Energy Transfer Partners: 2Q Earnings Dip but Beat Estimates
Midstream
The Midstream segment became Energy Transfer Partners’ (ETP) largest business segment after the completion of the ETP–RGP (Regency Energy Partners) merger in April 2015. The Midstream segment mainly provides natural gas gathering and processing services.
The segment’s 2Q15 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 5.6% YoY (year-over-year), driven by higher fee-based revenues from “increased production and increased capacity from assets recently placed in service.” This increase was offset by two factors:
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a decline in the segment’s non-fee-based margins because natural gas and NGL (natural gas liquids) prices stayed low
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“higher operating expenses primarily due to additional expense from assets recently placed in service”
Targa Resource Partners (NGLS), DCP Midstream Partners (DPM), MarkWest Energy Partners (MWE), and Crestwood Midstream Partners (CMLP) are among the midstream companies that also have exposure to natural gas and NGL prices. Together, ETP, NGLS, DPM, MWE, and CMLP account for ~23.54% of the Alerian MLP ETF (AMLP).
Liquids Transportation and Services
ETP’s Liquids Transportation and Services segment, which provides NGL transportation and fractionation services, grew by 7.1% YoY in 2Q15, driven by improvements in the segment’s transportation and fractionation margins. The transportation margin increased because of higher throughput volumes along the Lone Star Gateway Pipeline system. At the same time, the segment’s fractionation margin increased primarily due to the “ramp up of Lone Star’s second fractionator at Mont Belvieu, Texas.”
Interstate Transportation and Storage
ETP’s Interstate Transportation and Storage segment—which is involved in natural gas transportation, storage, and sales beyond state borders—saw 2Q15 adjusted EBITDA decrease by 2.1%, “primarily due to the expiration of a transportation rate schedule on the Transwestern pipeline.”
Intrastate Transportation and Storage
ETP’s Intrastate Transportation and Storage segment—which is involved in natural gas transportation, storage, and sales within state borders—saw 2Q15 adjusted EBITDA decrease by 5.6% YoY.
Other segments
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Investment in Sunoco Logistics – ETP’s Investment in Sunoco Logistics segment, which represents Sunoco Logistics (SXL), grew by 16.4% YoY in 2Q15.
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Retail Marketing – This segment is involved in the retail marketing of gasoline and other distillates. It grew by 2.9% YoY in 2Q15.
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All Other – The All Other segment’s 2Q15 adjusted EBITDA grew by 43% YoY.