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Segment Information
 6 Months Ended
Jun. 30, 2013
Segment Information [Abstract]  
Segment Information
Segment Information
During the fourth quarter of 2012, the Partnership realigned the composition of its segments and updated the segment names to reflect the realignment. Accordingly, the Partnership has restated the items of segment information for the three and six months ended June 30, 2012 to reflect this new segment alignment.
The Partnership has five reportable segments: Gathering and Processing, Natural Gas Transportation, NGL Services, Contract Services, and Corporate. The reportable segments are as described below:
•
Gathering and Processing. The Partnership provides “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, processing raw natural gas to separate NGLs from the raw natural gas and selling or delivering pipeline-quality natural gas and NGLs to various markets and pipeline systems. This segment also includes the Partnership’s 33.33% membership interest in Ranch JV, which processes natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas. The Partnership completed the SUGS Acquisition on April 30, 2013; therefore, the Gathering and Processing segment amounts have been retrospectively adjusted to reflect the SUGS Acquisition beginning March 26, 2012.
•
Natural Gas Transportation. The Partnership owns a 49.99% general partner interest in HPC, which owns RIGS, a 450 mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets, and a 50% membership interest in MEP, which owns a 500 mile interstate natural gas pipeline stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama. This segment also includes Gulf States, which owns a 10-mile interstate pipeline that extends from Harrison County, Texas to Caddo Parish, Louisiana.
•
NGL Services. The Partnership owns a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including pipelines, storage, fractionation and processing facilities located in Texas, Mississippi and Louisiana.
•
Contract Services. The Partnership owns and operates a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems. The Partnership also owns and operates a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management.
•
Corporate. The Corporate segment comprises the Partnership’s corporate assets.
The Partnership accounts for intersegment revenues as if the revenues were to third parties, exclusive of certain cost of capital charges.
Management evaluates the performance of each segment and makes capital allocation decisions through the separate consideration of segment margin and operation and maintenance expenses. Segment margin for the Gathering and Processing and the Natural Gas Transportation segments is defined as total revenues, including service fees, less cost of sales. In the Contract Services segment, segment margin is defined as revenues less direct costs.
Management believes segment margin is an important measure because it directly relates to volume, commodity price changes and revenue generating horsepower. Operation and maintenance expenses are a separate measure used by management to evaluate performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of operation and maintenance expenses. These expenses fluctuate depending on the activities performed during a specific period. The Partnership does not deduct operation and maintenance expenses from total revenues in calculating segment margin because management separately evaluates commodity volume and price changes in segment margin. The Partnership does not record segment margin for its investments in unconsolidated affiliates (HPC, MEP, Lone Star, Ranch JV and Grey Ranch) because it records its ownership percentages of their net income as income from unconsolidated affiliates in accordance with the equity method of accounting.
Results for each segment are shown below:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
External Revenues
 
 
 
 
 
 
 
Gathering and Processing
$
583

 
$
462

 
$
1,069

 
$
787

Natural Gas Transportation
—

 
—

 
—

 
—

NGL Services
—

 
—

 
—

 
—

Contract Services
52

 
44

 
101

 
90

Corporate
4

 
5

 
9

 
9

Eliminations
—

 
—

 
—

 
—

Total
$
639

 
$
511

 
$
1,179

 
$
886

Intersegment Revenues
 
 
 
 
 
 
 
Gathering and Processing
$
—

 
$
—

 
$
—

 
$
—

Natural Gas Transportation
—

 
—

 
—

 
—

NGL Services
—

 
—

 
—

 
—

Contract Services
4

 
5

 
7

 
10

Corporate
—

 
—

 
—

 
—

Eliminations
(4
)
 
(5
)
 
(7
)
 
(10
)
Total
$
—

 
$
—

 
$
—

 
$
—

Segment Margin
 
 
 
 
 
 
 
Gathering and Processing
$
145

 
$
130

 
$
248

 
$
204

Natural Gas Transportation
—

 
—

 
—

 
1

NGL Services
—

 
—

 
—

 
—

Contract Services
49

 
45

 
97

 
92

Corporate
4

 
5

 
9

 
9

Eliminations
(4
)
 
(5
)
 
(7
)
 
(10
)
Total
$
194

 
$
175

 
$
347

 
$
296

Operation and Maintenance
 
 
 
 
 
 
 
Gathering and Processing
$
60

 
$
47

 
$
114

 
$
76

Natural Gas Transportation
—

 
—

 
—

 
—

NGL Services
—

 
—

 
—

 
—

Contract Services
17

 
15

 
35

 
32

Corporate
—

 
—

 
—

 
—

Eliminations
(4
)
 
(5
)
 
(7
)
 
(10
)
Total
$
73

 
$
57

 
$
142

 
$
98


The table below provides a reconciliation of total segment margin to (loss) income before income taxes:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013

2012
 
2013
 
2012
 
Total segment margin
$
194

 
$
175

 
$
347

 
$
296

 
Operation and maintenance
(73
)
 
(57
)
 
(142
)
 
(98
)
 
General and administrative
(18
)
 
(25
)
 
(51
)
 
(57
)
 
Loss on asset sales, net
(1
)
 
(2
)
 
(2
)
 
(2
)
 
Depreciation and amortization
(68
)
 
(69
)
 
(133
)
 
(122
)
 
Income from unconsolidated affiliates
31

 
34

 
66

 
66

 
Interest expense, net
(41
)
 
(28
)
 
(78
)
 
(57
)
 
Loss on debt refinancing, net
(7
)
 
(8
)
 
(7
)
 
(8
)
 
Other income and deductions, net
(7
)
 
8

 
(21
)
 
25

*
Income (loss) before income taxes
$
10

 
$
28

 
$
(21
)
 
$
43

 
__________________
*
Other income and deductions, net for the six months ended June 30, 2012 included a one-time producer payment of $16 million related to an assignment of certain contracts.
The tables below provide amounts reflected in the consolidated balance sheet for each segment:
Total Assets
June 30,
2013
 
December 31,
2012
Gathering and Processing
$
4,491

 
$
4,210

Natural Gas Transportation
1,202

 
1,232

NGL Services
987

 
948

Contract Services
1,761

 
1,672

Corporate
80

 
61

Total
$
8,521

 
$
8,123

Investment in Unconsolidated Affiliates
June 30,
2013
 
December 31,
2012
Gathering and Processing
$
36

 
$
35

Natural Gas Transportation
1,201

 
1,231

NGL Services
987

 
948

Total
$
2,224

 
$
2,214