Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the fourth
quarter ended December 31, 2014.
Distributable Cash Flow, as adjusted, was $243 million for the
three months ended December 31, 2014 as compared to $185
million for the same period last year, an increase of $58 million.
ETE’s net income attributable to partners was $113 million for the
three months ended December 31, 2014, as compared to a net
loss of $172 million for the same period last year, an increase of
$285 million, including the impacts of non-cash goodwill
impairments in 2013 and 2014.
Distributable Cash Flow, as adjusted, for the year ended
December 31, 2014 was $895 million as compared to $719 million
for last year, an increase of $176 million. Distributable Cash Flow
per unit was $1.63 for 2014, an overall increase of 27% from 2013.
ETE’s net income attributable to partners was $633 million for the
year ended December 31, 2014, as compared to $196 million for
last year, an increase of $437 million or over 220%.
In January 2015, ETE’s Board of Directors approved its ninth
consecutive increase in its quarterly distribution to $0.45 per
unit on ETE Common Units for the quarter ended December 31, 2014,
an increase of 30% on an annualized basis compared to the fourth
quarter of 2013. For the quarter ended December 31, 2014, ETE’s
distribution coverage ratio was 1.00x. For the full year ended
December 31, 2014, ETE’s distribution coverage ratio was 1.03x.
The Partnership’s recent key accomplishments and other
developments include the following:
- In December 2014, ETE and Energy
Transfer Partners, L.P. (“ETP”) announced the final terms of a
transaction whereby ETE will transfer 30.8 million ETP Common
Units, ETE’s 45% interest in the Dakota Access Pipeline and Energy
Transfer Crude Oil Pipeline (collectively, the “Bakken pipeline
project”), and $879 million in cash (less amounts funded prior to
closing by ETE for capital expenditures for the Bakken pipeline
project) in exchange for 30.8 million newly issued Class H Units of
ETP that, when combined with the 50.2 million previously issued
Class H Units, generally entitle ETE to receive 90.05% of the cash
distributions and other economic attributes of the general partner
interest and IDRs of Sunoco Logistics. In addition, ETE and ETP
agreed to reduce the IDR subsidies that ETE previously agreed to
provide to ETP, with such reductions occurring in 2015 and 2016.
The transaction is expected to close in March 2015.
- As of December 31, 2014, ETE’s $1.2
billion revolving credit facility had $940 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 3.31x. In February 2015, ETE amended its revolving
credit facility to increase the capacity to $1.5 billion.
- In January 2015, ETP and Regency Energy
Partners LP (“Regency”) announced their entry into a definitive
merger agreement pursuant to which ETP will acquire Regency. Under
the terms of the definitive merger agreement, holders of Regency
common units will receive 0.4066 ETP common units for each Regency
common unit. Regency unitholders will also receive at closing an
additional $0.32 per common unit in the form of ETP common units
(based on the price for ETP common units prior to the merger
closing). The transaction is expected to close in the second
quarter of 2015.
- Regarding our Lake Charles LNG project,
the Federal Energy Regulatory Commission (“FERC”) has issued the
Notice of Schedule for the Lake Charles LNG project. The Notice of
Schedule from FERC that was issued on January 26, 2015 has reset
the timeframe under which we are working in terms of the Final
Investment Decision (“FID”) on the project. FERC has set August 14,
2015 for the release of the Environmental Impact Statement (“EIS”)
on the project and November 12, 2015 as the Federal Authorization
Decision deadline (90 days from the date of the EIS).Based on the
FERC schedule, the FID for the project has been pushed to 2016. We
continue to meet our development milestones and both BG and ETE/ETP
remain fully committed to the project and the timetable as Lake
Charles remains one of the lowest cost and most flexible LNG supply
options in BG’s global portfolio.
- ETE’s Board of Directors has approved a
$2 billion common unit buyback program, which is intended to be
used opportunistically and will be utilized and sequenced from time
to time depending on the trading price activity and performance of
ETE’s common units.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, February 19, 2015 to discuss its fourth
quarter 2014 results. The conference call will be broadcast live
via an internet webcast, which can be accessed through www.energytransfer.com and will also be available
for replay on the Partnership’s website 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 and Regency,
including 100% of ETP’s and Regency’s incentive distribution
rights, ETP common units, Regency common units, ETP Class H Units,
and the Partnership’s ownership of Lake Charles LNG. 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 30.8 million ETP common
units, and approximately 50.2 million ETP Class H Units, which
track 50% of the underlying economics of the general partner
interest and IDRs of Sunoco Logistics Partners L.P. (NYSE: SXL).
ETE also owns the general partner and 100% of the IDRs of Regency
Energy Partners LP (NYSE: RGP) and approximately 57.2 million RGP
common units. 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 currently owns and operates approximately 35,000 miles
of natural gas and natural gas liquids pipelines. ETP owns 100% of
Panhandle Eastern Pipe Line Company, LP (the successor of Southern
Union Company) and a 70% interest in Lone Star NGL LLC, a joint
venture that owns and operates natural gas liquids storage,
fractionation and transportation assets. 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. and 100% of Susser Holdings Corporation. Additionally
ETP owns the general partner, 100% of the incentive distribution
rights and approximately 43% of the limited partnership 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.
Regency Energy Partners LP (NYSE: RGP) is a
growth-oriented, midstream energy partnership engaged in the
gathering and processing, compression, treating and transportation
of natural gas; the transportation, fractionation and storage of
natural gas liquids; the gathering, transportation and terminaling
of oil (crude and/or condensate) received from producers; and the
management of coal and natural resource properties in the United
States. Regency’s general partner is owned by Energy Transfer
Equity, L.P. (NYSE:ETE). For more information, visit the Regency
Energy Partners LP web site at www.regencyenergy.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 master limited partnership
that primarily distributes motor fuel to convenience stores,
independent dealers, commercial customers and distributors. Sunoco
LP also operates more than 150 convenience stores and retail fuel
sites. 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.
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
December 31, 2014 2013
ASSETS
CURRENT ASSETS $ 6,153 $ 6,536 PROPERTY, PLANT AND
EQUIPMENT, net 40,292 30,682 ADVANCES TO AND INVESTMENTS IN
UNCONSOLIDATED AFFILIATES 3,659 4,014 NON-CURRENT PRICE RISK
MANAGEMENT ASSETS 10 18 GOODWILL 7,865 5,894 INTANGIBLES ASSETS,
net 5,582 2,264 OTHER NON-CURRENT ASSETS, net 908 922 Total assets
$ 64,469 $ 50,330
LIABILITIES AND
EQUITY
CURRENT LIABILITIES $ 6,782 $ 6,500 LONG-TERM DEBT,
less current maturities 29,653 22,562 DEFERRED INCOME TAXES 4,325
3,865 NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES 154 73 OTHER
NON-CURRENT LIABILITIES 1,193 1,019 COMMITMENTS AND
CONTINGENCIES PREFERRED UNITS OF SUBSIDIARY 33 32 REDEEMABLE
NONCONTROLLING INTEREST 15 — EQUITY: Total partners’ capital
664 1,078 Noncontrolling interest 21,650 15,201 Total equity 22,314
16,279 Total liabilities and equity $ 64,469 $ 50,330
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per unit
data)
(unaudited)
Three Months EndedDecember 31,
Years EndedDecember 31,
2014 2013 2014 2013 REVENUES: $ 13,481
$ 12,607 $ 55,691 $ 48,335 COSTS AND EXPENSES: Cost of products
sold 11,581 11,118 48,389 42,554 Operating expenses 719
466
2,127 1,695 Depreciation, depletion and amortization 476 351 1,724
1,313 Selling, general and administrative 170
136
611 533 Goodwill impairment 370 689 370 689
Total costs and expenses 13,316 12,760 53,221
46,784 OPERATING INCOME (LOSS) 165 (153 ) 2,470 1,551
OTHER INCOME (EXPENSE): Interest expense, net of interest
capitalized (354 ) (308 ) (1,369 ) (1,221 ) Equity in earnings of
unconsolidated affiliates 67 54 332 236 Losses on extinguishments
of debt (27 ) (155 ) (25 ) (162 ) Gains (losses) on interest rate
derivatives (84 ) (2 ) (157 ) 53 Gain on sale of AmeriGas common
units — — 177 87 Non-operating environmental remediation — (168 ) —
(168 ) Other, net 27 (1 ) (11 ) (1 ) INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE (206 ) (733 ) 1,417
375 Income tax expense (benefit) from continuing operations 86
(43 ) 357 93 INCOME (LOSS) FROM CONTINUING
OPERATIONS (292 ) (690 ) 1,060 282 Income (loss) from discontinued
operations (2 ) (11 ) 64 33 NET INCOME (LOSS) (294 )
(701 ) 1,124 315 LESS: NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTEREST (407 ) (529 ) 491 119 NET
INCOME (LOSS) ATTRIBUTABLE TO PARTNERS 113 (172 ) 633 196 GENERAL
PARTNER’S INTEREST IN NET INCOME (LOSS) 1 (1 ) 2 — CLASS D
UNITHOLDER’S INTEREST IN NET INCOME 1 — 2 —
LIMITED PARTNERS’ INTEREST IN NET INCOME (LOSS) $ 111
$ (171 ) $ 629 $ 196 INCOME (LOSS) FROM CONTINUING
OPERATIONS PER LIMITED PARTNER UNIT: Basic $ 0.21 $ (0.31 )
$ 1.15 $ 0.33 Diluted $ 0.21 $ (0.31 ) $ 1.14
$ 0.33 NET INCOME (LOSS) PER LIMITED PARTNER UNIT:
Basic $ 0.21 $ (0.31 ) $ 1.16 $ 0.35 Diluted $
0.21 $ (0.31 ) $ 1.15 $ 0.35
ENERGY TRANSFER
EQUITY, L.P.
DISTRIBUTABLE
CASH FLOW (1)
(Dollars in millions, except per unit
amounts)
(unaudited)
Three Months EndedDecember 31,
Years EndedDecember 31, 2014 2013 2014
2013 Cash distributions from ETP associated with: Limited partner
interest $ 31 $ 45 $ 119 $ 268 Class H Units 60 54 219 105 General
partner interest 5 5 21 20 Incentive distribution rights 208 173
754 701 IDR relinquishments (68 ) (57 ) (250 ) (199 ) Distributions
credited to Holdco consideration (2) — — — (68
) Total cash distributions from ETP 236 220 863 827 Cash
distributions from Regency associated with: Limited partner
interest 29 12 99 48 General partner interest 2 2 6 5 Incentive
distribution rights 10 4 33 12 IDR relinquishment (1 ) (1 ) (3 ) (3
) Total cash distributions from Regency 40 17 135 62 Cash dividends
from Holdco — — — 50 Total cash
distributions from ETP, Regency and Holdco 276 237 998 939
Distributable cash flow attributable to Lake Charles LNG: Revenues
54 — 216 — Operating expenses (4 ) — (17 ) — Selling, general and
administrative expenses (1 ) — (4 ) — Distributable
cash flow attributable to Lake Charles LNG 49 — 195 — Deduct
expenses of the Parent Company on a stand-alone basis: Selling,
general and administrative expenses, excluding non-cash
compensation expense (3 ) (6 ) (13 ) (34 ) Management fee to ETP
(3) (24 ) (5 ) (95 ) (15 ) Interest expense, net of amortization of
financing costs, interest income, and realized gains and losses on
interest rate swaps (56 ) (41 ) (197 ) (190 ) Distributable Cash
Flow 242 185 888 700 Transaction-related expenses 1 —
7 19 Distributable Cash Flow, as adjusted $ 243
$ 185 $ 895 $ 719 Distributable
Cash Flow, as adjusted, per Unit $ 0.45 $ 0.33 $ 1.63
$ 1.28 Cash distributions to be paid to the
partners of ETE: Distributions to be paid to limited partners $ 242
$ 194 $ 866 $ 748 Distributions to be paid to general partner — 1 2
2 Distributions to be paid to Class D unitholder — —
2 — Total cash distributions to be paid to the
partners of ETE $ 242 $ 195 $ 870 $ 750
Distribution Coverage Ratio (4) 1.00x 0.95x 1.03x 0.96x
(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) For the year ended December
31, 2013, cash distributions paid by ETP exclude distributions paid
in respect of the quarter ended March 31, 2013 on 49.5 million ETP
common units issued to ETE as a portion of the consideration for
ETP’s acquisition of ETE’s interest in Holdco on April 30, 2013.
These newly acquired ETP common units received cash distributions
on May 15, 2013; however, such distributions were reduced from the
total cash portion of the consideration paid to ETE in connection
with the April 30, 2013 Holdco transaction pursuant to the
contribution agreement.
(3) 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.
(4) Distribution Coverage Ratio
is calculated as Distributable Cash Flow, as adjusted, divided by
total cash distributions to be paid to the partners of ETE.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(In millions, except per unit amounts)
(unaudited)
Three Months EndedDecember 31, Years EndedDecember 31, 2014
2013 2014 2013 Net income (loss)
attributable to partners $ 113 $ (172 ) $ 633 $ 196 Equity in
earnings related to investments in ETP, Regency and Holdco (160 )
(44 ) (799 ) (617 ) Total cash distributions from ETP, Regency and
Holdco 276 237 998 939 Amortization included in interest expense
(excluding ETP and Regency) 2 4 8 18 Fair value adjustment of ETE
Preferred Units — — — 9 Loss on debt tender offering — 156 — 156
Other non-cash (excluding ETP, Regency and Holdco) 11 4
48 (1 ) Distributable Cash Flow 242 185 888 700
Transaction-related expenses 1 — 7 19
Distributable Cash Flow, as adjusted $ 243 $ 185 $
895 $ 719 Weighted average units outstanding
(common, Class D and General Partner) 541.7 561.3
547.5 562.3
Distributable Cash Flow, as adjusted, per
Unit
$ 0.45 $ 0.33 $ 1.63 $ 1.28
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 from ETP
and Regency in respect of such period in connection with the
Partnership’s investments in limited and general partner interests
of ETP (including the ETP Class H units which track the general
partner and IDRs in SXL) and Regency, 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
beginning January 1, 2014. Distributable Cash Flow and
Distributable Cash Flow, as adjusted, for the year ended December
31, 2013 also included Holdco until ETE’s 60% interest in Holdco
was contributed to ETP on April 30, 2013. 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 (“Parent Company”). The accompanying analysis of
Distributable Cash Flow is presented for the three and twelve
months ended December 31, 2014 and 2013 for comparative
purposes.
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 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. Using this measure, the Partnership’s management can
compare Distributable Cash Flow, as adjusted, among different
periods on a per-unit basis.
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
(Amounts in millions)
(unaudited)
December 31, 2014 2013
ASSETS CURRENT
ASSETS $ 17 $ 13 ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED
AFFILIATES 5,390 3,841 INTANGIBLE ASSETS, net 10 14 GOODWILL 9 9
OTHER NON-CURRENT ASSETS, net 46 41 Total assets $
5,472 $ 3,918
LIABILITIES AND PARTNERS’
CAPITAL CURRENT LIABILITIES $ 72 $ 38 LONG-TERM DEBT, less
current maturities 4,680 2,801 NOTE PAYABLE FROM AFFILIATE 54 —
OTHER NON-CURRENT LIABILITIES 2 1 COMMITMENTS AND
CONTINGENCIES PARTNERS’ CAPITAL: General Partner (1 ) (3 )
Limited Partners: Limited Partners – Common Unitholders
(538,766,899 and 559,923,300 units authorized, issued and
outstanding at December 31, 2014 and 2013, respectively) 648 1,066
Class D Units (1,540,000 units authorized, issued and outstanding)
22 6 Accumulated other comprehensive income (loss) (5 ) 9
Total partners’ capital 664 1,078 Total liabilities
and partners’ capital $ 5,472 $ 3,918
STATEMENTS OF
OPERATIONS
(Amounts in millions)
(unaudited)
Three Months EndedDecember 31, Years EndedDecember 31, 2014
2013 2014 2013 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES $ (28 ) $ (16 ) $ (111 ) $ (56 ) OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized (58 ) (46 ) (205 )
(210 ) Equity in earnings of unconsolidated affiliates 199 44 955
617 Gains (losses) on interest rate derivatives — — — 9 Loss on
extinguishment of debt — (157 ) — (157 ) Other, net (1 ) 3
(5 ) (8 ) INCOME BEFORE INCOME TAXES 112 (172 ) 634 195 Income tax
expense (benefit) (1 ) — 1 (1 ) NET INCOME 113 (172 )
633 196 GENERAL PARTNER’S INTEREST IN NET INCOME 1 (1 ) 2 — CLASS D
UNITHOLDER’S INTEREST IN NET INCOME 1 — 2 —
LIMITED PARTNERS’ INTEREST IN NET INCOME $ 111 $ (171
) $ 629 $ 196
Investor Relations:Energy TransferBrent Ratliff,
214-981-0700orMedia Relations:Granado Communications
GroupVicki Granado, 214-599-8785Cell: 214-498-9272
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