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 Companys subsidiaries include Trunkline, Sea Robin and Southwest Gas. Southern Union Panhandle LLC, an indirect wholly-owned subsidiary of ETO, owns a 1% general partner interest in PEPL and ETO indirectly owns a 99% limited partner interest in PEPL. Certain prior period amounts have been reclassified to conform to the 2019 presentation. These reclassifications had no impact on net income, total partners capital or cash flows. 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 Companys Annual Report on Form 10-K for the year ended December 31, 2018 . In the opinion of the Companys 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 managements available knowledge of current and expected future events, actual results could be different from those estimates. Change in Accounting Policy Adoption of Lease Accounting Standard In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02, Leases (Topic 842), which has amended the FASB Accounting Standards Codification (ASC) and introduced Topic 842, Leases. On January 1, 2019, the Company has adopted Topic 842, which is effective for interim and annual reporting periods beginning on or after December 15, 2018. Topic 842 requires entities to recognize lease assets and liabilities on the balance sheet for all leases with a term of more than one year, including operating leases, which historically were not recorded on the balance sheet in accordance with the prior standard. To adopt Topic 842, the Company recognized a cumulative catch-up adjustment to the opening balance sheet as of January 1, 2019 related to certain leases that existed as of that date. As permitted, we have not retrospectively modified our consolidated financial statements for comparative purposes. The adoption of the standard had a material impact on our consolidated balance sheet, but did not have an impact on our consolidated statements of operations, comprehensive income or cash flows. As a result of adoption, we have recorded additional net right-of-use (ROU) lease assets and lease liabilities of approximately $6 million and $6 million , respectively, as of January 1, 2019. In addition, we have updated our business processes, systems, and internal controls to support the on-going reporting requirements under the new standard. To adopt Topic 842, the Company elected the package of practical expedients permitted under the transition guidance within the standard. The expedient package allowed us not to reassess whether existing contracts contained a lease, the lease classification of existing leases and initial direct cost for existing leases. In addition to the package of practical expedients, the Company has elected not to capitalize amounts pertaining to leases with terms less than twelve months, to use the portfolio approach to determine discount rates, not to separate non-lease components from lease components and not to apply the use of hindsight to the active lease population. Cumulative-effect adjustments made to the opening balance sheet at January 1, 2019 were as follows: Balance at December 31, 2018, as previously reported Adjustments due to Topic 842 (Leases) Balance at January 1, 2019 Assets: Operating lease right-of-use assets $  $ 6 $ 6 Liabilities: Non-current operating lease liabilities  6 6