10-KPeriod: FY2014

Energy Transfer LP Annual Report, Year Ended Dec 31, 2014

Filed March 2, 2015For Securities:ETET-PI

Summary

Energy Transfer Equity, L.P. (ETE) reported significant operational and strategic activity for the fiscal year ending December 31, 2014. The company's primary business segments are its investments in Energy Transfer Partners (ETP) and Regency Energy Partners (Regency), alongside its Lake Charles LNG operations. ETE's financial performance and growth are largely driven by the performance of these subsidiaries. Throughout 2014, ETE and its subsidiaries engaged in a series of strategic transactions, including significant acquisitions and pipeline projects, aimed at expanding their infrastructure and market reach. Key developments include the pending merger of Regency with ETP and the transfer of ETE's interest in the Bakken Pipeline Project to ETP. These transactions reflect a strategy focused on consolidating and growing midstream energy infrastructure assets. The company also highlighted its retail marketing operations through Sunoco LP, which contributed to its overall business. Investors should note the company's substantial debt levels and ongoing capital expenditure plans.

Financial Highlights

44 data points
Beta

Revenue

$55.69B

13.1% Gross Margin

Net Income

$633.00M

1.1% Net Margin

Total Assets

$64.28B

Cash & Equivalents

$839.00M

Free Cash Flow

$3.17B

Financial Statements
Beta
Revenue$55.69B
Cost of Revenue$48.41B
Gross Profit$7.30B
SG&A Expenses$611.00M
Operating Expenses$53.22B
Operating Income$2.47B
Interest Expense$1.37B
Net Income$633.00M

Key Highlights

  • 1ETE's business is heavily influenced by its investments in ETP and Regency, which are master limited partnerships engaged in diversified energy-related services.
  • 2Significant strategic transactions occurred in 2014, including major acquisitions by Regency (PVR, Eagle Rock) and ETP (Susser), and the planned merger of Regency into ETP in Q2 2015.
  • 3ETE is actively involved in the development of large-scale projects, such as the Bakken Pipeline Project, and is expanding its NGL infrastructure with projects like the Lone Star NGL Pipeline.
  • 4The company operates a diversified portfolio, including natural gas transportation and storage, midstream operations, NGL transportation and services, and a retail marketing segment through Sunoco LP.
  • 5Goodwill impairments were recorded for Lake Charles LNG ($689 million in 2013) and Regency's Permian Basin operations ($370 million in 2014) due to changes in market conditions and asset valuations.
  • 6Total debt increased significantly, with consolidated indebtedness reaching approximately $30.66 billion as of December 31, 2014, impacting the company's financial flexibility.
  • 7Capital expenditures for 2015 were projected to be substantial, with ETP alone planning between $6.25 billion and $7.065 billion in growth capital, indicating a strong focus on expansion.

Frequently Asked Questions

ETE's primary business strategy is to increase distributable cash flow to its unitholders by supporting its subsidiaries, ETP and Regency, in growing their natural gas and liquids businesses. This growth is driven through strategic acquisitions, construction, and expansion opportunities within their existing infrastructure.

Key transactions in 2014 included Regency's acquisitions of PVR ($5.7 billion) and Eagle Rock's midstream business ($1.3 billion), ETP's merger with Susser ($1.8 billion), and Sunoco LP's acquisition of MACS. Additionally, ETE and ETP announced final terms for the Bakken Pipeline Project transaction in December 2014, and ETP and Regency entered into a merger agreement for Regency to merge with a subsidiary of ETP, expected to close in Q2 2015.

ETE and its subsidiaries utilize a combination of operating cash flows, debt financings, and equity issuances to fund their operations and growth projects. The company has significant outstanding debt, with consolidated debt reaching approximately $30.66 billion as of December 31, 2014. Debt agreements contain covenants that place limitations on various aspects of their operations, including incurring additional indebtedness and making distributions.

The pending merger of Regency with ETP is a significant strategic move expected to enhance ETP's scale and operational efficiencies. ETE is also agreeing to reduce its incentive distributions (IDRs) from ETP over a five-year period as part of the transaction. The merger is subject to customary closing conditions, including unitholder approval.