Business Segments (Notes)

9 Months Ended

Sep. 30, 2020

Business SegmentsOur 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. Adjusted 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 September 30, 2020:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	1,438	$	857	$	—	$	(709)	$	1,586
Adjusted gross margin (a)	$	88	$	280	$	—	$	—	$	368
Operating and maintenance expense	(8)		(135)		(3)		—		(146)
General and administrative expense	(1)		(8)		(57)		—		(66)
Depreciation and amortization expense	(3)		(82)		(7)		—		(92)

Other expense, net	(2)		(2)		—		—		(4)



Earnings (loss) from unconsolidated affiliates	132		(2)		—		—		130
Interest expense	—		—		(77)		—		(77)
Income tax expense	—		—		(1)		—		(1)
Net income (loss)	$	206	$	51	$	(145)	$	—	$	112
Net income attributable to noncontrolling interests	—		(1)		—		—		(1)
Net income (loss) attributable to partners	$	206	$	50	$	(145)	$	—	$	111
Non-cash derivative mark-to-market	$	28	$	(39)	$	—	$	—	$	(11)

Capital expenditures	$	1	$	13	$	9	$	—	$	23
Investments in unconsolidated affiliates, net	$	12	$	—	$	—	$	—	$	12

Nine Months Ended September 30, 2020:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	3,946	$	2,388	$	—	$	(1,817)	$	4,517
Adjusted gross margin (a)	$	268	$	911	$	—	$	—	$	1,179
Operating and maintenance expense	(24)		(411)		(12)		—		(447)
General and administrative expense	(4)		(15)		(154)		—		(173)
Depreciation and amortization expense	(9)		(253)		(22)		—		(284)
Asset impairments	—		(746)		—		—		(746)
Other expense, net	(6)		(4)		(2)		—		(12)


Restructuring costs	—		—		(9)		—		(9)
Earnings (loss) from unconsolidated affiliates	394		(63)		—		—		331
Interest expense	—		—		(226)		—		(226)
Income tax expense	—		—		(2)		—		(2)
Net income (loss)	$	619	$	(581)	$	(427)	$	—	$	(389)
Net income attributable to noncontrolling interests	—		(3)		—		—		(3)
Net income (loss) attributable to partners	$	619	$	(584)	$	(427)	$	—	$	(392)
Non-cash derivative mark-to-market	$	75	$	(9)	$	—	$	—	$	66
Non-cash lower of cost or net realizable value adjustments	$	6	$	—	$	—	$	—	$	6
Capital expenditures	$	2	$	112	$	11	$	—	$	125
Investments in unconsolidated affiliates, net	$	102	$	—	$	—	$	—	$	102

Three Months Ended September 30, 2019:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	1,509	$	916	$	—	$	(726)	$	1,699
Adjusted gross margin (a)	$	61	$	330	$	—	$	—	$	391
Operating and maintenance expense	(9)		(172)		(6)		—		(187)
General and administrative expense	(2)		(5)		(59)		—		(66)
Depreciation and amortization expense	(4)		(88)		(8)		—		(100)
Asset impairments	(35)		(212)		—		—		(247)



Restructuring costs	—		—		(2)		—		(2)
Earnings from unconsolidated affiliates	113		1		—		—		114
Interest expense	—		—		(79)		—		(79)
Income tax expense	—		—		(1)		—		(1)
Net income (loss)	$	124	$	(146)	$	(155)	$	—	$	(177)
Net income attributable to noncontrolling interests	—		(1)		—		—		(1)
Net income (loss) attributable to partners	$	124	$	(147)	$	(155)	$	—	$	(178)
Non-cash derivative mark-to-market	$	(21)	$	(5)	$	—	$	—	$	(26)

Capital expenditures	$	3	$	99	$	4	$	—	$	106
Investments in unconsolidated affiliates, net	$	56	$	—	$	—	$	—	$	56

Nine Months Ended September 30, 2019:


	Logistics and Marketing		Gathering and Processing		Other		Eliminations		Total
	(millions)
Total operating revenue	$	5,167	$	3,228	$	—	$	(2,699)	$	5,696
Adjusted gross margin (a)	$	207	$	1,021	$	—	$	—	$	1,228
Operating and maintenance expense	(29)		(502)		(16)		—		(547)
General and administrative expense	(6)		(17)		(178)		—		(201)
Depreciation and amortization expense	(10)		(272)		(22)		—		(304)
Asset impairments	(35)		(212)		—		—		(247)
Other expense, net	(1)		(5)		—		—		(6)

Loss on sale of assets, net	(10)		(4)		—		—		(14)
Restructuring costs	—		—		(11)		—		(11)
Earnings from unconsolidated affiliates	340		4		—		—		344
Interest expense	—		—		(221)		—		(221)
Income tax expense	—		—		(2)		—		(2)
Net income (loss)	$	456	$	13	$	(450)	$	—	$	19
Net income attributable to noncontrolling interests	—		(3)		—		—		(3)
Net income (loss) attributable to partners	$	456	$	10	$	(450)	$	—	$	16

Non-cash derivative mark-to-market	$	(15)	$	(26)	$	—	$	—	$	(41)
Non-cash lower of cost or net realizable value adjustments	$	8	$	—	$	—	$	—	$	8
Capital expenditures	$	28	$	375	$	11	$	—	$	414
Investments in unconsolidated affiliates, net	$	326	$	—	$	—	$	—	$	326


	September 30,		December 31,
	2020		2019
	(millions)
Segment long-term assets:
Gathering and Processing	$	7,851	$	8,904
Logistics and Marketing	3,968		3,848
Other (b)	229		295
Total long-term assets	12,048		13,047
Current assets	866		1,080
Total assets	$	12,914	$	14,127

(a) Adjusted gross margin consists of total operating revenues, including commodity derivative activity, less purchases and related costs. Adjusted 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, adjusted gross margin should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or gross margin as determined in accordance with GAAP. Our adjusted gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate adjusted gross margin in the same manner.

(b) Other long-term assets not allocable to segments consist of corporate leasehold improvements and other long-term assets