Acquisitions | 9 Months Ended |
Sep. 30, 2013 |
Business Combinations [Abstract] | ' |
Acquisitions | ' |
2. Acquisitions |
Express-Platte. On August 2, 2013, we acquired a 40% ownership interest in Express US and a 100% ownership interest in Express Canada from subsidiaries of Spectra Energy for $410.4 million in cash and 7.2 million of newly issued common and general partner units (valued at $318.8 million). The Express-Platte pipeline system, which begins in Hardisty, Alberta, and terminates in Wood River, Illinois, is comprised of both the Express and Platte crude oil pipelines. The Express pipeline carries crude oil to U.S. refining markets in the Rockies area, including Montana, Wyoming, Colorado and Utah. The Platte pipeline, which interconnects with the Express pipeline in Casper, transports crude oil predominantly from the Bakken shale and western Canada to refineries in the Midwest. The completion of the acquisition expands our growth platform to include the rapidly growing North American crude oil transportation and storage market and diversifies our profile of steady, fee-based cash flows with an escalating-fee asset. |
The following table summarizes the preliminary fair values of the assets and liabilities as of March 14, 2013, the acquisition date of Express-Platte from third-parties by Spectra Energy. Subsequent adjustments may be recorded upon the completion of the valuation and the final determination of the purchase price allocation. |
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| Purchase Price | | | | | | | | | | | | |
Allocation | | | | | | | | | | | | |
| (in millions) | | | | | | | | | | | | |
Cash | $ | 67.5 | | | | | | | | | | | | | |
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Receivables | 21.3 | | | | | | | | | | | | | |
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Other current assets | 10.2 | | | | | | | | | | | | | |
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Goodwill | 478.1 | | | | | | | | | | | | | |
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Property, plant and equipment | 1,352.50 | | | | | | | | | | | | | |
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Accounts payable | (20.4 | ) | | | | | | | | | | | | |
Other current liabilities | (19.1 | ) | | | | | | | | | | | | |
Deferred credits and other liabilities | (327.1 | ) | | | | | | | | | | | | |
Long-term debt, including current portion | (241.9 | ) | | | | | | | | | | | | |
Total assets acquired/liabilities assumed | $ | 1,321.10 | | | | | | | | | | | | | |
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The following tables present summarized financial information for Express US, which is a VIE, on a 100%-consolidated basis since March 14, 2013, the acquisition date of Express US from third-parties by Spectra Energy. |
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| Three Months Ended | | Nine Months Ended | | | | | | | | |
30-Sep-13 | 30-Sep-13 | | | | | | | | |
| (in millions) | | | | | | | | |
Operating revenues | $ | 61.1 | | | $ | 131.7 | | | | | | | | | |
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EBIT | 29.4 | | | 63.6 | | | | | | | | | |
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Net income | 26.6 | | | 57.3 | | | | | | | | | |
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| September 30, | | | | | | | | | | | | |
2013 | | | | | | | | | | | | |
| (in millions) | | | | | | | | | | | | |
Total current assets | $ | 75.1 | | | | | | | | | | | | | |
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Investments and other assets | 431.6 | | | | | | | | | | | | | |
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Net property, plant and equipment | 1,112.90 | | | | | | | | | | | | | |
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Total Assets | 1,619.60 | | | | | | | | | | | | | |
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Total current liabilities | 55 | | | | | | | | | | | | | |
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Long-term debt | 145.1 | | | | | | | | | | | | | |
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Equity | 1,419.50 | | | | | | | | | | | | | |
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Total Liabilities and Equity | $ | 1,619.60 | | | | | | | | | | | | | |
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The following table presents pro forma results of operations information that reflect the acquisition of Express-Platte as if the acquisition had occurred as of January 1, 2012, adjusted for items that are directly attributable to the acquisition. This information has been compiled from current and historical financial statements, and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred at the beginning of the periods presented or that may be achieved in the future. |
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| Three Months | | Nine Months |
Ended September 30, | Ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
| (in millions, except per-unit amounts) |
Operating revenues | $ | 133.1 | | | $ | 129.5 | | | $ | 395.1 | | | $ | 373.2 | |
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Earnings before income taxes | 77.3 | | | 83.3 | | | 217.3 | | | 227.3 | |
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Net income | 75.6 | | | 83 | | | 214.6 | | | 226.2 | |
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Net income-controlling interests | 59.6 | | | 71 | | | 175.2 | | | 202.2 | |
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Net income per limited partner unit—basic and diluted | 0.41 | | | 0.61 | | | 1.26 | | | 1.73 | |
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As of September 30, 2013, Express-Platte debt, including current maturities, totaled $227.9 million, consisting of $117.9 million of 7.39% subordinated notes due 2019 and $110.0 million of 6.09% senior notes due 2020. The notes are secured by the assignment of the Express-Platte transportation receivables and by the assets of the Express Canada pipeline system assets. |
U.S. assets acquisition. On August 5, 2013, we entered into a definitive agreement with Spectra Energy to acquire ownership interests in its remaining Spectra Energy U.S. transmission, storage and liquids assets, including Spectra Energy’s remaining 60% interest in the U.S. portion of Express-Platte (the Dropdown Transactions). The pipeline systems include Texas Eastern Transmission, LP (Texas Eastern), Algonquin Gas Transmission, LLC, the remaining 60% ownership interest in Express US, an additional 38.77% interest in Maritimes & Northeast Pipeline, L.L.C. (M&N US), 33.3% interests in both DCP Sand Hills Pipeline, LLC (Sand Hills) and DCP Southern Hills Pipeline, LLC (Southern Hills), an additional 1% interest in Gulfstream Natural Gas System, L.L.C. (Gulfstream) and a 50% interest in Southeast Supply Header, LLC. The natural gas and crude oil storage businesses include Bobcat Gas Storage, the remaining 50% interest in Market Hub, a 49.9% interest in Steckman Ridge, LP, and Texas Eastern's and Express-Platte's storage facilities. Aggregate consideration for the Dropdown Transactions, when completed, will be approximately 175.5 million in newly issued Spectra Energy Partners partnership units and approximately $2,300.0 million in cash. The contributed entities had approximately $2,400.0 million of third-party debt at the date of the contribution. On November 1, 2013, we completed the closing of substantially all of the Dropdown Transactions. We paid Spectra Energy aggregate consideration with the issuance of approximately 171.1 million newly issued partnership units and $2,300.0 million in cash. The first of the remaining two closings of the Dropdown Transactions is expected to occur at least 12 months following the November 1, 2013 closing, with the final closing expected to occur at least 12 months thereafter. |
M&N US. On October 31, 2012, we acquired a 38.76% ownership interest in M&N US from Spectra Energy for approximately $318.7 million in cash and approximately $56.2 million in common and general partner units. As of the acquisition date, M&N US had debt outstanding of $429.0 million. M&N US owns a Federal Energy Regulatory Commission (FERC) regulated mainline interstate natural gas transportation system in the United States which extends from the Canadian border near Baileyville, Maine to northeastern Massachusetts. M&N US’ pipeline location and key interconnects with Spectra Energy’s transmission system link regional natural gas supplies to the northeast U.S. and Atlantic Canadian markets. |
The M&N US acquisition represented a transaction between entities under common control, but did not represent a change in reporting entity. Accordingly, the Condensed Consolidated Financial Statements and related information presented herein include the results of the acquisition of M&N US as of the date of the acquisition. |