Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the fourth
quarter ended December 31, 2016.
ETE’s net income attributable to partners was $233 million for
the three months ended December 31, 2016 as compared to $314
million for the three months ended December 31, 2015. Distributable
Cash Flow, as adjusted, was $299 million for the three months ended
December 31, 2016 as compared to $343 million for the three
months ended December 31, 2015.
The decreases in net income attributable to partners and
Distributable Cash Flow, as adjusted, were primarily driven by a
$95 million reduction in incentive distributions from ETP. As
previously reported, ETE has agreed to a reduction in incentive
distributions from ETP in the aggregate amount of $720 million over
a period of seven quarters, beginning the quarter ended June 30,
2016.
The Partnership’s recent key accomplishments and other
developments include the following:
- In January 2017, ETE issued 32.2
million common units representing limited partner interests in the
Partnership to certain institutional investors in a private
transaction for gross proceeds of approximately $580 million, which
ETE used to purchase 15.8 million newly issued ETP common
units.
- On January 26, 2017, the Partnership
announced its quarterly cash distribution of $0.285 per ETE common
unit for the fourth quarter ended December 31, 2016, or $1.14 per
unit on an annualized basis.
- As of December 31, 2016, ETE’s $1.50
billion revolving credit facility had $875 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 3.00x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, February 23, 2017 to discuss its
fourth quarter 2016 results. The conference call will be broadcast
live via an internet webcast, which can be accessed through
www.energytransfer.com and will also
be available for replay on the Partnership’s website for a limited
time.
The Partnership’s principal sources of cash flow are derived
from distributions related to its direct and indirect investments
in the limited and general partner interests in Energy Transfer
Partners, L.P. (“ETP”) and Sunoco LP, including 100% of ETP’s and
Sunoco LP’s incentive distribution rights, ETP and Sunoco LP common
units, ETP Class I Units, and, through ETP Class H Units, which
track 90% of the underlying economics of the general partner
interest and IDRs of Sunoco Logistics Partners L.P. (“Sunoco
Logistics”), as well as the Partnership’s ownership of Lake Charles
LNG. The Partnership’s primary cash requirements are for general
and administrative expenses, debt service requirements and
distributions to its partners.
Energy Transfer Equity, L.P. (NYSE: ETE) is a
master limited partnership that owns the general partner and 100%
of the incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN). ETE also
owns approximately 18.4 million ETP common units and approximately
81.0 million ETP Class H Units, which track 90% of the underlying
economics of the general partner interest and IDRs of Sunoco
Logistics Partners L.P. (NYSE: SXL). On a consolidated basis,
ETE’s family of companies owns and operates approximately 71,000
miles of natural gas, natural gas liquids, refined products, and
crude oil pipelines. For more information, visit the Energy
Transfer Equity, L.P. website at www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE: ETP) is a
master limited partnership that owns and operates one of the
largest and most diversified portfolios of energy assets in the
United States. ETP’s subsidiaries include Panhandle Eastern Pipe
Line Company, LP (the successor of Southern Union Company) and Lone
Star NGL LLC, which owns and operates natural gas liquids storage,
fractionation and transportation assets. In total, ETP currently
owns and operates more than 62,500 miles of natural gas and natural
gas liquids pipelines. ETP also owns the general partner, 100% of
the incentive distribution rights, and approximately 67.1 million
common units of Sunoco Logistics Partners L.P. (NYSE: SXL), which
operates a geographically diverse portfolio of pipelines,
terminalling and acquisition and marketing assets. ETP recently
acquired the general partner, 100% of the incentive distribution
rights, and an approximate 65% limited partnership interest in
PennTex Midstream Partners, LP (NASDAQ: PTXP), which is a
growth-oriented master limited partnership that provides natural
gas gathering and processing and residue gas and natural gas
liquids transportation services to producers in northern Louisiana.
ETP’s general partner is owned by Energy Transfer Equity, L.P.
(NYSE: ETE). For more information, visit the Energy Transfer
Partners, L.P. website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master
limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary
pipeline, terminalling and acquisition and marketing assets which
are used to facilitate the purchase and sale of crude oil, natural
gas liquids, and refined products. SXL’s general partner is a
consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the Sunoco Logistics Partners
L.P. website at www.sunocologistics.com.
Sunoco LP (NYSE: SUN) is a master limited partnership
that operates approximately 1,345 convenience stores and retail
fuel sites and distributes motor fuel to approximately 7,325
convenience stores, independent dealers, commercial customers and
distributors located in 30 states. SUN’s parent -- Energy Transfer
Equity, L.P. (NYSE: ETE) -- owns SUN's general partner and
incentive distribution rights. For more information, visit the
Sunoco LP website at www.sunocolp.com.
PennTex Midstream Partners, LP (NASDAQ: PTXP) is a
growth-oriented master limited partnership focused on owning,
operating, acquiring and developing midstream energy infrastructure
assets in North America. PTXP provides natural gas gathering and
processing and residue gas and natural gas liquids transportation
services to producers in the Terryville Complex in northern
Louisiana. PennTex Midstream Partners, LP’s general partner is a
consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the PennTex Midstream Partners,
LP website at www.penntex.com.
Forward-Looking Statements
This press release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
management’s control. An extensive list of factors that can affect
future results are discussed in the Partnership’s Annual Reports on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
The information contained in this press release is available on
our web site at www.energytransfer.com.
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
December 31, 2016
2015
ASSETS Current assets $ 6,985 $
5,410 Property, plant and equipment, net 55,438 48,683
Advances to and investments in unconsolidated affiliates
3,040 3,462 Other non-current assets, net 818 730 Intangible
assets, net 5,992 5,431 Goodwill 6,738 7,473
Total assets $ 79,011 $ 71,189
LIABILITIES AND EQUITY Current liabilities $ 7,277 $
4,910 Long-term debt, less current maturities 42,608 36,837
Long-term notes payable - related companies 250 — Deferred income
taxes 5,112 4,590 Non-current derivative liabilities 76 137 Other
non-current liabilities 1,123 1,069 Commitments and
contingencies Preferred units of subsidiary 33 33 Redeemable
noncontrolling interest 15 15 Equity: Total partners’
deficit (1,694 ) (932 ) Noncontrolling interest 24,211
24,530 Total equity 22,517
23,598 Total liabilities and equity $ 79,011 $
71,189
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2016
2015 2016 2015
REVENUES: $ 10,803 $ 9,536 $ 37,504 $ 42,126 COSTS AND EXPENSES:
Cost of products sold 8,532 7,561 28,656 34,009 Operating expenses
678 706 2,696 2,661 Depreciation, depletion and amortization 614
548 2,359 2,079 Selling, general and administrative 218 146 807 639
Impairment losses 1,487 339
1,487 339 Total costs and expenses
11,529 9,300 36,005
39,727 OPERATING INCOME (LOSS) (726 ) 236 1,499 2,399 OTHER
INCOME (EXPENSE): Interest expense, net of interest capitalized
(474 ) (422 ) (1,832 ) (1,643 ) Equity in earnings (losses) of
unconsolidated affiliates 65 (8 ) 270 276 Impairment of investment
in an unconsolidated affiliate — — (308 ) — Gain on acquisitions 83
— 83 — Losses on extinguishments of debt — — — (43 ) Gains (losses)
on interest rate derivatives 167 (4 ) (12 ) (18 ) Other, net
30 (33 ) 124 22 INCOME
(LOSS) BEFORE INCOME TAX EXPENSE (855 ) (231 ) (176 ) 993 Income
tax expense (benefit) from continuing operations (95 )
(93 ) (217 ) (100 ) NET INCOME (LOSS) (760 )
(138 ) 41 1,093 LESS: Net loss attributable to noncontrolling
interest (993 ) (452 ) (954 ) (96 ) NET
INCOME ATTRIBUTABLE TO PARTNERS 233 314 995 1,189 General Partner’s
interest in net income 1 1 3 3 Convertible Unitholders’ interest in
income 6 — 9 — Class D Unitholder’s interest in net income —
1 — 3 Limited
Partners’ interest in net income $ 226 $ 312 $ 983
$ 1,183 NET INCOME PER LIMITED PARTNER UNIT: Basic $
0.22 $ 0.30 $ 0.94 $ 1.11 Diluted $
0.21 $ 0.30 $ 0.92 $ 1.11 WEIGHTED
AVERAGE NUMBER OF UNITS OUTSTANDING: Basic 1,046.9
1,052.5 1,045.5 1,062.8
Diluted 1,105.3 1,053.8 1,078.6
1,064.4
ENERGY TRANSFER
EQUITY, L.P.
SUPPLEMENTAL
INFORMATION
(In millions)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2016
2015 2016 2015
Cash distributions from ETP associated with: Limited partner
interest $ 20 $ 3 $ 28 $ 54 Class H Units 94 77 357 263 General
partner interest 8 8 32 31 Incentive distribution rights 351 324
1,363 1,261 IDR relinquishments, net of Class I distributions (1)
(138 ) (28 ) (409 ) (111 ) Total cash
distributions from ETP 335 384 1,371 1,498 Cash distributions from
Sunoco LP (2) 22 17 88
25 Cash distributions from investments in
subsidiaries $ 357 $ 401 $ 1,459 $ 1,523
Distributable cash flow attributable to Lake Charles
LNG: Revenues $ 49 $ 54 $ 197 $ 216 Operating expenses (3 ) (5 )
(16 ) (17 ) Selling, general and administrative expenses —
— (2 ) (3 ) Distributable cash
flow attributable to Lake Charles LNG $ 46 $ 49 $ 179
$ 196 Expenses of the Parent Company on a cash
basis: Selling, general and administrative expenses, excluding
certain non-cash expenses $ 8 $ 12 $ 80 $ 21 Management fee to ETP
(3) 24 24 95 95 Interest expense, net of amortization of financing
costs, interest income, and realized gains and losses on interest
rate swaps 80 75 315
281 Total Parent Company expenses $ 112 $ 111
$ 490 $ 397 Cash distributions
to be paid to the partners of ETE: Distributions to be paid to
limited partners (4) $ 250 $ 298 $ 971 $ 1,139 Distributions to be
paid to general partner 1 — 3 2 Distributions to be paid to Class D
unitholder — 1 — 3
Total cash distributions to be paid to the partners of ETE $
251 $ 299 $ 974 $ 1,144 Common
units outstanding — end of period 1,046.9
1,044.8 1,046.9 1,044.8
(1)
IDR relinquishments for the three months and year ended
December 31, 2016 include the impact of incentive distribution
reductions with respect to the second, third and fourth quarters
2016 of $75 million, $85 million and $95 million, respectively, as
agreed to between ETE and ETP in July 2016.
(2)
Effective July 1, 2015, ETE acquired 100% of the membership
interests of Sunoco GP LLC, the general partner of Sunoco LP, and
all of the IDRs of Sunoco LP from ETP.
(3)
In exchange for management services, ETE has agreed to pay to ETP
fees totaling $95 million per year. For GAAP purposes, ETE has
capitalized fees totaling $3 million for the three months ended
December 31, 2016 and 2015 and $13 million for the years ended
December 31, 2016 and 2015.
(4)
Includes distributions of $0.11 per common unit for the three
months ended December 31, 2016, and $0.44 per common unit for the
year ended December 31, 2016, to unitholders who elected to
participate in a plan to forgo a portion of their future potential
cash distributions on common units for a period of up to nine
fiscal quarters, commencing with the with distributions for the
quarter ended March 31, 2016, and reinvest those distributions in
the Convertible Units representing limited partner interest in the
Partnership.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(Dollars in millions)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2016
2015 2016 2015 Net
income attributable to partners $ 233 $ 314 $ 995 $ 1,189 Equity in
earnings related to investments in ETP and Sunoco LP (309 ) (387 )
(1,374 ) (1,443 ) Total cash distributions from investments in
subsidiaries 357 401 1,459 1,523 Amortization included in interest
expense (excluding ETP and Sunoco LP) 3 5 12 12 Other non-cash
(excluding ETP and Sunoco LP) 7 6
56 41 Distributable Cash Flow 291 339
1,148 1,322 Transaction-related expenses 8 4 59 9 Bakken Pipeline
Transaction — pro forma interest expense — —
— (6 ) Distributable Cash Flow, as
adjusted $ 299 $ 343 $ 1,207 $ 1,325
Total cash distributions to be paid to the partners of ETE
251 299 974 1,144
Distribution coverage ratio(1) 1.19x 1.15x 1.24x
1.16x
(1)
This press release and accompanying schedules include the
non-generally accepted accounting principle (“non-GAAP”) financial
measures of Distributable Cash Flow, Distributable Cash Flow, as
adjusted, and Distributable Cash Flow, as adjusted, per Unit. The
Partnership’s non-GAAP financial measures should not be considered
as alternatives to GAAP financial measures such as net income, cash
flow from operating activities or any other GAAP measure of
liquidity or financial performance.
Distributable Cash
Flow and Distributable Cash Flow, as adjusted. The
Partnership defines Distributable Cash Flow and Distributable Cash
Flow, as adjusted, for a period as cash distributions expected to
be received in respect of such period in connection with the
Partnership’s investments in limited and general partner interests,
net of the Partnership’s cash expenditures for general and
administrative costs and interest expense. The Partnership’s
definitions of Distributable Cash Flow and Distributable Cash Flow,
as adjusted, also include distributable cash flow from Lake Charles
LNG to the Partnership. For Distributable Cash Flow, as adjusted,
certain transaction-related expenses that are included in net
income are excluded.
Distributable Cash Flow is a significant
liquidity measure used by the Partnership’s senior management to
compare net cash flows generated by the Partnership to the
distributions the Partnership expects to pay its unitholders. Due
to cash expenses incurred from time to time in connection with the
Partnership’s merger and acquisition activities and other
transactions, Distributable Cash Flow, as adjusted, is also a
significant liquidity measure used by the Partnership’s senior
management to compare net cash flows generated by the Partnership
to the distributions the Partnership expects to pay its
unitholders. Using these measures, the Partnership’s management can
compute the coverage ratio of estimated cash flows for a period to
planned cash distributions for such period.
Distributable Cash Flow and Distributable
Cash Flow, as adjusted, are also important non-GAAP financial
measures for our limited partners since these indicate to investors
whether the Partnership’s investments are generating cash flows at
a level that can sustain or support an increase in quarterly cash
distribution levels. Financial measures such as Distributable Cash
Flow and Distributable Cash Flow, as adjusted, are quantitative
standards used by the investment community with respect to publicly
traded partnerships because the value of a partnership unit is in
part measured by its yield (which in turn is based on the amount of
cash distributions a partnership can pay to a unitholder). The GAAP
measure most directly comparable to Distributable Cash Flow, and
Distributable Cash Flow, as adjusted, is net income for ETE on a
stand-alone basis (the “Parent Company”).
Distributable Cash
Flow, as adjusted, per Unit. The Partnership defines
Distributable Cash Flow, as adjusted, per Unit for a period as the
quotient of Distributable Cash Flow, as adjusted, divided by the
weighted average number of units outstanding. For purposes of this
calculation, the number of units outstanding represents the
Partnership’s basic average common units outstanding plus Class D
units outstanding and the general partner common unit
equivalent.
Similar to Distributable Cash Flow, as
adjusted, as described above, Distributable Cash Flow, as adjusted,
per Unit is a significant liquidity measure used by the
Partnership’s senior management to compare net cash flows generated
by the Partnership to the distributions the Partnership expects to
pay to its unitholders.
Distribution
Coverage Ratio. The Partnership defines Distribution
Coverage Ratio for a period as Distributable Cash Flow, as
adjusted, divided by total cash distributions expected to be paid
to the partners of ETE in respect of such period.
SUPPLEMENTAL
INFORMATION
FINANCIAL
STATEMENTS FOR PARENT COMPANY
Following are condensed balance sheets and
statements of operations of the Parent Company on a stand-alone
basis.
BALANCE
SHEETS
(In millions)
(unaudited)
December 31, 2016
2015
ASSETS Current assets $ 57 $ 35 Property,
plant and equipment, net 36 20 Advances to and investments in
unconsolidated affiliates 5,088 5,764 Intangible assets, net 1 6
Goodwill 9 9 Other non-current assets, net 10
10 Total assets $ 5,201 $ 5,844
LIABILITIES
AND PARTNERS’ CAPITAL Current liabilities $ 92 $ 178 Long-term
debt, less current maturities 6,358 6,332 Note payable to affiliate
443 265 Other non-current liabilities 2 1 Commitments and
contingencies Partners’ deficit: General Partner (3 ) (2 )
Limited Partners: Common unitholders (1,871 ) (952 ) Class D Units
— 22 Series A Convertible Preferred Units 180
— Total partners’ deficit (1,694 ) (932 )
Total liabilities and partners’ deficit $ 5,201 $ 5,844
STATEMENTS OF
OPERATIONS
(In millions)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2016
2015 2016 2015
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ (29 ) $ (31 ) $ (185
) $ (112 ) OTHER INCOME (EXPENSE): Interest expense, net of
interest capitalized (83 ) (80 ) (327 ) (294 ) Equity in earnings
of unconsolidated affiliates 345 427 1,511 1,601 Other, net
— (2 ) (4 ) (5 ) INCOME BEFORE INCOME
TAXES 233 314 995 1,190 Income tax expense — —
— 1 NET INCOME 233 314 995 1,189
General Partner’s interest in net income 1 1 3 3 Convertible
Unitholders’ interest in income 6 — 9 — Class D Unitholder’s
interest in net income — 1 —
3 Limited Partners’ interest in net income $
226 $ 312 $ 983 $ 1,183
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Investor Relations:Energy TransferHelen Ryoo, Lyndsay
Hannah or Brent Ratliff, 214-981-0795ORMedia
Relations:Granado Communications GroupVicki Granado,
214-599-8785214-498-9272 (cell)
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