10-KPeriod: FY2010

Energy Transfer LP Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:ETET-PI

Summary

Energy Transfer LP's (ET) 2010 10-K filing reveals a year of significant strategic expansion and operational growth. The company successfully acquired a controlling interest in Regency Energy Partners LP, diversifying its midstream operations into key natural gas producing regions. This, combined with continued investments in its existing Energy Transfer Partners (ETP) infrastructure, including new pipelines like the Fayetteville Express and Tiger pipelines, positions ET for future growth. Financially, the year was marked by substantial debt issuance, including $1.8 billion in Senior Notes, to fund its expansion and manage its capital structure. While reporting robust revenues driven by its natural gas and retail propane segments, ET's consolidated net income saw a decrease compared to the prior year, largely due to the acquisition costs and increased interest expenses. Investors should note the company's reliance on distributions from ETP and Regency for its own cash flow and the associated risks tied to their operational performance and financial health.

Financial Highlights

44 data points
Beta

Revenue

$6.56B

37.9% Gross Margin

Net Income

$193.00M

2.9% Net Margin

Total Assets

$17.38B

Cash & Equivalents

$86.00M

Free Cash Flow

$1.09B

Financial Statements
Beta
Revenue$6.56B
Cost of Revenue$4.10B
Gross Profit$2.49B
SG&A Expenses$233.00M
Operating Expenses$5.51B
Operating Income$1.04B
Interest Expense$625.00M
Net Income$193.00M

Key Highlights

  • 1Acquisition of a controlling interest in Regency Energy Partners LP, expanding midstream service offerings in key shale plays.
  • 2Significant investments in pipeline construction, including the completion of the Fayetteville Express and Tiger pipelines by ETP.
  • 3Issued $1.8 billion in Senior Notes, strengthening the Parent Company's capital structure.
  • 4ETP's gross margin experienced a slight decrease, primarily due to less favorable intrastate transportation and storage margins, partially offset by growth in midstream operations.
  • 5Regency's operations were consolidated from May 2010, contributing to the overall financial results.
  • 6Managed commodity price risk through various derivative financial instruments across natural gas, NGL, and propane segments.
  • 7ETP and Regency continued to focus on expanding their asset base through strategic acquisitions and internal growth projects.

Frequently Asked Questions

In 2010, ETE's most significant strategic move was the acquisition of a controlling interest in Regency Energy Partners LP. This acquisition broadened ETE's midstream operations into several prolific natural gas producing regions. Additionally, ETE's subsidiary, ETP, completed several pipeline projects and continued investing in its infrastructure.

The Regency acquisition, completed in May 2010, led to the consolidation of Regency's results into ETE's financial statements from that point forward. While it diversified ETE's operations and cash flows, the acquisition also involved transaction costs and contributed to increased debt levels. ETE recorded a net loss for Regency for the portion of the year it was consolidated.

ETE's primary source of cash flow comes from distributions received from its direct and indirect investments in ETP and Regency. The associated risk is that ETE's ability to generate cash is entirely dependent on the operational and financial performance of ETP and Regency, and their ability to make cash distributions to ETE.

In 2010, ETE significantly increased its debt by issuing $1.8 billion in Senior Notes. These proceeds were used to repay existing credit facilities and for general partnership purposes. ETP also raised capital through equity offerings and borrowings under its credit facilities to fund its capital expenditures and growth projects.