8-KEarnings & ResultsRegulation FDExhibits & Filings

Energy Transfer LP 8-K Report, Financial Results (Aug 11, 2009)

Filed August 11, 2009For Securities:ETET-PI

Summary

Energy Transfer LP (ET) filed an 8-K on August 10, 2009, primarily to furnish a press release announcing its second quarter 2009 financial and operating results. The key information for investors revolves around a downward revision of Energy Transfer Partners, L.P. (ETP) EBITDA guidance for 2009. Originally projected between $1.7 billion and $1.8 billion, the guidance has been lowered to a range of $1.5 billion to $1.6 billion. This revision is attributed to significantly lower natural gas prices since July 2008 and prevailing capital market conditions, which have negatively impacted customers. Consequently, customers have reduced drilling levels and, in some cases, shut in production, leading to lower transportation volumes on ET's intrastate and interstate pipelines than initially forecasted. The company highlights that while a portion of its revenue is fee-based, volume-dependent revenue is affected by these reduced activities.

Key Highlights

  • 1ETP's 2009 EBITDA guidance revised downwards from $1.7-$1.8 billion to $1.5-$1.6 billion.
  • 2Lowered guidance attributed to decreased natural gas prices and capital market conditions impacting customers.
  • 3Reduced customer drilling activity and shut-in production are leading to lower natural gas transportation volumes.
  • 4The company expects to spend between $250 million and $300 million on growth initiatives for the remainder of 2009.
  • 5An additional $480 million to $520 million will be invested in joint ventures for large-diameter interstate pipelines.
  • 6EBITDA, as adjusted, is presented as a non-GAAP measure for performance comparison.
  • 7The press release is furnished, not filed, as per SEC regulations.

Frequently Asked Questions

The primary reason for the downward revision of ETP's 2009 EBITDA guidance is the significant decline in natural gas prices and challenging capital markets since July 2008. These factors have negatively impacted ET's customers, leading to reduced drilling and production activities, which in turn has decreased natural gas transportation volumes.

While a significant portion of Energy Transfer's revenue is derived from long-term fee-based arrangements that are less sensitive to volumes, a portion is based on actual volumes transported. Reduced drilling activity and shut-in production due to low natural gas prices result in lower transportation volumes, thus adversely affecting revenue from these volume-dependent segments.

For the remainder of 2009, ETP anticipates spending between $250 million and $300 million on growth initiatives. Additionally, the company plans to contribute between $480 million and $520 million in cash to joint ventures for the construction of large-diameter interstate pipelines.

'EBITDA, as adjusted' is a non-GAAP financial measure used by management to assess operating performance and compare results with peer companies that may have different capital structures. It represents earnings before interest, taxes, depreciation, amortization, and certain other non-cash items. The company provides this measure to offer additional insight into its operating results.