Business Segments (Notes)

6 Months Ended

Jun. 30, 2020

Our operations are organized into two reportable segments: (i) Logistics and Marketing and (ii) Gathering and Processing. These segments are monitored separately by management for performance against our internal forecast and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Our Gathering and Processing reportable segment includes operating segments that have been aggregated based on the nature of the products and services provided. Gross margin is a performance measure utilized by management to monitor the operations of each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in Note 2 of the Notes to Consolidated Financial Statements in “Financial Statements and Supplementary Data” included as Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2019.

Our Logistics and Marketing segment includes transporting, trading, marketing, storing natural gas and NGLs, and fractionating NGLs. Our Gathering and Processing segment consists of gathering, compressing, treating, processing natural gas, producing and fractionating NGLs, and recovering condensate. The remainder of our business operations is presented as “Other,” and consists of unallocated corporate costs. Elimination of inter-segment transactions are reflected in the Eliminations column.

The following tables set forth our segment information:

Three Months Ended June 30, 2020:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	1,150	$	618	$	—	$	(494)	$	1,274
Gross margin (a)	$	69	$	231	$	—	$	—	$	300
Operating and maintenance expense	(9)		(134)		(5)		—		(148)
Depreciation and amortization expense	(3)		(82)		(8)		—		(93)
General and administrative expense	(1)		(4)		(46)		—		(51)

Other expense (income), net	(4)		1		(2)		—		(5)


Restructuring costs	—		—		(9)		—		(9)
Earnings from unconsolidated affiliates	125		—		—		—		125
Interest expense	—		—		(71)		—		(71)

Net income (loss)	$	177	$	12	$	(141)	$	—	$	48
Net income attributable to noncontrolling interests	—		(1)		—		—		(1)
Net income (loss) attributable to partners	$	177	$	11	$	(141)	$	—	$	47
Non-cash derivative mark-to-market (b)	$	5	$	(62)	$	—	$	—	$	(57)
Non-cash lower of cost or net realizable value adjustments	$	2	$	—	$	—	$	—	$	2
Capital expenditures	$	—	$	32	$	1	$	—	$	33

Investments in unconsolidated affiliates, net	$	56	$	—	$	—	$	—	$	56

Six Months Ended June 30, 2020:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	2,508	$	1,531	$	—	$	(1,108)	$	2,931
Gross margin (a)	$	180	$	631	$	—	$	—	$	811
Operating and maintenance expense	(16)		(276)		(9)		—		(301)
Depreciation and amortization expense	(6)		(171)		(15)		—		(192)
General and administrative expense	(3)		(7)		(97)		—		(107)
Asset impairments	—		(746)		—		—		(746)
Other expense, net	(4)		(2)		(2)		—		(8)


Restructuring costs	—		—		(9)		—		(9)
Earnings from unconsolidated affiliates	262		(61)		—		—		201
Interest expense	—		—		(149)		—		(149)
Income tax expense	—		—		(1)		—		(1)
Net income (loss)	$	413	$	(632)	$	(282)	$	—	$	(501)
Net income attributable to noncontrolling interests	—		(2)		—		—		(2)
Net income (loss) attributable to partners	$	413	$	(634)	$	(282)	$	—	$	(503)

Non-cash derivative mark-to-market (b)	$	47	$	30	$	—	$	—	$	77
Non-cash lower of cost or net realizable value adjustments	$	6	$	—	$	—	$	—	$	6
Capital expenditures	$	1	$	99	$	2	$	—	$	102

Investments in unconsolidated affiliates, net	$	90	$	—	$	—	$	—	$	90

Three Months Ended June 30, 2019:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	1,613	$	1,024	$	—	$	(839)	$	1,798
Gross margin (a)	$	88	$	354	$	—	$	—	$	442
Operating and maintenance expense	(11)		(165)		(6)		—		(182)
Depreciation and amortization expense	(3)		(91)		(7)		—		(101)
General and administrative expense	(1)		(6)		(61)		—		(68)

Other expense, net	(1)		—		—		—		(1)

Loss on sale of assets, net	(1)		(4)		—		—		(5)
Restructuring costs	—		—		(9)		—		(9)
Earnings from unconsolidated affiliates	114		3		—		—		117
Interest expense	—		—		(73)		—		(73)


Net income (loss)	$	185	$	91	$	(156)	$	—	$	120
Net income attributable to noncontrolling interests	—		(1)		—		—		(1)
Net income (loss) attributable to partners	$	185	$	90	$	(156)	$	—	$	119

Non-cash derivative mark-to-market (b)	$	24	$	15	$	—	$	—	$	39
Non-cash lower of cost or net realizable value adjustments	$	3	$	—	$	—	$	—	$	3
Capital expenditures	$	11	$	111	$	4	$	—	$	126

Investments in unconsolidated affiliates, net	$	139	$	—	$	—	$	—	$	139

Six Months Ended June 30, 2019:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	3,658	$	2,312	$	—	$	(1,973)	$	3,997
Gross margin (a)	$	146	$	691	$	—	$	—	$	837
Operating and maintenance expense	(20)		(330)		(10)		—		(360)
Depreciation and amortization expense	(6)		(184)		(14)		—		(204)
General and administrative expense	(4)		(12)		(119)		—		(135)

Other expense, net	(1)		(5)		—		—		(6)

Loss on sale of assets, net	(10)		(4)		—		—		(14)
Restructuring costs	—		—		(9)		—		(9)
Earnings from unconsolidated affiliates	227		3		—		—		230
Interest expense	—		—		(142)		—		(142)
Income tax expense	—		—		(1)		—		(1)

Net income (loss)	$	332	$	159	$	(295)	$	—	$	196
Net income attributable to noncontrolling interests	—		(2)		—		—		(2)
Net income (loss) attributable to partners	$	332	$	157	$	(295)	$	—	$	194

Non-cash derivative mark-to-market (b)	$	6	$	(21)	$	—	$	—	$	(15)
Non-cash lower of cost or net realizable value adjustments	$	8	$	—	$	—	$	—	$	8
Capital expenditures	$	25	$	276	$	7	$	—	$	308

Investments in unconsolidated affiliates, net	$	270	$	—	$	—	$	—	$	270


	June 30,		December 31,
	2020		2019
	(millions)
Segment long-term assets:
Gathering and Processing	$	8,076	$	8,904
Logistics and Marketing	3,832		3,848
Other (c)	236		295

Total long-term assets	12,144		13,047
Current assets	802		1,080
Total assets	$	12,946	$	14,127

(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