Spotlight: Energy Transfer Partners Part 2 - Midstream and Liquids

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Energy Transfer Partners, L.P. is the second largest U.S. master limited partnership, with a market capitalization of approximately $19.9 billion, and its size and scope make it an important bellwether for the overall industry in each of its segments. Because ETP is so large and complex, we have issued our Spotlight analysis in two parts. Part One, published a few weeks back, focused on the two natural gas pipeline segments, which generated 30% of adjusted 2015 EBIDTA. Part Two, published today covers the Liquids and Midstream segments.

  • The company has four major business segments examined in this report: (1) Interstate Natural Gas Transportation and Storage, (2) Intrastate Natural Gas Transportation and Storage, (3) Liquids Transportation and Storage, and (4) Midstream.  ETP also has a controlling interest in Sunoco.
  • ETP's most significant earnings growth over the next five years is expected to come from the Liquids Transportation and Storage Segment, particularly in the Permian Basin, the Bakken Shale and the Gulf Coast.  The Dakota Access (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP) will move crude oil from the Bakken/ Three Forks play to the Sunoco Logistics terminaling facilities in Nederland, TX.
  • The Midstream Segment's diverse gathering and processing base has helped stabilized earnings in the current weak commodity price environment.   Future growth in the Marcellus, Utica, and Permian plays will generate a moderate increase in earnings.
  • Declining production and excess transport capacity in major U.S. plays drive our outlook for limited to no organic earnings growth in the Interstate natural gas segment and a gradual decline for the Intrastate segment.
  • Growth in the Interstate segment hinges on one major natural gas project, the Rover Pipeline out of Appalachia to the Midwest and Gulf Coast, which is moving forward despite some concerns about counterparty risk and a lower production profile. The other project, an expansion to feed the Lake Charles LNG project, is likely but dependent on a final investment decision (FID) by Royal Dutch Shell.

This Spotlight report addresses the primary drivers of ETP’s growth over the next five years, assesses the risk involved in that growth, and examines other aspects of the company’s business activities that will be significantly influenced by the levels of drilling activity in the basins where the company sources most of its processing plant, pipeline, fractionator and terminal throughput.

Energy Transfer Partners - Part 2: Midstream and Liquids Transportation and Services Segments is included as the 6th in RBN’s 2016 Drill Down report series, a suite of monthly reports covering many of the key issues expected to impact the markets for crude oil, natural gas and natural gas liquids. Spotlight reports are part of RBN Backstage Pass™ premium resources that also include Blog Archive Access, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. By subscribing to RBN’s Backstage Pass™ Premium Services, you plug into our network and get direct access to our premium resources.

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