Energy Transfer Equity, L.P. (ETE)

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Energy Transfer Equity, L.P. (ETE)

Q4 2010 Earnings Call

February 17, 2011 9:00 AM ET


Martin Salinas – Chief Financial Officer

Mackie McCrea – President and Chief Operating Officer

Kelcy Warren – Chairman


Darren Horowitz – Raymond James

Barrett Blaschke – RBC Capital Markets

Michael Blum – Wells Fargo

John Edwards – Morgan, Keegan

Louis Shammy – Zimmer Lucas

Yves Siegel – Credit Suisse

Helen Ryoo – Barclays Capital

Selman Akyol – Stifel Nicolaus



Good day, ladies and gentlemen and welcome to the Fourth Quarter 2010 Energy Transfer Partners Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will later conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Martin Salinas, Chief Financial Officer. Please proceed.

Martin Salinas

Hello everyone and thanks for joining us this morning. As we make a few comments about ETP and ETE’s financial results for the fourth quarter and year-ended December 31, 2010 as well as updating you on some of their commercial and operational initiatives that will provide growth to our partnerships in the upcoming years.

I encourage you to visit our web site to access the earnings release we issued yesterday after the market closed. And during this call, we may make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our beliefs as well as certain assumptions and information available to us. And with me to answer the questions are Kelcy, John McReynolds, Mackie and other members of our senior management team.

And before I go into our results, I would like to highlight a few of the achievements we had this quarter as we continue to expand our footprint in some of the most prolific shale plates in the United States. And after many months of talking about them, we are proud to say that both FEP and Tiger are not only online but flowing gas as well.

We also recently received FERC approval for the Tiger expansion for full steam ahead there. As we depicted in our Analyst Day slides which are posted on our website, we expect cash flows from these pipelines to increase over the course of 2011 and reach their full contracted fee potential by the first quarter of 2012. And this growth will give us the confidence of resuming our distribution rate growth in the not-so distant future.

We have also been working very hard in the Eagle Ford Shale. (inaudible) project was brought online in December and we are progressing quite nicely as planned on our Chisholm Pipeline. If you recall, we do expect constructions to start at the end of this month and be in service by the end of the second quarter of 2011.

And just announced, the Rich Eagle Ford Mainline or REM is approximately 160-mile 30-inch pipeline will have an initial capacity of approximately 400 million cubic feet a day and will originate in Dimmitt County, Texas and extend into our Chisholm Pipeline. The rich gas gathering system will initially have the capacity of delivering 200 million cubic feet a day of natural gas into the Chisholm Pipeline for ultimate deliveries to our existing processing plants.

In addition, we will also be constructing a new 120 million a day processing plants to help facilitate the additional need for processing capacity. The first phase of the REM project is expected to be in service by the fourth quarter of 2011.

We also entered into a joint venture with Copano to build a 12-inch NGL pipeline or the Liberty pipeline that will primarily service for most of the needs in East Texas. And this pipeline is expected to be completed sometime this summer. I can’t emphasize enough how much the Eagle Ford Shale remains an area of intense focus for us and we expect to continue increase in our presence there to meet our producers’ needs. This will cause results in incremental distributable cash flow growth to ETP over the next several years.

I also would like to touch on a couple of other areas where we are also seeing growth. In North Louisiana, in the Haynesville shale, now with Tiger up and running, we are seeing continued growth as our producers look to fill the committed Tiger capacity. We are currently gathering and transporting approximately 350 million cubic feet a day and expect to average over 450 million cubic feet a day over the course of 2011.

And also in the fourth quarter, we brought in service our East Texas Lumberjack Pipeline which is currently flowing close to 100 million cubic feet a day of gas and we do expect to flow approximately 250 million by the end of 2011. And in the North East, we are currently transporting 60 million cubic feet a day on our Bobcat pipeline and anticipated demand volumes to grow to 200 million cubic feet a day by the end of third quarter of this year.

We continue to actively negotiate additional pipeline projects in West Virginia and Pennsylvania and to further expand our capabilities in the Marcellus Shale. That about covers what we are currently working on.

Now let’s move on to our results. For the fourth quarter, our adjusted EBITDA was $411 million, slightly higher than 2009 fourth quarter EBITDA and distributable cash flow was $284.4 million, a solid 10% increase comparing to the fourth quarter of 2009. And for the year, we reached yet another milestone in our partnership’s history by surpassing the $1.5 billion mark with adjusted EBITDA of $1.54 billion which represented a $63.5 million increase over last year.

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