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Regency Energy Partners Reports Third-Quarter 2013 Results

DALLAS--(BUSINESS WIRE)--Nov. 5, 2013-- Regency Energy Partners LP (NYSE: RGP), (“Regency” or the “Partnership”), announced today its financial results for the third-quarter ended September 30, 2013.

The 2012 results presented herein have been retrospectively adjusted to combine Regency’s results with the results of Southern Union Gathering Company (“SUGS”) beginning March 26, 2012, due to the as-if pooling accounting treatment required for an acquisition between commonly controlled entities.

For the third quarter of 2013, adjusted EBITDA increased 23% to $172 million, compared to $140 million in the third quarter of 2012. This increase was primarily due to volume growth in the Gathering and Processing segment, driven by strong drilling activity in south and west Texas and in north Louisiana; as well as volume growth at Lone Star.

Regency generated $115 million in distributable cash flow (“DCF”) for the third quarter of 2013, compared to $69 million in the third quarter of 2012. DCF for 2012 excludes any impact related to the historical SUGS results.

For the third quarter of 2013, Regency reported net income of $39 million, compared to a net loss of $2 million for the third quarter of 2012. The increase in net income was primarily related to a $30 million increase in total segment margin and a $16 million increase in income from unconsolidated affiliates for the reasons discussed above.

“Regency’s strong third quarter performance was driven by the continued ramp up of our growth projects, which led to a 12% increase in gathering and processing volumes, and a 30% increase in NGL transportation volumes,” said Mike Bradley, president and chief executive officer of Regency. "In addition, we saw a 16% increase in revenue generating horsepower as demand remained strong for third-party compression services.”

REVIEW OF SEGMENT PERFORMANCE

Adjusted total segment margin increased 17% to $194 million for the third quarter of 2013, compared to $166 million for the third quarter of 2012.

Gathering and Processing – We provide “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 the pipeline-quality natural gas and NGLs to various markets and pipeline systems. This segment also includes our 33.33% membership interest in the Ranch Joint Venture, which processes natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas. The SUGS assets are included in this segment.

Adjusted segment margin for the Gathering and Processing segment, which excludes non-cash gains and losses from commodity derivatives, and includes our ownership interests in the Edwards Lime Joint Venture (“ELG”) and the Ranch Joint Venture, increased to $142 million for the third quarter of 2013, compared to $118 million for the third quarter of 2012. The increase was primarily due to volume growth in south and west Texas and north Louisiana.

Total throughput volumes for the Gathering and Processing segment increased to 2.2 million MMbtu per day of natural gas for the third quarter of 2013, compared to 2.0 million MMbtu per day of natural gas for the third quarter of 2012. Processed NGLs increased to 97,000 barrels per day for the third quarter of 2013, compared to 78,000 barrels per day for the third quarter of 2012.

Contract Services – We own and operate a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems. We also own and operate a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management.

Segment margin for the Contract Services segment, including both revenues from external customers as well as intersegment revenues, increased to $52 million for the third quarter of 2013, compared to $48 million for the third quarter of 2012. As of September 30, 2013 and 2012, the Contract Services segment’s revenue generating horsepower, including intersegment revenue generating horsepower, increased to 1,014,000, compared to 873,000, inclusive of 40,000 and 88,000, respectively, of revenue generating horsepower utilized by our Gathering and Processing segment. The increase in revenue generating horsepower is primarily attributable to additional horsepower placed into service in south and west Texas for external customers.

Corporate – The Corporate segment comprises our corporate assets. Segment margin in the Corporate segment was $4 million for the third quarter of 2013, compared to $5 million for the third quarter of 2012.

Natural Gas Transportation – We own a 49.99% general partner interest in RIGS Haynesville Partnership Co. (“HPC”), which owns the Regency Intrastate Gas System (“RIGS”), a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets, and a 50% membership interest in the Midcontinent Express Pipeline (“MEP”), which owns an interstate natural gas pipeline with approximately 500 miles 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.

The Haynesville Joint Venture consists solely of RIGS and is operated by Regency. Income from unconsolidated affiliates for the Haynesville Joint Venture was $8 million for the third quarter of 2013, compared to $2 million for the third quarter of 2012. Total throughput volumes for the Haynesville Joint Venture averaged 0.7 million MMbtu per day of natural gas for the third quarter of 2013, compared to 0.8 million MMbtu per day for the third quarter of 2012. The increase in income from unconsolidated affiliates was primarily due to the absence of a non-cash asset impairment charge in the three months ended September 30, 2012, partially offset by the expiration of certain contracts that were not renewed as well as a customer declaring bankruptcy in 2013.

The MEP Joint Venture consists solely of MEP and is operated by Kinder Morgan Energy Partners, L.P. Income from unconsolidated affiliates for the MEP Joint Venture was $11 million for the third quarter of 2013, compared to $10 million for the third quarter of 2012. Total throughput volumes for the MEP Joint Venture averaged 1.3 million MMbtu per day of natural gas for the third quarter of 2013 and 1.4 million MMbtu per day for the third quarter of 2012.

NGL Services – We own 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. The Lone Star Joint Venture owns and operates NGL storage, fractionation and transportation assets and is operated by Energy Transfer Partners, L.P. For the third quarter of 2013, income from unconsolidated affiliates for the Lone Star Joint Venture was $18 million, compared to $9 million for the third quarter of 2012. For the third quarter of 2013, total NGL transportation volumes averaged 172,000 barrels per day, compared to 132,000 barrels per day for the third quarter of 2012. Refinery Services throughput averaged 12,000 barrels per day for the third quarter of 2013, compared to 11,000 barrels per day for the third quarter of 2012. NGL Fractionation volumes for the first fractionator, which came online in December 2012, averaged 72,000 barrels per day for the third quarter of 2013.

ORGANIC GROWTH

For the nine months ended September 30, 2013, Regency incurred $690 million of growth capital expenditures: $378 million for the Gathering and Processing segment, $207 million for the Contract Services segment, and $105 million for the NGL Services segment.

For the nine months ended September 30, 2013, Regency incurred $29 million of maintenance capital expenditures.

In 2013, Regency expects to invest approximately $870 million in growth capital expenditures, of which $500 million is related to the Gathering and Processing segment, which includes expenditures related to SUGS growth projects; $220 million is related to the Contract Services segment; and $150 million is related to the NGL Services segment.

In addition, Regency expects to invest approximately $40 million in maintenance capital expenditures in 2013, including its proportionate share related to joint ventures.

CASH DISTRIBUTIONS

On October 24, 2013, Regency announced a cash distribution of $0.47 per outstanding common unit for the quarter ended September 30, 2013. This distribution is equivalent to $1.88 per outstanding common unit projected on an annualized basis and will be paid on November 14, 2013, to unitholders of record at the close of business on November 4, 2013.

Based on the terms of the partnership agreement, the Series A Preferred Units were paid a quarterly distribution of $0.445 per unit for the quarter ended September 30, 2013, on the same schedule as set forth above.

In the third quarter of 2013, Regency generated $115 million in DCF, representing 1.12 times the amount required to cover its announced distribution to unitholders.

Regency makes distribution determinations based on its DCF and the perceived sustainability of distribution levels over an extended period. In addition to considering the DCF generated during the quarter, Regency takes into account cash reserves established with respect to prior distributions, seasonality of results, timing of organic growth projects and its internal forecasts of adjusted EBITDA and DCF over an extended period. Distributions are determined by the Board of Directors and are driven by the long-term sustainability of the business.

TELECONFERENCE

Regency Energy Partners will hold a quarterly conference call to discuss its third-quarter 2013 results Wednesday, November 6, 2013, at 10 a.m. Central Time (11 a.m. Eastern Time).

The dial-in number for the call is 1-877-415-3177 in the United States, or +1-857-244-7320 outside the United States, passcode 11875082. A live webcast of the call may be accessed on the Investor Relations page of Regency’s website at www.regencyenergy.com. The call will be available for replay for seven days by dialing 1-888-286-8010 (from outside the U.S., +1-617-801-6888) passcode 30917942. A replay of the broadcast will also be available on the Partnership’s website for 30 days.

NON-GAAP FINANCIAL INFORMATION

This press release and the accompanying financial schedules include the non-GAAP financial measures of:

  • EBITDA;
  • adjusted EBITDA;
  • distributable cash flow;
  • segment margin;
  • total segment margin;
  • adjusted segment margin; and
  • adjusted total segment margin.

These financial metrics are key measures of the Partnership’s financial performance. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly-comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our non-GAAP financial measures should not be considered an alternative to, or more meaningful than, net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as a measure of operating performance, liquidity or ability to service debt obligations. Reconciliations of these non-GAAP financial measures to our GAAP financial statements are included in the Appendix.

We define EBITDA as net income (loss) plus interest expense, provision for income taxes and depreciation and amortization expense. We define adjusted EBITDA as EBITDA plus or minus the following:

  • non-cash loss (gain) from commodity and embedded derivatives;
  • unit-based compensation expenses;
  • loss (gain) on asset sales, net;
  • loss on debt refinancing;
  • other non-cash (income) expense, net;
  • net income attributable to the Edwards Lime Joint Venture (“ELG”);
  • partnership’s interest in ELG adjusted EBITDA; and
  • our interest in adjusted EBITDA from unconsolidated affiliates less income from unconsolidated affiliates.

These measures are used as supplemental measures by our management and by external users of our financial statements such as investors, banks, research analysts and others, to assess:

  • financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
  • the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our unitholders and General Partner;
  • our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and
  • the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

Adjusted EBITDA is the starting point in determining DCF, which is an important non-GAAP financial measure for a publicly traded partnership.

We define DCF as adjusted EBITDA:

  • minus interest expense, excluding capitalized interest;
  • minus maintenance capital expenditures;
  • minus distributions to Series A Preferred Units;
  • plus cash proceeds from asset sales, if any; and
  • other adjustments.

DCF is used as a supplemental liquidity measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to approximate the amount of operating surplus generated by us during a specific period and to assess our ability to make cash distributions to our unitholders and our general partner. DCF is not the same measure as operating surplus or available cash, both of which are defined in our partnership agreement.

Neither EBITDA nor adjusted EBITDA should be considered an alternative to, or more meaningful than net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA and adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA or adjusted EBITDA in the same manner. EBITDA and adjusted EBITDA do not include interest expense, income tax expense or depreciation and amortization expense. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate DCF. Because we use capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider both net income determined under GAAP, as well as EBITDA and adjusted EBITDA, to evaluate our performance.

We define segment margin, generally, as revenues minus cost of sales. We calculate our Gathering and Processing segment margin and Natural Gas Transportation segment margin as revenues generated from operations less the cost of natural gas and NGLs purchased and other costs of sales, including third-party transportation and processing fees. We do not record segment margin for our investments in unconsolidated affiliates (HPC, MEP, Lone Star, Ranch JV and Grey Ranch) because we record our ownership percentages of their net income as income from unconsolidated affiliates in accordance with the equity method of accounting. We calculate our Contract Services segment margin as revenues generated from our contract compression and treating operations minus direct costs, primarily repairs, associated with those revenues. We calculate total segment margin as the total of segment margin of our five segments less intersegment eliminations. We define adjusted segment margin as segment margin adjusted for non-cash (gains) losses from commodity derivatives, the 40% of ELG margin attributable to the holder of the noncontrolling interest and our 33.33% portion of Ranch JV margin. Our adjusted total segment margin equals the sum of our operating segments’ adjusted segment margins or segment margins, including intersegment eliminations.

Total segment margin and adjusted total segment margin are included as a supplemental disclosure because they are primary performance measures used by management as they represent the results of product purchases and sales, a key component of our operations.

Operation and maintenance expense is a separate measure used by management to evaluate operating performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of our operation and maintenance expenses. These expenses are largely independent of the volumes we transport or process but fluctuate depending on the activities performed during a specific period. We do not deduct operation and maintenance expenses from total revenue in calculating total segment margin and adjusted total segment margin because we separately evaluate commodity volume and price changes in these margin amounts.

As an indicator of our operating performance, total segment margin or adjusted total segment margin should not be considered an alternative to, or more meaningful than, net income as determined in accordance with GAAP. Our total segment margin and adjusted total segment margin may not be comparable to a similarly titled measure of another company because other entities may not calculate these measures in the same manner.

FORWARD-LOOKING INFORMATION AND OTHER DISCLAIMERS

This release includes “forward-looking” statements. Forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may” or similar expressions help identify forward-looking statements. Although we believe our forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, we cannot give any assurance that such expectations will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. Additional risks include: volatility in the price of oil, natural gas, and natural gas liquids, declines in the credit markets and the availability of credit for the Partnership as well as for producers connected to the Partnership’s system and its customers, the level of creditworthiness of, and performance by the Partnership’s counterparties and customers, the Partnership's ability to access capital to fund organic growth projects and acquisitions, the Partnership’s ability to obtain debt and equity financing on satisfactory terms, the Partnership's use of derivative financial instruments to hedge commodity and interest rate risks, the amount of collateral required to be posted from time-to-time in the Partnership's transactions, changes in commodity prices, interest rates, and demand for the Partnership's services, changes in laws and regulations impacting the midstream sector of the natural gas industry, weather and other natural phenomena, industry changes including the impact of consolidations and changes in competition, the Partnership's ability to obtain required approvals for construction or modernization of the Partnership's facilities and the timing of production from such facilities, and the effect of accounting pronouncements issued periodically by accounting standard setting boards. Therefore, actual results and outcomes may differ materially from those expressed in such forward-looking statements.

These and other risks and uncertainties are discussed in more detail in filings made by the Partnership with the Securities and Exchange Commission, which are available to the public. The Partnership undertakes no obligation to update publicly or to revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Regency Energy Partners LP (NYSE: RGP) is a growth-oriented, master limited partnership engaged in the gathering and processing, contract compression, contract treating and transportation of natural gas and the transportation, fractionation and storage of natural gas liquids. Regency's general partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE). For more information, please visit Regency’s website at www.regencyenergy.com.

Condensed Consolidated Balance Sheets

     
Regency Energy Partners LP
Condensed Consolidated Balance Sheets
($ in millions)
 
 
September 30, 2013 December 31, 2012
Assets
Current assets $ 367 $ 340
Property, plant and equipment, net 4,242 3,686
Investment in unconsolidated affiliates 2,081 2,214
Other assets, net 58 43
Intangible assets, net 690 712
Goodwill   1,128   1,128
Total Assets $ 8,566 $ 8,123
 
Liabilities and Partners' Capital and Noncontrolling Interest
Current liabilities $ 483 $ 489
Other long-term liabilities 61 64
Long-term debt 2,976 2,157
Series A Preferred Units 32 73
 
Partners' capital 4,918 3,530
Member's equity - 1,733
Noncontrolling interest   96   77
Total Partners' Capital and Noncontrolling Interest   5,014   5,340
Total Liabilities and Partners' Capital and Noncontrolling Interest $ 8,566 $ 8,123
 

Condensed Consolidated Statements of Operations

   
Regency Energy Partners LP
Condensed Consolidated Statements of Operations
($ in millions)
 
Three Months Ended September 30,
  2013     2012  
 
REVENUES $ 665 $ 527
 
OPERATING COSTS AND EXPENSES
Cost of sales 477 369
Operation and maintenance 78 61
General and administrative 13 21
Gain on asset sales, net (1 ) -
Depreciation and amortization   74     71  
Total operating costs and expenses 641 522
 
OPERATING INCOME 24 5
 
Income from unconsolidated affiliates 37 21
Interest expense, net (41 ) (29 )
Other income and deductions, net   24     1  
INCOME (LOSS) BEFORE INCOME TAXES 44 (2 )
Income tax expense (benefit)   2     (1 )
NET INCOME (LOSS) $ 42 $ (1 )
Net income attributable to noncontrolling interest   (3 )   (1 )
NET INCOME (LOSS) ATTRIBUTABLE TO REGENCY ENERGY PARTNERS LP $ 39   $ (2 )
 
Amount allocated to common units $ 33 $ (6 )
Weighted average number of common units outstanding 209,559,854 170,264,621
Basic income (loss) per common unit $ 0.16 $ (0.04 )
Diluted income (loss) per common unit $ 0.05 $ (0.04 )
 

Segment Financial and Operating Data

 
Three Months Ended September 30,
2013   2012
($ in millions)
Gathering and Processing Segment
Financial data:
Segment margin $ 136 $ 110
Adjusted segment margin 142 118
Operating data:
Throughput (MMbtu/d) 2,178,000 1,950,000
NGL gross production (Bbls/d) 96,700 78,000
 
Three Months Ended September 30,
2013   2012
($ in millions)
Contract Services
Financial data:
Segment margin $ 52 $ 48
Operating data:
Revenue generating horsepower, including intercompany
revenue generating horsepower 1,014,000 873,000
 
   
Three Months Ended September 30,
2013 2012
($ in millions)
Corporate Segment
Financial data:
Segment margin $ 4 $ 5
 

The following provides key performance measures for 100% of the Haynesville Joint Venture, the MEP Joint Venture, the Lone Star Joint Venture and the Ranch Joint Venture

 
Three Months Ended September 30,
2013   2012
($ in millions)
Haynesville Joint Venture
Financial data:
Adjusted EBITDA $ 28 $ 32
Operating data:
Throughput (MMbtu/d) 697,000 827,000
 
Three Months Ended September 30,
2013   2012
($ in millions)
MEP Joint Venture
Financial data:
Adjusted EBITDA $ 51 $ 52
Operating data:
Throughput (MMbtu/d) 1,279,000 1,392,000
 
Three Months Ended September 30,
2013   2012
($ in millions)
Lone Star Joint Venture
Financial data:
Adjusted EBITDA $ 83 $ 44
Operating data:

NGL Transportation - Throughput (Bbls/d) (1)

172,000 132,000
Refinery - Throughput (Bbls/d) 12,000 11,000

Fractionation - Throughput (Bbls/d) (2)

72,000 -
 
(1) Includes Gateway Pipeline throughput which was placed in service in December 2012
(2) Fractionator began operations in December 2012
 
Three Months Ended September 30,
2013   2012
($ in millions)
Ranch Joint Venture
Financial data:
Adjusted EBITDA $ 2 $ -
Operating data:
Throughput (MMbtu/d)(3) 76,000 863
 
(3) Ranch Joint Venture's Refrigeration Processing Plant started operating in June 2012.
 

Reconciliation of Non-GAAP Measures to GAAP Measures

       
Three Months Ended September 30,
  2013     2012  
($ in millions)
Net income (loss) $ 42 $ (1 )
Add (deduct):
Interest expense, net 41 29
Depreciation and amortization 74 71
Income tax expense (benefit)   2     (1 )

EBITDA (1)

$ 159 $ 98
Add (deduct):

Partnership's interest in unconsolidated affiliates' adjusted EBITDA (2)

66 55
Income from unconsolidated affiliates (37 ) (21 )
Non-cash (gain) loss from commodity and embedded derivatives (14 ) 7
Other income, net   (2 )   1  
Adjusted EBITDA $ 172   $ 140  
(1) Earnings before interest, taxes, depreciation and amortization.
 
(2) The following table presents reconciliations of net income to adjusted EBITDA for our unconsolidated affiliates, on a 100% basis, and our interest in adjusted EBITDA for the three months ended September 30, 2013 and 2012:
                     
Three months ended September 2013
HPC     MEP     Lone Star     Ranch JV     Total
Net income $ 18 $ 21 $ 61 $ 1
Add:

Depreciation and amortization

9 17 21 1
Interest expense, net 1 13 - -
Other expenses, net   -     -     1     -  
Adjusted EBITDA   28     51     83     2  
Ownership interest   49.99 %   50 %   30 %   33.33 %  
Partnership's interest in Adjusted EBITDA $ 14   $ 26   $ 25   $ 1   $ 66
 
 
Three months ended September 2012
HPC     MEP     Lone Star     Ranch JV     Total
Net income (loss) $ 7 $ 22 $ 31 $ (1 )
Add:

Depreciation and amortization

9 17 13 1
Interest expense, net 1 13 - -
Impairment of property, plant, and equipment 14 - - -
Other expenses, net   1     -     -     -  
Adjusted EBITDA   32     52     44     -  
Ownership interest   49.99 %   50 %   30 %   33.33 %  
Partnership's interest in Adjusted EBITDA $ 16   $ 26   $ 13   $ -   $ 55
 

Non-GAAP Adjusted Total Segment Margin to GAAP Net Income

 
Three Months Ended September 30,
  2013       2012  
($ in millions)
Net income (loss) $ 42 $ (1 )
Add (Deduct):
Operation and maintenance 78 61
General and administrative 13 21
Gain on asset sales, net (1 ) -
Depreciation and amortization 74 71
Income from unconsolidated affiliates (37 ) (21 )
Interest expense, net 41 29
Other income and deductions, net (24 ) (1 )
Income tax expense (benefit)   2     (1 )
Total Segment Margin 188 158
Non-cash gain from commodity derivatives 9 9
Segment margin related to the noncontrolling interest (4 ) (1 )
Segment margin related to ownership percentage in Ranch JV   1     -  
Adjusted Total Segment Margin $ 194   $ 166  
 
Gathering & Processing Segment Margin $ 136 $ 110
Non-cash gain from commodity derivatives 9 9
Segment margin related to the noncontrolling interest (4 ) (1 )
Segment margin related to ownership percentage in Ranch JV   1     -  
Adjusted Gathering and Processing Segment Margin 142 118
 
Natural Gas Transportation Segment Margin - -
 
Contract Services Segment Margin 52 48
 
Corporate Segment Margin 4 5
 
Inter-segment Elimination (4 ) (5 )
   
Adjusted Total Segment Margin $ 194   $ 166  
 

Reconciliation of distributable cash flow to net cash flows provided by operating activities and to net income

       
Three Months Ended September 30,
  2013           2012  
($ in millions)
Net cash flows provided by operating activities $ 183 $ 154
Add (deduct):
Depreciation and amortization, including debt issuance cost amortization and bond premium write-off and amortization (75 ) (72 )
Income from unconsolidated affiliates 37 21
Derivative valuation change 14 (7 )
Loss on asset sales, net 2 -
Unit-based compensation expenses (2 ) (1 )
Cash flow changes in current assets and liabilities:
Trade accounts receivables, accrued revenues, and related party receivables 32 20
Other current assets and other current liabilities (25 ) (49 )
Trade accounts payable, accrued cost of gas and liquids, related party payables and deferred revenues (89 ) (36 )
Distributions of earnings received from unconsolidated affiliates (37 ) (29 )
Other assets and liabilities   2     (2 )
Net (Loss) Income $ 42   $ (1 )
Add:
Interest expense, net 41 29
Depreciation and amortization 74 71
Income tax expense (benefit)   2     (1 )
EBITDA $ 159   $ 98  
Add (deduct):
Partnership's interest in unconsolidated affiliates' adjusted EBITDA 66 55
Income from unconsolidated affiliates (37 ) (21 )
Non-cash loss (gain) from commodity and embedded derivatives (14 ) 7
Other income, net   (2 )   1  
Adjusted EBITDA $ 172   $ 140  
Add (deduct):
Interest expense, excluding capitalized interest (40 ) (34 )
Maintenance capital expenditures (9 ) (11 )
SUGS Contribution Agreement adjustment (1) - (25 )
Proceeds from asset sales - 2
Other adjustments   (8 )   (3 )
Distributable cash flow $ 115   $ 69  
 
(1) Includes an adjustment to DCF related to the historical SUGS operations for the time period prior to the Partnership's acquisition.
 

Reconciliation of distributable cash flow to net cash flows provided by operating activities and to net income

       
Nine Months Ended September 30,
  2013       2012  
($ in millions)
Net cash flows provided by operating activities $ 381 $ 256
Add (deduct):
Depreciation and amortization, including debt issuance cost amortization and bond premium write-off and amortization (211 ) (197 )
Income from unconsolidated affiliates 103 87
Derivative valuation change (3 ) 11
Loss on asset sales, net (1 ) (2 )
Unit-based compensation expenses (5 ) (3 )
Cash flow changes in current assets and liabilities:
Trade accounts receivables, accrued revenues, and related party receivables 73 (9 )
Other current assets and other current liabilities 26 (53 )
Trade accounts payable, accrued cost of gas and liquids, related party payables and deferred revenues (103 ) 33
Distributions of earnings received from unconsolidated affiliates (108 ) (92 )
Other assets and liabilities   (128 )   11  
Net (Loss) Income $ 24   $ 42  
Add:
Interest expense, net 119 86
Depreciation and amortization 207 193
Income tax benefit   (1 )   (1 )
EBITDA $ 349   $ 320  
Add (deduct):
Non-cash gain from commodity and embedded derivatives - (17 )
Loss on debt refinancing, net 7 8
Income from unconsolidated affiliates (103 ) (87 )
Partnership's interest in unconsolidated affiliates' adjusted EBITDA 188 171
Other income, net   5     3  
Adjusted EBITDA $ 446   $ 398  
Add (deduct):
Interest expense, excluding capitalized interest (121 ) (110 )
Maintenance capital expenditures (29 ) (26 )
SUGS Contribution Agreement adjustment (1) 15 (34 )
Proceeds from asset sales 13 23
Other adjustments   (7 )   (9 )
Distributable cash flow $ 317   $ 242  
 
(1) Includes an adjustment to DCF related to the historical SUGS operations for the time period prior to the Partnership's acquisition.

Source: Regency Energy Partners LP

Investor Relations:
Regency Energy Partners
Lyndsay Hannah, 214-840-5477
Manager, Finance & Investor Relations
ir@regencygas.com
or
Media Relations:
Granado Communications Group
Vicki Granado, 214-599-8785
vicki@granadopr.com

 

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