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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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41-2232463
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(State or other jurisdiction of incorporation)
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(IRS Employer Identification No.)
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 6.
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•
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state, provincial, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an effect on rate structure, and affect the speed at and degree to which competition enters the natural gas and oil industries;
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•
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outcomes of litigation and regulatory investigations, proceedings or inquiries;
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•
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weather and other natural phenomena, including the economic, operational and other effects of hurricanes and storms;
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•
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the timing and extent of changes in interest rates and foreign currency exchange rates;
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•
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general economic conditions, including the risk of a prolonged economic slowdown or decline, or the risk of delay in a recovery, which can affect the long-term demand for natural gas and oil and related services;
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•
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potential effects arising from terrorist attacks and any consequential or other hostilities;
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•
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changes in environmental, safety and other laws and regulations;
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•
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the development of alternative energy resources;
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•
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results and costs of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general market and economic conditions;
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•
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increases in the cost of goods and services required to complete capital projects;
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•
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growth in opportunities, including the timing and success of efforts to develop U.S. and Canadian pipeline, storage, gathering and other related infrastructure projects and the effects of competition;
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•
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the performance of natural gas transmission, storage and gathering facilities, and crude oil transportation and storage;
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•
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the extent of success in connecting natural gas and oil supplies to transmission and gathering systems and in connecting to expanding gas and oil markets;
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•
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the effects of accounting pronouncements issued periodically by accounting standard-setting bodies;
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•
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conditions of the capital markets during the periods covered by forward-looking statements; and
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•
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the ability to successfully complete merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2014
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2013
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2014
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2013
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||||||||
Operating Revenues
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||||||||
Transportation of natural gas
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$
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402
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$
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355
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$
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828
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$
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724
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Transportation of crude oil
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70
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|
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67
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|
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141
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80
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Storage of natural gas and other
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59
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70
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143
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147
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Total operating revenues
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531
|
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492
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1,112
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951
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Operating Expenses
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Operating, maintenance and other
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166
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151
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322
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269
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Depreciation and amortization
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70
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65
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143
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126
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Property and other taxes
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46
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33
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90
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64
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Total operating expenses
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282
|
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|
249
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|
|
555
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|
459
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||||
Operating Income
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249
|
|
|
243
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|
|
557
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|
|
492
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Other Income and Expenses
|
|
|
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|
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||||||||
Equity in earnings of unconsolidated affiliates
|
29
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23
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|
|
57
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|
|
42
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||||
Other income and expenses, net
|
6
|
|
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16
|
|
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9
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|
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28
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|
||||
Total other income and expenses
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35
|
|
|
39
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|
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66
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70
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||||
Interest Expense
|
62
|
|
|
100
|
|
|
129
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|
|
194
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|
||||
Earnings Before Income Taxes
|
222
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|
|
182
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|
494
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368
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||||
Income Tax Expense
|
2
|
|
|
1
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|
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28
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|
|
2
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||||
Net Income
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220
|
|
|
181
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|
466
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366
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Net Income—Noncontrolling Interests
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5
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|
4
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9
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|
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8
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Net Income—Controlling Interests
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$
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215
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$
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177
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$
|
457
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$
|
358
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Calculation of Limited Partners’ Interest in Net Income:
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Net income—Controlling Interests
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$
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215
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$
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177
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$
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457
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$
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358
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Less: General partner’s interest in net income
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45
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13
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87
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24
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Limited partners’ interest in net income
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$
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170
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$
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164
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$
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370
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$
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334
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Weighted-average limited partner units outstanding—basic and diluted (a)
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286
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108
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285
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106
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Net income per limited partner unit—basic and diluted (a)
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$
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0.59
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$
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1.52
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$
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1.30
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$
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3.15
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Distributions paid per limited partner unit
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$
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0.55625
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$
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0.50125
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$
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1.1025
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$
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0.99625
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(a)
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Weighted average limited partners units outstanding used in the calculation of net income per limited partner unit for the period prior to the November 1, 2013 U.S. Assets Dropdown has not been recast. See Note 4 for further information.
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2014
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2013
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2014
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2013
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||||||||
Net Income
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$
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220
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$
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181
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$
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466
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$
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366
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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6
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(2
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)
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1
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(2
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)
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Total other comprehensive income (loss)
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6
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(2
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)
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1
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(2
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)
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Total Comprehensive Income
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226
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|
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179
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467
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364
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Less: Comprehensive Income—Noncontrolling Interests
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5
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4
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9
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8
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Comprehensive Income—Controlling Interests
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$
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221
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$
|
175
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|
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$
|
458
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|
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$
|
356
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|
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June 30,
2014 |
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December 31,
2013 |
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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123
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$
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121
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Receivables, net
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291
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355
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|
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Inventory
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|
38
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42
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Fuel tracker
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68
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28
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Other
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35
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19
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Total current assets
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555
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565
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Investments and Other Assets
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Investments in and loans to unconsolidated affiliates
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1,285
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1,396
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Goodwill
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3,251
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3,215
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Other
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3
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|
|
2
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|
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Total investments and other assets
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4,539
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4,613
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Property, Plant and Equipment
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Cost
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14,940
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|
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14,592
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|
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Less accumulated depreciation and amortization
|
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3,346
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3,229
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|
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Net property, plant and equipment
|
|
11,594
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|
|
11,363
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|
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Regulatory Assets and Deferred Debits
|
|
249
|
|
|
253
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|
||
Total Assets
|
|
$
|
16,937
|
|
|
$
|
16,794
|
|
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June 30,
2014 |
|
December 31,
2013 |
||||
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
212
|
|
|
$
|
231
|
|
Commercial paper
|
|
549
|
|
|
338
|
|
||
Taxes accrued
|
|
72
|
|
|
44
|
|
||
Interest accrued
|
|
60
|
|
|
61
|
|
||
Current maturities of long-term debt
|
|
34
|
|
|
445
|
|
||
Other
|
|
155
|
|
|
216
|
|
||
Total current liabilities
|
|
1,082
|
|
|
1,335
|
|
||
Long-term Debt
|
|
5,163
|
|
|
5,178
|
|
||
Deferred Credits and Other Liabilities
|
|
|
|
|
||||
Deferred income taxes
|
|
36
|
|
|
34
|
|
||
Regulatory and other
|
|
117
|
|
|
106
|
|
||
Total deferred credits and other liabilities
|
|
153
|
|
|
140
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
|
||
Equity
|
|
|
|
|
||||
Partners’ Capital
|
|
|
|
|
||||
Common units (287.9 million and 284.1 million units issued and outstanding at June 30, 2014 and December 31, 2013, respectively)
|
|
10,050
|
|
|
9,778
|
|
||
General partner units (5.9 million and 5.8 million units issued and outstanding at June 30, 2014 and December 31, 2013, respectively)
|
|
256
|
|
|
241
|
|
||
Accumulated other comprehensive income
|
|
(4
|
)
|
|
(5
|
)
|
||
Total partners’ capital
|
|
10,302
|
|
|
10,014
|
|
||
Noncontrolling interests
|
|
237
|
|
|
127
|
|
||
Total equity
|
|
10,539
|
|
|
10,141
|
|
||
Total Liabilities and Equity
|
|
$
|
16,937
|
|
|
$
|
16,794
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net income
|
|
$
|
466
|
|
|
$
|
366
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
148
|
|
|
130
|
|
||
Deferred income tax expense
|
|
25
|
|
|
1
|
|
||
Equity in earnings of unconsolidated affiliates
|
|
(57
|
)
|
|
(42
|
)
|
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Distributions received from unconsolidated affiliates
|
|
56
|
|
|
46
|
|
||
Other
|
|
(35
|
)
|
|
(15
|
)
|
||
Net cash provided by operating activities
|
|
603
|
|
|
486
|
|
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CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Capital expenditures
|
|
(414
|
)
|
|
(514
|
)
|
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Investment in and loans to unconsolidated affiliates
|
|
(30
|
)
|
|
(161
|
)
|
||
Purchases of held-to-maturity securities
|
|
(22
|
)
|
|
(30
|
)
|
||
Proceeds from sales and maturities of held-to-maturity securities
|
|
21
|
|
|
19
|
|
||
Purchases of available-for-sale securities
|
|
—
|
|
|
(2,897
|
)
|
||
Proceeds from sales and maturities of available-for-sale securities
|
|
—
|
|
|
2,718
|
|
||
Distributions received from unconsolidated affiliates
|
|
142
|
|
|
13
|
|
||
Other
|
|
15
|
|
|
1
|
|
||
Net cash used in investing activities
|
|
(288
|
)
|
|
(851
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Payments for the redemption of long-term debt
|
|
(427
|
)
|
|
(23
|
)
|
||
Net increase (decrease) in commercial paper
|
|
211
|
|
|
(12
|
)
|
||
Distributions to noncontrolling interests
|
|
(11
|
)
|
|
(9
|
)
|
||
Contributions from noncontrolling interests
|
|
112
|
|
|
—
|
|
||
Proceeds from issuance of units
|
|
195
|
|
|
193
|
|
||
Proceeds from notes payable—affiliates
|
|
—
|
|
|
220
|
|
||
Payments on notes payable—affiliates
|
|
—
|
|
|
(37
|
)
|
||
Distributions to partners
|
|
(393
|
)
|
|
(124
|
)
|
||
Contribution from parent
|
|
—
|
|
|
209
|
|
||
Net cash provided by (used in) financing activities
|
|
(313
|
)
|
|
417
|
|
||
Net increase in cash and cash equivalents
|
|
2
|
|
|
52
|
|
||
Cash and cash equivalents at beginning of period
|
|
121
|
|
|
48
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
123
|
|
|
$
|
100
|
|
Supplemental Disclosures
|
|
|
|
|
||||
Property, plant and equipment noncash accruals
|
|
$
|
84
|
|
|
$
|
85
|
|
|
Partners’ Capital
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||
|
Common
|
|
General
Partner
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
||||||||||||||
December 31, 2013
|
$
|
9,778
|
|
|
$
|
241
|
|
|
$
|
(5
|
)
|
|
$
|
127
|
|
|
$
|
10,141
|
|
Net income
|
370
|
|
|
87
|
|
|
—
|
|
|
9
|
|
|
466
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Adjustment to purchase price under net acquired assets from dropdowns
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||
Attributed deferred tax benefit
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Issuances of units
|
191
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|||||
Distributions to partners
|
(314
|
)
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
(393
|
)
|
|||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
112
|
|
|||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
|||||
Other, net
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
June 30, 2014
|
$
|
10,050
|
|
|
$
|
256
|
|
|
$
|
(4
|
)
|
|
$
|
237
|
|
|
$
|
10,539
|
|
December 31, 2012
|
$
|
5,483
|
|
|
$
|
141
|
|
|
$
|
3
|
|
|
$
|
107
|
|
|
$
|
5,734
|
|
Net income
|
334
|
|
|
24
|
|
|
—
|
|
|
8
|
|
|
366
|
|
|||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Net transfer from parent
|
1,340
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
1,367
|
|
|||||
Attributed deferred tax benefit
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Issuances of units
|
189
|
|
|
4
|
|
|
|
|
|
|
193
|
|
|||||||
Distributions to partners
|
(106
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|||||
June 30, 2013
|
$
|
7,240
|
|
|
$
|
194
|
|
|
$
|
1
|
|
|
$
|
106
|
|
|
$
|
7,541
|
|
|
Purchase Price
Allocation
|
||
|
(in millions)
|
||
Cash
|
$
|
67
|
|
Receivables
|
25
|
|
|
Other current assets
|
9
|
|
|
Goodwill
|
523
|
|
|
Property, plant and equipment
|
1,251
|
|
|
Accounts payable
|
(18
|
)
|
|
Other current liabilities
|
(17
|
)
|
|
Deferred credits and other liabilities
|
(259
|
)
|
|
Long-term debt, including current portion
|
(260
|
)
|
|
Total assets acquired/liabilities assumed
|
$
|
1,321
|
|
|
Six Months Ended
June 30, 2013
|
||
|
(in millions, except per-unit amount)
|
||
Operating revenues
|
$
|
1,009
|
|
Earnings before income taxes
|
381
|
|
|
Net income
|
379
|
|
|
Net income—controlling interests
|
371
|
|
|
Net income per limited partner unit—basic and diluted
|
3.05
|
|
Condensed Consolidated Statements of Operations
|
Total Operating Revenues
|
|
Depreciation and Amortization
|
|
Segment EBITDA/Consolidated Earnings Before Income Taxes
|
||||||
|
(in millions)
|
||||||||||
Three Months Ended June 30, 2014
|
|
|
|
|
|
||||||
U.S. Transmission
|
$
|
454
|
|
|
$
|
63
|
|
|
$
|
320
|
|
Liquids
|
77
|
|
|
7
|
|
|
51
|
|
|||
Total reportable segments
|
531
|
|
|
70
|
|
|
371
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
70
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
62
|
|
|||
Interest income and other
|
—
|
|
|
—
|
|
|
1
|
|
|||
Total consolidated
|
$
|
531
|
|
|
$
|
70
|
|
|
$
|
222
|
|
Three Months Ended June 30, 2013
|
|
|
|
|
|
||||||
U.S. Transmission
|
$
|
419
|
|
|
$
|
58
|
|
|
$
|
311
|
|
Liquids
|
73
|
|
|
7
|
|
|
40
|
|
|||
Total reportable segments
|
492
|
|
|
65
|
|
|
351
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
65
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
100
|
|
|||
Interest income and other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total consolidated
|
$
|
492
|
|
|
$
|
65
|
|
|
$
|
182
|
|
Six Months Ended June 30, 2014
|
|
|
|
|
|
||||||
U.S. Transmission
|
$
|
954
|
|
|
$
|
128
|
|
|
$
|
694
|
|
Liquids
|
158
|
|
|
15
|
|
|
109
|
|
|||
Total reportable segments
|
1,112
|
|
|
143
|
|
|
803
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
143
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
129
|
|
|||
Interest income and other
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total consolidated
|
$
|
1,112
|
|
|
$
|
143
|
|
|
$
|
494
|
|
Six Months Ended June 30, 2013
|
|
|
|
|
|
||||||
U.S. Transmission
|
$
|
865
|
|
|
$
|
118
|
|
|
$
|
647
|
|
Liquids
|
86
|
|
|
8
|
|
|
47
|
|
|||
Total reportable segments
|
951
|
|
|
126
|
|
|
694
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
126
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
194
|
|
|||
Interest income and other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total consolidated
|
$
|
951
|
|
|
$
|
126
|
|
|
$
|
368
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(in millions, except per unit amounts)
|
||||||||||||||
Net income—controlling interests
|
|
$
|
215
|
|
|
$
|
177
|
|
|
$
|
457
|
|
|
$
|
358
|
|
Less:
|
|
|
|
|
|
|
|
|
||||||||
General partner’s interest in net income—2%
|
|
4
|
|
|
4
|
|
|
9
|
|
|
7
|
|
||||
General partner’s interest in net income attributable to incentive distribution rights
|
|
41
|
|
|
9
|
|
|
78
|
|
|
17
|
|
||||
Limited partners’ interest in net income
|
|
$
|
170
|
|
|
$
|
164
|
|
|
$
|
370
|
|
|
$
|
334
|
|
Weighted average limited partner units outstanding—basic and diluted (a)
|
|
286
|
|
|
108
|
|
|
285
|
|
|
106
|
|
||||
Net income per limited partner unit—basic and diluted
|
|
$
|
0.59
|
|
|
$
|
1.52
|
|
|
$
|
1.30
|
|
|
$
|
3.15
|
|
(a)
|
As discussed in Note 1, the Condensed Consolidated Financial Statements for periods prior to the November 1, 2013 U.S. Assets Dropdown, including Net Income—Controlling Interests as presented on our Condensed Consolidated Statements of Operations, have been recast. Weighted average limited partners units outstanding used in the calculation of net income per limited partner unit for periods prior to the U.S. Assets Dropdown has not been recast.
|
•
|
less the amount of cash reserves established by the general partner to:
|
•
|
provide for the proper conduct of business,
|
•
|
comply with applicable law, any debt instrument or other agreement, or
|
•
|
provide funds for minimum quarterly distributions to the unitholders and to the general partner for any one or more of the next four quarters,
|
•
|
plus, if the general partner so determines, all or a portion of cash and cash equivalents on hand on the date of determination of Available Cash for the quarter.
|
|
|
Total Quarterly Distribution
|
|
Marginal Percentage
Interest in Distributions
|
||||
|
|
Target Per-Unit Amount
|
|
Common
Unitholders
|
|
General
Partner
|
||
Minimum Quarterly Distribution
|
|
$0.30
|
|
98
|
%
|
|
2
|
%
|
First Target Distribution
|
|
up to $0.345
|
|
98
|
%
|
|
2
|
%
|
Second Target Distribution
|
|
above $0.345 up to $0.375
|
|
85
|
%
|
|
15
|
%
|
Third Target Distribution
|
|
above $0.375 up to $0.45
|
|
75
|
%
|
|
25
|
%
|
Thereafter
|
|
above $0.45
|
|
50
|
%
|
|
50
|
%
|
|
Goodwill
|
||
|
(in millions)
|
||
December 31, 2013
|
$
|
3,215
|
|
Acquisition of Express-Platte
|
37
|
|
|
Foreign currency translation
|
(1
|
)
|
|
June 30, 2014
|
$
|
3,251
|
|
|
|
Expiration Date
|
|
Total Credit Facility Capacity
|
|
Commercial
Paper Outstanding at June 30, 2014 |
|
Available
Credit Facility
Capacity
|
||||||
|
|
|
|
|
|
(in millions)
|
|
|
||||||
Spectra Energy Partners, LP
|
|
2018
|
|
$
|
2,000
|
|
|
$
|
549
|
|
|
$
|
1,451
|
|
Description
|
Condensed Consolidated Balance Sheet Caption
|
|
June 30, 2014
|
||||||||||||||
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
|
|
|
(in millions)
|
||||||||||||||
Corporate debt securities
|
Cash and cash equivalents
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
Interest rate swaps
|
Investments and other assets — other
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total Assets
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
|
Book
Value
|
|
Approximate
Fair Value
|
|
Book
Value
|
|
Approximate
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Note receivable, noncurrent (a)
|
|
$
|
71
|
|
|
$
|
71
|
|
|
$
|
71
|
|
|
$
|
71
|
|
Long-term debt, including current maturities (b)
|
|
5,199
|
|
|
5,638
|
|
|
5,625
|
|
|
5,813
|
|
(a)
|
Included within Investments in and Loans to Unconsolidated Affiliates.
|
(b)
|
Excludes unamortized items and fair value hedge carrying value adjustments.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in millions)
|
||||||||||||||
Operating revenues
|
$
|
531
|
|
|
$
|
492
|
|
|
$
|
1,112
|
|
|
$
|
951
|
|
Operating expenses
|
282
|
|
|
249
|
|
|
555
|
|
|
459
|
|
||||
Operating income
|
249
|
|
|
243
|
|
|
557
|
|
|
492
|
|
||||
Equity in earnings of unconsolidated affiliates
|
29
|
|
|
23
|
|
|
57
|
|
|
42
|
|
||||
Other income and expenses, net
|
6
|
|
|
16
|
|
|
9
|
|
|
28
|
|
||||
Interest expense
|
62
|
|
|
100
|
|
|
129
|
|
|
194
|
|
||||
Earnings before income taxes
|
222
|
|
|
182
|
|
|
494
|
|
|
368
|
|
||||
Income tax expense
|
2
|
|
|
1
|
|
|
28
|
|
|
2
|
|
||||
Net income
|
220
|
|
|
181
|
|
|
466
|
|
|
366
|
|
||||
Net income—noncontrolling interests
|
5
|
|
|
4
|
|
|
9
|
|
|
8
|
|
||||
Net income—controlling interests
|
$
|
215
|
|
|
$
|
177
|
|
|
$
|
457
|
|
|
$
|
358
|
|
•
|
higher Express-Platte transportation revenues as a result of increased tariff rates and higher contracted volumes, partially offset by
|
•
|
higher depreciation due to expansion projects.
|
•
|
the restructuring of an intercompany loan contributed to us as part of the U.S. Assets Dropdown, partially offset by
|
•
|
higher debt balances attributable to a third quarter 2013 $1.9 billion debt issuance primarily related to the U.S. Assets Dropdown, and
|
•
|
lower capitalized interest resulting from projects placed in service in 2013.
|
•
|
increased natural gas transportation revenues from higher demands, primarily as a result of colder weather, and
|
•
|
higher Express-Platte transportation revenues as a result of increased tariff rates and higher contracted volumes, partially offset by
|
•
|
a decrease in storage revenues due to lower contract renewal rates, and
|
•
|
higher depreciation due to the acquisition of Express-Platte and expansion projects.
|
•
|
the restructuring of an intercompany loan contributed to us as part of the U.S. Assets Dropdown, partially offset by
|
•
|
higher debt balances attributable to a third quarter 2013 $1.9 billion debt issuance primarily related to the U.S. Assets Dropdown, and
|
•
|
lower capitalized interest resulting from projects placed in service in 2013.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in millions)
|
||||||||||||||
U.S. Transmission
|
$
|
320
|
|
|
$
|
311
|
|
|
$
|
694
|
|
|
$
|
647
|
|
Liquids
|
51
|
|
|
40
|
|
|
109
|
|
|
47
|
|
||||
Total reportable segment EBITDA
|
371
|
|
|
351
|
|
|
803
|
|
|
694
|
|
||||
Other
|
(18
|
)
|
|
(3
|
)
|
|
(37
|
)
|
|
(5
|
)
|
||||
Total reportable segment and other EBITDA
|
353
|
|
|
348
|
|
|
766
|
|
|
689
|
|
||||
Depreciation and amortization
|
70
|
|
|
65
|
|
|
143
|
|
|
126
|
|
||||
Interest expense
|
62
|
|
|
100
|
|
|
129
|
|
|
194
|
|
||||
Interest income and other
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Earnings before income taxes
|
$
|
222
|
|
|
$
|
182
|
|
|
$
|
494
|
|
|
$
|
368
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Operating revenues
|
$
|
454
|
|
|
$
|
419
|
|
|
$
|
35
|
|
|
$
|
954
|
|
|
$
|
865
|
|
|
$
|
89
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating, maintenance and other
|
160
|
|
|
147
|
|
|
13
|
|
|
311
|
|
|
289
|
|
|
22
|
|
||||||
Other income and expenses
|
26
|
|
|
39
|
|
|
(13
|
)
|
|
51
|
|
|
71
|
|
|
(20
|
)
|
||||||
EBITDA
|
$
|
320
|
|
|
$
|
311
|
|
|
$
|
9
|
|
|
$
|
694
|
|
|
$
|
647
|
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
an $8 million increase due to higher natural gas transportation revenues mainly at Texas Eastern and East Tennessee, partially offset by
|
•
|
a $7 million decrease in storage revenues due to lower contract renewal rates.
|
•
|
a $26 million increase due to higher natural gas transportation revenues from higher demands, primarily as a result of colder weather, partially offset by
|
•
|
a $12 million decrease in storage revenues due to lower contract renewal rates, and
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Operating revenues
|
$
|
77
|
|
|
$
|
73
|
|
|
$
|
4
|
|
|
$
|
158
|
|
|
$
|
86
|
|
|
$
|
72
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating, maintenance and other
|
34
|
|
|
34
|
|
|
—
|
|
|
64
|
|
|
39
|
|
|
25
|
|
||||||
Other income and expenses
|
8
|
|
|
1
|
|
|
7
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||||
EBITDA
|
$
|
51
|
|
|
$
|
40
|
|
|
$
|
11
|
|
|
$
|
109
|
|
|
$
|
47
|
|
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Platte PADD II deliveries, MBbl/d (a)(b)
|
176
|
|
|
165
|
|
|
11
|
|
|
171
|
|
|
165
|
|
|
6
|
|
•
|
A $68 million increase primarily due to the acquisition of Express-Platte, and
|
•
|
a $4 million increase in operating revenues due primarily to higher transportation revenues as a result of increased tariff rates and higher contracted volumes.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Operating expenses
|
$
|
18
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
37
|
|
|
$
|
5
|
|
|
$
|
32
|
|
EBITDA
|
$
|
(18
|
)
|
|
$
|
(3
|
)
|
|
$
|
(15
|
)
|
|
$
|
(37
|
)
|
|
$
|
(5
|
)
|
|
$
|
(32
|
)
|
•
|
distributions from equity investments,
|
•
|
other non-cash items affecting net income, less
|
•
|
equity in earnings of unconsolidated affiliates,
|
•
|
interest expense,
|
•
|
distributions to noncontrolling interests,
|
•
|
maintenance capital expenditures, excluding the effect of reimbursable projects, and
|
•
|
equity AFUDC.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in millions)
|
||||||||||||||
Net income
|
$
|
220
|
|
|
$
|
181
|
|
|
$
|
466
|
|
|
$
|
366
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
62
|
|
|
100
|
|
|
129
|
|
|
194
|
|
||||
Income tax expense
|
2
|
|
|
1
|
|
|
28
|
|
|
2
|
|
||||
Depreciation and amortization
|
70
|
|
|
65
|
|
|
143
|
|
|
126
|
|
||||
Foreign currency loss (gain)
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
EBITDA
|
353
|
|
|
348
|
|
|
766
|
|
|
689
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated affiliates
|
(29
|
)
|
|
(23
|
)
|
|
(57
|
)
|
|
(42
|
)
|
||||
Distributions from equity investments
|
43
|
|
|
30
|
|
|
80
|
|
|
59
|
|
||||
Other
|
4
|
|
|
2
|
|
|
6
|
|
|
4
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
62
|
|
|
100
|
|
|
129
|
|
|
194
|
|
||||
Distributions to noncontrolling interests
|
6
|
|
|
4
|
|
|
11
|
|
|
9
|
|
||||
Maintenance capital expenditures (a)
|
54
|
|
|
45
|
|
|
78
|
|
|
63
|
|
||||
Net cash paid for income taxes
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Equity AFUDC
|
5
|
|
|
17
|
|
|
9
|
|
|
28
|
|
||||
Adjustment (b)
|
—
|
|
|
135
|
|
|
—
|
|
|
287
|
|
||||
Distributable Cash Flow
|
$
|
239
|
|
|
$
|
56
|
|
|
$
|
563
|
|
|
$
|
129
|
|
(a)
|
Excludes reimbursable expenditures.
|
(b)
|
Removes the results of the U.S. Assets Dropdown for the periods prior to the dropdown (January 1, 2013 to October 31, 2013) and the results of Express-Platte for the periods prior to the dropdown (March 14, 2013 to August 1, 2013).
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
603
|
|
|
$
|
486
|
|
Investing activities
|
|
(288
|
)
|
|
(851
|
)
|
||
Financing activities
|
|
(313
|
)
|
|
417
|
|
||
Net increase in cash and cash equivalents
|
|
2
|
|
|
52
|
|
||
Cash and cash equivalents at beginning of the period
|
|
121
|
|
|
48
|
|
||
Cash and cash equivalents at end of the period
|
|
$
|
123
|
|
|
$
|
100
|
|
•
|
a $231 million decrease in capital and investment expenditures in 2014 primarily due to Sand Hills, Southern Hills and certain expansion projects being placed into service in 2013,
|
•
|
a $179 million decrease in net proceeds of available-for-sale securities, and
|
•
|
a $129 million increase in distributions from unconsolidated affiliates.
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
U.S. Transmission (a)
|
|
$
|
406
|
|
|
$
|
510
|
|
Liquids
|
|
38
|
|
|
165
|
|
||
Total consolidated
|
|
$
|
444
|
|
|
$
|
675
|
|
(a)
|
Excludes reimbursements from noncontrolling interests of $20 million in 2014.
|
•
|
a $404 million increase in the redemption of long-term debt,
|
•
|
a $269 million increase in distributions to partners in 2014,
|
•
|
a $209 million decrease in contributions from parent, and
|
•
|
a $183 million decrease in notes payable due to affiliates, partially offset by
|
•
|
a $223 million increase in net issuances of commercial paper in 2014, and
|
•
|
a $112 million increase in contributions from noncontrolling interests.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 6.
|
Exhibits.
|
•
|
were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;
|
•
|
may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
|
*
|
Filed herewith
|
|
|
|
|
|
|
|
SPECTRA ENERGY PARTNERS, LP
|
||
|
|
|
|
|
|
|
By:
|
|
Spectra Energy Partners (DE) GP, LP,
its general partner
|
|
|
|
|
|
|
|
By:
|
|
Spectra Energy Partners GP, LLC,
its general partner
|
|
|
|
|
|
Date: August 7, 2014
|
|
|
|
/
S
/ G
REGORY
L. E
BEL
|
|
|
|
|
Gregory L. Ebel
President and Chief Executive Officer
|
|
|
|
|
|
Date: August 7, 2014
|
|
|
|
/
S
/ J. P
ATRICK
R
EDDY
|
|
|
|
|
J. Patrick Reddy
Vice President and Chief Financial Officer
|
1)
|
I have reviewed this quarterly report on Form 10-Q of Spectra Energy Partners, LP;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 7, 2014
|
|
|
/s/ Gregory L. Ebel
|
|
|
|
Gregory L. Ebel
President and Chief Executive Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP
|
1)
|
I have reviewed this quarterly report on Form 10-Q of Spectra Energy Partners, LP;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 7, 2014
|
|
|
/s/ J. Patrick Reddy
|
|
|
|
J. Patrick Reddy
Vice President and Chief Financial Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Spectra Energy Partners, LP.
|
Date: August 7, 2014
|
|
|
/s/ Gregory L. Ebel
|
|
|
|
Gregory L. Ebel
President and Chief Executive Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Spectra Energy Partners, LP.
|
Date: August 7, 2014
|
|
|
/
S
/ J. P
ATRICK
R
EDDY
|
|
|
|
J. Patrick Reddy
Vice President and Chief Financial Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP
|