Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - Spectra Energy Partners, LP | d625912d8ka.htm |
| EX-99.2 - EX-99.2 - Spectra Energy Partners, LP | d625912dex992.htm |
| EX-99.5 - EX-99.5 - Spectra Energy Partners, LP | d625912dex995.htm |
Exhibit 99.4
Contributed Entities
Condensed Combined Financial Statements
(Unaudited)
September 30, 2013
CONTRIBUTED ENTITIES
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions)
| Nine Months Ended September 30, |
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| 2013 | 2012 | |||||||
| Operating Revenues |
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| Transportation of natural gas |
$ | 798 | $ | 813 | ||||
| Storage of natural gas and other services |
120 | 120 | ||||||
| Other operating revenues - affiliates |
5 | 5 | ||||||
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| Total operating revenues |
923 | 938 | ||||||
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| Operating Expenses |
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| Operating, maintenance and other |
253 | 268 | ||||||
| Operating, maintenance and other - affiliates |
35 | 50 | ||||||
| Depreciation and amortization |
121 | 118 | ||||||
| Property and other taxes |
66 | 60 | ||||||
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| Total operating expenses |
475 | 496 | ||||||
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| Operating Income |
448 | 442 | ||||||
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| Other Income and Expenses |
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| Equity in earnings of unconsolidated affiliates |
65 | 78 | ||||||
| Allowance for funds used during construction |
48 | 17 | ||||||
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| Total other income and expenses |
113 | 95 | ||||||
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| Interest Income |
— | 1 | ||||||
| Interest Expense |
37 | 58 | ||||||
| Interest Expense - Affiliates |
198 | 195 | ||||||
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| Earnings Before Income Taxes |
326 | 285 | ||||||
| Income Tax Expense (Benefit) |
(3 | ) | — | |||||
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| Net Income |
$ | 329 | $ | 285 | ||||
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See Notes to Condensed Combined Financial Statements.
2
CONTRIBUTED ENTITIES
CONDENSED COMBINED BALANCE SHEETS
(Unaudited)
(In millions)
| September 30, 2013 |
December 31, 2012 |
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| ASSETS |
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| Current Assets |
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| Receivables, net |
$ | 113 | $ | 120 | ||||
| Gas imbalances receivable |
69 | 68 | ||||||
| Gas imbalances receivable - affiliates |
5 | 6 | ||||||
| Inventory |
31 | 30 | ||||||
| Collateral assets - affiliates |
22 | 22 | ||||||
| Fuel tracker |
56 | 12 | ||||||
| Other |
18 | 10 | ||||||
| Other - affiliates |
4 | 3 | ||||||
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| Total current assets |
318 | 271 | ||||||
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| Investments and Other Assets |
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| Investments in and loans to unconsolidated affiliates |
1,740 | 1,557 | ||||||
| Goodwill |
2,088 | 2,152 | ||||||
| Other |
1 | 6 | ||||||
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| Total investments and other assets |
3,829 | 3,715 | ||||||
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| Property, Plant and Equipment |
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| Cost |
9,796 | 8,981 | ||||||
| Less accumulated depreciation and amortization |
2,425 | 2,333 | ||||||
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| Net property, plant and equipment |
7,371 | 6,648 | ||||||
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| Regulatory Assets and Deferred Debits |
151 | 123 | ||||||
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| Total Assets |
$ | 11,669 | $ | 10,757 | ||||
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See Notes to Condensed Combined Financial Statements.
3
CONTRIBUTED ENTITIES
CONDENSED COMBINED BALANCE SHEETS
(Unaudited)
(In millions)
| September 30, 2013 |
December 31, 2012 |
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| LIABILITIES AND EQUITY |
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| Current Liabilities |
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| Accounts payable |
$ | 106 | $ | 56 | ||||
| Accounts payable - affiliates |
— | 1 | ||||||
| Notes payable - affiliates |
17 | 17 | ||||||
| Taxes accrued |
26 | 24 | ||||||
| Interest accrued |
21 | 31 | ||||||
| Interest accrued - affiliates |
4 | 4 | ||||||
| Gas imbalances payable |
39 | 31 | ||||||
| Gas imbalances payable - affiliates |
23 | 41 | ||||||
| Collateral liabilities |
20 | 9 | ||||||
| Fuel tracker |
25 | 27 | ||||||
| Other |
28 | 26 | ||||||
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| Total current liabilities |
309 | 267 | ||||||
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| Notes Payable - Affiliates |
4,270 | 4,185 | ||||||
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| Long-term Debt |
1,995 | 1,994 | ||||||
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| Deferred Credits and Other Liabilities |
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| Deferred income taxes |
88 | 91 | ||||||
| Regulatory and other |
103 | 93 | ||||||
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| Total deferred credits and other liabilities |
191 | 184 | ||||||
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| Commitments and Contingencies |
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| Equity |
4,904 | 4,127 | ||||||
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| Total Liabilities and Equity |
$ | 11,669 | $ | 10,757 | ||||
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See Notes to Condensed Combined Financial Statements.
4
CONTRIBUTED ENTITIES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| Nine Months Ended September 30, |
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| 2013 | 2012 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net income |
$ | 329 | $ | 285 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
121 | 118 | ||||||
| Deferred income tax expense (benefit) |
(3 | ) | — | |||||
| Equity in earnings of unconsolidated affiliates |
(65 | ) | (78 | ) | ||||
| Distributions received from unconsolidated affiliates |
86 | 89 | ||||||
| Allowance for funds used during construction |
(48 | ) | (17 | ) | ||||
| Other |
(37 | ) | 43 | |||||
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| Net cash provided by operating activities |
383 | 440 | ||||||
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| CASH FLOWS FROM INVESTING ACTIVITIES |
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| Capital expenditures |
(749 | ) | (590 | ) | ||||
| Investment expenditures |
(211 | ) | (14 | ) | ||||
| Distributions received from unconsolidated affiliates |
7 | — | ||||||
| Other |
1 | 6 | ||||||
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| Net cash used in investing activities |
(952 | ) | (598 | ) | ||||
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| CASH FLOWS FROM FINANCING ACTIVITIES |
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| Proceeds from the issuance of long-term debt |
— | 350 | ||||||
| Increase in notes payable - affiliates |
85 | 8 | ||||||
| Net transfers from (to) parent |
483 | (200 | ) | |||||
| Other |
1 | — | ||||||
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| Net cash provided by financing activities |
569 | 158 | ||||||
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| Net change in cash and cash equivalents |
— | — | ||||||
| Cash and cash equivalents at beginning of period |
— | — | ||||||
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| Cash and cash equivalents at end of period |
$ | — | $ | — | ||||
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| Supplemental Disclosures |
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| Property, plant and equipment non-cash accruals |
$ | 65 | $ | 71 | ||||
See Notes to Condensed Combined Financial Statements.
5
CONTRIBUTED ENTITIES
CONDENSED COMBINED STATEMENTS OF EQUITY
(Unaudited)
(In millions)
| December 31, 2011 |
$ | 3,753 | ||
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| Net income |
285 | |||
| Net transfer to parent |
(108 | ) | ||
| Other |
(15 | ) | ||
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| September 30, 2012 |
$ | 3,915 | ||
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| December 31, 2012 |
$ | 4,127 | ||
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| Net income |
329 | |||
| Net transfers from parent |
420 | |||
| Other |
28 | |||
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| September 30, 2013 |
$ | 4,904 | ||
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See Notes to Condensed Combined Financial Statements.
6
CONTRIBUTED ENTITIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
| 1. | General |
The terms “we,” “our,” and “us” as used in this report refer collectively to the Contributed Entities unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity within the Contributed Entities. The Contributed Entities consist of the following:
| Entity Name |
Ownership % |
Entity Name |
Ownership % |
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| Algonquin Gas Transmission, LLC (a) |
100 | % | SESH Sub Inc. (b) (c) | 50 | % | |||||
| Black Cay Management, LLC (a) |
100 | % | Southeast Supply Header, LLC (b) | 50 | % | |||||
| Black Cay Transmission, LLC (a) |
100 | % | Spectra Energy Administrative Services, LLC (a) | 100 | % | |||||
| Copiah Storage, LLC (a) |
100 | % | Spectra Energy Aerial Patrol, LLC (a) | 100 | % | |||||
| DCP Sand Hills Pipeline, LLC (b) |
33.3 | % | Spectra Energy County Line, LLC (a) | 100 | % | |||||
| DCP Southern Hills Pipeline, LLC (b) |
33.3 | % | Spectra Energy Islander East Pipeline Company, L.L.C. (a) | 100 | % | |||||
| Egan Hub Storage, LLC (b) (c) |
50 | % | Spectra Energy MHP Holding, LLC (a) | 100 | % | |||||
| Gulfstream Management & Operating Services, L.L.C. (b) |
50 | % | Spectra Energy Sand Hills Holding, LLC (a) | 100 | % | |||||
| Gulfstream Natural Gas System, L.L.C. (b) |
1 | % | Spectra Energy Southeast MHP Holding, LLC (a) | 100 | % | |||||
| Islander East Pipeline Company, L.L.C. (b) |
50 | % | Spectra Energy Southeast Services, LLC (a) | 100 | % | |||||
| M&N Management Company (a) |
100 | % | Spectra Energy Southern Hills Holding, LLC (a) | 100 | % | |||||
| M&N Operating Company, LLC (a) |
100 | % | Spectra Energy Supply Company, LLC (a) | 100 | % | |||||
| Maritimes & Northeast Pipeline, L.L.C. (b) |
38.77 | % | Spectra Energy Transmission II, LLC (a) | 100 | % | |||||
| Market Hub Partners Holding (b) |
50 | % | Spectra Energy Transmission Resources, LLC (a) | 100 | % | |||||
| Moss Bluff Hub, LLC (b) (c) |
50 | % | Spectra Energy Transmission Services, LLC (a) | 100 | % | |||||
| Port Barre Investments, LLC (d/b/a Bobcat Gas Storage) (a) |
100 | % | Steckman Ridge GP, LLC (b) | 50 | % | |||||
| Renaissance Gas Transmission, LLC (a) |
100 | % | Steckman Ridge, LP (b) | 50 | % | |||||
| Sabal Trail Management, LLC (a) |
100 | % | Texas Eastern Communications, Inc. (a) | 100 | % | |||||
| Sabal Trail Transmission, LLC (a) |
67 | % | Texas Eastern Terminal Company (a) | 100 | % | |||||
| SESH Capital, LLC (b) (c) |
50 | % | Texas Eastern Transmission, LP (a) | 100 | % | |||||
| TPC Storage Holding Corp. (a) | 100 | % | ||||||||
| (a) | These entities are consolidated in the Contributed Entities financial statements. |
| (b) | These entities are equity method investments. |
| (c) | Effective ownership. |
Nature of Operations. We are mostly engaged in the interstate transportation and storage of natural gas. We provide transportation and storage of natural gas to customers in various regions of the northeastern and southeastern United States and the Pacific Northwest United States. Most of our operations are subject to the rules and regulations of the Federal Energy Regulatory Commission. We are indirectly owned by Spectra Energy Corp.
Basis of Presentation. The accompanying Condensed Combined Financial Statements include our accounts and the accounts of our majority-owned subsidiaries, after eliminating intercompany transactions and balances. These interim financial statements should be read in conjunction with the combined financial statements for the year ended December 31, 2012, and reflect all normal recurring adjustments that are, in our opinion, necessary to fairly present our results of operations and financial position.
Use of Estimates. To conform with generally accepted accounting principles in the United States, we make estimates and assumptions that affect the amounts reported in the Condensed Combined Financial Statements and Notes to Condensed Combined Financial Statements. Although these estimates are based on our best available knowledge at the time, actual results could differ.
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| 2. | Investments in Unconsolidated Affiliates |
Our most significant investment in unconsolidated affiliates is our 50% investment in Market Hub Partners Holding, which is accounted for under the equity method of accounting. The following represents summary financial information for Market Hub Partners Holding, presented at 100%:
| Nine Months Ended September 30, |
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| 2013 | 2012 | |||||||
| (in millions) | ||||||||
| Operating revenues |
$ | 71 | $ | 86 | ||||
| Operating expenses |
28 | 24 | ||||||
| Operating income |
43 | 62 | ||||||
| Net income |
43 | 62 | ||||||
| 3. | Goodwill |
The following table presents activity within goodwill:
| Enterprise Goodwill |
Other Goodwill |
Total Goodwill |
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| (in millions) | ||||||||||||
| December 31, 2012 |
$ | 1,828 | $ | 324 | $ | 2,152 | ||||||
| Net transfer to parent |
(64 | ) | — | (64 | ) | |||||||
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| September 30, 2013 |
$ | 1,764 | $ | 324 | $ | 2,088 | ||||||
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| 4. | Commitments and Contingencies |
Environmental. We are subject to various U.S. federal, state and local laws and regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These laws and regulations can change from time to time, imposing new obligations on us.
Litigation. We are involved in legal, tax and regulatory proceedings in various forums arising in the ordinary course of business, including matters regarding contract and payment claims, some of which involve substantial monetary amounts. We have insurance coverage for certain of these losses should they be incurred. We believe that the final disposition of these proceedings will not have a material effect on our combined results of operations, financial position or cash flows.
| 5. | Fair Value Measurements |
Our financial instruments included $1,995 million of long-term debt as of September 30, 2013 and $1,994 million as of December 31, 2012, with approximate fair values of $2,086 million and $2,287 million, respectively. Fair values of our long-term debt are determined based on market-based prices. These valuations may include inputs such as quoted market prices of the exact or similar instruments, broker or dealer quotations, or alternative pricing sources that may include models or matrix pricing tools, with reasonable levels of price transparency. Judgment is required in interpreting market data to develop the estimates of fair value. These estimates are not necessarily indicative of the amounts we could have realized in current markets. It is not practical to measure the fair value of notes payable-affiliates due to its related party nature.
The fair values of Receivables and Accounts Payable are not materially different from their carrying amounts because of the short-term nature of these accounts.
| 6. | Subsequent Events |
We have evaluated significant events and transactions that occurred from October 1, 2013 through November 18, 2013, the date the Condensed Combined Financial Statements were issued.
8