Natural gas pipeline operator
Energy Transfer Partners L.P.
(
ETP
) announced weak third quarter 2012 results, owing to
deteriorating natural gas market conditions and reduced gross
margin at Intrastate Transportation and Storage segment.
The partnership reported a loss of 33 cents per limited partner
unit in contrast to the Zacks Consensus Estimate of earnings of
30 cents. Reported loss was wider than a loss of 19 cents in the
year-ago quarter.
Quarterly revenues of $1,420.5 million were below our projection
of $1,731.0 million. Comparing year over year, sales decreased
16.5% from $1,701.5 million, due to low natural gas sales.
Quarterly Cash Distribution
Last month, Energy Transfer announced third quarter distribution
of 89.375 cents per unit ($3.575 per unit annualized), unchanged
from the year-earlier as well as previous quarter distributions.
The distribution will be paid on November 14, to unitholders of
record as of November 6, 2012.
EBITDA & Operating Income
Adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) for the quarter was $481.7 million compared
with $404.2 million in the year-ago quarter, reflecting robust
performance from the Interstate Transportation business unit.
Operating income of $291.9 million was up 6.6% from the third
quarter of 2011.
Distributable Cash Flow
Energy Transfer Partners reported distributable cash flow of
$339.5 million in the quarter, up from $266.1 million in the
prior-year quarter.
Capital Expenditure
During the quarter, maintenance capital expenditure totaled $27.0
million, down 14.1% year over year.
Balance Sheet
As of September 30, 2012, Energy Transfer had long-term debt
(less current maturities) of $8,690.7 million.
Debt-to-capitalization ratio was 52.7%.
Our Recommendation
We believe Energy Transfer Partners is well positioned to compete
in the natural gas midstream and transportation & storage
businesses with its geographically-dispersed asset mix. The
partnership has a significant market presence in each of its
operating areas, which are located in major natural gas-producing
regions of the U.S.
Earlier in October, Energy Transfer Partners merged with Sunoco
Inc. for $5.3 billion. The partnership will have the ownership of
Sunoco's branded retail business, general partner interest, plus
a 32.4% stake and incentives distribution rights in
Sunoco Logistics Partners L.P.
(
SXL
), a master limited partnership in which Sunoco had 34% stake.
With this acquisition, Energy Transfer Partners aims to penetrate
further in the crude oil transportation business as natural gas
supplies remain under pressure from decade-low prices.
Energy Transfer Partners currently retains a Zacks #2 Rank
(short-term Buy rating).
ENERGY TRAN PTR (ETP): Free Stock Analysis
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SUNOCO LOGISTIC (SXL): Free Stock Analysis
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