Energy Transfer 2012 Annual Report Download - page 86

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our non fee-based gross margins decreased $24 million primarily due to lower NGL prices. The composite NGL price
for 2012 was $0.96 per gallon as compared to $1.30 per gallon in 2011.
• Other midstream gross margin. We recorded derivative losses of $2 million in 2012 associated with our marketing
activities compared to derivative gains of $4 million in 2011 resulting in a decline of $6 million from 2012 compared to
2011. For the years ended December 31, 2012 and 2011, other midstream margin included $28 million and $36 million,
respectively, of fees charged by our intrastate transportation systems. These fees were recognized as income by our
intrastate transportation and storage segment and have no effect on our consolidated results of operations.
Unrealized (Gains) Losses on Commodity Risk Management Activities. Our midstream segment recorded unrealized losses of $2
million in 2012 associated with our marketing activities compared to unrealized gains of $3 million in 2011 mainly due to lower
notional volumes hedged compared to the prior year.
Operating Expenses, Excluding Non-Cash Compensation Expense. Midstream operating expenses increased primarily due to the
consolidation of Southern Union's gathering and processing operations effective March 26, 2012. In addition, growth in the Eagle
Ford Shale region resulted in $6 million of additional operating expenses.
Selling, General and Administrative Expenses, Excluding Non-Cash Compensation Expense. Midstream selling, general and
administrative expenses increased primarily due to consolidation of Southern Union's gathering and processing operations effective
March 26, 2012. In addition, additional assets placed into service in the Eagle Ford Shale also caused a slight increase. For the
periods presented, selling, general and administrative expenses increased $38 million due to consolidation of Southern Union's
gathering and processing operations. Increases related to new assets in the Eagle Ford Shale were higher due to employee costs
of $7 million, an increase in insurance costs of $2 million, an increase in professional fees of $1 million, an increase in information
technology costs of $3 million and an increase in office expenses of $2 million.
NGL Transportation and Services
Years Ended December 31,
2012 2011 Change
NGL transportation volumes (Bbls/d) 172,569 132,862 39,707
NGL fractionation volumes (Bbls/d) 17,754 16,475 1,279
Revenues $ 650 $ 397 $ 253
Cost of products sold 361 218 143
Gross margin 289 179 110
Operating expenses, excluding non-cash compensation expense (60)(39)(21)
Selling, general and administrative, excluding non-cash compensation
expense (20)(13)(7)
Segment Adjusted EBITDA $ 209 $ 127 $ 82
Our NGL Transportation and Services segment reflected the results from Lone Star, which was formed in 2011 and acquired all
of the membership interests in LDH on May 2, 2011, as well as multiple other wholly-owned or joint venture pipelines that have
recently become operational.
Volumes. The volumes reflected above for the year ended December 31, 2012 represent average daily volumes for the period from
May 2, 2011 to December 31, 2012. NGL transportation volumes increased for the year ended December 31, 2012 as compared
to the same period in the prior year primarily due to an increase in volumes transported on our wholly-owned and joint venture
NGL pipelines originating from our La Grange and Chisholm processing plants as a result of more production from the Eagle
Ford area. Average daily fractionated volumes increased for the year ended December 31, 2012 as compared to the year ended
December 31, 2011 at our Geismar fractionation complex in Louisiana due to less refinery downtime in 2012 as compared to the
comparable prior year period.
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