Capital Requirements
— The midstream energy business can be capital intensive, requiring significant
investment to maintain and upgrade existing operations. Our capital requirements have consisted primarily of,
and we anticipate will continue to consist of the following:
• maintenance capital expenditures, which are cash expenditures where we add on to or improve capital
assets owned, including certain system integrity and safety improvements, or acquire or construct new
capital assets if such expenditures are made to maintain, including over the long-term, our operating or
earnings capacity; and
• expansion capital expenditures, which are cash expenditures for acquisitions or capital improvements
(where we add on to or improve the capital assets owned, or acquire or construct new gathering lines,
treating facilities, processing plants, fractionation facilities, pipelines, terminals, docks, truck racks,
tankage and other storage, distribution or transportation facilities and related or similar midstream
assets) in each case if such addition, improvement, acquisition or construction is made to increase our
operating or earnings capacity.
We incur capital expenditures for our consolidated entities and our unconsolidated affiliates. We anticipate
maintenance capital expenditures of between $15.0 million and $20.0 million, and expenditures for expansion
capital of between $250.0 million and $300.0 million, for the year ending December 31, 2012. Expansion
capital expenditures include construction of the Eagle Plant, Discovery’s Keathley Canyon, which is shown as
investments in unconsolidated affiliates, expansion and upgrades to our East Texas complex and acquisition
integration projects. The board of directors may approve additional growth capital during the year, at their
discretion.
The following table summarizes our maintenance and expansion capital expenditures for our consolidated
entities.
Year Ended December 31, 2011
Year Ended December 31, 2010
Maintenance
Capital
Expenditures
Expansion
Capital
Expenditures
Total
Consolidated
Capital
Expenditures
Maintenance
Capital
Expenditures
Expansion
Capital
Expenditures
Total
Consolidated
Capital
Expenditures
(Millions)
(Millions)
Our portion . . . . . . . . . . . . . $ 9.5
$75.5
$ 85.0
$ 5.6
$30.3
$35.9
Noncontrolling interest
portion . . . . . . . . . . . . . . .
5.5
13.7
19.2
6.4
8.4
14.8
Total . . . . . . . . . . . . . . . . . . $15.0
$89.2
$104.2
$12.0
$38.7
$50.7
Year Ended December 31, 2009
Maintenance
Capital
Expenditures
Expansion
Capital
Expenditures
Total
Consolidated
Capital
Expenditures
(Millions)
Our portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$12.6
$ 67.1
$ 79.7
Noncontrolling interest portion . . . . . . . . . . . . . . . . . . . .
21.3
63.8
85.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$33.9
$130.9
$164.8
In addition, we invested cash in unconsolidated affiliates of $15.1 million, $28.6 million and $7.0 million
during the years ended December 31, 2011, 2010 and 2009, respectively, of which $8.3 million, $2.3 million
and $2.8 million, respectively, was to fund our share of capital expansion projects, and $4.2 million in 2009,
was to fund repairs to Discovery following damage caused by Hurricane Ike in 2008 (of which $1.2 and $2.2
million was returned to us by Discovery during 2010 and 2009, respectively).
Capital expenditures increased in 2011 compared to 2010 primarily as a result of construction of our Eagle
Plant and acquisition integration costs.
We intend to make cash distributions to our unitholders and our general partner. Due to our cash
distribution policy, we expect that we will distribute to our unitholders most of the cash generated by our
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