Energy Transfer LP current report, 10 August 2009

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Business Context and Reporting Period

Company: Energy Transfer Equity, L.P. (Parent of Energy Transfer Partners, L.P. or "ETP")
Filing Type: Form 8-K (Current Report)
Date: August 10, 2009
Context: The filing announces Q2 2009 results (via press release) and provides a significant revision to full-year 2009 EBITDA guidance due to market conditions.

Key Financial Metrics

EBITDA Guidance (2009): Revised to $1.5 billion – $1.6 billion (down from prior guidance of $1.7 billion – $1.8 billion).
Capital Expenditures (Remainder of 2009):

  • Growth initiatives: $250 million – $300 million.
  • Cash contributions to joint ventures (interstate pipelines): $480 million – $520 million.
Market Data: Natural gas spot prices in H1 2009 ranged from $3.09 to $5.25 per MMbtu; September 2009 futures closed at $3.67 per MMbtu on August 7, 2009.
Ownership: The Partnership owns the general partner of ETP and approximately 62.5 million ETP common units.

Material Changes vs. Prior Period

Guidance Revision: Full-year 2009 EBITDA guidance was lowered by $200 million at both the low and high ends compared to the July 2008 forecast.
Operational Impact:

  • Significant decline in natural gas and natural gas liquids prices since July 2008.
  • Reduced drilling activity and well shut-ins by customers due to low prices and capital market conditions.
  • Lower-than-forecasted natural gas transportation volumes in H1 2009.
Revenue Structure: While a portion of revenue is fee-based (capacity reservation), volume-based charges and fuel retention revenues have declined due to lower throughput.

Outlook, Risks, and Management Commentary

Outlook: Management does not expect natural gas prices to increase materially for the remainder of 2009. Internal estimates for transportation volumes and revenue have been adjusted downward accordingly.
Key Risks and Factors:

  • Dependence on natural gas exploration and production companies for revenue.
  • Volatility in natural gas and liquids prices and price differentials.
  • Weather conditions in operating areas.
  • Competition from other midstream and pipeline companies.
  • Capital market conditions affecting customer drilling budgets.
Non-GAAP Measures: The filing defines "EBITDA, as adjusted" as total partnership earnings before interest, taxes, depreciation, amortization, and other non-cash items (e.g., unit issuance compensation). Management notes limitations in using this metric as a sole comparison tool.

Investor Verification Checklist

  • Verify the specific Q2 2009 financial results in the attached Exhibit 99.1 (Press Release), as this 8-K only summarizes the guidance revision.
  • Confirm the reconciliation of "EBITDA, as adjusted" to GAAP net income on the company's investor website.
  • Monitor natural gas spot prices and drilling activity levels in the Partnership's core operating areas for the remainder of 2009.
  • Review the status of the $480 million – $520 million in planned joint venture contributions for interstate pipeline construction.
  • Assess the impact of customer well shut-ins on future volume-based revenue streams.