Segment Gross Margin
— Segment gross margin increased in 2010 compared to 2009, primarily as a
result of the following:
• $58.8 million increase related to commodity derivative activities as discussed in the Operating Revenues
section above;
• $31.2 million increase as a result of higher commodity prices; and
• $14.8 million increase as a result of increased fee-based throughput volumes resulting from the
Michigan acquisition, our organic growth project in the Piceance Basin, as well as the renegotiation of
commodity sensitive contracts to fee-based contracts partially offset by decreases across certain assets.
These increases were partially offset by:
• $19.4 million decrease attributable to reduced natural gas basis spreads, increased fuel consumption, the
impact of changes in contract mix, differences in gas quality, the impact of volume curtailment due to
plant shutdowns and producer wellhead freeze offs as a result of near record cold weather at East Texas
and North Louisiana in the first quarter and other natural gas volume reductions across certain of our
assets. 2009 results include the first quarter impact of a third party owned pipeline rupture, resulting in a
fire at East Texas and our Wyoming pipeline integrity and system enhancement project.
Operating and Maintenance Expense
— Operating and maintenance expense increased in 2010 compared
to 2009 primarily as a result of our Michigan acquisition and integration costs, turnaround activities at certain
assets, repairs as a result of near record cold weather and efficiency projects.
Depreciation and Amortization Expense
— Depreciation and amortization expense increased in 2010
compared to 2009 primarily as a result of our capital projects completed in 2009 and the Michigan acquisition.
Other income —
Other income relates to our reassessment of the fair value of contingent consideration for
our acquisition of an additional 5% interest in Collbran from Delta Petroleum Company, or Delta, in February
2010.
Earnings from Unconsolidated Affiliates
— Earnings from unconsolidated affiliates, primarily
representing our 40% ownership of Discovery and our 33.33% ownership of Southeast Texas, increased in 2010
compared to 2009 primarily due to higher prices and increased NGL production; partially offset by earnings
from Discovery which were partially offset by differences in gas quality, higher costs and downtime related to
turnarounds. The 2010 results reflect business interruption insurance recoveries at Southeast Texas. Settlements
related to our commodity derivatives on our unconsolidated affiliates are included in segment gross margin.
Segment net income attributable to noncontrolling interests
— Segment net income attributable to
noncontrolling interests includes the impact of organic growth from our Piceance Basin expansion project,
offset by volume curtailments due to plant shutdowns and producer wellhead freeze offs as a result of near
record cold weather in the first quarter, increased fuel consumption, differences in gas quality and turnarounds
at East Texas in 2010. 2009 results include the first quarter impact of a third party owned pipeline rupture,
resulting in a fire at East Texas.
Natural Gas Throughput
— Natural gas transported, processed and/or treated increased in 2010 compared
to 2009, as a result of increased fee-based throughput volumes from our Michigan acquisition, and increased
volumes at Discovery, partially offset by decreased volumes across certain assets. 2010 results include the
impact of volume curtailment due to plant shutdowns and producer wellhead freeze offs as a result of near
record cold weather at East Texas and North Louisiana in the first quarter. 2009 results include the first quarter
impact of operational downtime following the hurricanes, a third party owned pipeline rupture resulting in a fire
at East Texas and our Wyoming pipeline integrity and system enhancement project.
NGL Gross Production
— NGL production increased in 2010 compared to 2009, due primarily to
increased volumes from our Piceance Basin expansion project and increased NGL production at Discovery.
2010 results include the impact of volume curtailment due to plant shutdowns and producer wellhead freeze
offs as a result of near record cold weather at East Texas and North Louisiana in the first quarter. 2009 results
include the first quarter impact of operational downtime following the hurricanes, a third party owned pipeline
rupture resulting in a fire at East Texas and our Wyoming pipeline integrity and system enhancement project.
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