Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended June 30, 2015.
Distributable Cash Flow, as adjusted, for the three months ended
June 30, 2015 was $335 million compared to $218 million for
the three months ended June 30, 2014, an increase of $117
million. Distributable Cash Flow, as adjusted, per unit was $0.31
for the three months ended June 30, 2015, an increase of 55%
compared to the three months ended June 30, 2014. ETE’s net
income attributable to partners was $298 million for the three
months ended June 30, 2015 compared to $164 million for the
three months ended June 30, 2014, an increase of $134
million.
Distributable Cash Flow, as adjusted, for the six months ended
June 30, 2015 was $656 million compared to $417 million for
the six months ended June 30, 2014, an increase of $239
million. Distributable Cash Flow, as adjusted, per unit was $0.61
for the six months ended June 30, 2015, an increase of 61%
compared to the six months ended June 30, 2014. ETE’s net
income attributable to partners was $582 million for the six months
ended June 30, 2015 compared to $332 million for the six
months ended June 30, 2014, an increase of $250 million.
The Partnership’s recent key accomplishments and other
developments include the following:
- In July 2015, ETE completed a
two-for-one split of its outstanding common units. All unit and
per-unit amounts reported herein have been adjusted to give effect
to the split.
- In July 2015, ETE’s Board of Directors
approved a $0.02 increase in its quarterly distribution to $0.265
per ETE common unit on a post-split basis for the second quarter
ended June 30, 2015, an increase of 39% on an annualized basis
compared to the second quarter of 2014 and an increase of 8% on an
annualized basis compared to the first quarter of 2015. For the
quarter ended June 30, 2015, ETE’s distribution coverage ratio is
1.19x.
- In July 2015, ETE entered into an
exchange and repurchase agreement with Energy Transfer Partners,
L.P. (“ETP”), pursuant to which ETE will exchange 21.0 million ETP
common units for 100% of the general partner interest and incentive
distribution rights of Sunoco LP. In addition, ETE agreed to
provide ETP with a $35 million annual IDR subsidy for two years.
This transaction is expected to close in August 2015.
- During the second quarter of 2015, ETE
repurchased approximately $294 million of ETE common units under
its current buyback program.
- During the second quarter of 2015,
progress on Lake Charles LNG Export Company, LLC (“Lake Charles
LNG”), an entity owned 60% by ETE and 40% by ETP, continued as we
purchased the land for the project from Alcoa Inc. and as we
received the draft Environmental Impact Statement (“EIS”) and filed
the additional data and information requests required thereunder.
We have also continued our work with the short-listed EPC
contractors as we continue to refine the cost structure for the
project. We expect to receive the final EIS next week on August
14th. The next milestone after that will be the Federal Energy
Regulatory Commission (“FERC”) authorization. With the expected
emphasis on capital discipline and overall cost, we continue to
believe that Lake Charles LNG is one of the most attractive
pre-final investment decision (“FID”) projects for both Royal Dutch
Shell plc and BG Group plc and that as a result, we remain on track
to sanction FID of the project in 2016.
- In May 2015, ETE issued $1 billion
aggregate principal amount of its 5.5% senior notes due 2027.
- As of June 30, 2015, ETE’s $1.5 billion
revolving credit facility had $230 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 2.93x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, August 6, 2015 to discuss its second
quarter 2015 results. The conference call will be broadcast live
via an internet web cast, which can be accessed through
www.energytransfer.com and will also
be available for replay on the Partnership’s web site for a limited
time.
The Partnership’s principal sources of cash flow are derived
from distributions related to its direct and indirect investments
in the limited and general partner interests in ETP, including 100%
of ETP’s incentive distribution rights, ETP Common Units, ETP Class
I Units, and, through ETP Class H Units, 90% of the underlying
economics of the general partner interest and IDRs of Sunoco
Logistics, as well as the Partnership’s ownership of Lake Charles
LNG. Prior to ETP’s acquisition of Regency Energy Partners LP
(“Regency”), the Partnership’s sources of cash flow were also
derived from its direct and indirect investments in the limited and
general partner of Regency. The Partnership’s primary cash
requirements are for general and administrative expenses, debt
service requirements and distributions to its partners.
Energy Transfer Equity, L.P. (NYSE: ETE) is a
master limited partnership which owns the general partner and 100%
of the incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE: ETP), approximately 23.6 million ETP
common units, and approximately 81.0 million ETP Class H Units,
which track 90% of the underlying economics of the general partner
interest and IDRs of Sunoco Logistics Partners
L.P. (NYSE: SXL). On a consolidated basis, ETE’s family of
companies owns and operates approximately 71,000 miles of natural
gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer
Equity, L.P. web site at www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE: ETP) is a
master limited partnership owning and operating one of the largest
and most diversified portfolios of energy assets in the United
States. ETP’s subsidiaries include Panhandle Eastern Pipe Line
Company, LP (the successor of Southern Union Company) and Lone Star
NGL LLC, which owns and operates natural gas liquids storage,
fractionation and transportation assets. In total, ETP currently
owns and operates more than 62,000 miles of natural gas and natural
gas liquids pipelines. ETP also owns the general partner, 100% of
the incentive distribution rights, and approximately 67.1 million
common units in Sunoco Logistics Partners L.P. (NYSE: SXL), which
operates a geographically diverse portfolio of crude oil and
refined products pipelines, terminalling and crude oil acquisition
and marketing assets. ETP owns 100% of Sunoco, Inc. Additionally,
ETP owns the general partner, 100% of the incentive distribution
rights and approximately 66% of the limited partner interests in
Sunoco LP (formerly Susser Petroleum Partners LP) (NYSE: SUN), a
wholesale fuel distributor and convenience store operator. ETP’s
general partner is owned by ETE. For more information, visit the
Energy Transfer Partners, L.P. web site at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered
in Philadelphia, is a master limited partnership that owns and
operates a logistics business consisting of a geographically
diverse portfolio of complementary crude oil, refined products, and
natural gas liquids pipeline, terminalling and acquisition and
marketing assets which are used to facilitate the purchase and sale
of crude oil, refined products, and natural gas liquids. SXL’s
general partner is owned by Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the Sunoco Logistics Partners,
L.P. web site at www.sunocologistics.com.
Sunoco LP (NYSE: SUN) is a growth-oriented master limited
partnership that primarily distributes motor fuel to convenience
stores, independent dealers, commercial customers and distributors.
Sunoco LP also operates more than 830 convenience stores and retail
fuel sites. Sunoco LP conducts its business through wholly-owned
subsidiaries, as well as through its 31.58% interest in Sunoco LLC,
in partnership with its parent company, ETP. Sunoco LP’s general
partner is owned by Energy Transfer Partners, L.P. (NYSE: ETP). For
more information, visit the Sunoco LP web site at www.sunocolp.com.
Forward-Looking Statements
This press release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
management’s control. An extensive list of factors that can affect
future results are discussed in the Partnership’s Annual Reports on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
The information contained in this press release is available on
our web site at www.energytransfer.com.
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions) (unaudited) June 30, 2015 December 31, 2014
ASSETS
CURRENT ASSETS $ 7,237 $ 6,153 PROPERTY, PLANT AND
EQUIPMENT, net 44,047 40,292 ADVANCES TO AND INVESTMENTS IN
UNCONSOLIDATED AFFILIATES 3,653 3,659 NON-CURRENT DERIVATIVE ASSETS
1 10 GOODWILL 7,663 7,865 INTANGIBLE ASSETS, net 5,579 5,582 OTHER
NON-CURRENT ASSETS, net 965 908 Total assets $ 69,145
$ 64,469
LIABILITIES AND
EQUITY
CURRENT LIABILITIES $ 5,238 $ 6,782 LONG-TERM DEBT,
less current maturities 34,795 29,653 DEFERRED INCOME TAXES 4,182
4,325 NON-CURRENT DERIVATIVE LIABILITIES 109 154 OTHER NON-CURRENT
LIABILITIES 1,226 1,193 COMMITMENTS AND CONTINGENCIES
PREFERRED UNITS OF SUBSIDIARY 33 33 REDEEMABLE NONCONTROLLING
INTEREST 15 15 EQUITY: Total partners’ capital 501 664
Noncontrolling interest 23,046 21,650 Total equity
23,547 22,314 Total liabilities and equity $ 69,145 $
64,469
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited) Three Months EndedJune 30, Six Months EndedJune
30, 2015 2014 2015
2014 REVENUES $ 11,594 $ 14,143 $ 21,974 $
27,223 COSTS AND EXPENSES: Cost of products sold 9,338 12,351
17,825 23,793 Operating expenses 663 428 1,291 852 Depreciation,
depletion and amortization 514 450 1,007 823 Selling, general and
administrative 183 141 338
272 Total costs and expenses 10,698
13,370 20,461 25,740
OPERATING INCOME 896 773 1,513 1,483 OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized (408 ) (344 ) (779 )
(659 ) Equity in earnings of unconsolidated affiliates 117 77 174
181 Gains (losses) on interest rate derivatives 127 (46 ) 50 (48 )
Gain on sale of AmeriGas common units — 93 — 163 Other, net
(16 ) (25 ) (9 ) (23 ) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAX EXPENSE 716 528 949 1,097 Income tax
expense (benefit) from continuing operations (56 ) 70
(44 ) 215 INCOME FROM CONTINUING
OPERATIONS 772 458 993 882 Income from discontinued operations
— 42 — 66
NET INCOME 772 500 993 948 Less: Net income attributable to
noncontrolling interest 474 336
411 616 NET INCOME ATTRIBUTABLE TO PARTNERS
298 164 582 332 General Partner’s interest in net income — 1 1 1
Class D Unitholder’s interest in net income —
— 1 1 Limited Partners’ interest
in net income $ 298 $ 163 $ 580 $ 330
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: Basic $
0.28 $ 0.15 $ 0.54 $ 0.29 Diluted $
0.28 $ 0.15 $ 0.54 $ 0.29 NET INCOME
PER LIMITED PARTNER UNIT: Basic $ 0.28 $ 0.15 $ 0.54
$ 0.30 Diluted $ 0.28 $ 0.15 $ 0.54
$ 0.30 WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
Basic 1,076.0 1,087.3 1,077.2
1,101.2 Diluted 1,077.6
1,089.1 1,079.0 1,101.2
ENERGY TRANSFER
EQUITY, L.P.
DISTRIBUTABLE
CASH FLOW (1)
(Dollars in millions, except per unit amounts) (unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2015 2014 2015
2014 Cash distributions from ETP associated
with: Limited partner interest $ 24 $ 29 $ 48 $ 58 Class H Units 62
53 118 103 General partner interest 7 5 15 10 Incentive
distribution rights 317 178 617 346 IDR relinquishments, net of
distributions on Class I Units (2) (28 ) (58 )
(55 ) (115 ) Total cash distributions from ETP 382 207 743
402 Total cash distributions from Regency (prior to merger with
ETP) (3) — 37 — 57
Total cash distributions from investments in subsidiaries
382 244 743 459 Distributable cash flow attributable to Lake
Charles LNG: Revenues 54 53 108 107 Operating expenses (4 ) (4 ) (8
) (8 ) Selling, general and administrative expenses (1 )
(2 ) (2 ) (4 ) Distributable cash flow
attributable to Lake Charles LNG 49 47 98 95 Deduct expenses
of the Parent Company on a stand-alone basis: Selling, general and
administrative expenses, excluding non-cash compensation expense (5
) (5 ) (7 ) (7 ) Management fee to ETP (4) (24 ) (24 ) (48 ) (48 )
Interest expense, net of amortization of financing costs, interest
income, and realized gains and losses on interest rate swaps
(70 ) (47 ) (128 ) (86 ) Distributable Cash
Flow 332 215 658 413 Transaction-related expenses 3 3 4 4 Bakken
Pipeline Transaction — pro forma interest expense (5) —
— (6 ) — Distributable
Cash Flow, as adjusted $ 335 $ 218 $ 656 $ 417
Distributable Cash Flow, as adjusted, per Unit $ 0.31
$ 0.20 $ 0.61 $ 0.38 Cash distributions to be paid to the
partners of ETE: Distributions to be paid to limited partners $ 281
$ 205 $ 545 $ 400 Distributions to be paid to general partner — 1 1
1 Distributions to be paid to Class D unitholder —
— 1 1 Total cash
distributions to be paid to the partners of ETE $ 281 $ 206
$ 547 $ 402 Distribution coverage ratio
(6)
1.19
x
1.06
x
1.20
x
1.04
x
_________________
(1) This press release and accompanying schedules include
the non-generally accepted accounting principle (“non-GAAP”)
financial measures of Distributable Cash Flow, Distributable Cash
Flow, as adjusted, and Distributable Cash Flow, as adjusted, per
Unit. See supplemental information below for a reconciliation of
these non-GAAP financial measures to the most directly comparable
financial measure calculated and presented in accordance with GAAP.
The Partnership’s non-GAAP financial measures should not be
considered as alternatives to GAAP financial measures such as net
income, cash flow from operating activities or any other GAAP
measure of liquidity or financial performance. (2) The Class
I Units provide distributions to ETE for the purpose of offsetting
a portion of the IDR subsidies previously provided to ETP.
(3) ETP’s acquisition of Regency closed on April 30, 2015;
therefore, no distributions in relation to the quarter ended March
31, 2015 were paid by Regency. Instead, distributions from ETP
include distributions on the limited partner interests received by
ETE as consideration in ETP’s acquisition of Regency. (4) In
exchange for management services, ETE has agreed to pay to ETP fees
totaling $95 million, $95 million and $5 million for the years
ending December 31, 2014, 2015 and 2016, respectively. (5)
Pro forma interest expense adjustment for $879 million cash payment
to ETP related to the Bakken Pipeline Transaction to adjust for the
effective date of the transaction of January 1, 2015. (6)
Distribution coverage ratio for a period is calculated as
Distributable Cash Flow, as adjusted, divided by total cash
distributions expected to be paid to the partners of ETE in respect
of such period.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(In millions, except per unit amounts) (unaudited) Three
Months EndedJune 30, Six Months EndedJune 30, 2015
2014 2015 2014
Net income attributable to partners $ 298 $ 164 $ 582 $ 332
Equity in earnings related to investments in ETP and Regency (363 )
(209 ) (691 ) (410 ) Total cash distributions from investments in
subsidiaries 382 244 743 459 Amortization included in interest
expense (excluding ETP and Regency) 2 2 4 4 Other non-cash
(excluding ETP and Regency) 13 14
20 28 Distributable Cash Flow 332 215
658 413 Transaction-related expenses 3 3 4 4 Bakken Pipeline
Transaction — pro forma interest expense — —
(6 ) — Distributable Cash Flow, as
adjusted $ 335 $ 218 $ 656 $ 417
Weighted average units outstanding (common, Class D and General
Partner on a post-split basis) 1,081.8 1,093.0
1,082.6 1,107.0
Distributable Cash Flow, as adjusted, per Unit $ 0.31 $ 0.20
$ 0.61 $ 0.38
Distributable Cash Flow and Distributable
Cash Flow, as adjusted. The Partnership defines
Distributable Cash Flow and Distributable Cash Flow, as adjusted,
for a period as cash distributions expected to be received in
respect of such period in connection with the Partnership’s
investments in limited and general partner interests, net of the
Partnership’s cash expenditures for general and administrative
costs and interest expense. The Partnership’s definitions of
Distributable Cash Flow and Distributable Cash Flow, as adjusted,
also include distributable cash flow from Lake Charles LNG to the
Partnership. For Distributable Cash Flow, as adjusted, certain
transaction-related expenses that are included in net income are
excluded.
Distributable Cash Flow is a significant liquidity measure used
by the Partnership’s senior management to compare net cash flows
generated by the Partnership to the distributions the Partnership
expects to pay its unitholders. Due to cash expenses incurred from
time to time in connection with the Partnership’s merger and
acquisition activities and other transactions, Distributable Cash
Flow, as adjusted, is also a significant liquidity measure used by
the Partnership’s senior management to compare net cash flows
generated by the Partnership to the distributions the Partnership
expects to pay its unitholders. Using these measures, the
Partnership’s management can compute the coverage ratio of
estimated cash flows for a period to planned cash distributions for
such period.
Distributable Cash Flow and Distributable Cash Flow, as
adjusted, are also important non-GAAP financial measures for our
limited partners since these indicate to investors whether the
Partnership’s investments are generating cash flows at a level that
can sustain or support an increase in quarterly cash distribution
levels. Financial measures such as Distributable Cash Flow and
Distributable Cash Flow, as adjusted, are quantitative standards
used by the investment community with respect to publicly traded
partnerships because the value of a partnership unit is in part
measured by its yield (which in turn is based on the amount of cash
distributions a partnership can pay to a unitholder). The GAAP
measure most directly comparable to Distributable Cash Flow, and
Distributable Cash Flow, as adjusted, is net income for ETE on a
stand-alone basis (the “Parent Company”).
Distributable Cash Flow, as adjusted, per
Unit. The Partnership defines Distributable Cash Flow, as
adjusted, per Unit for a period as the quotient of Distributable
Cash Flow, as adjusted, divided by the weighted average number of
units outstanding. For purposes of this calculation, the number of
units outstanding represents the Partnership’s basic average common
units outstanding plus Class D units outstanding and the general
partner common unit equivalent.
Similar to Distributable Cash Flow, as adjusted, as described
above, Distributable Cash Flow, as adjusted, per Unit is a
significant liquidity measure used by the Partnership’s senior
management to compare net cash flows generated by the Partnership
to the distributions the Partnership expects to pay to its
unitholders.
SUPPLEMENTAL
INFORMATION
FINANCIAL
STATEMENTS FOR PARENT COMPANY
Following are condensed balance sheets and statements of
operations of the Parent Company on a stand-alone basis.
BALANCE
SHEETS
(In millions) (unaudited) June 30,2015
December 31,2014
ASSETS CURRENT ASSETS $ 23 $ 17 PLANT, PROPERTY AND
EQUIPMENT 7 — ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED
AFFILIATES 6,406 5,390 INTANGIBLE ASSETS, net 8 10 GOODWILL 9 9
OTHER NON-CURRENT ASSETS, net 52 46
Total assets $ 6,505 $ 5,472
LIABILITIES AND
PARTNERS’ CAPITAL CURRENT LIABILITIES $ 157 $ 72 LONG-TERM
DEBT, less current maturities 5,737 4,680 NOTE PAYABLE TO AFFILIATE
109 54 OTHER NON-CURRENT LIABILITIES 1 2 COMMITMENTS AND
CONTINGENCIES PARTNERS’ CAPITAL: General Partner (1 ) (1 ) Limited
Partners: Common Unitholders 484 648 Class D Units 20 22
Accumulated other comprehensive loss (2 ) (5 ) Total
partners’ capital 501 664 Total
liabilities and partners’ capital $ 6,505 $ 5,472
STATEMENTS OF
OPERATIONS
(In millions) (unaudited) Three Months EndedJune 30, Six
Months EndedJune 30, 2015 2014
2015 2014 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES $ (29 ) $ (32 ) $ (57 ) $ (63 ) OTHER
INCOME (EXPENSE): Interest expense, net of interest capitalized (72
) (50 ) (133 ) (90 ) Equity in earnings of unconsolidated
affiliates 398 248 771 487 Other, net — (2 )
1 (2 ) INCOME BEFORE INCOME TAXES 297 164 582
332 Income tax benefit (1 ) — —
— NET INCOME 298 164 582 332 GENERAL PARTNER’S
INTEREST IN NET INCOME — 1 1 1 CLASS D UNITHOLDER’S INTEREST IN NET
INCOME — — 1 1
LIMITED PARTNERS’ INTEREST IN NET INCOME $ 298 $ 163
$ 580 $ 330
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Energy TransferInvestor Relations:Brent Ratliff,
214-981-0700orLyndsay Hannah, 214-840-5477orMedia
Relations:Granado Communications GroupVicki Granado,
214-599-8785214-498-9272 (cell)
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