Segment Information

9 Months Ended

Sep. 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 nine months endedSeptember 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 ELG and 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 September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
External Revenues
Gathering and Processing	$	603		$	475		$	1,671		$	1,262
Natural Gas Transportation	—			—			—			—
NGL Services	—			—			—			—
Contract Services	58			47			159			137
Corporate	4			5			14			14
Eliminations	—			—			—			—
Total	$	665		$	527		$	1,844		$	1,413
Intersegment Revenues
Gathering and Processing	$	—		$	—		$	—		$	—
Natural Gas Transportation	—			—			—			—
NGL Services	—			—			—			—
Contract Services	4			5			11			15
Corporate	—			—			—			—
Eliminations	(4		)	(5		)	(11		)	(15		)
Total	$	—		$	—		$	—		$	—
Segment Margin
Gathering and Processing	$	136		$	110		$	383		$	314
Natural Gas Transportation	—			—			—			1
NGL Services	—			—			—			—
Contract Services	52			48			149			140
Corporate	4			5			14			14
Eliminations	(4		)	(5		)	(11		)	(15		)
Total	$	188		$	158		$	535		$	454
Operation and Maintenance
Gathering and Processing	$	63		$	50		$	177		$	125
Natural Gas Transportation	—			—			—			—
NGL Services	—			—			—			—
Contract Services	19			16			53			49
Corporate	—			—			1			—
Eliminations	(4		)	(5		)	(11		)	(15		)
Total	$	78		$	61		$	220		$	159

The table below provides a reconciliation of total segment margin to (loss) income before income taxes:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Total segment margin	$	188		$	158		$	535		$	454
Operation and maintenance	(78		)	(61		)	(220		)	(159		)
General and administrative	(13		)	(21		)	(64		)	(78		)
Gain (loss) on asset sales, net	1			—			(1		)	(2		)
Depreciation and amortization	(74		)	(71		)	(207		)	(193		)
Income from unconsolidated affiliates	37			21			103			87
Interest expense, net	(41		)	(29		)	(119		)	(86		)
Loss on debt refinancing, net	—			—			(7		)	(8		)
Other income and deductions, net	24			1			3			26			*
Income (loss) before income taxes	$	44		$	(2	)	$	23		$	41

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* Other income and deductions, net for the nine months endedSeptember 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	September 30, 2013		December 31, 2012
Gathering and Processing	$	4,631	$	4,210
Natural Gas Transportation	1,005		1,232
NGL Services	1,040		948
Contract Services	1,812		1,672
Corporate	78		61
Total	$	8,566	$	8,123

Investment in Unconsolidated Affiliates	September 30, 2013		December 31, 2012
Gathering and Processing	$	37	$	35
Natural Gas Transportation	1,004		1,231
NGL Services	1,040		948
Total	$	2,081	$	2,214