Company Quick10K Filing
Panhandle Eastern Pipe Line
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-02-21
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-07
10-Q 2014-03-31 Filed 2014-05-15
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-01
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-24
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-02-25
10-Q 2010-09-30 Filed 2010-11-04
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-01
8-K 2020-08-05 Regulation FD, Exhibits
8-K 2020-05-11
8-K 2020-02-19
8-K 2019-11-06
8-K 2019-08-07
8-K 2019-07-02
8-K 2019-05-08
8-K 2019-02-20
8-K 2018-11-07
8-K 2018-08-08
8-K 2018-05-09
8-K 2018-02-21

PEPL 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 pepl06-30x20ex311.htm
EX-31.2 pepl06-30x20ex312.htm
EX-32.1 pepl06-30x20ex321.htm
EX-32.2 pepl06-30x20ex322.htm

Panhandle Eastern Pipe Line Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
0.50.2-0.0-0.3-0.5-0.82014201620182020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-2921
PANHANDLE EASTERN PIPE LINE COMPANY, LP
(Exact name of registrant as specified in its charter)
Delaware
44-0382470
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
8111 Westchester Drive, Suite 600, Dallas, Texas 75225
(Address of principal executive offices) (zip code)
(214) 981-0700
(Registrant’s telephone number, including area code)
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. Yes x No ¨
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).  Yes x  No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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
¨
 
Accelerated filer
 
 
 
 
Non-accelerated filer
ý
 
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No x
Panhandle Eastern Pipe Line Company, LP meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.



FORM 10-Q

PANHANDLE EASTERN PIPE LINE COMPANY, LP
TABLE OF CONTENTS

i


Forward-Looking Statements
Certain matters discussed in this report, excluding historical information, as well as some statements by Panhandle Eastern Pipe Line Company, LP and its subsidiaries (“PEPL” or the “Company”) in periodic press releases and some oral statements of Panhandle officials during presentations about the Company, include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “estimate,” “intend,” “continue,” “believe,” “may,” “will” or similar expressions help identify forward-looking statements. Although the Company believes such forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, no assurance can be given that such assumptions, expectations, or projections will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Company’s actual results may vary materially from those anticipated, projected, forecasted, estimated or expressed in forward-looking statements since many of the factors that determine these results are subject to uncertainties and risks that are difficult to predict and beyond management’s control. For additional discussion of risks, uncertainties and assumptions, see “Part I — Item 1A. Risk Factors” in the Company’s Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 21, 2020 and “Part II – Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q.
Definitions
The following is a list of certain acronyms and terms used throughout this document:
 
ET
 
Energy Transfer LP, the parent company of ETO
 
 
 
 
 
ETO
 
Energy Transfer Operating, L.P.
 
 
 
 
 
Exchange Act
 
Securities Exchange Act of 1934
 
 
 
 
 
FERC
 
Federal Energy Regulatory Commission
 
 
 
 
 
GAAP
 
Accounting principles generally accepted in the United States of America
 
 
 
 
 
PCBs
 
Polychlorinated biphenyls
 
 
 
 
 
Sea Robin
 
Sea Robin Pipeline Company, LLC
 
 
 
 
 
SEC
 
United States Securities and Exchange Commission
 
 
 
 
 
Southwest Gas
 
Pan Gas Storage LLC (d.b.a. Southwest Gas)
 
 
 
 
 
TBtu
 
Trillion British thermal units
 
 
 
 
 
Trunkline
 
Trunkline Gas Company, LLC

ii


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
PANHANDLE EASTERN PIPE LINE COMPANY, LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
 
June 30,
2020
 
December 31,
2019
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$

 
$

Accounts receivable, net
38

 
45

Accounts receivable from related companies
8

 
9

Exchanges receivable
4

 
9

Inventories
40

 
61

Other current assets
3

 
7

Total current assets
93

 
131

 
 
 
 
Property, plant and equipment
3,312

 
3,281

Accumulated depreciation
(657
)
 
(607
)
 
2,655

 
2,674

 
 
 
 
Operating lease right-of-use assets
5

 
5

Other non-current assets, net
158

 
159

Total assets
$
2,911

 
$
2,969


The accompanying notes are an integral part of these consolidated financial statements.
1


PANHANDLE EASTERN PIPE LINE COMPANY, LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
 
June 30,
2020
 
December 31,
2019
LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3

 
$
11

Accounts payable to related companies
24

 
34

Exchanges payable
26

 
47

Other current liabilities
51

 
70

Total current liabilities
104

 
162

 
 
 
 
Long-term debt, less current maturities
246

 
247

Note payable to related company
631

 
732

Non-current operating lease liabilities
5

 
5

Other non-current liabilities
227

 
221

Commitments and contingencies


 


 
 
 
 
Partners’ capital:
 
 
 
Partners’ capital
1,713

 
1,626

Accumulated other comprehensive loss
(15
)
 
(24
)
Total partners’ capital
1,698

 
1,602

Total liabilities and partners’ capital
$
2,911

 
$
2,969












The accompanying notes are an integral part of these consolidated financial statements.
2


PANHANDLE EASTERN PIPE LINE COMPANY, LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in millions)
(unaudited)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
OPERATING REVENUES:
 
 
 
 
 
 
 
Transportation and storage of natural gas
$
122

 
$
133

 
$
261

 
$
285

Other
4

 
6

 
9

 
12

Total operating revenues
126

 
139

 
270

 
297

OPERATING EXPENSES:
 
 
 
 
 
 
 
Operating and maintenance
39

 
49

 
89

 
96

General and administrative
9

 
8

 
19

 
14

Depreciation and amortization
26

 
30

 
52

 
59

Total operating expenses
74

 
87

 
160

 
169

OPERATING INCOME
52

 
52

 
110

 
128

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Interest expense, net
(3
)
 
(5
)
 
(7
)
 
(10
)
Interest expense — related company
(8
)
 
(5
)
 
(17
)
 
(9
)
Other, net
3

 

 
(4
)
 

INCOME BEFORE INCOME TAX EXPENSE
44

 
42

 
82

 
109

Income tax expense (benefit)
1

 
11

 
(1
)
 
28

NET INCOME
43

 
31

 
83

 
81

 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE INCOME, NET OF TAX
 
 
 
 
 
 
 
Actuarial gain relating to postretirement benefit plans
4

 
3

 
9

 
9

 


 


 


 


COMPREHENSIVE INCOME
$
47

 
$
34

 
$
92

 
$
90


The accompanying notes are an integral part of these consolidated financial statements.
3


PANHANDLE EASTERN PIPE LINE COMPANY, LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(Dollars in millions)
(unaudited)
 
Partners’ Capital
 
Accumulated Other
Comprehensive Loss
 
Total
Balance, December 31, 2019
$
1,626

 
$
(24
)
 
$
1,602

Net income
40

 

 
40

Other comprehensive income, net of tax

 
5

 
5

Other
4

 

 
4

Balance, March 31, 2020
1,670

 
(19
)
 
1,651

Net income
43

 

 
43

Other comprehensive income, net of tax

 
4

 
4

Balance, June 30, 2020
$
1,713

 
$
(15
)
 
$
1,698

 
Partners’ Capital
 
Accumulated Other
Comprehensive Loss
 
Total
Balance, December 31, 2018
$
1,409

 
$
(47
)
 
$
1,362

Net income
50

 

 
50

Other comprehensive income, net of tax

 
6

 
6

Balance, March 31, 2019
1,459

 
(41
)
 
1,418

Net income
31

 

 
31

Other comprehensive income, net of tax

 
3

 
3

Other
1

 

 
1

Balance, June 30, 2019
$
1,491

 
$
(38
)
 
$
1,453


The accompanying notes are an integral part of these consolidated financial statements.
4


PANHANDLE EASTERN PIPE LINE COMPANY, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(unaudited)
 
Six Months Ended
June 30,
 
2020
 
2019
OPERATING ACTIVITIES:
 
 
 
Net income
$
83

 
$
81

Reconciliation of net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
52

 
59

Deferred income taxes
(1
)
 
4

Amortization of deferred financing fees
(1
)
 
(3
)
Other non-cash
3

 
7

Changes in operating assets and liabilities

 
(47
)
Net cash flows provided by operating activities
136

 
101

INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(35
)
 
(34
)
Net cash flows used in investing activities
(35
)
 
(34
)
FINANCING ACTIVITIES:
 
 
 
Repayment of long-term debt

 
(150
)
    Note payable issued from related company
128

 
152

    Repayment of note payable from related company
(229
)
 
(87
)
Net cash flows used in financing activities
(101
)
 
(85
)
Net change in cash and cash equivalents

 
(18
)
Cash and cash equivalents, beginning of period

 
20

Cash and cash equivalents, end of period
$

 
$
2

 
 
 
 
SUPPLEMENTAL INFORMATION:
 
 
 
Non-cash activity - Accrued capital expenditures
$
7

 
$
11

Non-cash activity - Settlement of related company payables
$
4

 
$

Cash paid for interest
$
8

 
$
14


The accompanying notes are an integral part of these consolidated financial statements.
5


PANHANDLE EASTERN PIPE LINE COMPANY, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollar amounts are in millions)
(unaudited)
1.
ORGANIZATION AND BASIS OF PRESENTATION
Organization
Panhandle Eastern Pipe Line Company, LP (“PEPL”) and its subsidiaries (collectively, the “Company”) primarily operate interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the Panhandle region of Texas and Oklahoma to major United States markets in the Midwest and Great Lakes regions and natural gas storage assets and are subject to the rules and regulations of the FERC. The Company’s subsidiaries include Trunkline, Sea Robin and Southwest Gas.
Southern Union Panhandle LLC, an indirect wholly-owned subsidiary of ETO, owns a 1% general partnership interest in PEPL, and ETO indirectly owns a 99% limited partnership interest in PEPL.
Basis of Presentation
The unaudited financial information included in this Form 10-Q has been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of the Company’s management, such financial information reflects all adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with GAAP. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.
Use of Estimates
The unaudited consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the consolidated financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates.
2.
RELATED PARTY TRANSACTIONS
Accounts receivable from related companies reflected on the consolidated balance sheets primarily relate to services provided to ETO and other affiliates. Accounts payable to related companies reflected on the consolidated balance sheets related to various services provided by ETO and other affiliates.
The following table provides a summary of the related party activity included in our consolidated statements of operations:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Operating revenues
$
22

 
$
24

 
$
44

 
$
48

Operating and maintenance
2

 
1

 
5

 
2

General and administrative
6

 
5

 
13

 
9

Interest expense — related company
8

 
5

 
17

 
9


As of June 30, 2020 and December 31, 2019, the Company had $631 million and $732 million, respectively, outstanding under a note payable with ETO. The note payable accrues interest monthly at an annual interest rate of 4.92% as of June 30, 2020. The note matures on July 31, 2027.

6


3.
FAIR VALUE MEASURES
The Company had $29 million and $31 million of fair value of available-for-sale securities, included in other non-current assets, as of June 30, 2020 and December 31, 2019, respectively. At June 30, 2020, $19 million in equity securities were valued at Level 1 and $10 million in fixed income securities were valued at Level 2. At December 31, 2019, $20 million in equity securities were valued at Level 1 and $11 million in fixed income securities were valued at Level 2. During the three months ended June 30, 2020 and 2019, the Company recognized $3 million and $1 million in unrealized gains, respectively, on available-for-sale securities. During the six months ended June 30, 2020 and 2019, the Company recognized $2 million in unrealized losses and $3 million in unrealized gains, respectively, on available-for-sale securities, unrealized gains and losses on available-for-sale securities are reflected in other, net in our consolidated statements of operations. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value. Based on the estimated borrowing rates currently available to the Company and its subsidiaries for loans with similar terms and average maturities, the aggregate fair value of the Company’s consolidated debt obligations (excluding related company balances) was $244 million and $247 million at June 30, 2020 and December 31, 2019, respectively. The fair value of the Company’s consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities. The Company did not have any Level 3 instruments measured at fair value at June 30, 2020 or December 31, 2019, and there were no transfers between hierarchy levels during the periods presented.
4.
REGULATORY MATTERS, COMMITMENTS, CONTINGENCIES AND ENVIRONMENTAL LIABILITIES
Contingent Residual Support Agreement with ETO
Under a contingent residual support agreement with ETO and Citrus ETO Finance LLC, the Company provides contingent, residual support to Citrus ETO Finance LLC (on a non-recourse basis to the Company) with respect to Citrus ETO Finance LLC’s obligations to ETO to support the payment of $2 billion in principal amount of senior notes issued by ETO on January 17, 2012.
FERC Proceedings
By order issued January 16, 2019, the FERC initiated a review of Panhandle’s existing rates pursuant to Section 5 of the Natural Gas Act to determine whether the rates currently charged by Panhandle are just and reasonable and set the matter for hearing.  On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the Natural Gas Act.  The Natural Gas Act Section 5 and Section 4 proceedings were consolidated by order dated October 1, 2019.  A hearing in the combined proceedings is scheduled for August 2020, with an initial decision expected in early 2021.
Environmental Matters
The Company’s operations are subject to federal, state and local laws, rules and regulations regarding water quality, hazardous and solid waste management, air quality control and other environmental matters.  These laws, rules and regulations require the Company to conduct its operations in a specified manner and to obtain and comply with a wide variety of environmental regulations, licenses, permits, inspections and other approvals.  Failure to comply with environmental laws, rules and regulations may expose the Company to significant fines, penalties and/or interruptions in operations.  The Company’s environmental policies and procedures are designed to achieve compliance with such applicable laws and regulations.  These evolving laws and regulations and claims for damages to property, employees, other persons and the environment resulting from current or past operations may result in significant expenditures and liabilities in the future.  The Company engages in a process of updating and revising its procedures for the ongoing evaluation of its operations to identify potential environmental exposures and enhance compliance with regulatory requirements.
The Company is responsible for environmental remediation at certain sites on its natural gas transmission systems for contamination resulting from the past use of lubricants containing PCBs in compressed air systems; the past use of paints containing PCBs; and the prior use of wastewater collection facilities and other on-site disposal areas.  The Company has implemented a program to remediate such contamination.  The primary remaining remediation activity on the Company’s systems is associated with past use of paints containing PCBs or PCB impacts to equipment surfaces and to a building at one location. The PCB assessments are ongoing and the related estimated remediation costs are subject to further change. Other remediation typically involves the management of contaminated soils and may involve remediation of groundwater.  Activities vary with site conditions and locations, the extent and nature of the contamination, remedial requirements, complexity and sharing of responsibility.  The ultimate liability and total costs associated with these sites will depend upon many factors.  If remediation activities involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Company could potentially be held responsible for contamination caused by other parties.  In some instances, the Company may share liability associated with contamination with other potentially responsible parties.  The Company may

7


also benefit from contractual indemnities that cover some or all of the cleanup costs.  These sites are generally managed in the normal course of business or operations.
The Company’s environmental remediation activities are undertaken in cooperation with and under the oversight of appropriate regulatory agencies, enabling the Company under certain circumstances to take advantage of various voluntary cleanup programs in order to perform the remediation in the most effective and efficient manner.
The Company’s consolidated balance sheets reflected $1 million in non-current liabilities as of June 30, 2020 and December 31, 2019 to cover environmental remediation actions where management believes a loss is probable and reasonably estimable.  The Company is not able to estimate the possible loss or range of loss in excess of amounts accrued. The Company does not have any material environmental remediation matters assessed as reasonably possible.
Liabilities for Litigation and Other Claims
The Company records accrued liabilities for litigation and other claim costs when management believes a loss is probable and reasonably estimable.  When management believes there is at least a reasonable possibility that a material loss or an additional material loss may have been incurred, the Company discloses (i) an estimate of the possible loss or range of loss in excess of the amount accrued; or (ii) a statement that such an estimate cannot be made. As of June 30, 2020 and December 31, 2019, the Company has litigation and other claim-related accrued liabilities of $18 million included in other non-current liabilities on the consolidated balance sheets. The Company does not have any material litigation or other claim contingency matters assessed as probable or reasonably possible that would require disclosure in the financial statements.
Other Commitments and Contingencies
The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment (the transfer of property to the state) of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements.  The Company is currently being examined by a third party auditor on behalf of nine states for compliance with unclaimed property laws.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Tabular dollar amounts are in millions)
The information in Item 2 has been prepared pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q. Accordingly, this Item 2 includes only management’s narrative analysis of the results of operations and should be read in conjunction with (i) our historical consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

8


RESULTS OF OPERATIONS
 
Six Months Ended
June 30,
 
2020
 
2019
OPERATING REVENUES:
 
 
 
Transportation and storage of natural gas
$
261

 
$
285

Other
9

 
12

Total operating revenues
270

 
297

OPERATING EXPENSES:
 
 
 

Operating and maintenance
89

 
96

General and administrative
19

 
14

Depreciation and amortization
52

 
59

Total operating expenses
160

 
169

OPERATING INCOME
110

 
128

OTHER EXPENSE:
 
 
 

Interest expense, net
(7
)
 
(10
)
Interest expense — related company
(17
)
 
(9
)
Other, net
(4
)
 

INCOME BEFORE INCOME TAX EXPENSE
82

 
109

Income tax expense (benefit)
(1
)
 
28

NET INCOME
$
83

 
$
81

 
 
 
 
Panhandle natural gas volumes transported (TBtu):
 
 
 

PEPL
383

 
446

Trunkline
286

 
365

Sea Robin
42

 
54

Operating revenues. Operating revenues decreased for the six months ended June 30, 2020 compared to the same period in the prior year primarily due to lower capacity sold at lower rates on the Panhandle and Trunkline pipelines.
Operating and maintenance. Operating and maintenance expense decreased for the six months ended June 30, 2020 compared to the same period in the prior year due to adjustments to reduce inventories to lower of cost or net realizable value.
General and administrative. General and administrative expenses increased for the six months ended June 30, 2020 compared to the same period in the prior year due to an increase in overhead costs allocated by the parent company.
Depreciation and amortization. Depreciation and amortization decreased for the six months ended June 30, 2020 compared to the same period in the prior year due to changes in certain estimates.
Interest expense — related company. Interest expense — related company increased for the six months ended June 30, 2020 compared to the same period in the prior year primarily due to additional borrowings under a note payable with ETO.
Other, net. Other, net increased for the six months ended June 30, 2020 compared to the same period in the prior year primarily due to unrealized losses on available-for-sale securities.
Income tax. Income tax expense decreased for the six months ended June 30, 2020 compared to the same period in the prior year primarily due to the PEPL restructuring transaction in July 2019. In connection with the restructuring, PEPL’s tax sharing agreement with its former corporate parent was terminated, and PEPL is no longer subject to corporate level income tax.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 3, Quantitative and Qualitative Disclosures About Market Risk, has been omitted from this report pursuant to the reduced disclosure format permitted by General Instruction H to Form 10-Q.

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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that information required to be disclosed by us, including our consolidated entities, in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Under the supervision and with the participation of senior management, including the Chief Executive Officer and the Chief Financial Officer of our General Partner, we evaluated our disclosure controls and procedures, as such term is defined under Rule 13a–15(e) promulgated under the Exchange Act. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer of our General Partner concluded that our disclosure controls and procedures were effective as of June 30, 2020 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer of our General Partner, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) or Rule 15d-15(f) of the Exchange Act) during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to or has property subject to litigation and other proceedings, including matters arising under provisions relating to the protection of the environment, as described in Note 4 in this Quarterly Report on Form 10-Q and in Note 8 in the Company’s Form 10-K for the year ended December 31, 2019.
The Company is subject to federal and state requirements for the protection of the environment, including those for the discharge of hazardous materials and remediation of contaminated sites. As a result, the Company is a party to or has its property subject to various other lawsuits or proceedings involving environmental protection matters. For information regarding these matters, see Note 4 in this Quarterly Report on Form 10-Q and Note 8 included in the Company’s Form 10-K for the year ended December 31, 2019.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors described in “Part I - Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020 and “Part II - Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 11, 2020.
ITEM 6. EXHIBITS
The exhibits listed below are filed or furnished, as indicated, as part of this report:
Exhibit
Number
 
Description
31.1*
 
31.2*
 
32.1**
 
32.2**
 
101*
 
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) our Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019; (ii) our Consolidated Statements of Operations and Comprehensive Income for the six months ended June 30, 2020 and 2019; (iii) our Consolidated Statements of Partners' Capital for the six months ended June 30, 2020 and 2019; (iv) our Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019; and (v) the notes to our Consolidated Financial Statements.
104
 
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
 
Filed herewith.
**
 
Furnished herewith.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Panhandle Eastern Pipe Line Company, LP has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
PANHANDLE EASTERN PIPE LINE COMPANY, LP
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
Date:
August 6, 2020
By:
 
/s/ A. Troy Sturrock
 
 
 
 
A. Troy Sturrock
 
 
 
 
Vice President and Controller (duly authorized to sign on behalf of the registrant)

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