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SEGMENTS (Notes)

9 Months Ended

Sep. 30, 2020

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Segment Descriptions - Our operations are divided into three reportable business segments, as follows:

• our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas;

• our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes NGL products; and

• our Natural Gas Pipelines segment operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities.

Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements.

Accounting Policies - The accounting policies of the segments are described in Note A of the Notes to Consolidated Financial Statements in our Annual Report.

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


Three Months Ended September 30, 2020	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	239,810	$	1,658,123	$	—	$	1,897,933
Residue natural gas sales	178,492		—		3,998		182,490
Gathering, processing and exchange services revenue	36,459		132,210		—		168,669
Transportation and storage revenue	—		39,774		113,047		152,821
Other	4,644		2,110		251		7,005
Total revenues (c)	459,405		1,832,217		117,296		2,408,918

Cost of sales and fuel (exclusive of depreciation and operating costs)	(207,519)		(1,289,667)		(3,389)		(1,500,575)
Operating costs	(69,351)		(101,223)		(34,567)		(205,141)
Equity in net earnings (loss) from investments	(42)		8,018		30,070		38,046
Noncash compensation expense and other	655		1,898		427		2,980
Segment adjusted EBITDA	$	183,148	$	451,243	$	109,837	$	744,228

Depreciation and amortization	$	(66,459)	$	(71,534)	$	(14,243)	$	(152,236)

Capital expenditures	$	63,030	$	298,891	$	12,978	$	374,899

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $541.7 million, of which $495.4 million related to revenues within the segment, and cost of sales and fuel of $137.5 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $71.8 million and cost of sales and fuel of $9.6 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $235.6 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.


Three Months Ended September 30, 2020	Total Segments		Other and Eliminations		Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	1,897,933	$	(224,731)	$	1,673,202
Residue natural gas sales	182,490		(5,897)		176,593
Gathering, processing and exchange services revenue	168,669		—		168,669
Transportation and storage revenue	152,821		(3,597)		149,224
Other	7,005		(429)		6,576
Total revenues (a)	$	2,408,918	$	(234,654)	$	2,174,264

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(1,500,575)	$	234,901	$	(1,265,674)
Operating costs	$	(205,141)	$	212	$	(204,929)
Depreciation and amortization	$	(152,236)	$	(1,009)	$	(153,245)

Equity in net earnings from investments	$	38,046	$	—	$	38,046
Capital expenditures	$	374,899	$	5,143	$	380,042

(a) - Noncustomer revenue for the three months ended September 30, 2020, totaled $4.0 million related primarily to gains from derivatives on commodity contracts.


Three Months Ended September 30, 2019	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	244,932	$	1,746,630	$	—	$	1,991,562
Residue natural gas sales	185,303		—		231		185,534
Gathering, processing and exchange services revenue	42,795		105,179		—		147,974
Transportation and storage revenue	—		46,407		119,924		166,331
Other	3,182		2,291		1,393		6,866
Total revenues (c)	476,212		1,900,507		121,548		2,498,267

Cost of sales and fuel (exclusive of depreciation and operating costs)	(210,739)		(1,438,206)		(381)		(1,649,326)
Operating costs	(91,227)		(114,903)		(40,170)		(246,300)
Equity in net earnings (loss) from investments	(1,837)		15,890		23,523		37,576
Noncash compensation expense and other	2,883		4,174		(701)		6,356
Segment adjusted EBITDA	$	175,292	$	367,462	$	103,819	$	646,573

Depreciation and amortization	$	(55,781)	$	(50,419)	$	(14,330)	$	(120,530)
Capital expenditures	$	245,745	$	738,038	$	27,767	$	1,011,550

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $379.7 million, of which $315.7 million related to revenues within the segment, and cost of sales and fuel of $129.5 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $72.3 million and cost of sales and fuel of $5.1 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $244.2 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.


Three Months Ended September 30, 2019	Total Segments		Other and Eliminations		Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	1,991,562	$	(230,080)	$	1,761,482
Residue natural gas sales	185,534		(567)		184,967
Gathering, processing and exchange services revenue	147,974		—		147,974
Transportation and storage revenue	166,331		(4,010)		162,321
Other	6,866		(382)		6,484
Total revenues (a)	$	2,498,267	$	(235,039)	$	2,263,228

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(1,649,326)	$	234,798	$	(1,414,528)
Operating costs	$	(246,300)	$	1,165	$	(245,135)
Depreciation and amortization	$	(120,530)	$	(900)	$	(121,430)
Equity in net earnings from investments	$	37,576	$	—	$	37,576
Capital expenditures	$	1,011,550	$	7,624	$	1,019,174

(a) - Noncustomer revenue for the three months ended September 30, 2019, totaled $89.0 million related primarily to gains from derivatives on commodity contracts.


Nine Months Ended September 30, 2020	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	569,308	$	4,429,414	$	—	$	4,998,722
Residue natural gas sales	518,435		—		6,033		524,468
Gathering, processing and exchange services revenue	110,345		370,920		—		481,265
Transportation and storage revenue	—		131,410		353,188		484,598
Other	11,106		6,779		916		18,801
Total revenues (c)	1,209,194		4,938,523		360,137		6,507,854

Cost of sales and fuel (exclusive of depreciation and operating costs)	(541,910)		(3,473,575)		(5,096)		(4,020,581)
Operating costs	(232,489)		(297,771)		(100,966)		(631,226)
Equity in net earnings (loss) from investments	(1,385)		31,083		78,303		108,001
Noncash compensation expense and other	(1,865)		1,541		(184)		(508)
Segment adjusted EBITDA	$	431,545	$	1,199,801	$	332,194	$	1,963,540

Depreciation and amortization	$	(180,634)	$	(198,440)	$	(43,937)	$	(423,011)
Impairment charges	$	(564,353)	$	(77,401)	$	—	$	(641,754)
Investments in unconsolidated affiliates	$	2,276	$	426,621	$	361,476	$	790,373
Total assets	$	6,437,301	$	13,449,529	$	2,082,846	$	21,969,676
Capital expenditures	$	362,811	$	1,504,881	$	40,478	$	1,908,170

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1,454.0 million, of which $1,306.2 million related to revenues within the segment, and cost of sales and fuel of $375.0 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $225.6 million and cost of sales and fuel of $22.4 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $557.1 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.


Nine Months Ended September 30, 2020	Total Segments		Other and Eliminations		Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	4,998,722	$	(513,170)	$	4,485,552
Residue natural gas sales	524,468		(10,860)		513,608
Gathering, processing and exchange services revenue	481,265		—		481,265
Transportation and storage revenue	484,598		(11,033)		473,565
Other	18,801		(1,126)		17,675
Total revenues (a)	$	6,507,854	$	(536,189)	$	5,971,665

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(4,020,581)	$	537,521	$	(3,483,060)
Operating costs	$	(631,226)	$	(5,207)	$	(636,433)
Depreciation and amortization	$	(423,011)	$	(3,003)	$	(426,014)
Impairment charges	$	(641,754)	$	—	$	(641,754)
Equity in net earnings from investments	$	108,001	$	—	$	108,001
Investments in unconsolidated affiliates	$	790,373	$	—	$	790,373
Total assets	$	21,969,676	$	811,200	$	22,780,876
Capital expenditures	$	1,908,170	$	15,833	$	1,924,003

(a) - Noncustomer revenue for the nine months ended September 30, 2020, totaled $103.0 million related primarily to gains from derivatives on commodity contracts.


Nine Months Ended September 30, 2019	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	890,021	$	5,826,297	$	—	$	6,716,318
Residue natural gas sales	725,672		—		1,242		726,914
Gathering, processing and exchange services revenue	126,073		309,571		—		435,644
Transportation and storage revenue	—		141,384		350,029		491,413
Other	11,287		7,313		4,208		22,808
Total revenues (c)	1,753,053		6,284,565		355,479		8,393,097

Cost of sales and fuel (exclusive of depreciation and operating costs)	(971,397)		(4,914,452)		(3,785)		(5,889,634)
Operating costs	(271,236)		(340,274)		(113,043)		(724,553)
Equity in net earnings (loss) from investments	(4,660)		49,406		70,429		115,175
Noncash compensation expense and other	8,399		12,618		1,931		22,948
Segment adjusted EBITDA	$	514,159	$	1,091,863	$	311,011	$	1,917,033

Depreciation and amortization	$	(162,014)	$	(143,166)	$	(42,653)	$	(347,833)
Investments in unconsolidated affiliates	$	35,252	$	445,755	$	389,504	$	870,511
Total assets	$	6,546,417	$	11,662,489	$	2,083,773	$	20,292,679
Capital expenditures	$	674,115	$	1,969,138	$	77,861	$	2,721,114

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1.0 billion, of which $853.0 million related to revenues within the segment, and cost of sales and fuel of $364.9 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $214.7 million and cost of sales and fuel of $14.4 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $897.9 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.


Nine Months Ended September 30, 2019	Total Segments		Other and Eliminations		Total
	(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales	$	6,716,318	$	(878,958)	$	5,837,360
Residue natural gas sales	726,914		(567)		726,347
Gathering, processing and exchange services revenue	435,644		—		435,644
Transportation and storage revenue	491,413		(11,827)		479,586
Other	22,808		(984)		21,824
Total revenues (a)	$	8,393,097	$	(892,336)	$	7,500,761

Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(5,889,634)	$	892,935	$	(4,996,699)
Operating costs	$	(724,553)	$	964	$	(723,589)
Depreciation and amortization	$	(347,833)	$	(2,719)	$	(350,552)
Equity in net earnings from investments	$	115,175	$	—	$	115,175
Investments in unconsolidated affiliates	$	870,511	$	—	$	870,511
Total assets	$	20,292,679	$	1,043,228	$	21,335,907
Capital expenditures	$	2,721,114	$	18,224	$	2,739,338

(a) - Noncustomer revenue for the nine months ended September 30, 2019, totaled $129.9 million related primarily to gains from derivatives on commodity contracts.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Thousands of dollars)
Reconciliation of net income to total segment adjusted EBITDA
Net income	$	312,316	$	309,155	$	304,780	$	958,326
Add:
Interest expense, net of capitalized interest	176,371		129,577		535,955		362,490
Depreciation and amortization	153,245		121,430		426,014		350,552
Income tax expense	106,555		97,365		94,300		274,234
Impairment charges	—		—		641,754		—
Noncash compensation expense	1,606		9,757		1,261		20,412
Other corporate costs and equity AFUDC (a)	(5,865)		(20,711)		(40,524)		(48,981)
Total segment adjusted EBITDA	$	744,228	$	646,573	$	1,963,540	$	1,917,033

(a) - The three and nine months ended September 30, 2020, include corporate gains of $2.2 million and $22.2 million, respectively, on extinguishment of debt related to open market repurchases.