•
|
$6 million increase in transportation, processing and other primarily related to increased volumes;
|
•
|
$145 million decrease attributable to lower NGL and crude prices, partially offset by higher natural gas prices, which impacted both sales and purchases, before the impact of derivative activity; and
|
•
|
$
23 million
decrease as a result of commodity derivative activity attributable to an increase in unrealized commodity derivative losses of
$50 million
, partially offset by an increase in realized cash settlement gains of $27 million due to movements in forward prices of commodities in 2019.
|
•
|
$
23 million
decrease as a result of commodity derivative activity as discussed above; and
|
•
|
$18 million decrease as a result of lower commodity prices;
|
•
|
$26 million increase primarily as a result of increased volume from growth projects related to our DJ Basin system in the North region, increased volumes in the Permian region and increased drilling activity in our Eagle Ford system in the South region;
|
•
|
cash generated from operations;
|
•
|
cash distributions from our unconsolidated affiliates;
|
•
|
borrowings under our Credit Agreement;
|
•
|
proceeds from asset rationalization;
|
•
|
debt offerings;
|
•
|
issuances of additional common units, preferred units or other securities;
|
•
|
borrowings under term loans, securitization agreements or other credit facilities; and
|
•
|
letters of credit.
|
•
|
quarterly distributions to our common unitholders and General Partner, and distributions to our preferred unitholders;
|
•
|
payments to service our debt;
|
•
|
growth capital expenditures;
|
•
|
contributions to our unconsolidated affiliates to finance our share of their capital expenditures;
|
•
|
business and asset acquisitions; and
|
•
|
collateral with counterparties to our swap contracts to secure potential exposure under these contracts, which may, at times, be significant depending on commodity price movements.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(millions)
|
||||||
Net cash provided by operating activities
|
$
|
317
|
|
|
$
|
122
|
|
Net cash used in investing activities
|
$
|
(210
|
)
|
|
$
|
(181
|
)
|
Net cash used in financing activities
|
$
|
(107
|
)
|
|
$
|
(95
|
)
|
•
|
Maintenance capital expenditures, which are cash expenditures to maintain our cash flows, operating or earnings capacity. These expenditures add on to or improve capital assets owned, including certain system integrity, compliance and safety improvements. Maintenance capital expenditures also include certain well connects, and may include the acquisition or construction of new capital assets; and
|
•
|
Expansion capital expenditures, which are cash expenditures to increase our cash flows, operating or earnings capacity. Expansion capital expenditures include acquisitions or capital improvements (where we add on to or improve the capital assets owned, or acquire or construct new gathering lines and well connects, treating facilities, processing plants, fractionation facilities, pipelines, terminals, docks, truck racks, tankage and other storage, distribution or transportation facilities and related or similar midstream assets).
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||
|
Maintenance
Capital
Expenditures
|
|
Expansion
Capital
Expenditures
|
|
Total
Consolidated
Capital
Expenditures
|
|
Maintenance
Capital
Expenditures
|
|
Expansion
Capital
Expenditures
|
|
Total
Consolidated
Capital
Expenditures
|
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Our portion
|
$
|
20
|
|
|
$
|
162
|
|
|
$
|
182
|
|
|
$
|
23
|
|
|
$
|
101
|
|
|
$
|
124
|
|
Noncontrolling interest portion and reimbursable projects (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||||
Total
|
$
|
20
|
|
|
$
|
162
|
|
|
$
|
182
|
|
|
$
|
22
|
|
|
$
|
102
|
|
|
$
|
124
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
Thereafter
|
||||||||||
|
(millions)
|
||||||||||||||||||
Debt (a)
|
$
|
8,239
|
|
|
$
|
1,195
|
|
|
$
|
955
|
|
|
$
|
1,235
|
|
|
$
|
4,854
|
|
Operating lease obligations
|
93
|
|
|
22
|
|
|
41
|
|
|
21
|
|
|
9
|
|
|||||
Purchase obligations (b)
|
4,540
|
|
|
955
|
|
|
1,222
|
|
|
997
|
|
|
1,366
|
|
|||||
Other long-term liabilities (c)
|
151
|
|
|
—
|
|
|
9
|
|
|
20
|
|
|
122
|
|
|||||
Total
|
$
|
13,023
|
|
|
$
|
2,172
|
|
|
$
|
2,227
|
|
|
$
|
2,273
|
|
|
$
|
6,351
|
|
(a)
|
Includes interest payments on debt securities that have been issued. These interest payments are $
270 million
, $
455 million
, $
385 million
, and $
2,029 million
for less than one year, one to three years, three to five years, and thereafter, respectively.
|
(b)
|
Our purchase obligations are contractual obligations and include purchase orders and non-cancelable construction agreements for capital expenditures, various non-cancelable commitments to purchase physical quantities of commodities in future periods and other items, including long-term fractionation agreements. For contracts where the price paid is based on an index or other market-based rates, the amount is based on the forward market prices or current market rates as of
March 31, 2019
. Purchase obligations exclude accounts payable, accrued taxes and other current
|
(c)
|
Other long-term liabilities include asset retirement obligations, long-term environmental remediation liabilities, gas purchase liabilities and other miscellaneous liabilities recognized in the
March 31, 2019
condensed consolidated balance sheet. The table above excludes non-cash obligations as well as $36 million of Executive Deferred Compensation Plan contributions and $7 million of long-term incentive plans as the amount and timing of any payments are not subject to reasonable estimation.
|
•
|
financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
|
•
|
our operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing methods or capital structure;
|
•
|
viability and performance of acquisitions and capital expenditure projects and the overall rates of return on investment opportunities; and
|
•
|
in the case of Adjusted EBITDA, the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, make cash distributions to our unitholders and general partner, and finance maintenance capital expenditures.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Reconciliation of Non-GAAP Measures
|
(millions)
|
|||||||
|
|
|
|
|
||||
Reconciliation of net income attributable to partners to gross margin:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net income attributable to partners
|
|
$
|
75
|
|
|
$
|
62
|
|
Interest expense
|
|
69
|
|
|
67
|
|
||
Income tax expense
|
|
1
|
|
|
1
|
|
||
Operating and maintenance expense
|
|
178
|
|
|
162
|
|
||
Depreciation and amortization expense
|
|
103
|
|
|
94
|
|
||
General and administrative expense
|
|
67
|
|
|
59
|
|
||
Other expense, net
|
|
5
|
|
|
2
|
|
||
Earnings from unconsolidated affiliates
|
|
(113
|
)
|
|
(78
|
)
|
||
Loss on sale of assets, net
|
|
9
|
|
|
—
|
|
||
Net income attributable to noncontrolling interests
|
|
1
|
|
|
1
|
|
||
Gross margin
|
|
$
|
395
|
|
|
$
|
370
|
|
Non-cash commodity derivative mark-to-market (a)
|
|
$
|
(54
|
)
|
|
$
|
(29
|
)
|
|
|
|
|
|
||||
Reconciliation of segment net income attributable to partners to segment gross margin:
|
|
|
|
|
||||
|
|
|
|
|
||||
Logistics and Marketing segment:
|
|
|
|
|
||||
Segment net income attributable to partners
|
|
$
|
147
|
|
|
$
|
79
|
|
Operating and maintenance expense
|
|
9
|
|
|
11
|
|
||
Depreciation and amortization expense
|
|
3
|
|
|
3
|
|
||
General and administrative expense
|
|
3
|
|
|
3
|
|
||
Other income, net
|
|
—
|
|
|
(1
|
)
|
||
Earnings from unconsolidated affiliates
|
|
(113
|
)
|
|
(77
|
)
|
||
Loss on sale of assets, net
|
|
9
|
|
|
—
|
|
||
Segment gross margin
|
|
$
|
58
|
|
|
$
|
18
|
|
Non-cash commodity derivative mark-to-market (a)
|
|
$
|
(18
|
)
|
|
$
|
(43
|
)
|
|
|
|
|
|
||||
Gathering and Processing segment:
|
|
|
|
|
||||
Segment net income attributable to partners
|
|
$
|
67
|
|
|
$
|
113
|
|
Operating and maintenance expense
|
|
165
|
|
|
148
|
|
||
Depreciation and amortization expense
|
|
93
|
|
|
84
|
|
||
General and administrative expense
|
|
6
|
|
|
4
|
|
||
Other expense, net
|
|
5
|
|
|
3
|
|
||
Earnings from unconsolidated affiliates
|
|
—
|
|
|
(1
|
)
|
||
Net income attributable to noncontrolling interests
|
|
1
|
|
|
1
|
|
||
Segment gross margin
|
|
$
|
337
|
|
|
$
|
352
|
|
Non-cash commodity derivative mark-to-market (a)
|
|
$
|
(36
|
)
|
|
$
|
14
|
|
(a)
|
Non-cash commodity derivative mark-to-market is included in gross margin and segment gross margin, along with cash settlements for our commodity derivative contracts.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(millions)
|
||||||
Reconciliation of net income attributable to partners to adjusted segment EBITDA:
|
|
|
|
|
||||
|
|
|
|
|
||||
Logistics and Marketing segment:
|
|
|
|
|
||||
Segment net income attributable to partners (a)
|
|
$
|
147
|
|
|
$
|
79
|
|
Non-cash commodity derivative mark-to-market
|
|
18
|
|
|
43
|
|
||
Depreciation and amortization expense, net of noncontrolling interest
|
|
3
|
|
|
3
|
|
||
Distributions from unconsolidated affiliates, net of earnings
|
|
6
|
|
|
5
|
|
||
Loss on sale of assets, net
|
|
9
|
|
|
—
|
|
||
Other income
|
|
—
|
|
|
(1
|
)
|
||
Adjusted segment EBITDA
|
|
$
|
183
|
|
|
$
|
129
|
|
|
|
|
|
|
||||
Gathering and Processing segment:
|
|
|
|
|
||||
Segment net income attributable to partners
|
|
$
|
67
|
|
|
$
|
113
|
|
Non-cash commodity derivative mark-to-market
|
|
36
|
|
|
(14
|
)
|
||
Depreciation and amortization expense, net of noncontrolling interest
|
|
92
|
|
|
84
|
|
||
Distributions from unconsolidated affiliates, net of earnings
|
|
5
|
|
|
8
|
|
||
Other expense
|
|
5
|
|
|
3
|
|
||
Adjusted segment EBITDA
|
|
$
|
205
|
|
|
$
|
194
|
|
(a)
|
We had lower of cost or market adjustments of
$5 million
for the
three months ended March 31, 2019
. There were no lower of cost or market adjustments for the
three months ended March 31, 2018
.
|
|
|
Period
|
|
Commodity
|
|
Notional
Volume
- Short
Positions
|
|
Reference Price
|
|
Price Range
|
April 2019 — December 2019
|
|
Natural Gas
|
|
(50,000) MMBtu/d
|
|
NYMEX Final Settlement Price (c)
|
|
$3.01-$3.28/MMBtu
|
April 2019 — December 2019
|
|
NGLs
|
|
(11,458) Bbls/d (d)
|
|
Mt. Belvieu (b)
|
|
$.31-$.92/Gal
|
April 2019 — February 2020
|
|
Crude Oil
|
|
(5,278) Bbls/d (d)
|
|
NYMEX crude oil futures (a)
|
|
$57.12-$66.29/Bbl
|
March 2020 — May 2020
|
|
Crude Oil
|
|
(1,057) Bbls/d (d)
|
|
NYMEX crude oil futures (a)
|
|
$61.61-$62.40/Bbl
|
|
Per Unit Decrease
|
|
Unit of
Measurement
|
|
Estimated
Decrease in
Annual Net
Income
Attributable to
Partners
|
||||
|
|
|
|
|
(millions)
|
||||
NGL prices
|
$
|
0.01
|
|
|
Gallon
|
|
$
|
3
|
|
Natural gas prices
|
$
|
0.10
|
|
|
MMBtu
|
|
$
|
7
|
|
Crude oil prices
|
$
|
1.00
|
|
|
Barrel
|
|
$
|
3
|
|
|
Per Unit
Increase
|
|
Unit of
Measurement
|
|
Estimated
Mark-to-
Market Impact
(Decrease in
Net Income
Attributable to
Partners)
|
||||
|
|
|
|
|
(millions)
|
||||
NGL prices
|
$
|
0.01
|
|
|
Gallon
|
|
$
|
2
|
|
Natural gas prices
|
$
|
0.10
|
|
|
MMBtu
|
|
$
|
2
|
|
Crude oil prices
|
$
|
1.00
|
|
|
Barrel
|
|
$
|
2
|
|
Period ended
|
|
Commodity
|
|
Notional Volume - Long
Positions
|
|
Fair Value
(millions)
|
|
Weighted
Average Price
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||
March 31, 2019
|
|
Natural Gas
|
|
8,370,604
|
|
|
MMBtu
|
|
$
|
23
|
|
|
$2.72/MMBtu
|
Period
|
|
Commodity
|
|
Notional Volume - (Short)/Long
Positions
|
|
Fair Value
(millions)
|
|
Price Range
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||
April 2019-January 2020
|
|
Natural Gas
|
|
(16,785,000
|
)
|
|
MMBtu
|
|
$
|
1
|
|
|
$2.63-$3.11/MMBtu
|
April 2019-May 2019
|
|
Natural Gas
|
|
8,515,000
|
|
|
MMBtu
|
|
$
|
—
|
|
|
$2.69-$2.86/MMBtu
|
Exhibit Number
|
|
|
|
Description
|
|
*
|
|
||
|
*
|
|
||
|
*
|
|
||
|
*
|
|
||
|
*
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
101
|
|
|
|
Financial statements from the Quarterly Report on Form 10-Q of DCP Midstream, LP for the three months ended March 31, 2019, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Changes in Equity, and (vi) the Notes to the Condensed Consolidated Financial Statements.
|
|
DCP Midstream, LP
|
|||
|
|
|
||
|
By:
|
DCP Midstream GP, LP
its General Partner |
||
|
|
|
||
|
By:
|
DCP Midstream GP, LLC
its General Partner |
||
|
|
|
||
Date: May 7, 2019
|
By:
|
/s/ Wouter T. van Kempen
|
||
|
|
Name:
|
Wouter T. van Kempen
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: May 7, 2019
|
By:
|
/s/ Sean P. O'Brien
|
||
|
|
Name:
|
Sean P. O'Brien
|
|
|
|
Title:
|
Group Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
1 Year DCP Midstream Chart |
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