Boardwalk Pipeline Partners LP

11/02/2026 | Press release | Distributed by Public on 11/02/2026 06:13

Quarterly Report for Quarter Ending September 30, 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 (U.S.) (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 and marketing of natural gas and related services throughout the U.S.
Acquisition
On April 30, 2026, we acquired 100% of the equity interests of Spire Marketing LLC (previously known as Spire Marketing Inc.) for $205.7 million in cash. Spire Marketing LLC (now known as Boardwalk Continuum Marketing, LLC (Continuum)) is engaged in the marketing of natural gas and related services throughout the U.S. Substantially all of its business is derived from the procurement and physical delivery of natural gas to a diverse customer base, including pipelines, power generators, storage operators, and large commercial and industrial customers.
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 4.7 billion cubic feet per day (Bcf/d) and our storage working gas capacity by 10 Bcf at an expected aggregate cost of approximately $3.6 billion and are scheduled to be completed through 2030. Through September 30, 2026, we have spent $525.2 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)
September 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(2)
First half 2028 0.3
Parks Line Upgrade and Sorrento Station Project(2)
First half 2028 0.2
Texas Gateway Project(3)
Second half 2029 1.8
Petal Gas Storage Expansion(4)
Second half 2030
(4)
Carthage Crossing Project(3)(5)
Second half 2030 0.2
(1)Eunice - Iowa went into service in September 2026.
(2)These projects have received approval from the Federal Energy Regulatory Commission (FERC) and construction has commenced.
(3)These projects remain subject to FERC approval, acquisition of land rights, and receipt of environmental permits and authorizations.
(4)This project remains subject to FERC approval and is expected to add 10 Bcf of storage working gas capacity.
(5)The Carthage Crossing project is expected to increase the capacity of our pipeline system from Carthage, Texas, to North Louisiana through the addition of compression facilities and auxiliary equipment. This project is supported by a precedent agreement with a utility customer and could expand based on the results of our open season.
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 $9.6 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 have little to no direct commodity price exposure. Continuum's commitments associated with the forward sale of natural gas generally meet the definition of a derivative. Continuum's wholesale contracts (primarily with producers, municipalities, and utility companies) are subject to derivative accounting and the resulting revenues are netted as a component of costs associated with product sales. Continuum's retail contracts (primarily with large commercial and industrial customers) that meet the definition of a derivative are designated as normal purchases or normal sales arrangements and are accounted for as revenues from contracts with customers. Note 6 in Part I, Item 1. of this Quarterly Report on Form 10-Q contains more information regarding Continuum's derivatives and related policies. 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
Nine Months Ended
September 30,
2026 2025
Net income $ 461.1 $ 454.3
Income taxes
1.4 1.0
Depreciation and amortization 333.8 330.6
Interest expense 113.9 118.8
Interest income (7.7) (8.0)
EBITDA $ 902.5 $ 896.7
For the Nine Months Ended September 30, 2026 and 2025
Our net income for the nine months ended September 30, 2026, increased $6.8 million, or 1%, to $461.1 million compared to $454.3 million for the nine months ended September 30, 2025. Our EBITDA increased $5.8 million, or 1%, to $902.5 million for the same period. Our net income and EBITDA increased primarily due to the factors discussed below.
Operating revenues for the nine months ended September 30, 2026, increased $115.5 million, or 7%, to $1,809.0 million compared to $1,693.5 million for the nine months ended September 30, 2025. Our transportation revenues increased $59.8 million, primarily due to higher contracting rates and higher utilization-based and growth project revenues. Our storage, parking and lending (PAL) revenues increased $18.7 million due to favorable market conditions which allowed for contracting at higher rates. Product sales revenues increased by $32.6 million primarily due to $44.0 million of product sales revenues from the Continuum acquisition, partially offset by decreases of $11.4 million for our ethane supply services and other product sales due to lower volumes.
Operating costs and expenses for the nine months ended September 30, 2026, increased $116.3 million, or 10%, to $1,246.5 million compared to $1,130.2 million for the nine months ended September 30, 2025. Costs associated with product sales increased $43.5 million, including $9.4 million of net unrealized losses on derivative instruments, primarily from the Continuum acquisition. Operation and maintenance expenses increased $8.5 million primarily from higher employee-related costs due to an increase in employees to support our growth and higher outside services and materials and supplies costs due to increased maintenance and reliability activities. Administrative and general expenses increased $35.4 million primarily from higher employee-related costs due to an increase in employees to support our growth, including additional employees from the Continuum acquisition, higher outside service costs and Continuum related transaction costs. Costs associated with service revenues increased $8.9 million primarily due to a storage gas loss adjustment. We also recognized an $8.7 million impairment charge related to the relocation of our Houston corporate headquarters. Other taxes increased $7.6 million due to an increased asset base and higher assessments.
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 13 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
Nine Months Ended
September 30,
2026 2025
Natural Gas $ 736.1 $ 734.4
Natural Gas Liquids 166.4 162.3
Total Segment EBITDA $ 902.5 $ 896.7
EBITDA(1)
$ 902.5 $ 896.7
(1) Refer to the reconciliation of net income to EBITDA in the table under Consolidated Results of Operations.
For the Nine Months Ended September 30, 2026 and 2025
Natural Gas Segment
The Natural Gas segment's operating revenues for the nine months ended September 30, 2026, increased $114.3 million or 10%, to $1,246.1 million, compared to $1,131.8 million for the nine months ended September 30, 2025. Segment operating costs and expenses increased $112.6 million, or 28%, for the nine months ended September 30, 2026, to $510.0 million, compared to $397.4 million for the nine months ended September 30, 2025. EBITDA increased by $1.7 million to $736.1 million for the same period.
EBITDA for the nine months ended September 30, 2026, as compared to the same period in the prior year, was primarily impacted by the following items:
•transportation revenues increased by $52.5 million primarily due to higher contracting rates and higher utilization-based and growth project revenues;
•storage and PAL revenues increased by $18.4 million primarily due to favorable market conditions which allowed for contracting at higher rates;
•operation and maintenance expenses increased $4.8 million primarily from higher employee-related costs due to an increase in employees to support our growth and higher outside services and materials and supplies costs due to increased maintenance and reliability activities;
•administrative and general expenses increased by $35.7 million primarily from higher employee-related costs due to an increase in employees to support our growth, including additional employees from the Continuum acquisition, higher outside service costs and Continuum related transaction costs;
•costs associated with service revenues increased $6.6 million primarily due to a storage gas loss adjustment;
•an $8.7 million impairment charge related to the relocation of our Houston corporate headquarters; and
•other taxes increased by $7.7 million primarily due to an increased asset base and higher assessments.
Natural Gas Liquids Segment
The Natural Gas Liquids segment's operating revenues for the nine months ended September 30, 2026, increased $1.2 million, or less than 1%, to $562.9 million compared to $561.7 million for the nine months ended September 30, 2025. Segment operating costs and expenses decreased $2.9 million, or 1%, for the nine months ended September 30, 2026, to $396.5 million,
compared to $399.4 million for the nine months ended September 30, 2025. EBITDA increased by $4.1 million to $166.4 million for the same period.
EBITDA for the nine months ended September 30, 2026, as compared to the same period in the prior year, was primarily impacted by the following items:
•transportation revenues increased by $7.3 million primarily due to higher volumes transported; and
•operation and maintenance expenses increased $3.7 million primarily from higher maintenance project costs.
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. As of September 30, 2026, we have an effective shelf registration statement on file with the Securities and Exchange Commission (SEC), under which we may publicly issue up to $3.5 billion of debt securities, warrants or rights from time to time. 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. We have $500.0 million of 4.45% Notes and $100.0 million of 7.25% Notes maturing in July 2027 (2027 Notes). We expect to retire the 2027 Notes at their maturity through available capital resources, including borrowings under our revolving credit facility or the issuance of debt securities. Refer to Note 8 in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information. In the first nine months of 2026, we paid total distributions of $225.0 million to Boardwalk GP, LP and Boardwalk Pipelines Holding Corp., and we paid $205.7 million in 2026 to acquire Boardwalk Continuum Marketing, LLC. Refer to Notes 2 and 11 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 $3.6 billion, which is expected to be spent through 2030. Through September 30, 2026, we have spent $525.2 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, the issuance of long-term debt and 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 nine months ended September 30, 2026 and 2025, were $135.7 million and $124.4 million. Growth capital expenditures for the nine months ended September 30, 2026 and 2025, were $411.6 million and $98.0 million. During the nine months ended September 30, 2026, we spent $2.9 million on natural gas to be used in our integrated natural gas pipeline system.
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 September 30, 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 September 30, 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 September 30, 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)
(17.3)
Total debt
$ 3,232.7
(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, operating 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 $116.8 million for the nine months ended September 30, 2026, and includes advances to and from each other, an operating lease right of use asset and lease liability 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 September 30, 2026, and December 31, 2025. Additionally, as of September 30, 2026, we have future capital commitments comprised of binding commitments under purchase orders for materials ordered but not received totaling approximately $606.3 million, which are expected to be settled through 2028. Refer to Notes 7 and 8 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.
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