Energy Transfer Equity Reports First Quarter Results

  Energy Transfer Equity Reports First Quarter Results

Business Wire

DALLAS -- May 6, 2014

Energy Transfer Equity, L.P. (NYSE:ETE) today reported financial results for
the quarter ended March31, 2014.

Distributable Cash Flow, as adjusted, for the three months ended March31,
2014 was $199 million compared to $178 million for the three months ended
March31, 2013, an increase of $21 million. ETE’s net income attributable to
partners was $168 million for the three months ended March31, 2014 compared
to $90 million for the three months ended March31, 2013, an increase of $78
million.

The Partnership’s key accomplishments during or subsequent to the quarter
include the following:

  *In January, ETE completed a two-for-one split of its outstanding common
    units. All unit and per-unit amounts reported herein have been adjusted to
    give effect to the split.
  *Effective January 1, 2014, ETE closed on its acquisition of Trunkline LNG
    Company, LLC (“Trunkline LNG”) from Energy Transfer Partners, L.P. (“ETP”)
    in exchange for the redemption by ETP of 18.7 million ETP units held by
    ETE.
  *ETE increased the capacity on its revolving credit facility to $1.2
    billion through two steps, in February and May, in order to support its
    previously announced unit buyback program and to fund the purchase of $400
    million of Regency common units in connection with Regency Energy Partners
    LP’s (“Regency”) pending Eagle Rock acquisition.
  *In April, ETE amended its Senior Secured Term Loan Agreement to increase
    the aggregate principal amount to $1.4 billion and used the proceeds from
    this $400 million increase to repay borrowings under our revolving credit
    facility and for general partnership purposes.
  *In April, ETE’s Board of Directors approved its sixth consecutive increase
    in its quarterly distribution to $0.35875 per unit ($1.435 annualized) on
    ETE Common Units for the quarter ended March 31, 2014.
  *From January through April, ETE repurchased approximately $750 million of
    ETE common units under its buyback program.
  *Trunkline LNG Export, LLC and Trunkline LNG filed an application with the
    Federal Energy Regulatory Commission (the “FERC”), seeking authorization
    for its proposed new liquefaction facilities and modifications to
    Trunkline LNG’s existing terminal to facilitate the storage and subsequent
    export of LNG (the “Liquefaction Project”). In addition, Trunkline LNG
    filed an application with the FERC to convert Trunkline LNG’s existing
    regasification facilities from Section 7 (open access) to Section 3 status
    in conjunction with the Liquefaction Project. The FERC filings represent
    the culmination of significant front-end engineering design efforts for
    the Liquefaction Project and pre-filing consultations with the FERC and
    other federal, state and local agencies that have been underway since
    mid-2012. Approval of these applications is requested from the FERC by
    April 1, 2015.

The Partnership has scheduled a conference call for 8:30 a.m. Central Time,
Wednesday, May 7, 2014 to discuss its first quarter 2014 results. The
conference call will be broadcast live via an internet web cast, 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 ETP and Regency, including 100% of ETP’s and
Regency’s incentive distribution rights, ETP common units, Regency common
units, ETP Class H Units, and the Partnership’s ownership of Trunkline 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 which
owns the general partner and 100% of the incentive distribution rights (IDRs)
of Energy Transfer Partners, L.P. (NYSE: ETP), approximately 30.8 million ETP
common units, and approximately 50.2 million ETP Class H Units, which track
50% of the underlying economics of the general partner interest and IDRs of
Sunoco Logistics Partners L.P. (NYSE: SXL). ETE also owns the general partner
and 100% of the IDRs of Regency Energy Partners LP (NYSE: RGP) and
approximately 26.3 million RGP common units. The Energy Transfer family of
companies owns more than 61,000 miles of natural gas, natural gas liquids,
refined products, and crude oil pipelines. For more information, visit the
Energy Transfer Equity, L.P. web site at www.energytransfer.com.

Energy Transfer Partners, L.P. (NYSE:ETP) is a master limited partnership
owning and operating one of the largest and most diversified portfolios of
energy assets in the United States. ETP currently owns and operates
approximately 35,000 miles of natural gas and natural gas liquids pipelines.
ETP owns 100% of Panhandle Eastern Pipe Line Company, LP (the successor of
Southern Union Company) and Sunoco, Inc., and a 70% interest in Lone Star NGL
LLC, a joint venture that owns and operates natural gas liquids storage,
fractionation and transportation assets. ETP also owns the general partner,
100% of the incentive distribution rights, and approximately 33.5 million
common units in Sunoco Logistics Partners L.P. (NYSE: SXL), which operates a
geographically diverse portfolio of crude oil and refined products pipelines,
terminalling and crude oil acquisition and marketing assets. ETP’s general
partner is owned by ETE. For more information, visit the Energy Transfer
Partners, L.P. web site at www.energytransfer.com.

Regency Energy Partners LP (NYSE: RGP) is a growth-oriented, midstream energy
partnership engaged in the gathering and processing, contract compression,
treating and transportation of natural gas and the transportation,
fractionation and storage of natural gas liquids. RGP also holds a 30%
interest in Lone Star NGL LLC, a joint venture that owns and operates natural
gas liquids storage, fractionation, and transportation assets in Texas,
Louisiana and Mississippi. Regency’s general partner is owned by Energy
Transfer Equity, L.P. (NYSE: ETE). For more information, visit the Regency
Energy Partners LP web site at www.regencyenergy.com.

Sunoco Logistics Partners L.P. (NYSE:SXL), headquartered in Philadelphia, is a
master limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary crude oil
and refined product pipeline, terminalling, and acquisition and marketing
assets. SXL’s general partner is owned by Energy Transfer Partners, L.P.
(NYSE: ETP). For more information, visit the Sunoco Logistics Partners, L.P.
web site at www.sunocologistics.com.

                                                              
                                                                  
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(unaudited)
                                                                  
                                                     March 31,    December 31,
                                                     2014         2013
ASSETS
                                                                  
CURRENT ASSETS                                       $ 7,516      $   6,536
                                                                  
PROPERTY, PLANT AND EQUIPMENT, net                     34,115         30,682
                                                                  
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED          3,818          4,014
AFFILIATES
NON-CURRENT PRICE RISK MANAGEMENT ASSETS               1              18
GOODWILL                                               6,216          5,894
INTANGIBLE ASSETS, net                                 5,132          2,264
OTHER NON-CURRENT ASSETS, net                         971          922
Total assets                                         $ 57,769    $   50,330
                                                                  
                                                                  
LIABILITIES AND EQUITY
                                                                  
CURRENT LIABILITIES                                  $ 8,091      $   6,500
                                                                  
LONG-TERM DEBT, less current maturities                24,905         22,562
DEFERRED INCOME TAXES                                  3,700          3,865
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES          59             73
OTHER NON-CURRENT LIABILITIES                          1,024          1,019
                                                                  
COMMITMENTS AND CONTINGENCIES
                                                                  
PREFERRED UNITS OF SUBSIDIARY                          32             32
                                                                  
EQUITY:
Total partners’ capital                                1,286          1,078
Noncontrolling interest                               18,672       15,201
Total equity                                          19,958       16,279
Total liabilities and equity                         $ 57,769    $   50,330

                                               
                                                  
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

(unaudited)
                                                  
                                                  Three Months Ended March 31,
                                                  2014            2013
REVENUES                                          $  13,080        $  11,179
COSTS AND EXPENSES:
Cost of products sold                                11,442           9,807
Operating expenses                                   407              372
Depreciation and amortization                        373              312
Selling, general and administrative                 148            157    
Total costs and expenses                            12,370         10,648 
OPERATING INCOME                                     710              531
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized        (315    )        (310   )
Equity in earnings of unconsolidated                 104              90
affiliates
Gains (losses) on interest rate derivatives          (2      )        6
Gain on sale of AmeriGas common units                70               —
Other, net                                          2              (19    )
INCOME FROM CONTINUING OPERATIONS BEFORE             569              298
INCOME TAX EXPENSE
Income tax expense (benefit) from continuing        145            (2     )
operations
INCOME FROM CONTINUING OPERATIONS                    424              300
Income from discontinued operations                 24             22     
NET INCOME                                           448              322
LESS: NET INCOME ATTRIBUTABLE TO                    280            232    
NONCONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO PARTNERS                  168              90
GENERAL PARTNER’S INTEREST IN NET INCOME             —                —
CLASS D UNITHOLDER INTEREST IN NET INCOME           1              —      
LIMITED PARTNERS’ INTEREST IN NET INCOME          $  167          $  90     
INCOME FROM CONTINUING OPERATIONS PER LIMITED
PARTNER UNIT:
Basic                                             $  0.30         $  0.14   
Diluted                                           $  0.30         $  0.14   
NET INCOME PER LIMITED PARTNER UNIT:
Basic                                             $  0.30         $  0.16   
Diluted                                           $  0.30         $  0.16   
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
Basic                                               557.7          559.9  
Diluted                                             558.4          559.9  

                                               
                                                                            
ENERGY TRANSFER EQUITY, L.P.

DISTRIBUTABLE CASH FLOW

(Tabular dollar amounts in millions)

(unaudited)
                                                                            
                                                  Three Months Ended March 31,
                                                  2014            2013
“Distributable Cash Flow,” “Distributable
Cash Flow, as adjusted,” and “Distribution
Coverage Ratio” ^(1):
Cash distributions from ETP associated with:
^(2)
Limited partner interest                          $   29           $  45
General partner interest                              5               5
Incentive distribution rights                         168             156
IDR relinquishments                                   (57    )        (31   )
Class H Units (50.05% general partner
interest and incentive distribution rights           50            —     
distributions from SXL)
Total cash distributions from ETP                     195             175
Cash distributions from Regency associated
with:
Limited partner interest                              13              12
General partner interest                              1               1
Incentive distribution rights                         7               2
IDR relinquishment                                   (1     )       —     
Total cash distributions from Regency                 20              15
Cash dividends from Holdco                           —             50    
Total cash distributions and dividends from           215             240
ETP, Regency and Holdco
                                                                            
Distributable cash flow attributable to               48              —
Trunkline LNG ^(3)
                                                                            
Deduct expenses of the Parent Company on a
stand-alone basis:
Selling, general and administrative expenses,         (2     )        (6    )
excluding non-cash compensation expense
Management fee to ETP ^(4)                            (24    )        —
Interest expense, net of amortization of
financing costs, interest income, and                (39    )       (58   )
realized gains and losses on interest rate
swaps
Distributable Cash Flow                               198             176
Transaction-related expenses                         1             2     
Distributable Cash Flow, as adjusted              $   199         $  178   
                                                                            
Cash distributions to be paid to the partners
of ETE:
Distributions to be paid to limited partners      $   195          $  181
Distributions to be paid to Class D                  1             —     
unitholder
Total cash distributions to be paid to the        $   196         $  181   
partners of ETE
                                                                            
Distribution coverage ratio ^(5)                  1.02       x     0.98     x
                                                                            
Reconciliation of Non-GAAP “Distributable
Cash Flow” and “Distributable Cash Flow, as
adjusted” to GAAP “Net income” ^(1):
Net income attributable to partners               $   168          $  90
Equity in income related to investments in            (201   )        (168  )
ETP, Regency and Holdco
Total cash distributions and dividends from           215             240
ETP, Regency and Holdco
Amortization included in interest expense             2               5
(excluding ETP and Regency)
Fair value adjustment of ETE Preferred Units          —               9
Other non-cash (excluding ETP, Regency and           14            —     
Holdco)
Distributable Cash Flow                               198             176
Transaction-related expenses                         1             2     
Distributable Cash Flow, as adjusted              $   199         $  178   

     
       This press release and accompanying schedules include the non-generally
       accepted accounting principle (“non-GAAP”) financial measure of
       Distributable Cash Flow. The schedule above provides a reconciliation
       of this non-GAAP financial measure to its most directly comparable
^(1)   financial measure calculated and presented in accordance with GAAP. The
       Partnership’s Distributable Cash Flow should not be considered as an
       alternative 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. The Partnership defines Distributable Cash
       Flow for a period as cash distributions expected to be received from
       ETP and Regency in respect of such period in connection with the
       Partnership’s investments in limited and general partner interests of
       ETP and Regency, net of the Partnership’s cash expenditures for general
       and administrative costs and interest expense. The Partnership’s
       definition of Distributable Cash Flow also includes distributable cash
       flow from Trunkline LNG to the Partnership beginning January 1, 2014.
       Distributable Cash Flow for the three months ended March 31, 2013 also
       included Holdco until ETE’s 60% interest in Holdco was contributed to
       ETP on April 30, 2013.
       
       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. Using this measure, 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 is also an important non-GAAP financial measure
       for our limited partners since it indicates 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 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 is net income for
       ETE on a stand-alone basis (“Parent Company”). The accompanying
       analysis of Distributable Cash Flow is presented for the three months
       ended March 31, 2014 and 2013 for comparative purposes.
       
       Distributable Cash Flow, as adjusted. The Partnership defines
       Distributable Cash Flow, as adjusted, for a period as cash
       distributions expected to be received from ETP and Regency in respect
       of such period in connection with the Partnership’s investments in
       limited and general partner interests of ETP and Regency, plus
       distributable cash flow from Trunkline LNG and dividends from Holdco
       (as described in the definition of Distributable Cash Flow above), net
       of the Partnership’s cash expenditures for general and administrative
       costs and interest expense, excluding certain items, such as
       transaction-related expenses. Due to the 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, for the three months ended March 31, 2014 and 2013 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. Using
       this measure, the Partnership’s management can compute the coverage
       ratio of estimated cash flows for a period to planned cash
       distributions for such period. The GAAP measure most directly
       comparable to Distributable Cash Flow, as adjusted, is net income for
       the Parent Company on a stand-alone basis. The accompanying analysis of
       Distributable Cash Flow, as adjusted, is presented for the three months
       ended March 31, 2014 and 2013 for comparative purposes.
       
       For the three months ended March 31, 2013, cash distributions paid by
       ETP exclude distributions on 49.5 million ETP common units issued to
       ETE as a portion of the considerations for ETP’s acquisition of ETE’s
^(2)   interest in Holdco on April 30, 2013. These ETP common units received
       cash distributions on May 15, 2013; however, such distributions were
       reduced from the total cash portion of the consideration paid to ETE in
       connection with the April 30, 2013 Holdco transaction pursuant to the
       contribution agreement.
       
^(3)   Distributable cash flow attributable to Trunkline LNG was calculated as
       follows (unaudited):

                                                        Three Months Ended
                                                          March 31, 2014
Revenues                                                  $     54
Operating expenses                                              (4     )
Selling, general and administrative expenses                    (1     )
Other, net                                                     (1     )
Distributable cash flow attributable to Trunkline LNG     $     48     
                                                          

       In exchange for management services, ETE has agreed to pay to ETP fees
^(4)  totaling $95 million, $95 million and $5 million for the years ending
       December 31, 2014, 2015 and 2016, respectively.
       
       Distribution coverage ratio for a period is calculated as Distributable
^(5)   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)
                                                               
                                         March 31,             December 31,
                                         2014                  2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                $    16               $   8
Accounts receivable from                      6                    5
related companies
Other current assets                         1                  —       
Total current assets                          23                   13
ADVANCES TO AND INVESTMENTS IN                4,448                3,841
UNCONSOLIDATED AFFILIATES
INTANGIBLE ASSETS, net                        13                   14
GOODWILL                                      9                    9
OTHER NON-CURRENT ASSETS, net                41                 41      
Total assets                             $    4,534           $   3,918   
LIABILITIES AND PARTNERS’
CAPITAL
CURRENT LIABILITIES:
Accounts payable to related              $    42               $   11
companies
Interest payable                              53                   24
Accrued and other current                    2                  3       
liabilities
Total current liabilities                     97                   38
LONG-TERM DEBT, less current                  3,150                2,801
maturities
OTHER NON-CURRENT LIABILITIES                 1                    1
COMMITMENTS AND CONTINGENCIES
PARTNERS’ CAPITAL:
General Partner                               (1       )           (3      )
Limited Partners:
Common Unitholders                            1,271                1,066
Class D Units                                 10                   6
Accumulated other                            6                  9       
comprehensive income
Total partners’ capital                      1,286              1,078   
Total liabilities and                    $    4,534           $   3,918   
partners’ capital

                                               
                                                  
STATEMENTS OF OPERATIONS

(Amounts in millions)

(unaudited)
                                                  
                                                  Three Months Ended March 31,
                                                  2014             2013
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES      $   (7    )       $  (6   )
MANAGEMENT FEE TO ETP                                 (24   )          —
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized         (40   )          (64  )
Equity in earnings of unconsolidated                  239              168
affiliates
Other, net                                           —              (8   )
INCOME BEFORE INCOME TAXES                            168              90
Income tax expense                                   —              —    
NET INCOME                                            168              90
GENERAL PARTNER’S INTEREST IN NET INCOME              —                —
CLASS D UNITHOLDER’S INTEREST IN NET INCOME          1              —    
LIMITED PARTNERS’ INTEREST IN NET INCOME          $   167          $  90   

Contact:

Investor Relations:
Energy Transfer
Brent Ratliff, 214-981-0700
or
Media Relations:
Granado Communications Group
Vicki Granado, 214-599-8785
Cell: 214-498-9272
 
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