Two Out of Four Ain't Bad - A Spotlight Report on Energy Transfer Partners

Energy Transfer Partners (ETP is the nation’s second-largest master limited partnership (MLP), with a market capitalization of $16.6 billion, $39.7 billion in 2015 revenue and $8 billion in 2015 capital investments, and a general partner—Energy Transfer Equity (ETE)—whose once-promising merger deal with Williams Cos. has turned ugly and may well be doomed. ETP’s extensive holdings include several major interstate and intrastate natural gas pipelines, midstream natural gas services, and natural gas liquids (NGL) pipelines and services; it also holds approximately 27.5% of the limited partner interests and all of the general partner interest in Sunoco Logistics Partners (SXL). With ETP’s size, its huge portfolio of midstream assets, and its high-profile general partner, the MLP was an obvious choice for our new Spotlight Report. Today, we provide the highlights of the report, which is available to RBN Backstage Pass subscribers.

First, a few words about Spotlight, which is a joint venture of RBN Energy and East Daley Capital Advisors. With the support of Oil & Gas Financial Analytics, Spotlight provides a “deep dive” into the fundamentals that shape the outlook for midstream energy companies. In each report, we “spotlight” a midstream energy firm, typically one operating within an MLP structure, and provide a comprehensive view of the company’s assets and operations. We examine their asset structure to reveal what volumes are flowing, what rates are (and can be) charged, how they are exposed to commodity price risk, how their assets fit together, and what aspects of their operations provide competitive advantages in today’s extremely volatile energy marketplace. This report, which covers ETP’s interstate and intrastate pipelines and storage facilities (the second half of our review of ETP—covering will follow), is the third edition of the Spotlight Report series. The first edition, covering ONEOK (OKS), was published in December 2015, and the second edition, covering DCP Midstream Partners (DPM), was published in February 2016.

Two more important things to note about Spotlight. One is that we use publicly available data, combined with the deep experience of our combined teams, to perform in-depth analysis that far exceeds the high-level assessments that are in the marketplace today. We get into micro-level details, integrating fundamentals data, market data and company data in a comprehensive model that provides a clearer picture of the company and its prospects. As with all energy fundamental analysis, Spotlight Reports rely on estimates and approximations of volumes, throughputs and fees. No non-public data from the subject company or any other source has been used in the preparation of this report. The second important note is that our Spotlight Reports are provided for reference only, and should not be viewed as investment advice. Neither RBN Energy nor East Daley Capital is an investment advisor.