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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.
9
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 June 30, 2022, 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 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 June 30, 2022, and December 31, 2021, its results of operations, comprehensive income and changes in partners' capital for the three and six months ended June 30, 2022 and 2021, and its changes in cash flows for the six months ended June 30, 2022 and 2021.
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, 2021 (2021 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 2021 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 local distribution companies, electric power generators, exporters of liquefied natural gas and industrial users, 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 for the three and six months ended June 30, 2022 and 2021 (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 June 30, 2022, and December 31, 2021, the Company had receivables recorded in Trade Receivables, net from contracts with customers of $i105.9 million and
$i126.2 million, contract assets recorded in Other Assets from contracts with a customer of $i2.7
million and $i2.3 million, and contract liabilities recorded in Other Current Liabilities (current portion) and Other Liabilities (noncurrent portion) from contracts with customers of $i20.9
million and $i19.2 million.
As of June 30, 2022, contract liabilities are expected to be recognized through 2040. iSignificant
changes in the contract liability balances during the six months ended June 30, 2022, are as follows (in millions):
(1)As of June 30, 2022, and December 31, 2021, $i3.5
million and $i3.6 million were recorded in Other Current Liabilities (current portion), and $ii17.4/
million and $i15.6 million were recorded in Other Liabilities (noncurrent portion).
Significant changes in the contract liability balances during the six months ended June 30, 2021, are as follows (in millions):
(1)As
of June 30, 2021, and December 31, 2020, $i4.6 million and $i4.9
million were recorded in Other Current Liabilities (current portion) and $i13.9 million and $i12.3
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 June 30, 2022. 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 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
2022 period is for the remaining six months ending iDecember 31, 2022. For the six months ended June 30, 2022, the Company recognized $i607.9
million of fixed fee revenues for the fulfillment of performance obligations.
i
Note 3: Gas 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 June 30, 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 i15.1
trillion British thermal units (TBtu). Assuming an average market price during June 2022 of $i7.35 per million British thermal unit (MMBtu), the market value of that gas was approximately $i111.0 million. As
of December 31, 2021, 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 i7.4 TBtu. Assuming an average market price during December 2021 of $i3.59
per MMBtu, the market value of that gas was approximately $i26.6 million. As of June 30, 2022, and December 31, 2021, 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 or 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 2021 Annual Report on Form 10-K.
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 June 30, 2022, and December 31, 2021, were as follows (in millions):
(1)The
carrying amount of long-term debt excludes a $i5.3 million long-term finance lease obligation and $i4.8 million of unamortized debt issuance costs.
Note
5: 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).
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 believe that the Trial Court ruling includes 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 have been set for this case on September
14, 2022.
13
City of New Orleans Litigation
Gulf South Pipeline Company, LLC (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 5th Circuit Court of Appeals in a similar case. On August 5, 2021, the 5th 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 5th 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.
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 June 30, 2022, the commitments were approximately $i125.2
million, all of which are expected to be settled within the next twelve months.
Note 6: iFinancing
Notes and Debentures
As of June 30, 2022, and December 31,
2021, the Company had principal amounts of notes and debentures outstanding of $i3.6 billion and $i3.4
billion, with weighted-average interest rates of i4.72% and i4.84%, of which $i300.0
million of the aggregate principal amount was recorded in Current Liabilities.
iFor the six months ended June 30, 2022, the Company completed the following debt issuance (in millions, except interest rates):
(1)The net proceeds of this offering were used to retire the outstanding $i300.0 million aggregate principal amount of Gulf South i4.00%
notes due June 2022 on March 21, 2022, to fund growth capital expenditures and for general partnership purposes.
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 June 30, 2022, Boardwalk Pipelines and its operating subsidiaries were in compliance with their debt covenants.
Revolving Credit Facility
As of June 30, 2022, and December 31, 2021, the
Company had iino/ outstanding borrowings and all of the $iii1.0//
billion available borrowing capacity under its revolving credit facility. iThe Company and its subsidiaries were in compliance with all covenant requirements under its revolving credit facility as of June 30, 2022.
On June 30, 2022, the
Company entered into Amendment No. 4 to Third Amended and Restated Revolving Credit
14
Agreement, which amended the Third Amended and Restated Revolving Credit Agreement, dated May 26, 2015, to (i) extend the maturity date from May 27, 2026, to May 27, 2027, while preserving the two one-year extensions that can be exercised at the Company's election, and (ii) complete a full transition to interest rates based on the term Secured Overnight Financing Rate (term SOFR) for various interest periods plus a flat i10
basis point credit spread adjustment across all available interest periods.
Note 7: iEmployee Benefits
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 June 30, 2022 and 2021, were as follows (in millions):
Components
of net periodic benefit cost for both the Retirement Plans and PBOP for the six months ended June 30, 2022 and 2021, were as follows (in millions):
During
the six months ended June 30, 2022, the Company made $i1.9 million in contributions to the defined benefit pension plan and expects to fund an additional $i1.1
million in the remainder of 2022.
Defined Contribution Plan
Texas Gas Transmission, LLC 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 $ii3.1/
million for each of the three months ended June 30, 2022 and 2021, and $i6.1 million and $i6.2
million for the six months ended June 30, 2022 and 2021.
15
Note 8: iRelated
Party Transactions
Loews provides a variety of corporate services to the Company under service agreements, including information technology, tax, risk management, internal audit and corporate development services and charges the Company for allocated overheads. The Company incurred charges related to these services of $i0.9
million and $i1.3 million for the three months ended June 30, 2022 and 2021, and $i1.8
million and $i2.7 million for the six months ended June 30, 2022 and 2021, which were recorded in Administrative and General on the Condensed Consolidated Statements of Income.
Note
9: iiiSupplemental
Disclosure of Cash Flow Information //(in millions):
Accounts payable and property, plant and equipment
i32.3
i43.4
16
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, 2021 (2021 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 2021 Annual Report on Form 10-K contains a summary of our revenues 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.
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.
Our net income for the six months ended June 30,
2022, decreased $4.3 million, or 2%, to $180.0 million compared to $184.3 million for the six months ended June 30, 2021. Our EBITDA for the six months ended June 30, 2022, increased $7.6 million to $456.2 million as compared to the comparable 2021 period. Our net income and EBITDA changed primarily due to the factors discussed below.
Operating revenues for the six months ended June 30, 2022, increased $20.9 million, or 3%, to $700.8 million, compared to $679.9 million for the six months ended June 30, 2021. Including the items in fuel and transportation expense, operating revenues increased $21.0 million, or 3%. The increase was driven primarily by an increase in our transportation revenues
of $16.4 million primarily due to recently completed growth projects and an increase in our storage and parking and lending revenues of $5.7 million due to favorable market conditions.
Operating costs and expenses for the six months ended June 30, 2022, increased $20.7 million, or 5%, to $440.3 million, compared to $419.6 million for the six months ended June 30, 2021. Excluding items offset with operating revenues, operating costs and expenses increased $20.8 million, or 5%, primarily due to increased costs from maintenance projects associated with the requirements of the Pipeline and Hazardous Materials Safety Administration Mega Rule, an increased asset base from recently completed growth projects and a change in the estimated life of certain of our assets.
Total
other deductions for the six months ended June 30, 2022, increased $4.4 million, or 6%, to $80.1 million compared to $75.7 million for the six months ended June 30, 2021, primarily due to higher interest expense from higher average outstanding long-term debt and higher pension costs.
17
Non-GAAP Reconciliation of Net Income to EBITDA
The following table presents a reconciliation of net income to EBITDA for the six months ended June 30, 2022 and 2021 (in millions):
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 2022 and to retire $300.0 million of aggregate principal amount of Boardwalk Pipelines, LP (Boardwalk Pipelines) 3.375% notes due February 2023, which has been classified as Current Liabilities. We also have an effective shelf registration statement on file with the Securities and Exchange Commission (SEC) under which we may publicly issue $1.0 billion of debt securities, warrants or rights from time to time. In February 2022, we issued $500.0 million aggregate principal amount of Boardwalk Pipelines 3.60% notes due September 2032, which utilized $500.0 million of capacity under our shelf registration statement. The net proceeds from this offering
were used to retire $300.0 million of Gulf South Pipeline Company, LLC 4.00% notes due June 2022 on March 21, 2022, to fund growth capital expenditures and for general partnership purposes. In June 2022, our revolving credit facility was amended to, among other things, extend the maturity date by one year to May 27, 2027. Refer to Note 6 in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information.
Our debt is primarily issued at Boardwalk Pipelines, our wholly owned subsidiary, although we have historically also issued debt at our operating subsidiaries.
As of June 30, 2022, all of the outstanding notes issued by Boardwalk Pipelines (Subsidiary Issuer) and the full amount of the revolving credit facility, are 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 June 30, 2022, there were no outstanding borrowings under the revolving credit facility. The below 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)
$
3,450.0
Principal amounts not guaranteed (2)
100.0
Other (3)
(18.4)
Total
debt and finance lease obligation
$
3,531.6
(1)This represents principal amounts of all outstanding debt, of which $300.0 million of the aggregate principal amount was classified as Current Liabilities, 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)As
of June 30, 2022, this represents the amounts related to a finance lease and unamortized debt discount and issuance costs.
18
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.
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 2021 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 six months ended June 30, 2022 and 2021, were $38.9 million and $52.2 million. Growth capital expenditures were $76.3 million and $86.2 million for the six months ended June 30, 2022 and 2021. During the six months ended June 30, 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 June 30, 2022, and December 31, 2021, were $3.6 billion and $3.4 billion. Refer to Note 6 in Part I, Item 1. of this Quarterly Report on Form 10-Q and Note 11 in Part II, Item 8. of our 2021 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 $35.0 million to $393.1 million for the six months ended June 30, 2022, compared to $358.1 million
for the comparable 2021 period, primarily due to the timing of receivables and prepaids.
Changes in cash flow from investing activities
Net cash used in investing activities decreased $16.2 million to $123.6 million for the six months ended June 30, 2022, compared to $139.8 million for the comparable 2021 period. The decrease was primarily driven by a decrease in capital spending primarily related to growth projects.
Changes in cash flow from financing activities
Net cash provided by financing activities increased $339.3 million to $197.0 million for the six months ended June 30,
2022, compared to net cash used in financing activities of $142.3 million for the comparable 2021 period, primarily from the net proceeds received from the issuances of long-term debt.
Off-Balance Sheet Arrangements
At June 30, 2022, 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 judgments affect the reported amounts for assets, liabilities, revenues and expenses and our disclosure of contingent assets and liabilities in our financial statements. We evaluate these estimates and judgments on an ongoing basis, utilizing historical experience, consultation with third parties and other methods we consider reasonable. Nevertheless, actual results may differ significantly
19
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 2022, there have been no significant changes to our critical accounting policies, judgments or estimates disclosed in our 2021 Annual Report on Form 10-K.
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, 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 our 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 2021 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 2021 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 June 30, 2022, 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 June 30, 2022, 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 5 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 2021 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.
