DALLAS–(BUSINESS WIRE)–Energy Transfer Partners, L.P. (NYSE: ETP) today reported its financial results for the quarter ended December 31, 2016. For the three months ended December 31, 2016 Energy Transfer Partners, L.P. (“ETP” or the “Partnership”) reported a net loss of $362 million, a decrease of $383 million compared to net income of $21 million for the same period last year, primarily due to non-cash impairments of $813 million recorded in the current period. Adjusted EBITDA for the three months ended December 31, 2016 totaled $1.43 billion, an increase of $73 million over the same period last year. Distributable Cash Flow attributable to the partners of ETP, as adjusted, for the three months ended December 31, 2016 totaled $796 million, a decrease of $83 million compared to the same period last year, primarily due to a current tax benefit that was recorded in the prior year. Excluding the impact of the change in current tax benefit between periods, Distributable Cash Flow attributable to the partners of ETP, as adjusted, increased approximately $100 million compared to the fourth quarter of 2015.
In January 2017, ETP announced a quarterly distribution of $1.055 per unit ($4.22 annualized) on ETP Common Units for the quarter ended December 31, 2016.
ETP’s other recent key accomplishments include the following:
- In November 2016, ETP and Sunoco Logistics Partners L.P. (“Sunoco Logistics”) entered into a merger agreement providing for the acquisition of ETP by Sunoco Logistics in a unit-for-unit transaction. Under the terms of the transaction, ETP unitholders will receive 1.5 common units of Sunoco Logistics for each common unit of ETP they own.
- On November 1, 2016, ETP acquired certain interests in PennTex Midstream Partners, LP (“PennTex”) from various parties for total consideration of approximately $640 million in ETP units and cash.
- In February 2017, ETP announced that the Federal Energy Regulatory Commission (“FERC”) approved Rover Pipeline LLC’s (“Rover”) application to construct and operate the Rover Pipeline project, allowing Rover to move forward with its targeted in-service goals of July 2017 for Phase I and November 2017 for Phase II.
- On February 8, 2017, ETP announced that Dakota Access, LLC had received an easement from the U.S. Army Corps of Engineers (“Army Corps”) to construct a pipeline across land owned by the Army Corps on both sides of Lake Oahe in North Dakota. With the receipt of the easement, ETP expects to commence commercial operations on the Dakota Access Pipeline and the adjoining Energy Transfer Crude Oil Pipeline (collectively, the “Bakken Pipeline”) in the second quarter of 2017. In addition, the previously announced project financing for the Bakken Pipeline and the sale of a 36.75% interest in the Bakken Pipeline were completed in February 2017.
- In January 2017, the previously announced Comanche Trail Pipeline, which transports natural gas from the Permian Basin to Mexico, was placed into service.
- In the fourth quarter of 2016, ETP issued 6.5 million common units through its at-the-market equity program, generating net proceeds of $236 million. In addition, in January 2017, ETP raised $568 million through a private placement of its common units and $1.48 billion through a senior notes offering.
- As of December 31, 2016, ETP’s $3.75 billion revolving credit facility had $2.78 billion of outstanding borrowings, and its leverage ratio, as defined by the credit agreement, was 4.32x.
An analysis of ETP’s segment results and other supplementary data is provided after the financial tables shown below. ETP has scheduled a conference call for 8:00 a.m. Central Time, Thursday, February 23, 2017 to discuss the 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 ETP’s website for a limited time.
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. For more information, visit the Energy Transfer Partners, L.P. website at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master limited partnership that owns the general partner and 100% of the incentive distribution rights of Energy Transfer Partners, L.P. and Sunoco LP. 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 the 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.
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. Sunoco Logistics’ 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.
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.
This news 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 Report 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 website at www.energytransfer.com.
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
|Property, plant and equipment, net||50,917||45,087|
|Advances to and investments in unconsolidated affiliates||4,280||5,003|
|Other non-current assets, net||672||536|
|Intangible assets, net||4,696||4,421|
|LIABILITIES AND EQUITY|
|Long-term debt, less current maturities||31,741||28,553|
|Long-term notes payable – related party||250||233|
|Non-current derivative liabilities||76||137|
|Deferred income taxes||4,394||4,082|
|Other non-current liabilities||952||968|
|Commitments and contingencies|
|Series A Preferred Units||33||33|
|Redeemable noncontrolling interests||15||15|
|Total partners’ capital||18,642||20,836|
|Total liabilities and equity||$||70,191||$||65,173|
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
|Three Months Ended December 31,||Years Ended December 31,|
|COSTS AND EXPENSES:|
|Cost of products sold||4,865||4,237||15,394||27,029|
|Depreciation, depletion and amortization||517||478||1,986||1,929|
|Selling, general and administrative||122||86||348||475|
|Total costs and expenses||6,691||5,638||20,025||32,033|
|OPERATING INCOME (LOSS)||(165||)||187||1,802||2,259|
|OTHER INCOME (EXPENSE):|
|Interest expense, net||(336||)||(312||)||(1,317||)||(1,291||)|
|Equity in earnings (losses) from unconsolidated affiliates||(201||)||81||59||469|
|Impairment of investment in an unconsolidated affiliate||—||—||(308||)||—|
|Gains on acquisitions||83||—||83||—|
|Losses on extinguishments of debt||—||—||—||(43||)|
|Gains (losses) on interest rate derivatives||167||(4||)||(12||)||(18||)|
|INCOME (LOSS) BEFORE INCOME TAX EXPENSE||(417||)||(82||)||438||1,398|
|Income tax benefit||(55||)||(103||)||(186||)||(123||)|
|NET INCOME (LOSS)||(362||)||21||624||1,521|
|Less: Net income (loss) attributable to noncontrolling interest||96||(25||)||327||157|
|Less: Net loss attributable to predecessor||—||—||—||(34||)|
|NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS||(458||)||46||297||1,398|
|General Partner’s interest in net income||208||285||948||1,064|
|Class H Unitholder’s interest in net income||94||74||351||258|
|Class I Unitholder’s interest in net income||2||14||8||94|
|Common Unitholders’ interest in net loss||$||(762||)||$||(327||)||$||(1,010||)||$||(18||)|
|NET LOSS PER COMMON UNIT:|
|WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING:|
|Three Months Ended December 31,||Years Ended December 31,|
|Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow (a):|
|Net income (loss)||$||(362||)||$||21||$||624||$||1,521|
|Interest expense, net||336||312||1,317||1,291|
|Gains on acquisitions||(83||)||—||(83||)||—|
|Impairment losses (b)||813||339||813||339|
|Income tax benefit||(55||)||(103||)||(186||)||(123||)|
|Depreciation, depletion and amortization||517||478||1,986||1,929|
|Non-cash compensation expense||20||20||80||79|
|(Gains) losses on interest rate derivatives||(167||)||4||12||18|
|Unrealized (gains) losses on commodity risk management activities||35||(7||)||131||65|
|Inventory valuation adjustments||(27||)||120||(170||)||104|
|Impairment of investment in an unconsolidated affiliate||—||—||308||—|
|Losses on extinguishments of debt||—||—||—||43|
|Equity in (earnings) losses of unconsolidated affiliates||201||(81||)||(59||)||(469||)|
|Adjusted EBITDA related to unconsolidated affiliates||235||226||946||937|
|Adjusted EBITDA (consolidated)||1,433||1,360||5,605||5,714|
|Adjusted EBITDA related to unconsolidated affiliates||(235||)||(226||)||(946||)||(937||)|
|Distributable cash flow from unconsolidated affiliates||134||129||518||646|
|Interest expense, net of interest capitalized||(336||)||(312||)||(1,317||)||(1,291||)|
|Amortization included in interest expense||(4||)||(6||)||(20||)||(36||)|
|Current income tax benefit (c)||40||283||17||325|
|Transaction-related income taxes (c)||—||(51||)||—||(51||)|
|Maintenance capital expenditures||(134||)||(177||)||(368||)||(485||)|
|Distributable Cash Flow (consolidated)||906||1,001||3,510||3,897|
|Distributable Cash Flow attributable to Sunoco Logistics (100%)||(247||)||(240||)||(943||)||(874||)|
|Distributions from Sunoco Logistics to ETP||139||118||532||413|
|Distributable Cash Flow attributable to PennTex (100%)||(11||)||—||(11||)||—|
|Distributions from PennTex to ETP||8||—||16||—|
|Distributable Cash Flow attributable to Sunoco LP (100%) (d)||—||—||—||(68||)|
|Distributions from Sunoco LP to ETP (d)||—||—||—||24|
|Distributable cash flow attributable to noncontrolling interest in other consolidated subsidiaries||(11||)||(5||)||(37||)||(20||)|
|Distributable Cash Flow attributable to the partners of ETP||784||874||3,067||3,372|
|Distributable Cash Flow attributable to the partners of ETP, as adjusted||$||796||$||879||$||3,083||$||3,414|
|Distributions to the partners of ETP (e):|
|Common units held by public||$||561||$||512||$||2,168||$||1,970|
|Common units held by ETE||20||3||28||54|
|Class H Units held by ETE (f)||94||77||357||263|
|General Partner interests held by ETE||8||8||32||31|
|Incentive Distribution Rights (“IDRs”) held by ETE||351||324||1,363||1,261|
|IDR relinquishments net of Class I Unit distributions (g)||(138||)||(28||)||(409||)||(111||)|
|Total distributions to be paid to the partners of ETP||$||896||$||896||$||3,539||$||3,468|
|Common Units outstanding – end of period (e)||529.9||505.6||529.9||505.6|
|Distribution coverage ratio (h)||
(a) Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of ETP’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities, or other GAAP measures.
There are material limitations to using measures such as Adjusted EBITDA and Distributable Cash Flow, including the difficulty associated with using either as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA and Distributable Cash Flow may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as gross margin, operating income, net income, and cash flow from operating activities.
Definition of Adjusted EBITDA
ETP defines Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Unrealized gains and losses on commodity risk management activities include unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Adjusted EBITDA reflects amounts for less than wholly-owned subsidiaries based on 100% of the subsidiaries’ results of operations and for unconsolidated affiliates based on ETP’s proportionate ownership.
Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.
Definition of Distributable Cash Flow
ETP defines Distributable Cash Flow as net income, adjusted for certain non-cash items, less maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. Unrealized gains and losses on commodity risk management activities includes unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.
Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.
On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ETP’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among ETP’s subsidiaries, the Distributable Cash Flow generated by ETP’s subsidiaries may not be available to be distributed to the partners of ETP. In order to reflect the cash flows available for distributions to the partners of ETP, ETP has reported Distributable Cash Flow attributable to the partners of ETP, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:
- For subsidiaries with publicly traded equity interests, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to the partners of ETP includes distributions to be received by the parent company with respect to the periods presented.
- For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, but Distributable Cash Flow attributable to the partners of ETP is net of distributions to be paid by the subsidiary to the noncontrolling interests.
For Distributable Cash Flow attributable to the partners of ETP, as adjusted, certain transaction-related and non-recurring expenses that are included in net income are excluded.
(b) During the three months ended December 31, 2016, we recorded goodwill impairments of $638 million in the interstate transportation and storage segment and $32 million in the midstream segment. These goodwill impairments were primarily due to decreases in projected future revenues and cash flows driven by declines in commodity prices and changes in the markets that these assets serve. In addition, impairment losses for the three months ended December 31, 2016 also include a $133 million impairment to property, plant and equipment in the interstate transportation and storage segment due to a decrease in projected future cash flows as well as a $10 million impairment to property, plant and equipment in the midstream segment. During the three months ended December 31, 2015, we recorded goodwill impairments of (i) $99 million related to Transwestern due primarily to the market declines in current and expected future commodity prices in the fourth quarter of 2015, (ii) $106 million related to Lone Star Refinery Services due primarily to changes in assumptions related to potential future revenues as well as the market declines in current and expected future commodity prices, (iii) $110 million of fixed asset impairments related to Lone Star NGL Refinery Services primarily due to the economic obsolescence identified as a result of low utilization and expected decrease in future cash flows, and (iv) $24 million of intangible asset impairments related to Lone Star NGL Refinery Services primarily due to the economic obsolescence identified as a result of expected decrease in future cash flows.
(c) The three months ended December 31, 2015 reflect current income tax benefits of $80 million due to lower earnings among the Partnership’s consolidated corporate subsidiaries, $120 million due to the retroactive re-enactment of bonus depreciation, and $24 million attributable to the reversal of an income tax reserve for certain amended tax returns that had been filed claiming previously disallowed Pennsylvania net operating loss deductions. Additionally, the three months ended December 31, 2015 also reflect a $51 million current income tax benefit related to the funding of Sunoco, Inc.’s pension plan obligations, which benefit has been excluded from Distributable Cash Flow.
(d) Amounts related to Sunoco LP reflect the periods through June 30, 2015, subsequent to which Sunoco LP was deconsolidated and is now reflected as an equity method investment.
(e) Distributions on ETP Common Units and the number of ETP Common Units outstanding at the end of the period, both as reflected above, exclude amounts related to ETP Common Units held by subsidiaries of ETP.
(f) Distributions on the Class H Units for the three months and years ended December 31, 2016 and 2015 were calculated as follows:
Three Months Ended
|General partner distributions and incentive distributions from Sunoco Logistics||$||105||$||86||$||397||$||293|
|Total Class H Unit distributions||$||94||$||77||$||357||$||263|
* Incremental distributions previously paid to the Class H Unitholder were eliminated in Amendment No. 9 to ETP’s Amended and Restated Agreement of Limited Partnership effective in the first quarter of 2015.
(g) IDR relinquishments for the three and twelve months ended December 31, 2016 include the impact of $95 million and $255 million, respectively, of incentive distribution reductions beginning with respect to the second quarter 2016 distributions, as agreed to between ETE and ETP in July 2016. Additionally, the three and twelve months ended December 31, 2016 include the impact of $8 million and $17 million, respectively, of incentive distribution reductions beginning with respect to the third quarter of 2016 distributions, as agreed to between ETE and ETP in November 2016 related to ETP’s acquisition of PennTex.
(h) Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to the partners of ETP, as adjusted, divided by net distributions expected to be paid to the partners of ETP in respect of such period.
SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
(Tabular dollar amounts in millions)
Our segment results are presented based on the measure of Segment Adjusted EBITDA. The tables below identify the components of Segment Adjusted EBITDA, which was calculated as follows:
- Gross margin, operating expenses, and selling, general and administrative expenses. These amounts represent the amounts included in our consolidated financial statements that are attributable to each segment.
Helen Ryoo, Lyndsay Hannah or Brent Ratliff, 214-981-0795
Granado Communications Group
Vicki Granado, 214-599-8785
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