10-QPeriod: Q3 FY2009

Energy Transfer LP Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 9, 2009For Securities:ETET-PI

Summary

Energy Transfer Equity, L.P. (ET) reported its quarterly financial results for the period ending September 30, 2009. The company experienced a significant decline in total revenues and net income compared to the same period in the previous year, largely driven by lower commodity prices impacting its natural gas and retail propane operations. Despite revenue challenges, the company maintained its regular cash distributions to unitholders, reflecting a focus on returning capital to investors. Key financial developments include a substantial decrease in operating income across most segments, particularly in intrastate transportation and storage, due to lower commodity prices and derivative impacts. The company also highlighted its ongoing strategic investments in growth projects, such as the Midcontinent Express Pipeline (MEP) and Fayetteville Express Pipeline (FEP), and efforts to manage liquidity through existing credit facilities and recent debt and equity offerings. Management expressed cautious optimism about future funding and operational stability, while acknowledging the ongoing economic recession and volatile commodity market conditions.

Financial Highlights

19 data points
Beta

Revenue

$1.13B

Net Income

$46.97M

4.2% Net Margin

Cash & Equivalents

$50.19M

Free Cash Flow

$67.93M

Financial Statements
Beta
Revenue$1.13B
SG&A Expenses$34.58M
Operating Expenses$956.35M
Operating Income$173.50M
Interest Expense$120.10M
Net Income$46.97M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2009, decreased significantly to $3.91 billion from $7.50 billion in the prior year's comparable period.
  • 2Net income attributable to partners for the nine months ended September 30, 2009, decreased to $302.9 million from $352.5 million in the prior year's comparable period.
  • 3Operating income across segments showed a decline, with Intrastate Transportation and Storage experiencing the largest decrease, largely due to lower commodity prices and unfavorable derivative impacts.
  • 4The company continued to pay regular cash distributions to its limited partners, maintaining a quarterly distribution of $0.535 per Common Unit.
  • 5Significant capital expenditures were made towards growth projects, including contributions to the Midcontinent Express Pipeline (MEP) and Fayetteville Express Pipeline (FEP) joint ventures.
  • 6ETP successfully raised capital through debt and equity offerings totaling approximately $2.4 billion since December 1, 2008, enhancing liquidity.
  • 7The company was compliant with all debt covenants as of September 30, 2009.

Frequently Asked Questions

The decline in revenue and net income was primarily driven by lower commodity prices for natural gas and propane, which significantly impacted the company's natural gas operations and retail propane segment. Additionally, the company experienced unfavorable impacts from derivative activities, particularly in its storage operations, and a decrease in volumes transported due to reduced drilling activity by customers.

Energy Transfer Equity, L.P. is managing its liquidity through a combination of existing credit facilities, cash from operations, and recent debt and equity offerings that have raised significant capital. The company has also focused on reducing discretionary capital expenditures and managing operating costs. Management expects to fund its capital requirements through these resources until the latter half of 2010, although they reserve the right to access capital markets sooner if deemed prudent.

The Midcontinent Express Pipeline (MEP) became operational in August 2009, and a capacity expansion was approved. The company made significant capital contributions to MEP during the period to reduce outstanding debt under its credit facility. The Fayetteville Express Pipeline (FEP) project is proceeding, with plans to finalize a credit facility. The company anticipates making further capital contributions to FEP if the financing is not secured.

The company has been involved in significant legal proceedings, including a settlement with the FERC regarding alleged market manipulation, resulting in a $5 million payment and the establishment of a $25 million fund for third-party claims. The company also faces ongoing third-party litigation related to these matters, with an accrual of $30.0 million established as of September 30, 2009, to cover potential resolutions. While the company believes its accrual is adequate, it acknowledges the possibility of exceeding this amount.