Energy Transfer 2012 Annual Report Download - page 85

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77
Midstream
Years Ended December 31,
2012 2011 Change
Gathered Volumes (MMBtu/d)
ETP Legacy Assets 2,364,133 2,020,126 344,007
Southern Union gathering and processing 510,061 — 510,061
NGLs produced (Bbls/d)
ETP Legacy Assets 79,640 54,246 25,394
Southern Union gathering and processing 41,163 — 41,163
Equity NGLs produced (Bbls/d)
ETP Legacy Assets 17,314 16,385 929
Southern Union gathering and processing 7,437 — 7,437
Revenues $ 3,084 $ 2,543 $ 541
Cost of products sold 2,432 2,072 360
Gross margin 652 471 181
Unrealized (gains) losses on commodity risk management activities 2(3) 5
Operating expenses, excluding non-cash compensation expense (151)(83)(68)
Selling, general and administrative, excluding non-cash compensation
expense (73)(19)(54)
Adjusted EBITDA related to unconsolidated affiliates (7) — (7)
Adjusted EBITDA attributable to discontinued operations 15 23 (8)
Segment Adjusted EBITDA $ 438 $ 389 $ 49
Volumes. NGL production increased primarily due to increased inlet volumes as a result of more production by our customers
in the Eagle Ford Shale area and increased capacity from recent completed projects. The increase in equity NGL production was
primarily due to the higher production partially offset by a higher concentration of volumes billed under fee-based contracts in
2012 as compared to 2011. Additionally, in conjunction with the Holdco Transaction, Southern Union's gathering and processing
operations were retrospectively consolidated into our midstream segment beginning March 26, 2012. For the period from March
26, 2012 to December 31, 2012, NGL production averaged 41,163 Bbls/d for Southern Union's gathering and processing
operations.
Gross Margin. The components of our midstream segment gross margin were as follows:
Years Ended December 31,
2012 2011 Change
Gathering and processing fee-based revenues $ 339 $ 253 $ 86
Non fee-based contracts and processing 335 234 101
Other (22)(16)(6)
Total gross margin $ 652 $ 471 $ 181
Midstream gross margin increased between the periods due to the net impact of the following:
• Gathering and processing fee-based revenues. Increased volumes from production in the Eagle Ford Shale resulted in
increased fee-based revenues of $70 million in 2012 as compared to 2011, partially offset by declines in the Fort Worth
Basin that affected our North Texas system resulting in a $5 million decline from 2012 to 2011. Additionally, Southern
Union's gathering and processing segment contributed $20 million of fee-based revenue during March 26, 2012 through
December 31, 2012.
• Non fee-based contracts and processing margin. We recorded $125 million of incremental non-fee based revenue in
connection with the consolidation of Southern Union's gathering and processing business from March 26, 2012 through
December 31, 2012. Excluding these incremental revenues from Southern Union's gathering and processing business,
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