Energy Transfer LP Quarterly Report for Q2 Ended Jun 30, 2011

Summary

Energy Transfer LP's (ET) Q2 2011 filing shows a significant increase in revenues and operating income compared to the prior year's quarter, driven by strong performance in natural gas operations and retail propane segments. This growth is underpinned by strategic acquisitions and expansions, notably the LDH Acquisition which significantly bolstered its NGL platform. The company is also actively pursuing large-scale strategic initiatives, including the pending acquisition of Southern Union Company (SUG) valued at $9.4 billion and the Citrus Transaction involving the Florida Gas Transmission pipeline system. These moves signal a clear intention to expand market reach and diversify revenue streams through fee-based assets and strategic infrastructure plays. Financially, the company has seen a substantial increase in total assets, largely due to property, plant, and equipment growth and significant goodwill additions from acquisitions. Long-term debt has also risen considerably to fund these strategic endeavors. Despite increased leverage, the company appears committed to growth and has demonstrated operational improvements, with healthy cash flow generation from operations supporting its investment activities. Investors should monitor the progress and integration of the major pending acquisitions and their impact on the company's financial leverage and future cash flows.

Key Highlights

• 1Total revenues increased by approximately 45% to $1.97 billion for the three months ended June 30, 2011, compared to $1.36 billion for the same period in 2010.
• 2Operating income rose by approximately 45% to $260.6 million for Q2 2011, up from $179.3 million in Q2 2010.
• 3The LDH Acquisition, completed in May 2011 for $1.97 billion, significantly expanded ET's NGL storage, transportation, and fractionation capabilities, adding $408.3 million in goodwill.
• 4The company is pursuing a $9.4 billion acquisition of Southern Union Company (SUG), which includes cash and ET common units, and aims to close in Q1 2012.
• 5ETP, a subsidiary, issued $1.5 billion in senior notes to repay debt and fund capital expenditures, while Regency issued $500 million in senior notes.
• 6Total assets grew from $17.38 billion at the end of 2010 to $19.87 billion at the end of Q2 2011, with a notable increase in Property, Plant, and Equipment.
• 7Long-term debt increased significantly from $9.35 billion at year-end 2010 to $11.12 billion as of June 30, 2011, largely to fund acquisitions and growth projects.

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