Energy Transfer LP · NYSE:ET
Energy Transfer LP — Energy Transfer Partners — Analyst Conference May 2006
35 slides from Energy Transfer LP's conference presentation, May 2006
Slide 1: Energy Transfer Partners, LP / Energy Transfer Equity, LP Analyst Conference
Energy Transfer Partners, LP Energy Transfer Equity, LP Analyst Conference May 2006
Slide 2: Legal Disclaimer
Legal Disclaimer The statements made by representatives of Energy Transfer Partners (ETP) or Energy Transfer Equity (ETE) during the course of this presentation that are not historical facts are forward- looking statements. Although the assumptions underlying these statements are believed to be reas
Slide 3: Agenda
Agenda Overview Asset Profile ETP Corporate Structure Investment Highlights Propane Overview Project Update Midstream Overview Financial Review Energy Transfer Equity, LP Summary 3
Slide 4: Asset Profile
Asset Profile A diversified midstream and propane MLP: 3rd largest MLP in the U.S. Largest intrastate pipeline system in U.S. with interconnects to major consumption areas throughout U.S. Significant strategically located natural gas storage capacity One of five largest retail propane mark
Slide 5: ETP Corporate Structure
ETP Corporate Structure Energy Transfer Equity, L.P. 2% General Partner 32.9% Limited, Partner 50% Incentive Interest Interest Distribution Rights Energy Transfer Partners, L.P. Public Unitholders 110,625,711 Units Outstanding 67.1% Limited Partner Interest Heritage Operating, L.P. Heritage La Grang
Slide 6: Investment Highlights
Investment Highlights Substantial competitive advantage High quality portfolio of assets Strong credit statistics Compares favorably with BBB+ / BBB peers Management commitment to credit quality High common unit coverage ETP retains cash to fund internal growth and strengthen balance s
Slide 7: Propane Overview
Propane Overview Asset Overview Keys to Success Customer Mix Titan Acquisition 7
Slide 8: Propane Operations
Propane Operations ETP’s propane operations are concentrated in higher than average population growth areas where natural gas distribution may not be cost effective, and its geographic diversification minimizes the impact of weather patterns in individual regions. Fee-based, pass-through business,
Slide 9: Keys to Success
Keys to Success Decentralized Operations Eliminates large scale corporate staff Pricing determined at regional level Billing and collection at local level, CSR collecting accounts receivables from neighbors, likely to be paid first Internal Growth Plant Bonus Program to share EBITDA in e
Slide 10: Diversified Customer Base
Diversified Customer Base Gallons by Retail Class Other 13.0% Industrial/Commercial/ Agricultural 31.0% Residential 56.0% 10
Slide 11: Titan Acquisition
Titan Acquisition 200 million gallons 146 district locations 325,000 customers 33 states $.10 -.15 accretive per unit Closing June 1, 2006 11
Slide 12: Project Update
Project Update 12
Slide 13: Project Update: 42" Expansion and Loop
Project Update 42” Expansion and Loop New Addition South Loop $895 million total capital to be spent $320 already incurred 13
Slide 14: Midstream Overview
Midstream Overview System Map with Expansions Competitive Advantages US Natural Gas Supply/ Demand Discussion Supply Discussion Producer Economics 2006 Volume and Margin Review 14
Slide 15: Energy Transfer System Map
Energy Transfer System Map 15
Slide 16: Competitive Advantages
Competitive Advantages Texas Infrastructure Market Options for Producers Strong Position in Active Supply Basins Operating Expertise Producer Relationships Backlog of Organic Growth Positive impact of LNG 16
Slide 17: Natural Gas Supply - Texas
Natural Gas Supply - Texas *Texas produced 28% of estimated domestic production in 2004 *Source: www.eia.doe.gov 17
Slide 18: US Natural Gas Consumption
US Natural Gas Consumption 5% 8.3% 11% 17.5% 6% Source: EIA – 2004 Natural Gas Total Consumption 18
Slide 19: US Natural Gas Supply/Demand
US Natural Gas Supply/ Demand 28% Source: EIA 19
Slide 20: Natural Gas Supply - Texas: Factors affecting drilling
Natural Gas Supply - Texas Factors effecting drilling Price of gas Cost of drilling/ completing Rig availability Pipeline accessibility Lease terms Reserve risk Magnitude of dollars per well Availability of capital Producer infrastructure in area Royalty terms 20
Slide 21: Volume/Margin
Volume/Margin ETP Midstream Volume/ Margin Analysis Mar. - May June - Aug. Sept. - Nov. Dec. - Feb. Trailing Q3 2005 Q4 2005 Q1 2006 Q2 2006 12-Month Consolidated Sales volume 581,914,952 627,678,954 635,388,103 643,221,361 2,488,203,370 Margin 147,079,476 131,566,320 147,768,428 275,561,668 701,975
Slide 22: Financial Review
Financial Review Liquidity Distributable Cash Flow Forecast Common Unit Coverage Potential Distribution @ 1.15 X Description of Class E Units Interest Expense Calculation Distribution Review 22
Slide 23: Liquidity
Liquidity Long term assets supported by long term fixed rate debt MLP structure more efficient with fixed rate debt Energy Transfer Partners, L.P. Schedule of Required Principal Payments ($ in 000's) Required Principal Payments Balance Available Balance Facility As Of Capacity Fiscal Fiscal Fisc
Slide 24: Liquidity (cont.)
Liquidity (cont.) $400 $40.0 $350.0 $350 $336.4 $35.0 $300 $30.0 Equity Issued ($ millions) $250 $25.0 Unit Price ($) $194.2 $200 $20.0 $150 $132.4 $15.0 $106.0 $100 $10.0 $52.1 $50 $5.0 $0 $0.0 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep-
Slide 25: Distributable Cash Flow/Coverage
Distributable Cash Flow/ Coverage ETP Distributable Cash Flow Calculation (in thousands) (@ $2.55/ LP Unit) 2006E EBITDA $ 710,000 Less: Maintenance Capital $ (37,000) Less: Interest Expense $ (115,000) Less: Taxes $ (20,000) Distributable Cash Flow $ 538,000 Less: Distributions to GP (IDRs) $ (120,
Slide 26: Interest Expense
Interest Expense (000's) $750mm Senior Notes @ 5.95% $ 44,625 $400mm Senior Notes @ 5.65% 22,600 $300mm Private Placement Notes @ 8.25% 24,000 $17mm Other @ 8.00% 1,360 $360mm Average Working Capital @ 6% 22,415 Total Annual Interest Expense $ 115,000 26
Slide 27: Potential Distribution @ 1.15X
Potential Distribution @ 1.15X ETP Common Distribution @ 1.15X Distributable Cash Flow (000's) $ 538,000 ETP DCF/ LP Unit $ 2.99 Less: Distributions to GP (IDRs) $ (158,180) Distributable Cash Flow to LP $ 379,820 LP Unit Distributions $ 330,243 Excess Distributable Cash Flow $ 49,577 Distribution C
Slide 28: Class E Units
Class E Units Number of Class E Units 8,853,832 Maximum Distribution Rate for Class E Units (per Common Unit) Distribution •Class E Unit $3,120,976 •General Partner 877,550 Total $3,998,526 Class E Unit distribution treated as Treasury Unit thus distribution is returned to ETP. Net outbound cash rel
Slide 29: Distribution Review
Distribution Review ETP Distribution History $3.00 $2.55 $2.60 $2.35 $2.20 $2.20 $1.95 $2.00 $1.85 $1.75 $1.65 $1.80 $1.50 $1.40 $1.30 $1.40 $1.00 4 4 4 4 5 5 5 5 6 6 6 00 00 00 00 00 00 00 00 00 00 00 12 22 32 42 12 22 32 42 12 22 32 Q Q Q Q Q Q Q Q Q Q Q 29
Slide 30: Energy Transfer Equity, LP
Energy Transfer Equity, LP ETE Corporate Structure Statistics Distributable Cash Flow ETE DCF @ ETP DCF Increases 30
Slide 31: ETE Corporate Structure
ETE Corporate Structure LE GP, LLC Management 0.5% General Public Partner Interest and Affiliates Unitholders 17.7% Limited 81.8% Limited Partner Interest Partner Interest Energy Transfer Equity, L.P. 137,216,912 Common Units Outstanding 2% General Partner 50% Incentive Distribution 32.9% Limited Pa
Slide 32: Statistics
Statistics ETE Statistics Market Capitalization $3.55 billion Long Term Debt $377 million Enterprise Value $3.93 billion Outstanding Units 137,216,912 Current DCF/ Unit $0.80 *as of May 5, 2006 32
Slide 33: Distributable Cash Flow
Distributable Cash Flow ETE Distributable Cash Flow (in thousands) Cash Flow from ETP 2% GP Cash Flow $ 8,297 IDR Cash Flow $ 55,979 LP Unit Distributions $ 92,855 Total Cash Flow from ETP $ 157,131 Less: Interest Expense $ (23,563) Less: G&A $ (3,000) Distributable Cash Flow $ 130,569 Outstanding U
Slide 34: ETE Distributions @ ETP DCF Increases
ETE Distributions @ ETP DCF Increases ETE DCF Estimates $1.50 $1.36 $1.29 ETE DCF/ Unit $1.30 $1.23 $1.16 $1.09 $1.10 $1.02 $0.95 $0.90 $0.70 $2.55 $2.65 $2.75 $2.85 $2.95 $3.05 $3.15 ETP DCF/ Unit 34
Slide 35: Investment Highlights
Investment Highlights Substantial competitive advantage High quality portfolio of assets Strong credit statistics Compares favorably with BBB+ / BBB peers Management commitment to credit quality High common unit coverage ETP retains cash to fund internal growth and strengthen balance s
Energy Transfer Partners — Analyst Conference May 2006 on 6ix