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SEGMENT INFORMATION
9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
SEGMENT INFORMATION

4. SEGMENT INFORMATION

As of September 30, 2019, our reportable segments are:

 

the Utica Shale, which is served by Summit Utica;

 

Ohio Gathering, which includes our ownership interest in OGC and OCC;

 

the Williston Basin, which is served by Polar and Divide and Bison Midstream;

 

the DJ Basin, which is served by Niobrara G&P;

 

the Permian Basin, which is served by Summit Permian;

 

the Piceance Basin, which is served by Grand River;

 

the Barnett Shale, which is served by DFW Midstream; and

 

the Marcellus Shale, which is served by Mountaineer Midstream.

Additionally, until March 22, 2019, we owned Tioga Midstream, a crude oil, produced water and associated natural gas gathering system operating in the Williston Basin, which includes the Bakken and Three Forks shale formations in northwestern North Dakota. Refer to Note 17 to the unaudited condensed consolidated financial statements for details on the sale of Tioga Midstream.

Each of our reportable segments provides midstream services in a specific geographic area. Our reportable segments reflect the way in which we internally report the financial information used to make decisions and allocate resources in connection with our operations.

The Ohio Gathering reportable segment includes our investment in OGC and OCC. Income or loss from equity method investees, as reflected on the statements of operations, relates to Ohio Gathering and is recognized and disclosed on a one-month lag (see Note 8).

For the three and nine months ended September 30, 2019, other than the investment activity described in Note 8, Double E did not have any results of operations given that the Project is currently under development. The Project is expected to be operational in the third quarter of 2021.

Corporate and Other represents those results that are: (i) not specifically attributable to a reportable segment; (ii) not individually reportable (such as Double E); or (iii) that have not been allocated to our reportable segments for the purpose of evaluating their performance, including certain general and administrative expense items, natural gas and crude oil marketing services and transaction costs.

Assets by reportable segment follow.

 

 

 

September 30,2019

 

 

December 31, 2018

 

 

 

(In thousands)

 

Assets (1):

 

 

 

 

 

 

 

 

Utica Shale

 

$

207,850

 

 

$

207,357

 

Ohio Gathering

 

 

620,496

 

 

 

649,250

 

Williston Basin

 

 

445,838

 

 

 

526,819

 

DJ Basin

 

 

187,542

 

 

 

166,580

 

Permian Basin

 

 

184,386

 

 

 

145,702

 

Piceance Basin

 

 

665,489

 

 

 

699,638

 

Barnett Shale

 

 

354,173

 

 

 

376,564

 

Marcellus Shale

 

 

186,899

 

 

 

208,790

 

Total reportable segment assets

 

 

2,852,673

 

 

 

2,980,700

 

Corporate and Other

 

 

48,783

 

 

 

44,181

 

Eliminations

 

 

 

 

 

(4,319

)

Total assets

 

$

2,901,456

 

 

$

3,020,562

 

(1) At September 30, 2019, Corporate and Other included $28.3 million relating to our investment in Double E (included in the Investment in equity method investees caption of the unaudited condensed consolidated balance sheet). At December 31, 2018, Corporate and Other included $9.6 million of capital expenditures relating to the Project.

 

Revenues by reportable segment follow.

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Revenues (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

8,865

 

 

$

7,974

 

 

$

23,951

 

 

$

28,437

 

Williston Basin

 

 

21,118

 

 

 

29,010

 

 

 

77,440

 

 

 

90,850

 

DJ Basin

 

 

7,867

 

 

 

3,782

 

 

 

17,839

 

 

 

10,355

 

Permian Basin

 

 

4,885

 

 

 

 

 

 

12,545

 

 

 

 

Piceance Basin

 

 

33,111

 

 

 

38,683

 

 

 

101,995

 

 

 

116,689

 

Barnett Shale

 

 

17,820

 

 

 

21,020

 

 

 

52,452

 

 

 

53,345

 

Marcellus Shale

 

 

5,987

 

 

 

7,150

 

 

 

18,081

 

 

 

23,025

 

Total reportable segments revenue

 

 

99,653

 

 

 

107,619

 

 

 

304,303

 

 

 

322,701

 

Corporate and Other

 

 

534

 

 

 

23,636

 

 

 

31,196

 

 

 

57,234

 

Eliminations

 

 

 

 

 

(3,776

)

 

 

(4,218

)

 

 

(6,953

)

Total revenues

 

$

100,187

 

 

$

127,479

 

 

$

331,281

 

 

$

372,982

 

(1) Excludes revenues earned by Ohio Gathering due to equity method accounting.

 

Counterparties accounting for more than 10% of total revenues were as follows:

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Percentage of total revenues (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparty A - Piceance Basin

 

 

12

%

 

 

11

%

 

 

11

%

 

 

11

%

Counterparty B - Williston Basin

 

 

10

%

 

*

 

 

 

10

%

 

*

 

Counterparty C - Barnett Shale

 

*

 

 

 

12

%

 

*

 

 

 

10

%

(1) Excludes revenues earned by Ohio Gathering due to equity method accounting.

* Less than 10%

 

Depreciation and amortization, including the amortization expense associated with our favorable and unfavorable (for 2018) gas gathering contracts as reported in Other revenues, by reportable segment follows.

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Depreciation and amortization (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

1,913

 

 

$

1,887

 

 

$

5,744

 

 

$

5,773

 

Williston Basin

 

 

4,788

 

 

 

5,672

 

 

 

14,958

 

 

 

16,903

 

DJ Basin

 

 

775

 

 

 

783

 

 

 

2,038

 

 

 

2,349

 

Permian Basin

 

 

1,312

 

 

 

 

 

 

3,547

 

 

 

 

Piceance Basin

 

 

11,798

 

 

 

11,729

 

 

 

35,399

 

 

 

35,168

 

Barnett Shale (2)

 

 

4,045

 

 

 

3,760

 

 

 

12,542

 

 

 

11,276

 

Marcellus Shale

 

 

2,286

 

 

 

2,273

 

 

 

6,855

 

 

 

6,819

 

Total reportable segment depreciation and amortization

 

 

26,917

 

 

 

26,104

 

 

 

81,083

 

 

 

78,288

 

Corporate and Other

 

 

723

 

 

 

488

 

 

 

1,836

 

 

 

1,464

 

Total depreciation and amortization

 

$

27,640

 

 

$

26,592

 

 

$

82,919

 

 

$

79,752

 

(1) Excludes depreciation and amortization recognized by Ohio Gathering due to equity method accounting.

(2) Includes the amortization expense associated with our favorable and unfavorable (for 2018) gas gathering contracts as reported in Other revenues.

Cash paid for capital expenditures by reportable segment follow.

 

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Cash paid for capital expenditures (1):

 

 

 

 

 

 

 

 

Utica Shale

 

$

2,473

 

 

$

3,922

 

Williston Basin

 

 

20,288

 

 

 

18,463

 

DJ Basin

 

 

66,775

 

 

 

38,864

 

Permian Basin

 

 

43,422

 

 

 

67,640

 

Piceance Basin

 

 

1,919

 

 

 

5,302

 

Barnett Shale (2)

 

 

317

 

 

 

914

 

Marcellus Shale

 

 

347

 

 

 

557

 

Total reportable segment capital expenditures

 

 

135,541

 

 

 

135,662

 

Corporate and Other

 

 

16,122

 

 

 

1,371

 

Total cash paid for capital expenditures

 

$

151,663

 

 

$

137,033

 

(1) Excludes cash paid for capital expenditures by Ohio Gathering due to equity method accounting.

(2) For the nine months ended September 30, 2019, the amount includes sales tax reimbursements of $1.1 million.

During the nine months ended September 30, 2019, Corporate and Other included cash paid of $0.7 million for corporate purposes; the remainder represents capital expenditures relating to the Project.

We assess the performance of our reportable segments based on segment adjusted EBITDA. We define segment adjusted EBITDA as total revenues less total costs and expenses; plus (i) other income excluding interest income, (ii) our proportional adjusted EBITDA for equity method investees, (iii) depreciation and amortization, (iv) adjustments related to MVC shortfall payments, (v) adjustments related to capital reimbursement activity, (vi) unit-based and noncash compensation, (vii) change in the Deferred Purchase Price Obligation fair value, (viii) impairments and (ix) other noncash expenses or losses, less other noncash income or gains. We define proportional adjusted EBITDA for our equity method investees as the product of (i) total revenues less total expenses, excluding impairments and other noncash income or expense items, and amortization for deferred contract costs; and (ii) our ownership interest in Ohio Gathering during the respective period.

For the purpose of evaluating segment performance, we exclude the effect of Corporate and Other revenues and expenses, such as certain general and administrative expenses (including compensation-related expenses and professional services fees), natural gas and crude oil marketing services, transaction costs, interest expense, change in the Deferred Purchase Price Obligation fair value and income tax expense or benefit from segment adjusted EBITDA.

Segment adjusted EBITDA by reportable segment follows.

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Reportable segment adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utica Shale

 

$

7,864

 

 

$

6,521

 

 

$

20,697

 

 

$

24,459

 

Ohio Gathering

 

 

10,435

 

 

 

10,171

 

 

 

29,584

 

 

 

29,583

 

Williston Basin

 

 

13,840

 

 

 

19,849

 

 

 

49,224

 

 

 

54,849

 

DJ Basin

 

 

6,554

 

 

 

2,248

 

 

 

12,043

 

 

 

4,528

 

Permian Basin

 

 

210

 

 

 

 

 

 

(996

)

 

 

 

Piceance Basin

 

 

24,044

 

 

 

27,583

 

 

 

74,627

 

 

 

82,211

 

Barnett Shale

 

 

10,901

 

 

 

10,818

 

 

 

33,483

 

 

 

31,770

 

Marcellus Shale

 

 

4,958

 

 

 

5,550

 

 

 

14,735

 

 

 

18,769

 

Total of reportable segments' measures of profit

 

$

78,806

 

 

$

82,740

 

 

$

233,397

 

 

$

246,169

 

A reconciliation of income or loss before income taxes and income or loss from equity method investees to total of reportable segments' measures of profit or loss follows.

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Reconciliation of (loss) income before income taxes

    and loss from equity method investees to total

    of reportable segments' measures of profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes and loss

    from equity method investees

 

$

(9,947

)

 

$

58,589

 

 

$

(40,183

)

 

$

7,488

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other expense

 

 

7,039

 

 

 

9,324

 

 

 

28,406

 

 

 

28,949

 

Interest expense

 

 

19,335

 

 

 

14,862

 

 

 

54,803

 

 

 

44,821

 

Deferred Purchase Price Obligation

 

 

3,760

 

 

 

(37,204

)

 

 

11,899

 

 

 

53,759

 

Depreciation and amortization

 

 

27,640

 

 

 

26,592

 

 

 

82,919

 

 

 

79,752

 

Proportional adjusted EBITDA for equity method

   investees

 

 

10,435

 

 

 

10,171

 

 

 

29,584

 

 

 

29,583

 

Adjustments related to MVC shortfall payments

 

 

3,534

 

 

 

(2,999

)

 

 

2,868

 

 

 

(6,541

)

Adjustments related to capital reimbursement activity

 

 

(145

)

 

 

(106

)

 

 

(1,906

)

 

 

49

 

Unit-based and noncash compensation

 

 

1,291

 

 

 

1,965

 

 

 

5,370

 

 

 

6,188

 

(Gain) loss on asset sales, net

 

 

(347

)

 

 

6

 

 

 

(1,595

)

 

 

(6

)

Long-lived asset impairment

 

 

 

 

 

1,540

 

 

 

45,021

 

 

 

2,127

 

Goodwill impairment

 

 

16,211

 

 

 

 

 

 

16,211

 

 

 

 

Total of reportable segments' measures of profit

 

$

78,806

 

 

$

82,740

 

 

$

233,397

 

 

$

246,169

 

Adjustments related to MVC shortfall payments recognize the earnings from MVC shortfall payments ratably over the term of the associated MVC (see Note 3). Contributions in aid of construction are recognized over the remaining term of the respective contract. We include adjustments related to capital reimbursement activity in our calculation of segment adjusted EBITDA to account for revenue recognized from contributions in aid of construction.  

Adjustments related to MVC shortfall payments by reportable segment follow.

 

 

Three months ended September 30, 2019

 

 

 

Williston Basin

 

 

Piceance

Basin

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to expected MVC shortfall payments:

 

$

2,081

 

 

$

 

 

$

1,453

 

 

$

3,534

 

 

 

 

Three months ended September 30, 2018

 

 

 

Williston Basin

 

 

Piceance

Basin

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to expected MVC shortfall payments:

 

$

2,032

 

 

$

 

 

$

(5,031

)

 

$

(2,999

)

 

 

 

Nine months ended September 30, 2019

 

 

 

Williston Basin

 

 

Piceance

Basin

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to expected MVC shortfall payments:

 

$

(1,387

)

 

$

(103

)

 

$

4,358

 

 

$

2,868

 

 

 

 

Nine months ended September 30, 2018

 

 

 

Williston Basin

 

 

Piceance

Basin

 

 

Barnett

Shale

 

 

Total

 

 

 

(In thousands)

 

Adjustments related to expected MVC shortfall payments:

 

$

(1,354

)

 

$

(93

)

 

$

(5,094

)

 

$

(6,541

)