Midcoast Energy Partners (MEP) 8-K Midcoast Energy Partners, L.P. Reports Earnings for First Quarter 2016

Exhibit 99.2

MIDCOAST ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

	For the three months
	ended March 31,
	2016			2015
	(unaudited; in millions, except per unit amounts)
Operating revenues:
Commodity sales	$	377.8		$	800.9
Commodity sales - affiliate		5.2			21.8
Transportation and other services		48.9			50.8
		431.9			873.5
Operating expenses:
Cost of natural gas and natural gas liquids		335.4			761.2
Cost of natural gas and natural gas liquids – affiliate		12.6			17.9
Operating and maintenance		32.3			38.2
Operating and maintenance - affiliate		24.9			25.2
General and administrative		2.5			1.9
General and administrative - affiliate		13.1			19.1
Depreciation and amortization		39.5			38.3
		460.3			901.8
Operating loss		(28.4	)		(28.3	)
Interest expense, net		(8.3	)		(6.7	)
Equity in earnings of joint ventures		7.1			5.7
Other income		0.2			-
Loss before income tax expense		(29.4	)		(29.3	)
Income tax expense		(0.9	)		(0.8	)
Net loss		(30.3	)		(30.1	)
Less: Net loss attributable to noncontrolling interest		(10.1	)		(10.1	)
Net loss attributable to general and limited partner ownership
interest in Midcoast Energy Partners, L.P.	$	(20.2	)	$	(20.0	)
Net loss attributable to limited partner ownership interest	$	(19.8	)	$	(19.6	)
Net loss per limited partner unit (basic and diluted)	$	(0.44	)	$	(0.43	)
Weighted-average limited partner units outstanding		45.2			45.2

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MIDCOAST ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the three months
	ended March 31,
	2016			2015
	(unaudited; in millions)
Cash provided by operating activities:
Net loss	$	(30.3	)	$	(30.1	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		39.5			38.3
Derivative fair value net losses		27.1			35.1
Inventory market price adjustments		-			4.6
Distributions from investment in joint ventures		7.1			5.7
Equity earnings from investment in joint ventures		(7.1	)		(5.7	)
Other		(3.1	)		0.7
Changes in operating assets and liabilities, net of acquisitions:
Receivables, trade and other		4.8			(11.6	)
Due from General Partner and affiliates		45.4			44.4
Accrued receivables		32.1			184.9
Inventory		18.2			48.2
Current and long-term other assets		(1.7	)		(12.1	)
Due to General Partner and affiliates		68.8			4.8
Accounts payable and other		(31.1	)		(9.3	)
Accrued purchases		(34.7	)		(115.9	)
Interest payable		(4.1	)		(4.1	)
Property and other taxes payable		(7.6	)		(9.7	)
Net cash provided by operating activities		123.3			168.2
Cash used in investing activities:
Additions to property, plant and equipment		(16.3	)		(56.1	)
Changes in restricted cash		3.0			(2.7	)
Acquisitions		-			(44.1	)
Investment in joint ventures		-			(1.9	)
Distributions from investment in joint ventures in excess of cumulative earnings		4.2			2.4
Other		(0.8	)		(0.6	)
Net cash used in investing activities		(9.9	)		(103.0	)
Cash used in financing activities:
Net repayments under credit facility		(50.0	)		(45.0	)
Distributions to partners		(16.5	)		(15.8	)
Contributions from General Partner		9.5			-
Contributions from noncontrolling interest		2.9			20.7
Distributions to noncontrolling interest		(25.9	)		(19.8	)
Net cash used in financing activities		(80.0	)		(59.9	)
Net increase in cash and cash equivalents		33.4			5.3
Cash and cash equivalents at beginning of year		18.0			-
Cash and cash equivalents at end of period	$	51.4		$	5.3

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MIDCOAST ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	March 31,			December 31,
	2016			2015
ASSETS	(unaudited; in millions)
Current assets:
Cash and cash equivalents	$	51.4		$	18.0
Restricted cash		14.6			20.6
Receivables, trade and other, net of allowance for doubtful accounts of $2.6 million
and $2.5 million, respectively, at March 31, 2016 and December 31, 2015		10.3			13.3
Due from General Partner and affiliates		4.3			47.0
Accrued receivables		24.0			56.1
Inventory		13.7			31.9
Other current assets		100.2			118.5
		218.5			305.4
Property, plant and equipment, net		4,207.5			4,226.3
Intangible assets, net		267.5			272.9
Equity investment in joint ventures		368.0			372.3
Other assets, net		81.1			95.2
Total assets	$	5,142.6		$	5,272.1
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Due to General Partner and affiliates	$	108.2		$	45.7
Accounts payable and other		57.2			92.6
Accrued purchases		109.1			143.8
Property and other taxes payable		10.8			18.4
Interest payable		1.1			5.2
		286.4			305.7
Long-term debt		838.3			888.2
Other long-term liabilities		39.6			45.9
Total liabilities		1,164.3			1,239.8
Commitments and contingencies
Partners’ capital :
Class A common units (22,610,056 authorized and issued at March 31, 2016 and
December 31,2015)		504.2			522.2
Subordinated units (22,610,056 authorized and issued at March 31, 2016 and
December 31, 2015)		1,044.0			1,062.0
General Partner units (922,859 authorized and issued at March 31, 2016 and
December 31, 2015)		52.1			43.3
Accumulated other comprehensive income		(0.9	)		(0.9	)
Total Midcoast Energy Partners, L.P. partners’ capital		1,599.4			1,626.6
Noncontrolling interest		2,378.9			2,405.7
Total partners’ capital		3,978.3			4,032.3
	$	5,142.6		$	5,272.1

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NET INCOME PER LIMITED PARTNER AND GENERAL PARTNER INTEREST

We allocate our net income among our General Partner and limited partners using the two-class method. Under the two-class method, we allocate our net income, including any earnings in excess of distributions, to our limited partners, our General Partner and the holders of our IDRs in accordance with the terms of our partnership agreement. We allocate any distributions in excess of earnings for the period to our General Partner and our limited partners based on their respective proportionate ownership interests in us, after taking into account distributions to be paid with respect to the IDRs, as set forth in our partnership agreement.

Distribution Targets	Portion of Quarterly Distribution Per Unit	Percentage Distributed to Limited Partners	Percentage Distributed to General Partner
Minimum Quarterly Distribution	Up to $0.3125	98%	2%
First Target Distribution	> $0.3125 to $0.359375	98%	2%
Second Target Distribution	> $0.359375 to $0.390625	85%	15%
Third Target Distribution	> $0.390625 to $0.468750	75%	25%
Over Third Target Distribution	In excess of $0.468750	50%	50%

We determined basic and diluted net loss per limited partner unit as follows:

	For the three months
	ended March 31,
	2016			2015
	(in millions, except per unit amounts)
Net loss	$	(30.3	)	$	(30.1	)
Less: Net loss attributable to noncontrolling interest		(10.1	)		(10.1	)
Net loss attributable to general and limited partner
interests in Midcoast Energy Partners, L.P.		(20.2	)		(20.0	)
Less distributions:
Total distributed earnings to our General Partner		(0.3	)		(0.3	)
Total distributed earnings to our limited partners		(16.2	)		(15.7	)
Total distributed earnings		(16.5	)		(16.0	)
Overdistributed earnings	$	(36.7	)	$	(36.0	)
Weighted-average limited partner units outstanding		45.2			45.2
Basic and diluted earnings per unit:
Distributed earnings per limited partner unit (1)	$	0.36		$	0.35
Overdistributed earnings per limited partner unit (2)		(0.80	)		(0.78	)
Net loss per limited partner unit (basic and diluted)	$	(0.44	)	$	(0.43	)

________________

(1)	Represents the total distributed earnings to limited partners divided by the weighted-average number of limited partner interests outstanding for the period.
(2)	Represents the limited partners' share (98%) of distributions in excess of earnings divided by the weighted-average number of limited partner interests outstanding for the period and underdistributed earnings allocated to the limited partners based on the distribution waterfall that is outlined in our partnership agreement.

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SEGMENT INFORMATION

Our business is divided into operating segments, defined as components of the enterprise, about which financial information is available and evaluated regularly by our Chief Operating Decision Maker, collectively comprised of our senior management, in deciding how resources are allocated and performance is assessed.

Each of our reportable segments is a business unit that offers different services and products that are managed separately, since each business segment requires different operating strategies. We conduct our business through two distinct reporting segments:

• Gathering, Processing and Transportation; and

• Logistics and Marketing.

The following tables present certain financial information relating to our business segments and corporate activities:

	As of and for the three months ended March 31, 2016
	Gathering, Processing and Transportation			Logistics and Marketing		Corporate (1)			Total
	(in millions)
Total revenue	$	243.1		$	248.8	$	-		$	491.9
Less: Intersegment revenue		54.5			5.5		-			60.0
Operating revenue		188.6			243.3		-			431.9
Cost of natural gas and natural gas liquids		118.5			229.5		-			348.0
Segment gross margin		70.1			13.8		-			83.9
Operating and maintenance		46.7			10.4		0.1			57.2
General and administrative		13.0			1.5		1.1			15.6
Depreciation and amortization		37.7			1.8		-			39.5
		97.4			13.7		1.2			112.3
Operating income (loss)		(27.3	)		0.1		(1.2	)		(28.4	)
Other income		7.1	(2)		-		0.2			7.3
Interest expense, net		-			-		(8.3	)		(8.3	)
Income (loss) before income tax expense		(20.2	)		0.1		(9.3	)		(29.4	)
Income tax expense		-			-		(0.9	)		(0.9	)
Net income (loss)		(20.2	)		0.1		(10.2	)		(30.3	)
Less: Net loss attributable to noncontrolling interest		-			-		(10.1	)		(10.1	)
Net income (loss) attributable to general and limited partner
ownership interests in Midcoast Energy Partners, L.P.	$	(20.2	)	$	0.1	$	(0.1	)	$	(20.2	)
Total assets	$	4,897.8	(3)	$	130.9	$	113.9		$	5,142.6
Capital expenditures (excluding acquisitions)	$	15.9		$	2.7	$	(0.9	)	$	17.7

 ________________

(1)	Corporate consists of interest expense, interest income, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.
(2)	Other income for our Gathering, Processing and Transportation segment includes our equity investment in the Texas Express NGL system.
(3)	Totals assets for our Gathering, Processing and Transportation segment includes $368.0 million for our equity investment in the Texas Express NGL system.

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	As of and for the three months ended March 31, 2015
	Gathering, Processing and Transportation			Logistics and Marketing			Corporate (1)			Total
	(in millions)
Total revenue	$	385.4		$	765.3		$	-		$	1,150.7
Less: Intersegment revenue		267.3			9.9			-			277.2
Operating revenue		118.1			755.4			-			873.5
Cost of natural gas and natural gas liquids		21.9			757.2			-			779.1
Segment gross margin		96.2			(1.8	)		-			94.4
Operating and maintenance		50.8			12.6			-			63.4
General and administrative		16.3			3.0			1.7			21.0
Depreciation and amortization		36.7			1.6			-			38.3
		103.8			17.2			1.7			122.7
Operating loss		(7.6	)		(19.0	)		(1.7	)		(28.3	)
Other income		5.7	(2)		-			-			5.7
Interest expense, net		-			-			(6.7	)		(6.7	)
Loss before income tax expense		(1.9	)		(19.0	)		(8.4	)		(29.3	)
Income tax expense		-			-			(0.8	)		(0.8	)
Net loss		(1.9	)		(19.0	)		(9.2	)		(30.1	)
Less: Net loss attributable to noncontrolling interest		-			-			(10.1	)		(10.1	)
Net income (loss) attributable to general and limited partner
ownership interests in Midcoast Energy Partners, L.P.	$	(1.9	)	$	(19.0	)	$	0.9		$	(20.0	)
Total assets	$	5,226.2	(3)	$	236.9		$	116.5		$	5,579.6
Capital expenditures (excluding acquisitions)	$	54.8		$	0.7		$	0.1		$	55.6

  ________________

(1)	Corporate consists of interest expense, interest income, noncontrolling interest and other costs such as income taxes, which are not allocated to the business segments.
(2)	Other income for our Gathering, Processing and Transportation segment includes our equity investment in the Texas Express NGL system.
(3)	Totals assets for our Gathering, Processing and Transportation segment includes $380.1 million for our equity investment in the Texas Express NGL system.

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