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 the corporate and Merger Transaction-related 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. Our chief operating decision-maker reviews the financial performance of each of our three segments, as well as our financial performance as a whole, on a regular basis. Beginning in 2016, adjusted EBITDA by segment is utilized in this evaluation. We believe this financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA for each segment is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation, and other noncash items. Prior periods have been adjusted to conform to current presentation. This calculation may not be comparable with similarly titled measures of other companies.

Customers - Our Natural Gas Gathering and Processing segment derives services revenue primarily from crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. The downstream commodity sales customers of our Natural Gas Gathering and Processing segment are primarily utilities, large industrial companies, marketing companies and our NGL affiliate. Our Natural Gas Liquids segment’s customers are primarily NGL and natural gas gathering and processing companies; large integrated and independent crude oil and natural gas production companies; propane distributors; ethanol producers; and petrochemical, refining and NGL marketing companies. Our Natural Gas Pipelines segment’s customers are primarily local natural gas distribution companies, electric-generation companies, large industrial companies, municipalities, producers and marketing companies.

For each of the years ended December 31, 2017, 2016 and 2015, we had no single customer from which we received 10 percent or more of our consolidated revenues.

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



Year Ended December 31, 2017	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total Segments
	(Thousands of dollars)
Sales to unaffiliated customers	$	1,750,655		$	10,009,576		$	411,490		$	12,171,721
Intersegment revenues	1,275,919			616,628			8,442			1,900,989
Total revenues	3,026,574			10,626,204			419,932			14,072,710
Cost of sales and fuel (exclusive of depreciation and items shown separately below)	(2,216,355		)	(9,176,494		)	(43,424		)	(11,436,273		)
Operating costs	(309,536		)	(359,753		)	(126,241		)	(795,530		)
Equity in net earnings from investments	12,098			59,876			87,304			159,278
Other	5,691			5,106			2,247			13,044
Segment adjusted EBITDA	$	518,472		$	1,154,939		$	339,818		$	2,013,229

Depreciation and amortization	$	(184,923	)	$	(167,277	)	$	(51,025	)	$	(403,225	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	—		$	(20,240	)
Total assets	$	5,495,163		$	8,782,700		$	2,055,020		$	16,332,883
Capital expenditures	$	284,205		$	114,267		$	95,564		$	494,036

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1.2 billion, of which $1.0 billion related to sales within the segment and cost of sales and fuel of $497.4 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $264.9 million and cost of sales and fuel of $44.0 million.



Year Ended December 31, 2017	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
Sales to unaffiliated customers	$	12,171,721		$	2,186		$	12,173,907
Intersegment revenues	1,900,989			(1,900,989		)	—
Total revenues	$	14,072,710		$	(1,898,803	)	$	12,173,907

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(11,436,273	)	$	1,898,228		$	(9,538,045	)
Operating costs	$	(795,530	)	$	(38,056	)	$	(833,586	)
Depreciation and amortization	$	(403,225	)	$	(3,110	)	$	(406,335	)
Impairment of long-lived assets and equity investments	$	(20,240	)	$	—		$	(20,240	)
Equity in net earnings from investments	$	159,278		$	—		$	159,278
Total assets	$	16,332,883		$	513,054		$	16,845,937
Capital expenditures	$	494,036		$	18,357		$	512,393



Year Ended December 31, 2016	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total Segments
	(Thousands of dollars)
Sales to unaffiliated customers	$	1,375,738		$	7,168,983		$	373,738		$	8,918,459
Intersegment revenues	675,839			506,671			5,623			1,188,133
Total revenues	2,051,577			7,675,654			379,361			10,106,592
Cost of sales and fuel (exclusive of depreciation and items shown separately below)	(1,331,542		)	(6,321,377		)	(30,561		)	(7,683,480		)
Operating costs	(285,599		)	(327,597		)	(115,628		)	(728,824		)
Equity in net earnings from investments	10,742			54,513			74,435			139,690
Other	1,600			(1,574		)	5,530			5,556
Segment adjusted EBITDA	$	446,778		$	1,079,619		$	313,137		$	1,839,534

Depreciation and amortization	$	(178,548	)	$	(163,303	)	$	(46,718	)	$	(388,569	)
Total assets	$	5,320,666		$	8,347,961		$	1,946,318		$	15,614,945
Capital expenditures	$	410,485		$	105,861		$	96,274		$	612,620

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1.2 billion, of which $992.8 million related to sales within the segment and cost of sales and fuel of $458.7 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $238.7 million and cost of sales and fuel of $30.0 million.



Year Ended December 31, 2016	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
Sales to unaffiliated customers	$	8,918,459		$	2,475		$	8,920,934
Intersegment revenues	1,188,133			(1,188,133		)	—
Total revenues	$	10,106,592		$	(1,185,658	)	$	8,920,934

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(7,683,480	)	$	1,187,356		$	(6,496,124	)
Operating costs	$	(728,824	)	$	(28,360	)	$	(757,184	)
Depreciation and amortization	$	(388,569	)	$	(3,016	)	$	(391,585	)
Equity in net earnings from investments	$	139,690		$	—		$	139,690
Total assets	$	15,614,945		$	523,806		$	16,138,751
Capital expenditures	$	612,620		$	12,014		$	624,634



Year Ended December 31, 2015	Natural Gas Gathering and Processing			Natural Gas Liquids (a)			Natural Gas Pipelines (b)			Total Segments
	(Thousands of dollars)
Sales to unaffiliated customers	$	1,187,390		$	6,248,002		$	325,676		$	7,761,068
Intersegment revenues	649,726			331,697			6,771			988,194
Total revenues	1,837,116			6,579,699			332,447			8,749,262
Cost of sales and fuel (exclusive of depreciation and items shown separately below)	(1,265,617		)	(5,328,256		)	(34,481		)	(6,628,354		)
Operating costs	(272,418		)	(314,505		)	(105,720		)	(692,643		)
Equity in net earnings from investments	17,863			38,696			68,741			125,300
Other	1,610			(3,342		)	13,993			12,261
Segment adjusted EBITDA	$	318,554		$	972,292		$	274,980		$	1,565,826

Depreciation and amortization	$	(150,008	)	$	(158,709	)	$	(43,479	)	$	(352,196	)
Impairment of long-lived assets	$	(73,681	)	$	(9,992	)	$	—		$	(83,673	)
Impairment of equity investments	$	(180,583	)	$	—		$	—		$	(180,583	)
Total assets	$	5,123,450		$	8,017,799		$	1,851,857		$	14,993,106
Capital expenditures	$	887,938		$	226,135		$	58,215		$	1,172,288

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $954.8 million, of which $770.1 million related to sales within the segment and cost of sales and fuel of $412.6 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $266.9 million and cost of sales and fuel of $31.1 million.



Year Ended December 31, 2015	Total Segments			Other and Eliminations			Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
Sales to unaffiliated customers	$	7,761,068		$	2,138		$	7,763,206
Intersegment revenues	988,194			(988,194		)	—
Total revenues	$	8,749,262		$	(986,056	)	$	7,763,206

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(6,628,354	)	$	987,302		$	(5,641,052	)
Operating costs	$	(692,643	)	$	(688	)	$	(693,331	)
Depreciation and amortization	$	(352,196	)	$	(2,424	)	$	(354,620	)
Impairment of long-lived assets	$	(83,673	)	$	—		$	(83,673	)
Impairment of equity investments	$	(180,583	)	$	—		$	(180,583	)
Equity in net earnings from investments	$	125,300		$	—		$	125,300
Total assets	$	14,993,106		$	453,005		$	15,446,111
Capital expenditures	$	1,172,288		$	16,024		$	1,188,312



	Years Ended December 31,
(Unaudited)	2017		2016			2015
Reconciliation of income from continuing operations to total segment adjusted EBITDA	(Thousands of dollars)
Income from continuing operations	$	593,519	$	745,550		$	385,276
Add:
Interest expense, net of capitalized interest	485,658		469,651			416,787
Depreciation and amortization	406,335		391,585			354,620
Income taxes	447,282		212,406			136,600
Impairment charges	20,240		—			264,256
Noncash compensation expense	13,421		31,981			13,799
Other corporate costs and noncash items (a)	46,774		(11,639		)	(5,512		)
Total segment adjusted EBITDA	$	2,013,229	$	1,839,534		$	1,565,826

(a) - The year ended December 31, 2017, includes our April 2017 $20.0 million contribution of Series E Preferred Stock to the Foundation and costs related to the Merger Transaction of $30.0 million.