Natural gas pipeline operator Energy Transfer Partners LP (ETP) reported third-quarter 2014 earnings of 44 cents per limited partner unit, lagging the Zacks Consensus Estimate of 66 cents. The bottom line was also lower than the year-ago quarter earnings of 51 cents per share. Reduced contribution from the Interstate Transportation and Storage segment, in addition to higher expenses, affected the results.
Quarterly revenues of to $13,618 million fell short of the Zacks Consensus Estimate of $14,665 million. However, it increased 14.4% year over year owing to significant improvement in the Midstream as well as Liquids Transportation and Services segments.
Quarterly Cash Distribution
Last month, Energy Transfer Partners announced third-quarter distribution of 97.5 cents per unit ($3.90 per unit annualized), representing a sequential increase of 2 cents. The distribution is payable on Nov 14, 2014, to unitholders of record on Nov 4.
EBITDA & Operating Income
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,172 million, up from $942 million a year ago.
The partnership reported an operating income of $668 million, up 27% from $526 million in third-quarter 2013.
Total Expense
Energy Transfer Partners reported total cost of $12,950 million for third-quarter 2014, reflecting a year-over-year increase of 13.8%.
Distributable Cash Flow
Energy Transfer Partners recorded distributable cash flow of $610 million, significantly higher than the prior-year quarter level of $533 million.
Capital Expenditure
Maintenance capital expenditure totaled $98 million, compared with $62 million in the third quarter of 2013.
Balance Sheet
As of Sep 30, 2014, Energy Transfer Partners had long-term debt (less current maturities) of $17,540 million. The debt-to-capitalization ratio was 49.2%.
Capex Guidance
The partnership expects growth capital expenditure to be $4,085–$4,525 million for full-year 2014. Maintenance capital expenses are anticipated to range between $305 million to $360 million for the same time frame.
News Updates
Energy Transfer Partners’ Lone Star to Build Third Fractionation Plant: Energy Transfer Partners announced that Lone Star NGL LLC – a joint venture unit of the partnership and Regency Energy Partners LP (RGP) – is building natural gas liquids (NGL) fractionation plant in Mont Belvieu, TX. The 100,000 barrel per day facility, Fractionator III, is likely to cost around $420–$430 million. The fractionation plant, expected to start operations by the end of next year, has already secured long-term commitments.
Energy Transfer Partners Gets Long-Term Gathering & Processing Contract: Energy Transfer Partners has started building two cryogenic gas processing facilities and associated gathering pipelines after receiving long-term gathering and processing contracts from producers located in the Eagle Ford and Eaglebine areas.
The 200 million cubic feet per day East Texas Plant, to be located east of the Partnership’s La Grange Plant, is likely to commence operations in the final quarter of 2015. The proposed 70-mile Volunteer Pipeline will deliver gas to the East Texas Plant. The pipeline is expected to have an initial capacity of 200 million cubic feet per day.
The partnership has also started construction of a 200 million cubic feet per day cryogenic gas processing facility to support production from Eagle Ford. This plant is likely to commence operations by June next year.
Zacks Rank
Energy Transfer Partners currently has a Zacks Rank #2 (Buy).
Other Stock Picks
One could also consider other players from the same industry like Delek Logistics Partners, LP (DKL), Magellan Midstream Partners LP (MMP) and MarkWest Energy Partners, L.P. (MWE). While Delek Logistics sports a Zacks Rank #1 (Strong Buy), Magellan Midstream and MarkWest Energy hold a Zacks Rank #2.
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