Segment Information | SEGMENT INFORMATION As of March 31, 2015, our reportable segments are: • the Marcellus Shale, which is served by Mountaineer Midstream; • the Williston Basin – Gas, which is served by Bison Midstream; • the Williston Basin – Liquids, which is served by Polar and Divide; • the Barnett Shale, which is served by DFW Midstream; and • the Piceance Basin, which is served by Grand River Gathering. Each of our reportable segments provides midstream services in a specific geographic area. Within specific geographic areas, we may further differentiate reportable segments by type of gathering service provided. Our reportable segments reflect the way in which we internally report the financial information used to make decisions and allocate resources in connection with our operations. In the first quarter of 2015, we combined our Red Rock Gathering operating segment with the Grand River Gathering operating segment to become one operating segment serving the Piceance Basin. Prior to 2015, we aggregated the Red Rock Gathering and Grand River Gathering operating segments into the Piceance Basin reportable segment. In connection with the Polar and Divide Drop Down, we identified two reportable segments in the Williston Basin. We had previously only provided natural gas gathering services in the Williston Basin. With the acquisition of Polar Midstream and Epping in May 2015, we now also provide crude oil and produced water gathering services in the Williston Basin. As such, we evaluated the quantitative and qualitative factors for operating segment aggregation in the Williston Basin and concluded that the characteristics for crude oil and produced water gathering services were not sufficiently similar to those of our natural gas gathering services. As a result, we now report the results of Bison Midstream in the Williston Basin – Gas reportable segment and those of Polar Midstream and Epping in the Williston Basin – Liquids reportable segment. Corporate represents those revenues and expenses that are not specifically attributable to a reportable segment, not individually reportable, or that have not been allocated to our reportable segments. Beginning in the first quarter of 2015, we discontinued allocating certain general and administrative expenses, primarily salaries, benefits, incentive compensation and rent expense, to our operating segments. Assets by reportable segment follow. March 31, December 31, 2015 2014 (In thousands) Assets: Marcellus Shale $ 243,391 $ 243,884 Williston Basin – Gas 296,870 311,041 Williston Basin – Liquids 412,187 398,847 Barnett Shale 425,142 428,935 Piceance Basin 843,054 872,437 Total reportable segment assets 2,220,644 2,255,144 Corporate 20,531 38,577 Total assets $ 2,241,175 $ 2,293,721 Revenues by reportable segment follow. Three months ended March 31, 2015 2014 (In thousands) Revenues: Marcellus Shale $ 7,840 $ 5,356 Williston Basin – Gas 8,908 16,763 Williston Basin – Liquids 8,582 3,179 Barnett Shale 23,897 23,037 Piceance Basin 27,934 31,046 Total reportable segment revenues and total revenues $ 77,161 $ 79,381 Depreciation and amortization by reportable segment follow. Three months ended March 31, 2015 2014 (In thousands) Depreciation and amortization: Marcellus Shale $ 2,168 $ 1,801 Williston Basin – Gas 4,698 4,250 Williston Basin – Liquids 1,612 737 Barnett Shale 3,906 3,638 Piceance Basin 11,205 9,811 Total reportable segments 23,589 20,237 Corporate 166 142 Total depreciation and amortization $ 23,755 $ 20,379 Capital expenditures by reportable segment follow. Three months ended March 31, 2015 2014 (In thousands) Capital expenditures: Marcellus Shale $ 496 $ 4,431 Williston Basin – Gas 4,934 10,941 Williston Basin – Liquids 13,274 13,480 Barnett Shale 893 7,721 Piceance Basin 5,193 16,970 Total reportable segments 24,790 53,543 Corporate 398 37 Total capital expenditures $ 25,188 $ 53,580 We assess the performance of our reportable segments based on segment adjusted EBITDA. We define segment adjusted EBITDA as total revenues less total costs and expenses; plus (i) other income excluding interest income, (ii) depreciation and amortization, (iii) adjustments related to minimum volume commitment ("MVC") shortfall payments, (iv) impairments and (v) other noncash expenses or losses, less other noncash income or gains. Segment adjusted EBITDA excludes the effect of allocated corporate expenses, such as certain general and administrative expenses (including compensation-related expenses and professional services fees) interest expense and income tax expense. Adjustments related to MVC shortfall payments account for (i) the net increases or decreases in deferred revenue for MVC shortfall payments and (ii) our inclusion of expected annual MVC shortfall payments. We include a proportional amount of these historical or expected minimum volume commitment shortfall payments in each quarter prior to the quarter in which we actually recognize the shortfall payment. These adjustments have not been billed to our customers and are not recognized in our consolidated financial statements. A reconciliation of income before income taxes to total reportable segment adjusted EBITDA follows. Three months ended March 31, 2015 2014 (In thousands) Reconciliation of Income Before Income Taxes to Segment Adjusted EBITDA: Income before income taxes $ 5,190 $ 6,084 Add: Interest expense 12,118 7,144 Depreciation and amortization 24,006 20,605 Allocated corporate expenses 5,857 2,555 Adjustments related to MVC shortfall payments 12,340 12,013 Unit-based compensation 1,397 1,148 Less: Interest income 1 1 Total reportable segment adjusted EBITDA $ 60,907 $ 49,548 Segment adjusted EBITDA by reportable segment follows. Three months ended March 31, 2015 2014 (In thousands) Reportable segment adjusted EBITDA: Marcellus Shale $ 6,535 $ 3,883 Williston Basin – Gas 5,333 4,676 Williston Basin – Liquids 5,043 374 Barnett Shale 16,760 15,034 Piceance Basin 27,236 25,581 Total reportable segment adjusted EBITDA $ 60,907 $ 49,548 |