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Acquisition
12 Months Ended
Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
Acquisition Acquisition
On September 29, 2023, Boardwalk Resources Company, LLC, a wholly owned subsidiary of the Company, acquired 100% of the equity interests of Williams Olefins Pipeline Holdco LLC (Bayou Ethane) from Williams Field Services Group, LLC for $355.0 million in cash, including working capital. Bayou Ethane owns an approximately 380-mile pipeline system that transports ethane from Mont Belvieu, Texas, to the Mississippi River corridor in Louisiana and two 15-mile pipelines in the Houston Ship Channel area that carry ammonia and hydrogen chloride. Bayou Ethane provides ethane supply and transportation services for industrial customers in Louisiana and Texas. In providing ethane supply services, Bayou Ethane purchases ethane at Mont Belvieu and various locations in Louisiana and utilizes its pipeline to deliver supply to its customers. The acquisition allows the Company to extend its assets, diversify its customer base and service offerings and to complement its existing NGLs operations. The purchase price was funded with available cash on hand.

The acquisition was accounted for as a business combination. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values for PPE, including rights-of-way, were determined primarily using a combination of the market and cost approaches. The fair values for the customer-based intangibles were determined using a discounted cash flow analysis with inputs not observable in the market, such as estimated future cash flows and weighted-average cost of capital rates, which were considered Level 3 fair value estimates. During the fourth quarter 2023, the purchase price allocation was finalized. The final fair values of the assets acquired and liabilities assumed as of September 29, 2023, the acquisition date, were as follows (in millions):

Current assets$51.8 
Property, plant and equipment296.2 
Customer-based intangibles (1)
33.9 
Noncurrent assets0.5 
Total assets acquired382.4 
Current liabilities26.7 
Noncurrent liabilities0.7 
Total liabilities assumed27.4 
Net assets acquired$355.0 

(1)Customer-based intangibles have a weighted-average useful life of 35 years and are recorded in Other Assets.

For the year ended December 31, 2023, the acquisition contributed $101.5 million and $5.5 million to the Company's operating revenues and net income. The Company incurred an immaterial amount of acquisition costs related to the acquisition for the year ended December 31, 2023. Acquisition costs were expensed as incurred and are recorded in Administrative and general on the Consolidated Statements of Income.

Pro Forma Financial Information (unaudited)

The following unaudited pro forma results of operations are presented as if the acquisition occurred on January 1, 2022. Such results are not necessarily indicative of future results. These pro forma results also do not reflect any cost savings, operating synergies or revenue enhancements that the Company may achieve or the costs necessary to achieve those objectives (in millions):
Pro Forma
For the Year Ended December 31,
20232022
Operating revenue (1)(2)
$1,962.8 $2,253.4 
Net income (2)
393.8 357.4 

(1)Bayou Ethane provides ethane supply services, which result in ethane sales and purchases being presented on a gross basis in the Consolidated Statements of Income.

(2)The average ethane price of $0.25 per gallon for the year ended December 31, 2023, was lower as compared to $0.48 per gallon for the comparable period for 2022, which resulted in higher revenues in the 2022 period.

The pro forma information was adjusted for the following items:

Revenues and operating costs were based on actual results for the periods indicated. Acquisition costs were not material and were excluded; and
Depreciation and amortization expense was calculated using PPE and intangible asset amounts as determined by the purchase price allocation and estimated useful lives.