Boardwalk Pipeline Partners LP

05/04/2026 | Press release | Distributed by Public on 05/04/2026 05:14

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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, 2025 (2025 Annual Report on Form 10-K).
We operate in the midstream portion of the natural gas and natural gas liquids, olefins and other hydrocarbons industry, providing transportation and storage for those commodities. We also provide ethane supply and transportation services for petrochemical customers in Louisiana and Texas.
Current Growth Projects
We regularly review opportunities to expand our existing facilities and footprint to meet growing demand for transportation and storage services. The recent growth of liquefied natural gas export and power generation demand has led to the announcement of additional growth projects for us. Through the date of this filing, we have growth projects for which we have executed precedent or long-term firm transportation agreements that are expected to increase capacity on our pipeline systems by an aggregate of 4.2 billion cubic feet per day (Bcf/d) and our storage working gas capacity by 10 Bcf at an expected aggregate cost of approximately $3.2 billion and are scheduled to be completed through 2030. As of March 31, 2026, we have spent $245.1 million on these growth projects. These projects remain contingent upon, among other things, the receipt of required regulatory approvals and permits and are subject to construction risk.
These projects have lengthy planning and construction periods and, as a result, will not contribute to our earnings and cash flows until they receive the required regulatory approvals and permits and are constructed and placed into service over the next several years. Refer to Liquidity and Capital Resources of this Quarterly Report on Form 10-Q for further discussion of capital expenditures and financing. Our cost and timing estimates for these projects are based on a variety of inputs such as contractor indicative bids, quotes on materials and internally-developed financial models, metrics and timelines and are subject to a variety of risks and uncertainties, including obtaining timely regulatory and permit approvals and the cost thereof, adverse weather conditions during construction, our ability to acquire and the cost of obtaining rights to construct and operate on land not owned by us, delays in obtaining and shortages and price increases for key materials (including pipe, compressor facilities and related equipment), tariff implications and shortages and increased costs of qualified labor. Factors in the estimates include, among other things, those related to pipeline costs based on mileage, size and type of pipe, materials, including compressors and related equipment, land, engineering and construction costs and timely receipt of all necessary permits and approvals. Actual costs and timing of in-service dates for our growth projects may differ, perhaps materially, from our estimates. In addition, failure to timely meet development milestones may result in, among other things, contractual counterparties having the ability to terminate contracts with us. Refer to Part I, Item 1. Business and Part I, Item 1A. Risk Factors of our 2025 Annual Report on Form 10-K for project descriptions and additional risks associated with our growth projects and the related financing.
Our more significant growth projects are listed below:
Expected in-service date Expected incremental capacity added to system
(Bcf/d)
Eunice - Iowa(1)
Third quarter 2026 0.1
Carnation Project(2)
Fourth quarter 2027 0.2
Northeast Texas Power Plant Project(3)
Fourth quarter 2027 0.3
Kosciusko Junction project (3)
First half 2028 1.2
Ohio Power Plant Project(3)
First half 2028 0.3
Southeast Compression for Utility Reliability Expansion project (3)
First half 2028 0.3
Parks Line Upgrade and Sorrento Station Project(4)
First half 2028 0.2
Texas Gateway Project(3)
Second half 2029 1.5
Petal Gas Storage Expansion(5)
Second half 2030
(5)
(1)This project has received approval from the Federal Energy Regulatory Commission (FERC) and is in construction.
(2)This project remains subject to FERC approval and receipt of environmental permits and authorizations.
(3)These projects remain subject to FERC approval, acquisition of land rights, and receipt of environmental permits and authorizations.
(4)This project received FERC approval in December 2025 and is expected to start construction in the first half of 2026.
(5)This project remains subject to FERC approval and is expected to add 10 Bcf of storage working gas capacity.
Refer to Current Growth Projects in Part I, Item 1. of our 2025 Annual Report on Form 10-K for further discussion of our significant growth projects. Our growth projects include $9.5 billion of estimated revenues that are anticipated under executed precedent or long-term firm transportation agreements for growth projects that are contingent upon, among other things, receipt of required regulatory approvals and permits and are subject to construction risk.
In addition to growth projects for which we have executed precedent agreements, we regularly consider other potential growth projects at earlier stages of development, and we are currently evaluating additional growth projects involving substantial capital commitments. We may from time to time make public disclosures regarding these potential projects, for instance, through announcements of open seasons for potential future capacity. In addition to the risks, uncertainties and contingencies described above regarding the growth projects for which we have executed precedent agreements, these potential growth projects at earlier stages of development are subject to a variety of additional risks and uncertainties as we have not reached final investment decisions or secured executed precedent agreements for them. Therefore, these potential growth projects at earlier stages of development may not be consummated as contemplated in any such public disclosures or at all.
Consolidated Results of Operations
Note 2 in Part II, Item 8. of our 2025 Annual Report on Form 10-K contains a summary of our revenue contracts 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 as discussed in our 2025 Annual Report on Form 10-K. The pricing contained in the purchase and sales agreements associated with our ethane supply services is generally based on the same ethane commodity index, plus a fixed delivery fee. As a result, except for possible timing differences that may occur when volumes are purchased in one month and sold in another month, our ethane supply services, like our other businesses, have little to no direct commodity price exposure. Our operating costs and expenses do not vary significantly based upon the volume of products transported, with the exception of costs recorded in Costs associated with service revenues. Our operation and maintenance expenses are impacted by our compliance with the requirements of, among other regulations, pipeline integrity maintenance regulations and our efforts to monitor, control and reduce emissions, as further discussed in our 2025 Annual Report on Form 10-K.
We use earnings before interest, income taxes, depreciation and amortization (EBITDA), a measure not included in GAAP, 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 as EBITDA is a commonly used metric within the midstream industry.
The following table presents a reconciliation of net income to EBITDA (in millions):
For the
Three Months Ended
March 31,
2026 2025
Net income $ 211.7 $ 206.6
Income taxes
0.6 0.5
Depreciation and amortization 109.9 105.5
Interest expense 43.2 39.5
Interest income (5.4) (1.0)
EBITDA $ 360.0 $ 351.1
For the Three Months Ended March 31, 2026 and 2025
Our net income for the three months ended March 31, 2026, increased $5.1 million, or 2%, to $211.7 million compared to $206.6 million for the three months ended March 31, 2025. Our EBITDA increased $8.9 million, or 3%, to $360.0 million for the same period. Our net income and EBITDA increased primarily due to the factors discussed below.
Operating revenues for the three months ended March 31, 2026, increased $4.5 million, or 1%, to $623.1 million compared to $618.6 million for the three months ended March 31, 2025. Our transportation revenues increased $15.1 million, primarily due to higher contracting rates and higher utilization-based revenue. Our storage, parking and lending (PAL) revenues increased $15.6 million due to favorable market conditions which allowed for contracting at higher rates. These increases were partially offset by decreased product sales revenues of $28.6 million primarily due to lower volumes for our ethane supply services and other product sales.
Operating costs and expenses for the three months ended March 31, 2026, increased $0.7 million, or less than 1%, to $374.9 million compared to $374.2 million for the three months ended March 31, 2025, primarily from: higher employee-related and outside services costs, increased depreciation and amortization expense, and higher property taxes due to higher assessments, partially offset by lower product costs associated with lower ethane product sales.
Our interest income and expense for the three months ended March 31, 2026, as compared to the same period in the prior year, were impacted by the following items:
•increased interest expense of $3.7 million due to the pre-financing of a June 2026 debt maturity that was redeemed in March 2026; and
•increased interest income of $4.4 million due to income earned from cash invested in short-term investments and money market funds.
Segment Results
We report our operations under two business segments: Natural Gas and Natural Gas Liquids. Management uses Segment EBITDA as a basis to assess segment financial performance and allocate resources, which financial information is contained in Note 12 in Part I, Item 1. of this Quarterly Report on Form 10-Q.
The following table provides our Total Segment EBITDA and a reconciliation to EBITDA (in millions):
For the
Three Months Ended
March 31,
2026 2025
Natural Gas $ 302.9 $ 290.6
Natural Gas Liquids 57.1 60.5
Total Segment EBITDA
$ 360.0 $ 351.1
EBITDA (1)
$ 360.0 $ 351.1
(1)Refer to the reconciliation of net income to EBITDA in the table under Consolidated Results of Operations.
For the Three Months Ended March 31, 2026 and 2025
Natural Gas Segment
The Natural Gas segment's operating revenues for the three months ended March 31, 2026, increased $22.1 million or 5%, to $432.8 million, compared to $410.7 million for the three months ended March 31, 2025. Segment operating costs and expenses increased $9.8 million for the three months ended March 31, 2026, or 8%, to $129.9 million, compared to $120.1 million for the three months ended March 31, 2025. EBITDA increased by $12.3 million to $302.9 million for the same period.
EBITDA for the three months ended March 31, 2026, as compared to the same period in the prior year, was primarily impacted by the following items:
•transportation revenues increased by $8.3 million primarily due to higher contracting rates, recently completed growth projects and higher utilization-based revenue;
•storage and PAL revenues increased by $14.5 million primarily due to favorable market conditions which allowed for contracting at higher rates;
•administrative and general costs increased by $5.1 million primarily due to higher employee-related and outside service costs; and
•other taxes increased by $3.6 million primarily due to higher property tax assessments and an increased asset base.
Natural Gas Liquids Segment
The Natural Gas Liquids segment's operating revenues for the three months ended March 31, 2026, decreased $17.6 million, or 9%, to $190.3 million compared to $207.9 million for the three months ended March 31, 2025. Segment operating costs and expenses decreased $14.2 million for the three months ended March 31, 2026, or 10%, to $133.2 million, compared to $147.4 million for the three months ended March 31, 2025. EBITDA decreased by $3.4 million to $57.1 million for the same period.
EBITDA for the three months ended March 31, 2026, as compared to the same period in the prior year, was primarily impacted by the following items:
•transportation revenues increased by $6.8 million primarily due to higher volumes;
•product costs related to propane and ethylene sales increased by $15.2 million, partially offset by higher propane and ethylene product sales of $6.6 million; and
•for our ethane supply services, ethane product sales decreased by $32.9 million primarily due to lower volumes, partially offset by lower product costs related to ethane product sales of $29.5 million.
Liquidity and Capital Resources
We believe that our existing capital resources, including our cash and cash equivalents, revolving credit facility and our cash flows from operating activities, will be adequate to fund our anticipated obligations over the next twelve months. During the first quarter 2026, we filed a $3.5 billion shelf registration statement with the Securities and Exchange Commission (SEC), under which we may publicly issue debt securities, warrants or rights from time to time, which was declared effective on March 19, 2026. On March 1, 2026, we redeemed the outstanding $550.0 million aggregate principal amount of Boardwalk Pipelines 5.95% notes due June 1, 2026, at a redemption price equal to par plus unpaid and accrued interest. The redemption was funded from the proceeds of the $550.0 million aggregate principal amount of Boardwalk Pipelines 5.375% notes due 2036 issued in November 2025. In the first quarter 2026, we paid total distributions of $75.0 million to Boardwalk GP, LP and Boardwalk Pipelines Holding Corp., and paid $215.0 million in April 2026 to acquire Spire Marketing LLC (previously known as Spire Marketing Inc.). Refer to Notes 2 and 7 in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.
Capital Expenditures
As described in Current Growth Projects, we are currently engaged in growth projects for which we have executed precedent or long-term firm transportation agreements. Through the date of this filing, the expected aggregate cost associated with these agreements is approximately $3.2 billion, which is expected to be spent through 2030. As of March 31, 2026, we have spent $245.1 million on these growth projects. The majority of the capital expenditures for each of these projects is expected to be spent upon receiving FERC approval to begin construction, which is generally 12-18 months prior to the project's expected in-service date. We are also evaluating additional growth projects involving substantial capital commitments. We expect to finance our growth projects through a combination of operating cash flows and the issuance of long-term debt, including borrowings under our revolving credit facility. Our cost and timing estimates for our growth projects are subject to a variety of risks and uncertainties, and are based on the factors described in Current Growth Projects. Actual costs and timing of in-service dates for our growth projects may differ, perhaps materially, from our estimates. Refer to Part I, Item 1A. Risk Factors of our 2025 Annual Report on Form 10-K for additional risks associated with our growth projects and the related financing.
The nature of our existing growth projects will require us to enhance or modify our existing assets to accommodate increased operating pressures or changing flow patterns. We consider capital expenditures associated with the modification or enhancement of existing assets in the context of a growth project to be growth capital to the extent that the modification would not have been made in the absence of the growth project without regard to the condition of the existing assets.
Maintenance capital expenditures for the three months ended March 31, 2026 and 2025, were $34.1 million and $35.8 million. Growth capital expenditures for the three months ended March 31, 2026 and 2025, were $109.5 million and $15.8 million.
Guarantee of Securities of Subsidiaries
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, 2026, 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 amounts borrowed under the revolving credit facility, but any amounts borrowed under the revolving credit facility are not subject to the reporting requirements of Rule 13-01 of Regulation S-X (Rule 13-01). As of March 31, 2026, 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 (in millions):
As of March 31, 2026
Principal amounts guaranteed by Boardwalk Pipeline Partners and subject to Rule 13-01 (1)
$ 3,150.0
Principal amounts not guaranteed (2)
100.0
Other (3)
(19.0)
Total debt
$ 3,231.0
(1)This represents principal amounts of all outstanding debt at Boardwalk Pipelines subject to the disclosure rules of Rule 13-01 (the Guaranteed Notes).
(2)This represents principal amounts of outstanding debt at Texas Gas Transmission, LLC.
(3)This represents amounts related to 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 guaranteed 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, which includes the Guaranteed Notes and interest expense of $42.9 million for the three months ended March 31, 2026, and includes advances to and from each other, operating lease right of use assets related to an office building and their investments in the operating subsidiaries. For these reasons, we meet the criteria in Rule 13-01 to omit the summarized financial information from our disclosures.
Contractual Obligations
Our future principal payments associated with our outstanding debt obligations were $3.3 billion and $3.8 billion as of March 31, 2026, and December 31, 2025. Additionally, as of March 31, 2026, we have future capital commitments comprised of binding commitments under purchase orders for materials ordered but not received totaling approximately $466.8 million, which are expected to be settled through 2028. Refer to Notes 6 and 7 in Part I, Item 1. of this Quarterly Report on Form 10-Q and Note 11 in Part II, Item 8. of our 2025 Annual Report on Form 10-K for more information on our future capital commitments, financing activities and debt obligations.
Critical Accounting Estimates and 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 2026, there have been no significant changes to our critical accounting policies, judgments or estimates from those disclosed in our 2025 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 and periodic press releases and some statements made by our officials, us and our subsidiaries in 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, including tariffs, or the implementation thereof, our ability to complete growth projects that we have commenced or will
commence at budgeted amounts and within the projected timeframes, the costs of maintaining and ensuring the integrity and reliability of our pipeline systems, the impacts of climate change, sustainability matters and pipeline safety requirements and initiatives, recontracting at acceptable rates, 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 2025 Annual Report on Form 10-K for additional risks and uncertainties regarding our forward-looking statements.
Boardwalk Pipeline Partners LP published this content on May 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 04, 2026 at 11:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]