Results of Operations — NGL Logistics Segment
The segment consists of the Seabreeze and Wilbreeze intrastate NGL pipelines, the Wattenberg and Black Lake
interstate NGL pipelines, the NGL storage facility in Michigan and the DJ Basin NGL Fractionators in Colorado:
Year Ended December 31,
Variance
2011 vs. 2010
Variance
2010 vs. 2009
2011 (b) 2010 (c)(d) 2009 (d)
Increase
(Decrease) Percent
Increase
(Decrease) Percent
(Millions, except operating data)
Operating revenues:
Sales of NGLs . . . . . . . . . . . . . . . . . . . . . . $ 4.8 $ 4.7 $ 3.0 $ 0.1 2% $ 1.7 57%
Transportation, processing and other . . . . . 51.8 12.9
7.5 38.9 302% 5.4 72%
Total operating revenues . . . . . . . . . . . . . . 56.6 17.6 10.5 39.0 222% 7.1 68%
Purchases of NGLs . . . . . . . . . . . . . . . . . . . .
4.6
4.7
2.9
(0.1)
(2)% 1.8 62%
Segment gross margin(a) . . . . . . . . . . . . . . . . 52.0 12.9
7.6 39.1 303% 5.3 70%
Operating and maintenance expense . . . . .
(15.9)
(3.7)
(1.2) 12.2 330% 2.5 208%
Depreciation and amortization expense . . .
(8.2)
(2.6)
(1.4) 5.6 215% 1.2 86%
Step acquisition – equity interest
re-measurement gain . . . . . . . . . . . . . . . —
9.1 —
(9.1) (100)% 9.1 100%
Other income . . . . . . . . . . . . . . . . . . . . . . .
0.5 — —
0.5 100% — —%
Earnings from unconsolidated
affiliates(d) . . . . . . . . . . . . . . . . . . . . . . . —
0.8
1.9
(0.8) (100)% (1.1) (58)%
Segment net income attributable to
partners . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28.4 $ 16.5 $ 6.9 $ 11.9 72% $ 9.6 139%
Operating data:
NGL pipelines throughput (Bbls/d)(c) . . . 62,555 38,282 30,160 24,273 63% 8,122 27%
(a) Segment gross margin consists of total operating revenues less purchases of NGLs. Please read
“Reconciliation of Non-GAAP Measures” above.
(b) Includes the results of our Marysville NGL storage facility and our DJ Basin NGL Fractionators since the
dates of acquisition of December 30, 2010 and March 24, 2011, respectively.
(c) Includes the results of our Wattenberg pipeline and our Black Lake pipeline since the dates of acquisition
of January 28, 2010 and July 30, 2010, respectively.
(d) For periods prior to July 30, 2010, includes our 50% share of the throughput volumes and earnings for
Black Lake. Black Lake’s earnings included the accretion of the net difference between the carrying
amount of the investment and the underlying equity of the investment.
Year Ended December 31, 2011 vs. Year Ended December 31, 2010
Total Operating Revenues
— Total operating revenues increased in 2011 compared to 2010, primarily as a
result of our acquisitions of the Marysville NGL storage facility, the DJ Basin NGL Fractionators and an
additional 50% interest in Black Lake, and the Wattenberg capital expansion project.
Segment Gross Margin
— Segment gross margin increased in 2011 compared to 2010, primarily as a
result of our acquisitions of the Marysville NGL storage facility, the DJ Basin NGL Fractionators and an
additional 50% interest in Black Lake, the Wattenberg capital expansion project, and increased throughput on
our pipelines.
Operating and Maintenance Expense
— Operating and maintenance expense increased in 2011 compared
to 2010, primarily as a result of our acquisitions of the Marysville NGL storage facility, an additional 50%
interest in Black Lake and the DJ Basin NGL Fractionators, and the Wattenberg capital expansion project.
Depreciation and Amortization Expense
— Depreciation and amortization expense increased in 2011
compared to 2010, primarily as a result of our acquisitions of the Marysville NGL storage facility, the DJ Basin
NGL Fractionators, an additional 50% interest in Black Lake, and the Wattenberg capital expansion project.
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