| Reportable Segments | Reportable Segments During the first quarter of 2017, as a result of the acquisition of JPE described in Note 1, we realigned the composition of our reportable segments. Accordingly, we have restated the items of segment information for the three and six months ended June 30, 2016 to reflect this new segment adjustment. Our operations are located in the United States and are organized into six reportable segments: 1) Gas Gathering and Processing Services, 2) Liquid Pipelines and Services, 3) Natural Gas Transportation Services, 4) Offshore Pipelines and Services, 5) Terminalling Services, and 6) Propane Marketing Services. • Gas Gathering and Processing Services . Our Gas Gathering and Processing Services segment provides “wellhead-to-market” services to producers of natural gas and natural gas liquids, which include transporting raw natural gas from various receipt points through gathering systems, treating the raw natural gas, processing raw natural gas to separate the NGLs from the natural gas, fractionating NGLs, and selling or delivering pipeline-quality natural gas and NGLs to various markets and pipeline systems. • Liquid Pipelines and Services . Our Liquid Pipelines and Services segment provides transportation, purchase and sales of crude oil from various receipt points including lease automatic customer transfer (“LACT”) facilities and deliveries to various markets. • Natural Gas Transportation Services . Our Natural Gas Transportation Services segment transports and delivers natural gas from producing wells, receipt points, or pipeline interconnects for shippers and other customers, which include local distribution companies (“LDCs”), utilities and industrial, commercial and power generation customers. • Offshore Pipelines and Services . Our Offshore Pipelines and Services segment gathers and transports natural gas and crude oil from various receipt points to other pipeline interconnects, onshore facilities and other delivery points. • Terminalling Services . Our Terminalling Services segment provides above-ground leasable storage operations at our marine terminals that support various commercial customers, including commodity brokers, refiners and chemical manufacturers to store a range of products and also includes crude oil storage in Cushing, Oklahoma and refined products terminals in Texas and Arkansas. • Propane Marketing Services . Our Propane Marketing Services segment gathers, transports and sells natural gas liquids (NGLs). This is accomplished through cylinder tank exchange, sales through retail, commercial and wholesale distribution and through a fleet of trucks operating in the Eagle Ford and Permian basin areas. These segments are monitored separately by our chief operating decision maker (“CODM”) for performance and are consistent with our internal financial reporting. The CODM periodically reviews segment gross margin information for each segment to make business decisions. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. We define total segment gross margin as the sum of the segment gross margins for our Gas Gathering and Processing Services, Liquid Pipelines and Services, Natural Gas Transportation Services, Offshore Pipelines and Services, Terminalling Services and Propane Marketing Services segments. We define segment gross margin in our Gas Gathering and Processing Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives, construction and operating management agreement income and the cost of natural gas, crude oil and NGLs and condensate purchased. We define segment gross margin in our Liquid Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives and the cost of crude oil purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk. We define segment gross margin in our Natural Gas Transportation Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk. We define segment gross margin in our Offshore Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk. We define segment gross margin in our Terminalling Services segment as total revenue less direct operating expense which includes direct labor, general materials and supplies and direct overhead. We define segment gross margin in our Propane Marketing Services segment as total revenue less purchases of natural gas, NGLs and condensate excluding non-cash charges such as non-cash unrealized gains or plus unrealized losses on commodity derivatives. A reconciliation from Segment Gross Margin to Net Income attributable to the Partnership for the periods presented is below (in thousands): Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Reconciliation of Segment Gross Margin to Net loss attributable to the Partnership: Gas Gathering and Processing Services segment gross margin $ 12,651 $ 13,337 $ 23,902 $ 24,957 Liquid Pipelines and Services segment gross margin 6,683 9,432 13,152 15,284 Natural Gas Transportation Services segment gross margin 5,631 3,843 11,750 9,406 Offshore Pipelines and Services segment gross margin 25,623 20,558 51,426 33,819 Terminalling Services segment gross margin (1) 10,760 11,586 21,920 21,030 Propane Marketing Services segment gross margin 17,952 22,316 37,254 50,621 Total Segment Gross Margin 79,300 81,072 159,404 155,117 Less: Other direct operating expenses (1) 28,886 29,579 55,902 57,545 Plus: Gain (loss) on commodity derivatives, net 207 (1,367 ) (50 ) (1,605 ) Less: Corporate expenses 30,084 22,281 62,928 43,382 Depreciation, amortization and accretion expense 30,170 26,398 59,521 51,439 (Gain) loss on sale of assets, net 52 478 (176 ) 1,600 Interest expense 17,152 10,610 35,118 18,912 Other income (72 ) (496 ) (86 ) (527 ) Other (income) expense, net 136 (365 ) 806 (730 ) Income tax expense 801 701 1,924 1,436 Loss from discontinued operations, net of tax — — — 539 Net income attributable to noncontrolling interest 1,462 954 2,765 951 Net loss attributable to the Partnership $ (29,164 ) $ (10,435 ) $ (59,348 ) $ (21,035 ) _____________________________________ (1) Other direct operating expenses include Gas Gathering and Processing Services segment direct operating expenses of $8.0 million and $8.9 million , respectively, Liquid Pipelines and Services segment direct operating expenses of $1.8 million and $2.2 million , respectively, Natural Gas Transportation Services segment direct operating expenses of $1.9 million and $2.0 million , respectively, Offshore Pipelines and Services segment direct operating expenses of $3.5 million and $2.8 million , respectively, and Propane Marketing Services segment direct operating expenses of $13.6 million and $13.6 million , respectively, for the three months ended June 30, 2017 and 2016 . Direct operating expenses related to our Terminalling Services segment of $3.0 million and $2.4 million for the three months ended June 30, 2017 and 2016 , respectively, are included within the calculation of Terminalling Services segment gross margin. Other direct operating expenses include Gas Gathering and Processing Services segment direct operating expenses of $16.1 million and $17.5 million , respectively, Liquid Pipelines and Services segment direct operating expenses of $3.9 million and $4.7 million , respectively, Natural Gas Transportation Services segment direct operating expenses of $3.2 million and $3.2 million , respectively, Offshore Pipelines and Services segment direct operating expenses of $6.1 million and $5.1 million , respectively, and Propane Marketing Services segment direct operating expenses of $26.7 million and $27.1 million , respectively, for the six months ended June 30, 2017 and 2016 . Direct operating expenses related to our Terminalling Services segment of $6.1 million and $5.0 million for the six months ended June 30, 2017 and 2016 , respectively, are included within the calculation of Terminalling Services segment gross margin. The following tables set forth our segment information for the three and six months ended June 30, 2017 and 2016 (in thousands): Three months ended June 30, 2017 Gas Gathering and Processing Services Liquid Pipelines and Services Natural Gas Transportation Services Offshore Pipelines and Services Terminalling Services Propane Marketing Services Total Revenue $ 39,307 $ 82,303 $ 11,397 $ 12,139 $ 15,831 $ 32,449 $ 193,426 Gain (loss) on commodity derivatives, net (98 ) 297 — — — 8 207 Total revenue 39,209 82,600 11,397 12,139 15,831 32,457 193,633 Earnings in unconsolidated affiliates — 1,482 — 16,070 — — 17,552 Operating expenses: Cost of Sales 26,582 77,332 5,678 2,586 2,073 14,565 128,816 Direct operating expenses 8,045 1,833 1,928 3,490 2,998 13,590 31,884 Corporate expenses 30,084 Depreciation, amortization and accretion expense 30,170 Loss on sale of assets, net 52 Total operating expenses 221,006 Interest expense 17,152 Other income (72 ) Loss from continuing operations before taxes (26,901 ) Income tax expense 801 Net loss (27,702 ) Less: Net income attributable to non-controlling interests 1,462 Net loss attributable to the Partnership $ (29,164 ) Segment gross margin $ 12,651 $ 6,683 $ 5,631 $ 25,623 $ 10,760 $ 17,952 Three months ended June 30, 2016 Gas Gathering and Processing Services Liquid Pipelines and Services Natural Gas Transportation Services Offshore Pipelines and Services Terminalling Services Propane Marketing Services Total Revenue $ 30,710 $ 85,415 $ 7,877 $ 10,645 $ 17,815 $ 34,741 $ 187,203 Gain (loss) on commodity derivatives, net (763 ) (716 ) — (2 ) (260 ) — 374 (1,367 ) Total revenue 29,947 84,699 7,877 10,643 17,555 35,115 185,836 Earnings in unconsolidated affiliates — 1,009 — 10,693 — — 11,702 Operating expenses: Cost of Sales 17,162 76,992 4,026 778 3,542 12,580 115,080 Direct operating expenses 8,945 2,235 1,963 2,802 2,388 13,634 31,967 Corporate expenses 22,281 Depreciation, amortization and accretion expense 26,398 Loss on sale of assets, net 478 Total operating expenses 196,204 Interest expense 10,610 Other income (496 ) Loss from continuing operations before taxes (8,780 ) Income tax expense 701 Loss from continuing operation (9,481 ) Loss from discontinued operations, net of tax $ — Net loss (9,481 ) Less: Net income attributable to non-controlling interests $ 954 Net loss attributable to the Partnership $ (10,435 ) Segment gross margin $ 13,337 $ 9,432 $ 3,843 $ 20,558 $ 11,586 $ 22,316 Six months ended June 30, 2017 Gas Gathering and Processing Services Liquid Pipelines and Services Natural Gas Transportation Services Offshore Pipelines and Services Terminalling Services Propane Marketing Services Total Revenue $ 73,714 $ 164,342 $ 23,835 $ 26,970 $ 34,457 $ 69,997 $ 393,315 Gain (loss) on commodity derivatives, net (105 ) 669 — — — (614 ) (50 ) Total revenue 73,609 165,011 23,835 26,970 34,457 69,383 393,265 Earnings in unconsolidated affiliates — 2,569 — 30,385 — — 32,954 Operating expenses: Cost of Sales 49,769 154,409 11,938 5,929 6,466 33,090 261,601 Direct operating expenses 16,110 3,906 3,163 6,070 6,071 26,652 61,972 Corporate expenses 62,928 Depreciation, amortization and accretion expense 59,521 Gain on sale of assets, net (176 ) Total operating expenses 445,846 Interest expense 35,118 Other income (86 ) Loss from continuing operations before taxes (54,659 ) Income tax expense 1,924 Net loss (56,583 ) Less: Net income attributable to non-controlling interests 2,765 Net loss attributable to the Partnership $ (59,348 ) Segment gross margin $ 23,902 $ 13,152 $ 11,750 $ 51,426 $ 21,920 $ 37,254 Six months ended June 30, 2016 Gas Gathering and Processing Services Liquid Pipelines and Services Natural Gas Transportation Services Offshore Pipelines and Services Terminalling Services Propane Marketing Services Total Revenue $ 54,004 $ 129,930 $ 17,672 $ 17,645 $ 32,210 $ 79,356 $ 330,817 Gain (loss) on commodity derivatives, net (866 ) (948 ) — (2 ) (436 ) 647 (1,605 ) Total revenue 53,138 128,982 17,672 17,643 31,774 80,003 329,212 Earnings in unconsolidated affiliates 1,009 18,036 19,045 Operating expenses: Cost of Sales 28,868 115,645 8,250 1,860 5,747 28,648 189,018 Direct operating expenses 17,492 4,701 3,190 5,055 4,997 27,107 62,542 Corporate expenses 43,382 Depreciation, amortization and accretion expense 51,439 Loss on sale of assets, net 1,600 Total operating expenses 347,981 Interest expense 18,912 Other income (527 ) Loss from continuing operations before taxes (18,109 ) Income tax expense 1,436 Loss from continuing operation (19,545 ) Loss from discontinued operations, net of tax (539 ) Net loss (20,084 ) Less: Net income attributable to non-controlling interests $ 951 Net loss attributable to the Partnership $ (21,035 ) Segment gross margin $ 24,957 $ 15,284 $ 9,406 $ 33,819 $ 21,030 $ 50,621 A reconciliation of Total assets by segment to the amounts included in the condensed consolidated balance sheets follows: June 30, December 31, 2017 2016 Segment assets: Gas Gathering and Processing Services $ 524,905 $ 530,889 Liquid Pipelines and Services 433,618 422,636 Offshore Pipelines and Services (2) 369,137 400,193 Natural Gas Transportation Services 227,466 221,604 Terminalling Services (2) 281,016 299,534 Propane Marketing Services 130,731 140,864 Other (1) 85,069 333,601 Total Assets $ 2,051,942 $ 2,349,321 _____________________________________ (1) Other assets not allocable to segments consist of corporate leasehold improvements and other miscellaneous assets. (2) The Partnership has revised the December 31, 2016 amounts by segment above from those amounts previously reported in its Form 10-Q for the quarter ended March 31, 2017 to increase the Offshore Pipelines and Services segment by approximately $14 million and to decrease the amounts of Other and the Offshore Pipelines and Services segment by approximately $13 million and $1 million , respectively. |
