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(Exact name of registrant as specified
in its charter)
iDelaware
i20-3265614
(State
or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
i9 Greenway Plaza, Suite 2800
iHouston,
iTexas
i77046
i(866)
i913-2122
(Address
and Telephone Number of Registrant’s Principal Executive Office)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
NONE
NONE
NONE
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYesý No o
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYesý No o
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o Accelerated Filer o iNon-Accelerated Filerý Smaller Reporting Company i☐
Emerging Growth Company i☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐ No ý
Boardwalk Pipeline Partners, LP meets the conditions set forth in General Instructions H(1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.
The
accompanying notes are an integral part of these condensed consolidated financial statements.
8
BOARDWALK PIPELINE PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: iBasis
of Presentation
Boardwalk Pipeline Partners, LP (the Company) is a Delaware limited partnership formed in 2005 to own and operate the business conducted by its primary subsidiary Boardwalk Pipelines, LP (Boardwalk Pipelines) and its operating subsidiaries, which consists of integrated pipeline and storage systems for natural gas and natural gas liquids and other hydrocarbons (herein referred to together as NGLs). As of March 31, 2023, Boardwalk Pipelines Holding Corp. (BPHC), a wholly owned subsidiary of Loews Corporation (Loews), owned directly or indirectly, i100%
of the Company's capital.
iThe accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted
in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of March 31, 2023, and December 31, 2022, and its results of operations, comprehensive income and changes in cash flow and partners' capital for the three months ended March 31, 2023 and 2022, in each case in accordance with GAAP. Reference is made to the Notes to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Annual Report on Form 10-K), which should be read in conjunction with these unaudited condensed consolidated financial statements. The accounting policies described in Note 2 of Part II, Item 8. of the Company's 2022 Annual Report on Form 10-K are the same policies that were used in preparing the accompanying unaudited condensed consolidated financial statements. Net income for interim periods may not necessarily be indicative of results for the full year.
Note 2: iRevenues
The Company operates in ione reportable segment and contracts directly with end-use customers, including electric power generators, local distribution companies, industrial users and exporters of liquefied natural gas, with producers and marketers of natural gas, and with interstate and intrastate pipelines,
who, in turn, provide transportation and storage services for end-users. iThe following table presents the Company's revenues disaggregated by type of service (in millions):
(1)Revenues
earned from contracts with minimum volume commitments (MVCs) are included in firm service given the stand-ready nature of the performance obligation and the guaranteed nature of the fees over the contract term.
(2)Other operating revenues include certain revenues earned from operating leases, pipeline management fees and other activities that are not considered central and ongoing major business operations of the Company and do not represent revenues earned from contracts with customers.
As of March 31, 2023, and December 31, 2022, the Company had receivables recorded in Trade Receivables, net from contracts with customers of $i134.2 million and
$i148.4 million, contract assets recorded in Other Assets from contracts with a customer of $i3.5
million and $i3.3 million, and contract liabilities recorded in Other Current Liabilities (current portion) and Other Liabilities (noncurrent portion) from contracts with customers of $i26.1
million and $i23.0 million.
As of March 31, 2023, contract liabilities are expected to be recognized through 2040. iSignificant
changes in the contract liability balances during the three months ended March 31, 2023, were as follows (in millions):
(1)As of March 31, 2023, and December 31, 2022, $i6.6
million and $i3.6 million were recorded in Other Current Liabilities (current portion), and $i19.5
million and $i19.4 million were recorded in Other Liabilities (noncurrent portion).
Significant changes in the contract liability balances during the three months ended March 31, 2022, were as follows (in millions):
(1)As
of March 31, 2022, and December 31, 2021, $i4.0 million and $i3.6
million were recorded in Other Current Liabilities (current portion), and $i16.4 million and $i15.6
million were recorded in Other Liabilities (noncurrent portion).
Performance Obligations
iThe following table includes estimated operating revenues expected to be recognized in the future related to agreements that contain performance obligations that were unsatisfied as
of March 31, 2023. The amounts presented primarily consist of fixed fees or MVCs which are typically recognized over time as the performance obligation is satisfied, in accordance with firm service contracts. For the Company's customers that are charged maximum tariff rates related to its Federal Energy Regulatory Commission (FERC) regulated operating subsidiaries, the amounts below reflect the current tariff rate for such services for the term of the agreements; however, the tariff rates may be subject to future adjustment. The Company has elected to exclude the following
from the table: (a) unsatisfied performance obligations from usage fees associated with its firm services because of the stand-ready nature of such services; and (b) consideration in contracts that is recognized in revenue as invoiced, such as for interruptible services. The estimated revenues reflected in the table may include estimated revenues that are anticipated under executed precedent transportation agreements for projects that are subject to regulatory approvals.
(1)The
2023 period is for the remaining nine months ending iDecember 31, 2023. For the three months ended March 31, 2023, the Company recognized $i351.0
million of fixed fee revenues for the fulfillment of performance obligations.
Note 3: iGas and Liquids Stored Underground and Gas and NGLs Receivables and Payables
iThe
operating subsidiaries of the Company provide storage services whereby they store natural gas or NGLs on behalf of customers and also periodically hold customer gas under parking and lending (PAL) services. Since the customers retain title to the gas held by the Company in providing these services, the Company does not record the related gas on its Condensed Consolidated Balance Sheets.
The operating subsidiaries of the
Company also periodically lend gas to customers under PAL and certain firm services, and gas or NGLs may be owed to the operating subsidiaries as a result of transportation imbalances. As of March 31, 2023, the amount of gas owed to the Company's operating subsidiaries due to gas imbalances and gas loaned under PAL and certain firm service agreements was approximately i23.3
trillion British thermal units (TBtu). Assuming an average market price during March 2023 of $i2.25 per million British thermal unit (MMBtu), the market value of that gas was approximately $i52.4 million. As of
December 31, 2022, the amount of gas owed to the Company's operating subsidiaries due to gas imbalances and gas loaned under PAL and certain firm service agreements was approximately i13.3 TBtu. Assuming an average market price during December 2022 of $i5.33
per MMBtu, the market value of that gas was approximately $i70.9 million. As of March 31, 2023, and December 31, 2022, there were iino/
outstanding NGL imbalances owed to the Company's operating subsidiaries. If any significant customer should have credit or financial problems resulting in a delay or failure to pay for services provided or repay the gas owed to the operating subsidiaries, it could have a material adverse effect on the Company's financial condition, results of operations and cash flows.
Note 4: iFair
Value Measurements
Financial Assets and Liabilities
The methods and assumptions used in estimating the fair value amounts included in the disclosures for financial assets and liabilities are consistent with those disclosed in the Company's 2022 Annual Report on Form 10-K.
The Company had equity securities recorded at fair value on a recurring basis in Other Current Assets of $i2.3
millionand $i3.0 million as of March 31, 2023, and December 31, 2022, which were considered Level 1 investments. The Company had iino/
liabilities recorded at fair value on a recurring basis as of March 31, 2023, and December 31, 2022.
11
i
The carrying amounts and estimated fair values of the Company's financial assets and liabilities which
were not recorded at fair value on the Condensed Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022, were as follows (in millions):
(1)The
carrying amount of long-term debt excluded a $i4.3 million long-term finance lease obligation and $i4.8 million of unamortized debt issuance costs.
(1)The
carrying amount of long-term debt excluded a $i4.5 million long-term finance lease obligation and $i5.1 million of unamortized debt issuance costs.
/
Note
5: iProperty, Plant and Equipment
In September 2022, Gulf South Pipeline Company, LLC (Gulf South), a wholly owned subsidiary of the Company, submitted an application with the FERC seeking authorization to reclassify i13.54
billion cubic feet (Bcf) of working gas capacity as additional base gas. The reclassification was necessary to reflect changing operational practices and was supported, among other things, by an operational study of certain storage assets. In the first quarter 2023, Gulf South had accumulated the required natural gas of approximately i13.54 Bcf to achieve the increased base gas capacity requirements and the FERC comment period closed with no protests or subject to any comments. As of March 31,
2023, as a result of the operational need for the base gas, Gulf South reclassified the approximately i13.54 Bcf of natural gas at its carrying value of $i47.8 million
to Property, Plant and Equipment, of which $i40.9 million of the natural gas had been recorded in Gas Stored Underground within Current Assets, and $i6.9 million
had been recorded in Gas Stored Underground within Other Assets. The application was approved by the FERC in April 2023.
Note 6: iCommitments and Contingencies
Legal Proceedings and Settlements
The Company and its subsidiaries are parties to various legal actions arising in the normal course of business. Management believes the disposition of these outstanding legal actions, including the legal actions identified below, will not have a material impact on the Company's financial condition, results of operations or cash flows.
Mishal and Berger Litigation
On
May 25, 2018, plaintiffs Tsemach Mishal and Paul Berger (on behalf of themselves and the purported class, Plaintiffs) initiated a purported class action in the Court of Chancery of the State of Delaware (the Trial Court) against the following defendants: the Company, Boardwalk GP, LP (Boardwalk GP), Boardwalk GP, LLC and BPHC (together, Defendants), regarding the potential exercise by Boardwalk GP of its right to purchase the issued and outstanding common units of the Company not already owned by Boardwalk GP or its affiliates (Purchase Right).
12
On
June 25, 2018, Plaintiffs and Defendants entered into a Stipulation and Agreement of Compromise and Settlement, subject to the approval of the Trial Court (the Proposed Settlement). Under the terms of the Proposed Settlement, the lawsuit would be dismissed, and related claims against the Defendants would be released by the Plaintiffs, if BPHC, the sole member of the general partner of Boardwalk GP, elected to cause Boardwalk GP to exercise its Purchase Right for a cash purchase price, as determined by the Company's Third Amended and Restated Agreement of Limited Partnership, as amended (the Limited Partnership Agreement), and gave notice of such election as provided in the Limited Partnership Agreement within a period specified by the Proposed Settlement. On June 29, 2018, Boardwalk
GP elected to exercise the Purchase Right and gave notice within the period specified by the Proposed Settlement. On July 18, 2018, Boardwalk GP completed the purchase of the Company's common units pursuant to the Purchase Right.
On September 28, 2018, the Trial Court denied approval of the Proposed Settlement. On February 11, 2019, a substitute verified class action complaint was filed in this proceeding, which, among other things, added Loews as a Defendant. The Defendants filed a motion to dismiss, which was heard by the Trial Court in July 2019. In October 2019, the Trial Court ruled on the motion and granted a partial dismissal, with certain aspects
of the case proceeding to trial. A trial was held the week of February 22, 2021, and post-trial oral arguments were held on July 14, 2021.
On November 12, 2021, the Trial Court issued a ruling in the case. The Trial Court held that Boardwalk GP breached the Limited Partnership Agreement and found that Boardwalk GP is liable to the Plaintiffs for approximately $i690.0 million
in damages, plus pre-judgment interest (approximately $i166.0 million), post-judgment interest and attorneys' fees. The Trial Court's ruling and damages award was against Boardwalk GP, and not the Company or its subsidiaries.
The
Defendants believed that the Trial Court ruling included factual and legal errors. Therefore, on January 3, 2022, the Defendants appealed the Trial Court's ruling to the Supreme Court of the State of Delaware (the Supreme Court). On January 17, 2022, the Plaintiffs filed a cross-appeal to the Supreme Court contesting the calculation of damages by the Trial Court. Oral arguments were held on September 14, 2022, and on December 19, 2022, the Supreme Court reversed the Trial Court's ruling and remanded the case to the Trial Court for further proceedings related to claims not decided by the Trial Court's ruling. Briefing by the parties at the Trial Court on the remanded issues is scheduled to be completed in July 2023.
City
of New Orleans Litigation
Gulf South, along with several other energy companies operating in Southern Louisiana, has been named as a defendant in a petition for damages and injunctive relief in state district court for Orleans Parish, Louisiana, (Case No. 19-3466) by the City of New Orleans. The case was filed on March 29, 2019. The lawsuit claims include, among other things, negligence, strict liability, nuisance and breach of contract, alleging that the defendants' drilling, dredging, pipeline and industrial operations since the 1930s have caused increased storm surge risk, increased flood protection costs and unspecified damages to the City of New Orleans. In October 2020, this case was stayed pending the outcome of a consolidated appeal to the
Fifth Circuit Court of Appeals in a similar case. On August 5, 2021, the Fifth Circuit Court of Appeals ruled in favor of the oil-and-gas defendants in that consolidated appeal, finding that the two cases being appealed should be re-examined in federal district court since they involve operations that were federally overseen at the time. The ruling reverses a previous decision that allowed the cases to be heard in state court, which the plaintiffs had sought. As a result of the Fifth Circuit Court of Appeals' decision, it is anticipated that this case will be reviewed in federal district court to determine whether the case should be heard in that court.
Gulf South and Texas Gas Transmission, LLC (Texas Gas) have been named as defendants in several suits in the State of Louisiana that are similar in nature to the City of New Orleans Litigation
discussed above. These cases were filed in Louisiana state courts and are advancing to discovery.
Commitments for Construction
The Company's future capital commitments are comprised of binding commitments under purchase orders for materials ordered but not received and firm commitments under binding construction service agreements. As of March 31, 2023, the commitments were approximately $i122.5
million, all of which are expected to be settled within the next twelve months.
13
Note 7: iFinancing
Notes and Debentures
As
of March 31, 2023, and December 31, 2022, the Company had principal amounts of notes and debentures outstanding of $i3.3 billion, with a weighted-average interest rate of i4.84%.
The indentures governing the notes and debentures have restrictive covenants which provide that, with certain exceptions, neither the Company nor any of its subsidiaries may create, assume or suffer to exist any lien upon any property to secure any indebtedness unless the debentures and notes shall be equally and ratably secured. All of the Company's debt obligations are unsecured. iAs
of March 31, 2023, Boardwalk Pipelines and its operating subsidiaries were in compliance with their debt covenants.
Defined Benefit Retirement Plans (Retirement Plans) and Postretirement Benefits Other Than Pension (PBOP)
i
Components
of net periodic benefit cost for both the Retirement Plans and PBOP for the three months ended March 31, 2023 and 2022, were as follows (in millions):
During
the three months ended March 31, 2023, the Company made $i0.8 million in contributions to the defined benefit pension plan and expects to fund an additional $i2.2
million in the remainder of 2023.
Defined Contribution Plan
Texas Gas employees hired on or after November 1, 2006, and all other employees of the Company are provided retirement benefits under a defined contribution plan, which also provides 401(k) plan benefits to its participants. Costs related to the Company's defined contribution plan were $i3.3
million and $i3.1 million for the three months ended March 31, 2023 and 2022.
14
Note
9: iRelated Party Transactions
Loews provides a variety of corporate services to the Company under service agreements, including risk management, finance and accounting, legal, tax and corporate development services, and charges the Company for allocated overheads. The
Company incurred charges related to these services of $i1.1 million and $i0.9
million for the three months ended March 31, 2023 and 2022, which were recorded in Administrative and general on the Condensed Consolidated Statements of Income.
Note 10: iiSupplemental
Disclosure of Cash Flow Information /(in millions):
Accounts payable and property, plant and equipment
i29.9
i25.6
15
Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our accompanying interim condensed consolidated financial statements and related notes, included elsewhere in this report, and prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and our consolidated financial statements, related notes, Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Annual Report on Form 10-K).
We operate in the midstream portion of the
natural gas and natural gas liquids and other hydrocarbons industry, providing transportation and storage for those commodities.
Results of Operations
Note 2 in Part II, Item 8. of our 2022 Annual Report on Form 10-K contains a summary of our revenue contract types and the related revenue recognition policies. A significant portion of our revenues are fee-based, being derived from capacity reservation charges under firm agreements with customers, which do not vary significantly period to period, but are impacted by longer-term trends in our business such as changes in pricing on contract renewals and other factors. Our operating
costs and expenses do not vary significantly based upon the amount of products transported, with the exception of costs recorded in Fuel and transportation expense, which are netted with fuel retained on our Condensed Consolidated Statements of Income. Our operations and maintenance expenses are impacted by our compliance with the requirements of, among other regulations, the Pipeline and Hazardous Materials Safety Administration Mega Rule (Mega Rule) and our efforts to monitor, control and reduce emissions, as further discussed in our 2022 Annual Report on Form 10-K.
We use earnings before interest, income taxes, depreciation and amortization (EBITDA), a non-GAAP measure, as a financial measure to assess our operating and financial performance and return on invested capital. We believe that some investors may find this measure useful in
evaluating our performance.
The following table presents a reconciliation of net income to EBITDA for the three months ended March 31, 2023 and 2022 (in millions):
Our net income for the three months ended March 31, 2023, decreased $6.2 million, or 5%, to $119.0 million compared to $125.2 million for the three months ended March 31, 2022. Our EBITDA for the three months ended March 31, 2023, decreased $4.8 million, or 2%, to $256.3 million as compared to the comparable 2022 period. Our net income and EBITDA decreased primarily due to the factors discussed below.
Operating revenues for the three months ended March 31, 2023,
increased $16.4 million, or 4%, to $394.3 million, compared to $377.9 million for the three months ended March 31, 2022. Including fuel and transportation expense, operating revenues increased $13.7 million, or 4%. The increase was driven by an increase in our transportation revenues of $19.5 million primarily due to re-contracting at higher rates and recently completed growth projects, as well as a $3.1 million increase in our storage and parking and lending revenues due to favorable market conditions, partially offset by product sales that occurred in 2022.
16
Operating costs and expenses for the three months ended March 31, 2023, increased
$25.0 million, or 12%, to $237.8 million, compared to $212.8 million for the three months ended March 31, 2022. Excluding expenses offset with operating revenues, operating costs and expenses increased $22.3 million, or 11%. Our operating expenses were impacted by the following items:
•increased operating and maintenance expenses of $10.4 million due to increased maintenance projects associated with the requirements of the Mega Rule and higher employee-related and materials and supplies costs; and
•increased administrative and general expenses of $4.8 million due to higher employee-related and outside services costs.
Our depreciation and amortization and interest
were impacted by the following items:
•an increased asset base from recently completed growth projects and a change in the estimated life of certain of our assets which collectively increased our depreciation and amortization expense by $6.6 million; and
•lower interest expense of $3.6 million due to lower average outstanding long-term debt and higher interest income earned from money market funds of $1.7 million.
Liquidity and Capital Resources
We anticipate that our existing capital resources, including our cash on
hand, revolving credit facility and our cash flows from operating activities, will be adequate to fund our operations and capital expenditures for 2023. We also have an effective shelf registration statement on file with the Securities and Exchange Commission (SEC) under which we have $500.0_million of remaining capacity available to publicly issue debt securities, warrants or rights.
Our debt is primarily issued at Boardwalk Pipelines, LP (Boardwalk Pipelines), our wholly owned subsidiary, although we have historically also issued debt at our operating subsidiaries.
As of March 31, 2023, all of the outstanding notes issued by Boardwalk Pipelines (Subsidiary Issuer) and the full amount of the revolving credit facility, were guaranteed by us (Parent Guarantor). The purpose of the guarantees is to help simplify our reporting and capital structure.
We guarantee the amounts borrowed under the revolving credit facility, but those amounts are not subject to the reporting requirements of Rule 13-01 of Regulation S-X. As of March 31, 2023, there were no outstanding borrowings under the revolving credit facility. The following table identifies our principal amounts outstanding for the debt that is subject to the disclosure rules of Rule 13-01 of Regulation S-X (in millions):
Principal amounts guaranteed by Boardwalk Pipeline Partners (1)
$
3,150.0
Principal amounts not guaranteed (2)
100.0
Other (3)
(15.7)
Total
debt and finance lease obligation
$
3,234.3
(1)This represents principal amounts of all outstanding debt at Boardwalk Pipelines subject to the disclosure rules of Rule 13-01 of Regulation S-X (the Guaranteed Notes).
(2)This represents principal amounts of outstanding debt at Texas Gas Transmission, LLC.
(3)This represents the amounts related to a finance lease and unamortized debt discount and issuance costs.
The
Guaranteed Notes are fully and unconditionally guaranteed by the Parent Guarantor on a senior unsecured basis. The guarantees of the Guaranteed Notes rank equally with all of our existing and future senior debt, including our guarantee of indebtedness under our revolving credit facility. The guarantees will be effectively subordinated in right of payment to all of our future secured debt to the extent of the value of the assets securing such debt. There are no restrictions on the Subsidiary Issuer's ability to pay dividends or make loans to the Parent Guarantor. The guarantee obligations will be terminated with respect to any series of notes if that series has been discharged or defeased.
17
Our operating assets, operating liabilities,
operating revenues, expenses and other comprehensive income either exist at or are generated by our operating subsidiaries. The Parent Guarantor and the Subsidiary Issuer have no material assets, liabilities or operations independent of their respective financing activities, including the Guaranteed Notes and advances to and from each other and the operating subsidiaries as a result of the cash management program described in Note 2 of Part II, Item 8. of our 2022 Annual Report on Form 10-K, and their investments in the operating subsidiaries. For these reasons, we meet the criteria in Rule 13-01 of Regulation S-X to omit the summarized financial information from our disclosures.
Capital
Expenditures
Maintenance capital expenditures for the three months ended March 31, 2023 and 2022, were $26.7 million and $18.2 million. Growth capital expenditures for the three months ended March 31, 2023 and 2022, were $59.4 million and $35.2 million. In the first quarter of 2022, we spent $6.7 million on natural gas to be used in our integrated natural gas pipeline system.
Contractual Obligations
Our principal payments associated with our outstanding debt obligations as of March 31,
2023, and December 31, 2022, were $3.3 billion. Refer to Note 7 in Part I, Item 1. of this Quarterly Report on Form 10-Q and Note 11 in Part II, Item 8. of our 2022 Annual Report on Form 10-K for more information on our financing activities and debt obligations.
Changes in cash flow from operating activities
Net cash provided by operating activities increased $4.9 million to $206.0 million for the three months ended March 31, 2023, compared to $201.1 million for the comparable 2022 period, primarily due to changes in net income adjusted for depreciation and amortization and other non-cash operating activities, and the impacts of lower natural gas prices on our imbalance activities.
Changes
in cash flow from investing activities
Net cash used in investing activities increased $23.9 million to $86.0 million for the three months ended March 31, 2023, compared to $62.1 million for the comparable 2022 period. The increase was primarily driven by an increase in capital spending primarily related to growth projects.
Changes in cash flow from financing activities
Cash flow from financing activities changed by $197.6 million to net cash used in financing activities of $0.1 million for the three months ended March 31, 2023, compared to net cash provided by financing activities of $197.5 million for the comparable
2022 period, primarily due to a decrease in long-term debt activities.
Off-Balance Sheet Arrangements
At March 31, 2023, we had no guarantees of off-balance sheet debt to third parties, no debt obligations that contain provisions requiring accelerated payment of the related obligations in the event of specified levels of declines in credit ratings and no other off-balance sheet arrangements.
Critical Accounting Policies
Certain amounts included in or affecting our unaudited condensed
consolidated financial statements and related disclosures must be estimated, requiring us to make certain judgments and assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our condensed consolidated financial statements. We review our estimates and assumptions on an ongoing basis, utilizing historical experience, consultation with third parties and other methods we consider reasonable. Nevertheless, actual results may differ materially from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the periods in which the facts that give rise to the revisions become known.
During
2023, there have been no significant changes to our critical accounting policies, judgments or estimates disclosed in our 2022 Annual Report on Form 10-K.
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Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q, as well as some statements in our other filings with the SEC and periodic press releases and some oral statements made by our officials and our subsidiaries during presentations about us, are “forward-looking.” Forward-looking
statements include, without limitation, any statement that may project, indicate or imply future results, events, performance, intentions or achievements, and may contain the words “expect,”“intend,”“plan,”“anticipate,”“estimate,”“believe,”“will likely result” and similar expressions. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible actions by us or our subsidiaries, are also forward-looking statements.
Forward-looking statements are based on current expectations and projections about future events and their potential impact on us. While management believes that these forward-looking statements are reasonable as and
when made, there is no assurance that future events affecting us will be those that we anticipate. All forward-looking statements are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those anticipated or projected. These include, among others, the impacts of legislative and regulatory initiatives, or the implementation thereof, the impacts of climate change, environmental, social and governance matters and pipeline safety requirements and initiatives, the costs of maintaining and ensuring the integrity and reliability of our pipeline systems, our ability to complete projects that we have commenced or will commence, the risk of a failure in computer systems or cybersecurity attack, successful negotiation, consummation and completion of contemplated transactions, projects and agreements, risks and uncertainties related to the impacts of volatility in energy prices
and our exposure to credit risk relating to default or bankruptcy by our customers. Developments in any of these areas could cause our results to differ materially from results that have been or may be anticipated or projected. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.
Refer to Part I, Item 1A. of our 2022 Annual Report on Form 10-K for additional risks and uncertainties regarding our forward-looking statements.
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Item
3. Quantitative and Qualitative Disclosures About Market Risk
Refer to Part II, Item 7A. of our 2022 Annual Report on Form 10-K for discussion of our market risk.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (Exchange Act), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer,
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to allow timely decisions regarding required disclosure and to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2023, at the
reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2023, that have materially affected or that are reasonably likely to materially affect our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item
1. Legal Proceedings
For a discussion of certain of our current legal proceedings, please see Note 6 in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously discussed in Part I, Item 1A. of our 2022 Annual Report on Form 10-K.
Item 6. Exhibits
The
following documents are filed or furnished as exhibits to this report:
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.