Business Segments and Related Information

3 Months Ended

Mar. 31, 2025

Business Segments [Abstract]

Business Segments and Related Information

Note 10.  Business Segments and Related Information

Our operations are reported under four business segments: (i) NGL Pipelines & Services, (ii) Crude Oil Pipelines & Services, (iii) Natural Gas Pipelines & Services and (iv) Petrochemical & Refined Products Services.  Our business segments are generally organized and managed according to the types of services rendered (or technologies employed) and products produced and/or sold.  

Financial information regarding these segments is evaluated regularly by our co-chief operating decision makers (“CODMs”) in deciding how to allocate resources and in assessing our operating and financial performance.  The co-principal executive officers of our general partner have been identified as our CODMs.

The following information summarizes the assets and operations of each business segment:

• Our NGL Pipelines & Services business segment includes our natural gas processing and related NGL marketing activities, NGL pipelines, NGL fractionation facilities, NGL and related product storage facilities, and NGL marine terminals.

• Our Crude Oil Pipelines & Services business segment includes our crude oil pipelines, crude oil storage and marine terminals, and related crude oil marketing activities.  

• Our Natural Gas Pipelines & Services business segment includes our natural gas pipeline systems that provide for the gathering, treating and transportation of natural gas.  This segment also includes our natural gas marketing activities.

• Our Petrochemical & Refined Products Services business segment includes our (i) propylene production facilities, which include propylene fractionation units and PDH facilities, and related pipelines and marketing activities, (ii) butane isomerization complex and related deisobutanizer operations, (iii) octane enhancement, iBDH and HPIB production facilities, (iv) refined products pipelines, terminals and related marketing activities, (v) ethylene export terminal and related operations; and (vi) marine transportation business.

Our plants, pipelines and other fixed assets are located in the U.S.

Segment Gross Operating Margin

Our CODMs evaluate segment performance based on our financial measure of gross operating margin.  Gross operating margin is an important performance measure of the core profitability of our operations, forms the basis of our internal financial reporting, and is used by our CODMs on a monthly basis to monitor budgeted versus actual results.  Our CODMs also consider gross operating margin results, in part, when determining how to allocate resources (e.g., employees and capital investments) to each segment, primarily in the annual budget process.  We believe that investors benefit from having access to the same financial measures that our management uses in evaluating segment results.  Gross operating margin is exclusive of other income and expense transactions, income taxes, the cumulative effect of changes in accounting principles and extraordinary charges.  Gross operating margin is presented on a 100% basis before any allocation of earnings to noncontrolling interests.  Our calculation of gross operating margin may or may not be comparable to similarly titled measures used by other companies.

The following table presents a reconciliation of total segment gross operating margin to income before income taxes for the periods indicated:

	For the Three Months Ended March 31,
	2025			2024
Total segment gross operating margin	$	2,464		$	2,507
Adjustments to reconcile total segment gross operating margin to    income before income taxes (addition or subtraction indicated by sign):
Depreciation, amortization and accretion expense in operating costs and expenses (1)		(602	)		(582	)
Asset impairment charges in operating costs and expenses		(10	)		(20	)
Net gains attributable to asset sales and related matters in operating costs    and expenses		2			–
General and administrative costs		(60	)		(66	)
Non-refundable payments received from shippers attributable to make-up rights (2)		(37	)		(25	)
Subsequent recognition of revenues attributable to make-up rights (3)		4			8
Total other expense, net (4)		(331	)		(318	)
Income before income taxes	$	1,430		$	1,504

(1)	Excludes amortization of major maintenance costs for reaction-based plants and amortization of finance lease right-of-use (“ROU”) assets, which are components of gross operating margin.
(2)	Since make-up rights entail a future performance obligation by the pipeline to the shipper, these receipts are recorded as deferred revenue for GAAP purposes; however, these receipts are included in gross operating margin in the period of receipt since they are nonrefundable to the shipper.
(3)	As deferred revenues attributable to make-up rights are subsequently recognized as revenue under GAAP, gross operating margin must be adjusted to remove such amounts to prevent duplication since the associated non-refundable payments were previously included in gross operating margin.
(4)	As presented on our Statements of Consolidated Operations, Total other expense, net is comprised of Interest expense, Interest income and Other, net.

Summarized Segment Financial Information

The following tables present segment revenues and significant segment expenses by segment, together with a reconciliation to segment gross operating margin, for the periods indicated:

	For the Three Months Ended March 31, 2025
	NGL Pipelines & Services		Crude Oil Pipelines & Services		Natural Gas Pipelines & Services		Petrochemical & Refined Products Services		Segment Total
Segment revenues:
Revenues from third parties	$	5,398	$	5,115	$	1,216	$	3,675	$	15,404
Revenues from related parties		2		6		5		–		13
Intersegment and intrasegment revenues		17,017		10,622		232		7,195		35,066
Total segment revenues		22,417		15,743		1,453		10,870		50,483
Significant segment expenses:
Cost of sales		20,433		15,307		899		10,156		46,795
Variable operating costs and expenses (1)		199		35		22		106		362
Fixed operating costs and expenses (2)		423		101		177		294		995
Total significant segment expenses		21,055		15,443		1,098		10,556		48,152
Other segment income:
Equity in income of unconsolidated affiliates		20		72		2		–		94
Other segment items (3)		36		2		–		1		39
Total other segment income		56		74		2		1		133
Total segment gross operating margin	$	1,418	$	374	$	357	$	315	$	2,464
Other financial information:
Capital expenditures	$	635	$	23	$	303	$	101	$	1,062

(1)	Variable operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally fluctuate based on utilization.
(2)	Fixed operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally remain constant independent of utilization.
(3)	Other segment items for each segment primarily represent the following: • NGL Pipelines & Services – Non-refundable payments received from shippers attributable to make-up rights and subsequent recognition of revenues attributable to make-up rights. • Crude Oil Pipelines & Services – Other segment expenses. • Petrochemical & Refined Products Services – Other segment expenses.

	For the Three Months Ended March 31, 2024
	NGL Pipelines & Services		Crude Oil Pipelines & Services			Natural Gas Pipelines & Services		Petrochemical & Refined Products Services			Segment Total
Segment revenues:
Revenues from third parties	$	5,137	$	5,406		$	851	$	3,351		$	14,745
Revenues from related parties		3		9			3		–			15
Intersegment and intrasegment revenues		11,555		13,827			177		6,324			31,883
Total segment revenues		16,695		19,242			1,031		9,675			46,643
Significant segment expenses:
Cost of sales		14,810		18,749			558		8,875			42,992
Variable operating costs and expenses (1)		174		46			15		94			329
Fixed operating costs and expenses (2)		425		104			150		249			928
Total significant segment expenses		15,409		18,899			723		9,218			44,249
Other segment income (expense):
Equity in income of unconsolidated affiliates		31		69			2		–			102
Other segment items (3)		23		(1	)		2		(13	)		11
Total other segment income (expense), net		54		68			4		(13	)		113
Total segment gross operating margin	$	1,340	$	411		$	312	$	444		$	2,507
Other financial information:
Capital expenditures	$	577	$	37		$	204	$	229		$	1,047

(1)	Variable operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally fluctuate based on utilization.
(2)	Fixed operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally remain constant independent of utilization.
(3)	Other segment items for each segment primarily represent the following: • NGL Pipelines & Services – Non-refundable payments received from shippers attributable to make-up rights and subsequent recognition of revenues attributable to make-up rights. • Crude Oil Pipelines & Services – Other segment expenses. • Natural Gas Pipelines & Services – Other segment expenses. • Petrochemical & Refined Products Services – Other segment expenses.

Segment revenues include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates.  Our consolidated revenues reflect the elimination of intercompany transactions.  The following table reconciles total segment revenues as reported in the preceding tables to consolidated revenues as presented on our Unaudited Condensed Statements of Consolidated Operations:

	For the Three Months Ended March 31,
	2025			2024
Segment revenues:
NGL Pipelines & Services	$	22,417		$	16,695
Crude Oil Pipelines & Services		15,743			19,242
Natural Gas Pipelines & Services		1,453			1,031
Petrochemical & Refined Products Services		10,870			9,675
Total segment revenues		50,483			46,643
Elimination of intersegment and intrasegment revenues		(35,066	)		(31,883	)
Total consolidated revenues	$	15,417		$	14,760

Segment expenses represent operating costs and expenses exclusive of (i) depreciation, amortization and accretion expenses (excluding amortization of major maintenance costs for reaction-based plants and amortization of finance lease right-of-use assets), (ii) impairment charges, and (iii) gains and losses attributable to asset sales and related matters. Segment expense presented in the tables above include intersegment and intrasegment transactions, which are generally based on transactions made at market-based rates.  Additionally, the significant segment expense categories presented align with the manner in which our CODMs evaluate segment results.  Our consolidated operating costs and expenses are inclusive of the aforementioned adjustments and reflect the elimination of intercompany transactions.

The following table presents our segment assets, together with a reconciliation to our consolidated total assets, at the dates indicated:

	March 31, 2025		December 31, 2024
NGL Pipelines & Services	$	21,735	$	21,900
Crude Oil Pipelines & Services		11,327		11,390
Natural Gas Pipelines & Services		12,312		12,260
Petrochemical & Refined Products Services		11,276		11,350
Total segment assets		56,650		56,900
Construction in progress		4,981		4,138
Current assets		12,763		15,133
Other assets		1,012		997
Consolidated total assets	$	75,406	$	77,168

Supplemental Revenue and Expense Information

The following table presents additional information regarding our consolidated revenues and costs and expenses for the periods indicated:

	For the Three Months Ended March 31,
	2025			2024
Consolidated revenues:
NGL Pipelines & Services	$	5,400		$	5,140
Crude Oil Pipelines & Services		5,121			5,415
Natural Gas Pipelines & Services		1,221			854
Petrochemical & Refined Products Services		3,675			3,351
Total consolidated revenues	$	15,417		$	14,760
Consolidated costs and expenses
Operating costs and expenses:
Cost of sales	$	12,005		$	11,405
Other operating costs and expenses (1)		1,059			954
Depreciation, amortization and accretion		618			595
Asset impairment charges		10			20
Net gains attributable to asset sales and related matters		(2	)		–
General and administrative costs		60			66
Total consolidated costs and expenses	$	13,750		$	13,040

(1) Represents the cost of operating our plants, pipelines and other fixed assets excluding depreciation, amortization and accretion charges; asset impairment charges; and net gains attributable to asset sales and related matters.

Fluctuations in our product sales revenues and cost of sales amounts are explained in large part by changes in energy commodity prices.  In general, higher energy commodity prices result in an increase in our revenues attributable to product sales; however, these higher commodity prices would also be expected to increase the associated cost of sales as purchase costs are higher.  The same type of relationship would be true in the case of lower energy commodity sales prices and purchase costs.