energy transfer partners (etp) earnings report: q4 2015

CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy

EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14

©2014TheStreet,Inc.Al l R ightsReserved Page1of25

EnergyTransferPartners(ETP)EarningsReport:Q42015ConferenceCallTranscriptThefollowingEnergyTransferPartnersconferencecalltookplaceonFebruary25,2016,09:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

TomLong;EnergyTransferPartners;CFOMackieMcCrea;EnergyTransferPartners;President&COOKelcyWarren;EnergyTransferPartners;Chairman&CEO

OtherPart icipants

BrandonBlossman;TudorPickeringHolt;AnalystJeremyTonet;JPMorgan;AnalystMichaelBlum;WellsFargo;AnalystDarrenHorowitz;RaymondJames;AnalystTedDurbin;GoldmanSachs;AnalystKristinaKazarian;DeutscheBank;AnalystRobertBalsamo;UBS;AnalystHelenRyoo;BarclaysCapital;AnalystJohnEdwards;CreditSuisse;AnalystSelmanAkyol;StifelNicolaus;AnalystCoreyGoldman;Jefferies;AnalystEricMcCarthy;CitadelSecuritiesLLC;AnalystJohnKiani;TeilingerCapital;AnalystZevNijensohn;TheBostonCompanyAssetManagement;AnalystNormanHale;StifelNicolaus;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometotheEnergyTransferPartnersfourth-quarter2015earningsconferencecall.

(OperatorInstructions)

Asareminder,thisconferenceisbeingrecorded.

IwouldnowliketoturntheconferenceovertoMr.TomLong,ChiefFinancialOfficerforEnergyTransferPartners.Thankyou,Mr.Long.Youmaynowbegin.

T omLong (CFO):

Thankyou,Operator.Goodmorning,everyone.WelcometoEnergyTransferPartners'andEnergyTransferEquity'sfourth-quarter2015earningscall.Thankyouforjoiningustoday.

IwillbeginwithadiscussionofEnergyTransferPartners'fourth-quarterresults,followedbyagrowthprojectupdate,afinancingandliquidityupdate,andanETPdistributiondiscussion.ThenIwillprovideabriefupdateonthemergerwithWilliamsandlastly,anoverviewofEnergyTransferEquity'sfourth-quarter




earningsandotherhighlights.

I'malsojoinedtodaybyKelcyWarren;MackieMcCrea;MattRamsey,whoisETP'snewPresidentandChiefOperatingOfficer;JohnMcReynolds;andothermembersofourseniormanagementteamwhoareheretohelpansweryourquestionsafterourpreparedremarks.

Asareminder,wewillbemakingforward-lookingstatementswithinthemeaningofSection21EoftheSecuritiesExchangeActof1934.Thesearebasedonourbeliefsaswellascertainassumptionsandinformationcurrentlyavailabletous.IalsorefertoadjustedEBITDAanddistributablecashflow,orDCF,bothofwhicharenon-GAAPfinancialmeasures.You'llfindareconciliationofournon-GAAPmeasuresonourwebsite.

NowforETP'sfourth-quarterresults.PleasenoteasaresultoftheRegencymerger,whichwasacombinationofentitiesundercommoncontrol,ETP'sfinancialresultshavebeenretrospectivelyadjustedtoreflecttheconsolidationofRegency.

AdjustedEBITDAonaconsolidatedbasistotaled$1.36billion,whichisadecreaseof$168millioncomparedtothefourthquarterof2014.Wehadcontinuedstronggrowthintheliquidsegment,butsawmidstreamEBITDAdecrease.Andinthefourthquarterof2014,wehadunusuallystrongretailperformance.

DCFattributabletothepartnersofETP,asadjusted,totaled$959million,anincreaseof$165millionfromayearago.Wehadacurrenttaxbenefitfrombonusdepreciation,partiallyoffsetbyhighermaintenancecapital.

Nowlet'sgoovertheindividualsegmentresults.Inthemidstreamsegment,adjustedEBITDAwas$264million,down$96millioncomparedtothesameperiodayearago.Thisdecreasewasprimarilydrivenbylowercommodityprices.Thesewerepartiallyoffsetbyhigherthroughputvolumes,anincreaseinfee-basedrevenues,andlowerG&A.Therewerealsoseveralplantoutages,themajorityofwhichhavebeenresolved,andcontinuedvolumeshut-insintheNortheast.

Gatheredgasvolumestotaledover10millionMMBtusperday,whichisa5%increaseversusthesameperiodlastyear,primarilyduetohighervolumesintheEagleFord,Permian,andCottonValleyregionsaswellastheKingRanchacquisition.

NGLproductionalsoincreasedinthefourthquarterby67,000barrelsperdayto444,000barrelsperdaycomparedtothefourthquarterof2014.AndEquityNGLsdecreasedinthefourthquarterby1,000barrelsperdayto29,000barrelsperday.

Intheliquids,transportation,andservicessegment,adjustedEBITDAincreasedby40%to$222millioncomparedtothesameperiodlastyear.TheincreaseinadjustedEBITDAwasduetohigherthroughputattheLoneStarfractionatorsandWestTexasNGLpipelineaswellasincreasesinstoragemarginduetotherampupofMarinerSouthandrelatedstoragefees.Wealsoincreasedmargininseveralotherareas.

NGLandcrudetransportationvolumesonourwhollyownedandjointventurepipelinesincreased20%to474,000barrels.ThiswasduetoincreasedvolumesoutoftheEagleFordandPermianaswellasthecommissioningofacrudeoiltransportationpipelineattheendof2014.TherewasalsoanincreaseinvolumesonourNGLpipelinesfromourplantsinSoutheastTexas.

Averagedailyfractionatedvolumesincreased22%to250,000barrelscomparedtothefourthquarteroflastyearduetothestartupofoursecondfractionatoratMontBelvieu,whichwascommissionedinlate2013.

Inourintrastatesegment,adjustedEBITDAincreasedslightlyyearoveryearto$122million.Thiswasdue




totheincreasedtransportationfeesandnewlyinitiatedlong-termdemandcontractsforMexicoexportvolumesonourHoustonpipelinesystem.Also,whiletransportedvolumesdecreasedto7.9millionMMBtusperdayfromlowerproductionintheBarnettShale,weexpectthistrendtoreverseduetovolumegrowthin2016relatedtoincreaseddemandfromMexicoandtheGulfCoastLNGfacilities.

Inourinterstatesegment,adjustedEBITDAwas$283million,down$24millionfromayearago,partiallyduetotheexpirationofatransportationratescheduleontheTranswesternpipelineandtherepurposingofTrunkline's30-inchlinefortheBakkenpipelineproject.Therewere,however,increaseddeliveriesontheTranswesternpipelineduetosustainedcoolingdemandandincreasedcustomerdemand.

MovingtoSunocoLogistics,whohadanothergreatquarter,withEBITDAof$317million.Thiswas$80millionhigherthanSXL'sfourthquarterof2014.Movingtoretail,asareminder,duetoETP'ssaleofits100%membershipinterestofSunocoGPLLCandalloftheIDRsofSunocotoETE,ETPnolongerconsolidateSunocoforaccountingpurposes.

ETP'sremainingproportionateinvestmentinSUNisaccountedforundertheequitymethod.Thischangeimpactsthecomparabilityoftheretailsegmentresultsversuspriorperiods.

Forthefourthquarterof2015,adjustedEBITDAfortheretailsegmentisreportedasETP's100%ownershipoftheassetsinSunoco,Inc.,andincludesadjustedEBITDArelatedtounconsolidatedaffiliates,whichiscomprisedofour68.4%interestinSunocoLLC,thewholesaledistributionbusiness,andourinvestmentinSunocoLPbasedonETP'spercentageownershipofoutstandingLPunit.Forthefourthquarter,theretailsegmentcontributed$119millionofadjustedEBITDA.

Goingforward,asaresultofourdropdownofourremaininginterestinSunocoLLCtoSUNLP,whichisexpectedtocloseinMarch,wewillnotreportretailresultsasitsownsegment.Instead,ourinvestmentinSUNLPwillbereportedintheallothersegmentandbrokenoutinourdisclosuresrelatedtosupplementalinformationonunconsolidatedaffiliates.

Forthecurrentallothersegment,adjustedEBITDAdecreasedto$33million,down$17millionversusayearagoduetoweakerrefiningcrackspreadsfromourinvestmentinPES.AsitrelatestothePESIPO,thishasbeenpostponedandwillrestartwhenmarketconditionsimprove.Westillviewthisinterestasanattractivenear-termmonetizationoptionforETP.

Nowlet'smovetoourgrowthprojects,whereI'llprovideabriefupdate.StartingwiththeBakkenpipelineproject,ourjointventurewithSXLandP66,weareobtainingthenecessarypermitsandregulatoryauthorizationsforthisproject.Weexpecttoreceivetheremainingstateagencyauthorizationsinthenextfewmonths.

Thisshouldprovideuswithsufficienttimetoconstructtheprojectbythefourthquarterthisyear.OurprojectmanagementgrouphasdoneanoutstandingjobkeepingBakkenonschedule.

NextonBayouBridge,anotherjointventurewithSXLandP66,constructionisnearlycompleteontheNederlandtoLakeCharlessegmentofthepipeline,whichisexpectedtobemechanicallycompleteinMarch.BayouBridgesuccessfullyconcludeditsexpansionopenseasoninNovember,addingincrementalcommittedshippervolumestotheproject.

Basedonthesecommitments,thesegmentfromLakeCharlestoSt.Jamesismovingforwardandiscurrentlyinthepermittingandright-of-wayacquisitionphase.WecontinuetoanticipatethedeliveriestoSt.Jameswillcommenceinthesecondhalfof2017.

OntheRovergaspipeline,wereceivedthedraftEISfromFERClastFriday,withfinalEISscheduledforthe




endofJulyandtheFERCcertificateinthebeginningofthefourthquarterofthisyear.WeanticipatebeinginservicetotheMidwesthubnearDefiance,Ohio,byJuneof2017.AndtomarketsinMichiganandUnionGasDawnhubbyNovemberof2017.

LoneStar'sFracIIIwasplacedintoserviceinmid-Decemberontimeandunderbudget.LoneStar'sthree100,000-barrel-per-dayfractionatorshaveaveraged339,000barrelsperdaytodate.FracIVremainsonscheduletobeinservicebyDecemberof2016.

TheLoneStarExpressNGLpipelineremainsonschedule,withPhaseItostartupinthesecondquarterandfinalcompletionexpectedtobeinthethirdquarterofthisyear.Itisalsoexpectedtocomeinunderbudget.

TheTrans-PecosandComancheTrailpipelines,whichwillexpandourintrastatepipelinecapacitytocarrygasfromthePermianBasintoMexico,remainontracktobeinserviceinthefirstquarterof2017.Wehavecompletedtheprojectfinancingandexpecttocommenceconstructiononbothprojectsinthenextseveralweeks.

OntheEdinburghandOasispipelinesinSouthTexas,volumestoMexicocontinuetogrowasourdemandfeecontractexpandsfrom530millioncubicfeetperdayto930millioncubicfeetperday,effectiveMarch1.Boththe24-inchVolunteerpipelineandthe200-million-cubic-foot-per-dayEastTexascryoplant,alsoknownastheAlamoplant,cameonlineinJanuaryof2016.

Onthe2.1BcfperdayUticaOhioRiverexpansion,asareminder,PhaseIwasplacedinserviceinmid-OctoberlastyearandPhasesIIandIIIcameonlineattheendofDecember.Theprojectisnowfullyinservice,deliveringvolumesintobothREXandTETCOandweexpectvolumestocontinuetogrowthroughouttheyear.

AndontheRevolutionproject,thepipelineandplantaswellasthefractionationfacilityareexpectedtobeinserviceinthethirdquarterof2017.Asareminder,ourprojectprovidesshipperswithuniqueend-to-endsolution,withsignificantlyimprovednetbackeconomicscomparedtotheirotheralternatives.

Our200millioncubicfeetperdayOrlacryoprocessingplantintheDelawareBasinisexpectedtocomeonlineinAprilandbefullwithin30days.Wehaveadditional200millioncubicfootperdaycryoprocessingplant,thePantherplant,whichisinthePermianBasinthatisexpectedtocomeonlineinthefourthquarterofthisyear.

NowmovingontoCapEx,ETPinvestedover$1.2billionduringthefourthquarterinorganicgrowthprojects,withthemajorityallocatedtoourliquidstransportationandservices,midstream,andinterstatesegments.Forfullyear2015,ETPinvestedapproximately$5.6billioningrowthCapExprojects.

For2016,aswementionedinourdistributionpressrelease,wehaveidentifiedapproximately$750millionofCapExthatcouldbedeferredorcutfromouroriginalforecast.Asaresult,wenowexpecttospendapproximately$4.2billiononorganicgrowthcapitalfor2016.Thisisnetofanadditional$325millionthatisexpectedtobefinancedatthejointventurelevelwithnonrecoursedebt.

AmajorityoftheCapExreductionisrelatedtothemidstreamsegment,wherewehaveplacednewprocessingplantsandotherprojectsonhold.Inaddition,wehavedeferredsomeprojectsatLoneStaranddelayedandreducedcostintheinterstatesegment.WecontinuetoforeseesignificantEBITDAgrowthin2017fromthecompletionofourprojectbacklogandamajorityoftheseprojectsarebackedbylong-termfee-basedcontracts.

Duringthefourthquarter,wespent$142milliononmaintenancecapitalexpenditures,andforfullyear2015,wespent$394million.Asyoucansee,fourth-quartermaintenancecapitalwashigherthannormal.




Accordingly,for2016,weexpecttospendapproximately$345milliononmaintenancecapitalexpenditures.

Beforemovingontodiscussingourdistribution,let'stakeaquicklookatourliquiditypositionaswellasourfundingstrategyfor2016.WeendedthequarterwithadebttoEBITDAratioof4.5timesforourcreditfacility.AsofDecember31,2015,therewas$1.36billioninoutstandingborrowingunderthe$3.75billionfacility.Andweissuedapproximately$400millionofequityduringthefourthquarterof2015underourATMandDRIPprograms.

Takingalookatourcurrentfundingstrategyfor2016,withtheexpectedclosingofthepreviouslyannounceddropdownoftheremaininginterestinSunocoLLCandthelegacySunocoretailbusinesstoSunocoLPinMarch,theoutstandingbalanceunderETP'srevolverwillbeclosetozero.Asaresultofthistransaction,alongwiththe$750millionreductionin2016,growthcapitalfundingandotherpotentialassetsales,andtheprojectfinancings,wedonotexpecttoneedtoaccessthefixedincomemarketin2016ortoneedtoissueETPcommonunitsin2016.

Whilewedonotneedtheequitymarketstofundourgrowth,weexpecttoopportunisticallyutilizetheATMfromtimetotimeinordertomanageourleverage.Inaddition,ETErecentlyagreedtoextendthe$95millionannualmanagementfeepaidtoETPthrough2016.Collectively,theseactionsarefullyconsistentwithourgoalofmaintainingETP'sinvestment-graderating,whichweconsideratoppriority.

WehavealsokickedoffinitialdiscussionsregardingprojectfinancingoftheBakkenpipeline.ThismeasurewouldmateriallyreducethedirectspendingrequiredtofinancethisprojectandwouldsubstantiallyreduceETP'sandSXL's2016capitalfundingrequirements.

NowIwouldliketotouchonourrecentdistributionannouncement.InJanuary,weannouncedadistributionof$1.055percommonunitforthefourthquarteror$4.22percommonunitonanannualizedbasis.Thiswasflatcomparedtoourthird-quarterdistributionandwaspaidonFebruary16tounitholdersofrecordasofthecloseofbusinessonFebruary8.

Asitrelatestopotentialdistributionincreasesgoingforward,thisisatimewhencoverageandliquidityarevaluedmorebytheequitymarketsandratingagenciesthandistributiongrowth.Wewillcontinuetoevaluateourdistributiononaquarterlybasisandwillbeprudentasitrelatestobalancingcoverageandliquiditywithdistributiongrowth.

NowforabriefupdateonourmergerwithWilliams.AsaresultoftheFTC'ssecondrequestforadditionalinformation,weenteredintoatimingagreementwiththeFTConDecember14,underwhichwehaveagreednottoconsummatetheproposedacquisitionpriorto60daysaftersubstantialcompliancewiththesecondrequest.ETEandWilliamscontinuetoworkcooperativelywiththestaffoftheFTCasitconductsitsreviewoftheproposedacquisition.

Inaddition,onFebruary1,wereceivedcommentstoourS4ProxythatwepreviouslyfiledwiththeSEC.Weareintheprocessofworkingthroughthosecomments,someofwhichrelatetotheinformationthatwillbeincludedintheETEandWilliams10-KsandexpecttofileanamendmenttotheS4shortlyafterfilingourrespective10-Ks.

ThependingmergeralsoremainssubjecttotheapprovalofWilliamsstockholdersandothercustomaryclosingconditions.Asaresult,wenowexpectclosingtooccursometimeinthesecondquarter.

Asitrelatestotheintegrationplanning,werecentlyannouncedthatDonChappelhasacceptedtheroleofCEOofWPZpost-closingofthemerger.Inaddition,ourintegrationcommitteehasbeendiligentlyworkingthroughtheintegrationplanning.Weintendtoactivelyimplementasharedservicesmodelandcontinuetoexpectsubstantialsynergiesasaresultofthemerger.




Asareminder,wehaveacommitmentfora$6.05billionbridgeloaninplacewithasyndicateofbankstofundthecashportionofthemerger.Thisiseffectivelyatwo-yearloan.Wehavehadextensivediscussionswiththeratingagenciesandweareevaluatingseveralalternativefinancingplansinternally.Wewillprovidemoredetailsonthisattheappropriatetime.

Withthatupdate,wewillnotbetakingquestionsonthecalltodayrelatedtothemerger.Weappreciateyourcooperationinthisregard.

MovingonnowtoETE,IwillbeginwithETE'sfourth-quarterresults,followedbyaliquidityfinancingupdateandaLakeCharlesLNGupdate.Wewillthentakeyourquestions.

Turningtothefinancialresults,firstofall,wearepleasedwiththefourth-quarterresultsofSXL,Sunoco,andETP.Asareminder,effectiveJuly1,2015,ETEacquired100%ofthemembershipinterestofSunocoGPLLC,thegeneralpartnerofSunocoLP,andalloftheIDRsofSunocoLPfromETP.SoSunocostillappearsintheconsolidatedfinancialstatementsforETE.

ETE'scashflowscamefromthegeneralpartnerandIDRsandLPinterestsatETP,90%oftheeconomicsoftheGP,andtheIDRsfromSXLthroughtheClassHunits,throughtheownershipoftheLakeCharlesLNG,and100%oftheGPandIDRsofSunocoLP.Ourdistributablecashflowasadjustedforthefourthquartertotaled$343million,anincreaseof$100millioncomparedtothesameperiodlastyear.

DCFasadjustedperunitforthefourthquarterwas$0.32perunitoranincreaseof45%comparedtothefourthquarterof2014.DistributionsfromETPaccountedfor68%ofETE'stotalcashflowsinthelatestquarter.SXLcontributed17%,LakeCharlesLNGapproximately11%,andSunocoLPcontributed4%.

ETEannouncedlastmonthaquarterlydistributionof$0.285perunit.Thisequatesto$1.14perunitonanannualizedbasis.Ourdistributablecashflowcoveragewas1.15timesforthefourthquarter.ItwaspaidonFebruary19tounitholdersofrecordasofcloseofbusinessofFebruary8.

Let'slooknowatliquidityandfinancing.ETEcontinuestohaveahealthyliquidityposition.WeendedthequarterwithadebttoEBITDAratioof2.96timesforourcreditfacility.AsofDecember31,2015,therewere$860millioninoutstandingborrowingsunderthefacility.Therefore,attheendofthefourthquarterof2015,theoverallETEstand-alonedebtwas$6.33billionwithablendedinterestrateof4.8%andwithnopendingmaturitiesuntilalmost2019.

NowturningtoLakeCharleswhichtoremindeveryoneisowned60%byETEand40%byETP.Progresscontinuedtobemadeduringthefourthquarter.WereceivedourfinalFERCauthorizationinDecembertosite,construct,andoperatethefacility,andwereceivedourfinalapprovalfromtheUSArmyCorpsofEngineerslastFriday.

OnFebruary15,ShellcompleteditsacquisitionofBG.Andlastweek,weheldourkickoffmeetingfortheprojectfinancing,andpreliminaryresponsesfromlendershasbeenstrong.WeremainontargettoreachaffirmativeFIDontheprojectin2016,withtheconstructionexpectedtostartimmediatelythereafterandfirstLNGexportsanticipatedinearly2021.

Beforeopeningthecalluptoyourquestions,Iwouldjustliketosaythatourbusinesscontinuestodemonstrateresiliencyincommoditymarketsthathavebeenchallengingaswellasthebenefitsofourdiversifiedbusinessmodel.Ourprojectbacklogisbuiltonlong-termthird-partydemandfeesthatgiveusvisibilityintofutureEBITDAgrowth,particularlyin2017.Theseprojectsaretrackingonscheduleandonbudget.

ETP'sfinancingneedsfor2016areexpectedtobemetwithouttheneedtoaccesstheequityordebtmarkets,andourcounterpartiesarestrong,high-qualitycompanies,orhavesecurityforperformance




thatiswellstructuredtomitigaterisk.ETE'spriorityistosupportitscoreoperatingsubsidiariesanditwilltakethestepsnecessarytoensuretheymaintaintheirfinancialhealthandinvestment-graderatings.

Weremainveryfocusedonprojectexecution,costmanagement,andimprovingourbalancesheetstrengthbyloweringourleverageandincreasingcoverage.Theunderlyingfundamentalsofourbusinessarestrongandwebelievewewillbeinagreatpositionforgrowthwhenthecurrentmarketconditionsimprove.

Beforewebegintakingyourquestions,IjustwanttoreiteratethatwewillnotbetakingquestionsonthecalltodayrelatedtothependingmergerwithWilliamsorrelatedmatters.Thankyouonceagainforyourcooperation.

Withthat,Operator,thatconcludesourpreparedremarks.Pleaseopenthelineupforquestions.

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

BrandonBlossman,TudorPickeringHolt.

BrandonBlossman (Analyst-TudorPickeringHolt):

Let'sstartonLakeCharles.HastherebeenanyconversationswithShellpost-close?Andwhatdoesthattimelinelooklikeorwhat'stheprocesstogettoFIDoverthecourseof2016?

Unidentif iedCompanyRepresentative :

There'sbeennodirectconversationswithShell,butBGmetwithShelllastweekandthoseconversationscontinue.ThisweekandthefeedbackfromourcounterpartsatBGsaidthemeetingswereveryfavorableandwe'vebeentoldtoproceedasplanned.


Great.Thatsoundsverypositive.Okay,let's--asfaraswecantrackthrough2016andinto2017,whatconceptuallyorphilosophically--howdoyouaddressthekindofintermittentuseoftheATMprogramforequityversuskindofdistributionthoughtsasyouconsiderkindofratingagencyactionandyourinvestment-gradecreditrating?

T omLong (CFO):

Youbet.Asyouknow,theATMhasalwaysbeenreallyagoodtool.Wehaveobviouslygonelighteronitaswe'vemovedintotheselowerprices.Butclearlywewanttoleaveitasanoptionoutthere.Andwithtryingtomanageonceagainourleverageratioandour--asfarasourcreditmetrics,allofourcreditmetrics.

Sothereasonwhywewanttoleavethatis--inplaceisnotbecauseofthefundingneedsthatwehave,butonceagainjustbecausewewanttojustmakesurethatwearestayingdownthemiddleofthefairway.


Okay.Fairenough.Andthenjustadetailedaccountingquestion.OnthebonusdepreciationaddtoDCFinthefourthquarter,whatperiodwasthatfor?




T omLong (CFO):

Thebonusdepreciationwasfor2015.


Fullyear2015?

T omLong (CFO):

Yes.Buttherewassomecarrybackinto2014and2013.


Thankyouverymuch.That'sallformeforrightnow.

Operator :

JeremyTonet,JPMorgan.

JeremyT onet (Analyst-JPMorgan):

Justwanttoturntothemidstreamsegment,ifwecould.Andwaswonderingifyoucouldprovideanymorethoughtsasfarashowthingsaretrendinginto2016.Andwesawadeclineinthequarter.DoyouthinkthingshavebaselinedandgrowthCapExcomingintoservicecankindofstemthat?Orhowdoyouthinkaboutthatthesedays?Andappreciatethere'salotofuncertaintywithproducerbudgetsatthispoint.

MackieMcCrea(President&COO):

Thanks,Jeremy.ThisisMackie.Aswelookatthechallengingtimeswe'reinandyoulookatourvolumes,theyareactuallyupifyoucomparethefourthquarterof2014to2015.CertainlysomeofthatisrelatedtoKingRanch,butevenwithoutKingRanch,asawhole,somedown,someup.Asawhole,ourvolumesareupacrosstheboard.InfactifyoutakeoutNorthTexas,theBarnettShale,ourvolumesareupsignificantly,notonlyonmidstream,butalsoonourintrastate.

Inadditiontothat,aswekindoftakeaforwardlookinto2016,onceagaininverychallengingtimes,thethingweconcentrateonthemostisvolumes.AsKelcyhasalwayssaid,wecan'tcontrolbasis.Wecan'tcontrolcommodityprices,butwecanbeaggressiveandmorecompetitiveonvolumes.Andweactuallyareseeingvolumegrowthin2016comparedtothefourthquarterof2015,ranginganywherefrom4%toashighas17%dependingonthebasin.

Sothethingsthatwecancontrol,wearepleasedwith,especiallyintheenvironmentwearein.Andwecan'tworryaboutthethingswedon'tcontrol.


Gotyou.Fairenough.Andasfarasthemidstreamreductionsthere,wouldyoubeabletosharemorecoloronwhichplantswerebeingdeferred?AndwasRevolutionpartofthatCapExreduction?


I'mnotsureaCapExreduction,butwe've--westillareontracktohaveRevolutioninbythethirdquarterof2017.Ithasbeenpushedbackalittlebittobeinlinewiththedownstreampipelines.

TheotherplantthatTomtalkedaboutearlierwasOrla.It'scomingonsoon.Weareverypleasedwiththatplant.It'sveryrareyoubringaplantonandit'sfullwithin30days.Pantherwillbeverysimilaratthe




endofthisyear.Itwillrampupfairlyquickly.Anyotherplantsthatwehavecontemplated,wehaveputonholduntilwehaveaccretivecontractstosupportthem.


Soundsgreat.Thanksforthat.AndjustasfarastheJVpotentialasfarasmanagingthebalancesheetandasfarasprojectfinancingatDakotaAccess,doyouneedagreementfromalloftheJVpartnerstheretodothat?AndareyoulookingforanyotherJVsongrowthprojectsthatyouhavetofurtherstrengthenyourbalancesheet?

T omLong (CFO):

Weare--firstoff,firstpart--Ithinkthelastpartofyourquestionthere--yes,wedoneedtheconsentoftheJVpartners,which,asyouknow,that'sP66isour25%partneronthatone.Whatwe'relookingatthereiswe'renotlookingatnecessarilypushingtheleverageupreallyhighonthat.Wearereallyjustkindoflookingatkindofa50-50financingonthatproject.I'msorry.ThesecondpartofyourquestionwasaroundtheJV?


Well,for--asfarasthistypeofafinancing,bringinginJVpartnersforanyotherprojects--isthatapossibilityatthistime?

T omLong (CFO):

Yes,Iwouldsaythatthatisapossibility.We'reclearlyfocusedontheprojectfinancingsideofitiswhatwearefocusedonrightnow.Butyes,thatisapossibility.


Gotyou.Thankyou.Andthenjustonelastonefromme.Intheliquidsegment,itlooksliketherewasaninventoryliquidation.Couldyoujustprovidealittlebitmorecoloronwhatwashappeningthere?

T omLong (CFO):

Areyoutalkingaboutkindofthegoodwillandtheimpairment?Isthatwhatyouarereferringto?


Inothermargin?Inothermargin,Ithinktherewasalittlebitofanincreasethisquarter,soIwasjustwonderingaboutthat.

T omLong (CFO):

Listen,I'llhavetogetbacktoyouonthatothermarketing.Iapologize.Ithoughtyouwereaskingaquestion.Letmegetbacktoyouonthatone.


Great,appreciateit.Thankyou.

Operator :

MichaelBlum,WellsFargo.

MichaelBlum(Analyst-WellsFargo):




Canyougobackto,IguessMackie,someofyourcommentsyouwerejustmakingaboutyouroutlookforvolume?Iknowatyourinvestorday,yousaidthatyouweren'treallyseeingvolumedeclinesandyouactuallyexpectedsomeincreases.

Soyoujustthrewoutarange:4%to17%growth.Canyoujustkindofwalkusthroughbybasinkindofwhatyou'reseeingthereandwhat'sdrivingvolumegrowth?


Sure,youbet.Onethingweareverypleasedwithisalotofourdollars,alotofourcapitalhasbeenfocusedintwoofthebetterbasinsinthecountry,thatbeingEagleFordandprobablythebestbasinintheworldwithPermianDelaware.Sowecertainlyare--seesignificantgrowththere.AsImentionedaminuteago,we'llhave200,000adayflowingthroughourOrlafacilitybyMayorso.Sothat'sanincreasealonejustatthatonefacility.

Also,we'veseensignificantgrowthupintheNortheastonourOhioRiversystem.Itcameonlastyear,startedrampinguptowardtheendoftheyear,anditsexceedingourexpectationsinthefirstquarter.Andweprojectthatthatwillcontinuethroughout2016.Onceagain,evenintheseverydifficultenvironments.

AsImentionedearlier,BarnettShale--BarnettShale,itisonaslowdecline.Thereservesarethere.Ourpipestherearewaitingwheneverthepricesmakessense,buteveryotherareaforthemostpart--Revelisgrowingthevolumesthere.SouthTexas,we'vehadsomedowntimeonsomeplantsthat,asTomalludedto,wehavethoseupandrunning.Sowe'llseevolumesatleasthold,ifnotgainalittlebitintheEagleFord.

Soallinall,asImentionedearlier,otherthanafewexceptions,weareprettyexcitedorpleasedwithwhereweseevolumegrowththisyearcomparedtoourcompetitorsandinthisverydifficultenvironment.


Okay,great.AndthenasI'msureyouknow,ChesapeakemadesomecommentsontheircallaboutsomerecontractingonTiger,itlookslike.Butitseemslikethereissomesortofquidproquoandyou'llbeseeingabenefitsomewhereinyourgatheringsystem.Iwaswonderingifyoucouldjustprovidealittlemoredetailsandmaybeifyoucouldquantifyforushowthattradeoccurred.


Youbet.Youknow,it'sfunny.Whenallthisstartedhappening,KelcyandItalked.Thereisalwayssomelemonadewiththelemons,andthat'swhatwetrytodo.We'vebuiltourrelationshipwithcreatingorworkingwithproducersontheirneeds.Andclearly,there'salotofpainontheE&Pside--onallthesides.

AndwehaveinthatsituationbeenabletohelpoutChesapeakeintheshorttermbyshiftingdemandcharges,wheresomeoftheirbusinessismorecommoditynowwithusintheshortterm,andbyextendingcontractsthatwereendingoverthenextthreetofiveyearsformanyyearsout.Andthenalsoaddingsignificantbusinessinthefuture.

SoweareverypleasedwithChesapeake.Weenjoy--haveenjoyedworkingwiththem.Wedobelievetheywillmakeitthroughthesetoughtimesandwelookforwardtobeingkindoftheirpartnerofchoiceiswhatwehopeastheycontinuetodrilloutsomeofthebetterrockthattheyhavecontroloforhaveleasesonthroughoutthecountry.





Okay.Soweshouldseethatbenefitshowupinlateryearsinthemidstreamsegment?Justtryingtofigureoutwheretheoffsetis.


Yes.You'llseemoreofit--Ican'tgetintoalotofdetailshere,butcertainlyyou'llseemoreofitmoreinthemidstreamandeveninsomedifferentbasins.


Okay.AndthenjustonRover,canyoujustreminduskindofwhatpercentofthatpipeiscurrentlycontracted?Andalsohowmuchcapitalhasbeenspenttodate?


I'llletTomspeaktothecapitalonthemath.It'slike97%,Ibelieve.97%,98%.Wehave150,000leftor3.25%,whateverthemathisthere.Ithinkit'sabout97%or98%ondemandcharge.AndontheCapExthat'sbeenspent?

T omLong (CFO):

OntheCapEx,Michael,I'llgetbackwithyou.Ibelieveweareprobablyatabout$2billionorso.ButItellyouwhat--I'llgetbackwithyouonthat,seewhat'stheabsolutelatestonthat.


Okay,great.Andmylastquestionisreally--Idon'tknowifyoucanorwillcomment,butobviouslythere'sbeenalotofspeculationwiththedepartureofJamie.AndIjustwantedtoknowifthere'sanythingyoucouldshareintermsofthecircumstanceswiththatwholesituation?Thanks.

KelcyWarren (Chairman&CEO):

Michael,thisisKelcy.IthinktoberespectfultoJamie,I'llkeepthistoaminimum.Andwe'vetalkedtomany,manythatareonthiscall.Jamieisaverytalentedguy,butthedecisionwasmadebymethatweneededtomakeamoveandwedid.AndTomLongisnowourCFO.


Great.Thankyou.

Operator :

DarrenHorowitz,RaymondJames.

DarrenHorowitz (Analyst-RaymondJames):

Tom,ifIcould,Ijusthaveonequestion.Iwanttogobacktoyourdiscussionaroundthebalancesheet.Andobviouslywhatthemarketistellingusistheywantmoretransparency,notjustintothetiming,butthemagnitudeofenhancingliquidityandreducingleverage.

You'vetalkedaboutyouroptions,likemonetizingpartoftheBakkenpipe,maybedeferringmoreCapEx.Obviously,that$2.2billioninproceedsfromthesaleofSunocointeresthelps.ButthereareotheroptionsandI'mwonderinghowyouguysrankthoseintermsofpriorityorintermsofwhatcouldhavethebiggestbenefittothebalancesheet.

IfyouthinkaboutSUN,it'sobviouslycountercyclical.Historically,you'vesaidnotacorebusiness.Andit




helpsbothETEandETPwithregardtotheGPandtheLPinterest.AndI'mthinkingaboutifyoucouldjustprovidesomecolorhowyouviewthosemonetizationoptions,what'schangedinthemarketplace,andifyoucouldprovideanytransparencyonthetimingandyourforecastforwhereyouwantleveragetobeexitingthisyear,especiallyifthisfundamentalorcostofcapitalchallengecontinuesinto2017.

T omLong (CFO):

Okay.No,youbet.Letmekindofstartwiththelastpart.Ourtargetisstilltomaintaina4.5timesleverageratio,soobviouslyatyearend.Andthisisperthecreditfacility.That'showwecontinuetomanagethataswelookout.Andwestillthinkthat'saverygoodtarget,andofcourse,asyouknow,wearerightinthemiddleofalotofpre-funding.

Soweknewthatthatwasgoingtoputsomepressureontheleverage,butitwasalsogoingtoputsomepressureonthecoverage.Youknow,therealcomfortingthingtousistheseprojectsareallcomingonlatethisyear,earlynextyear.Sothat'swhatwe'vebeenworkingtowardingettingkindofthelastportionsofthisfunded.

Backtotheprioritization,IguessIwouldsaywedohavethoseoptions.It'sreallykindofdifficulttoprioritizetheminthesensethatthemarketissodynamic.Youknow,asyoulookatvariousoptions,differentdays,differentthingsmovearoundonyou.Andit's--we'regoingtoprobablystayconsistentwithwhatwe'vealwaysdoneinthepast,andthatisto--aswegetandmakeacertaindecisionastowhat'sthebestfortheCompany,fromonceagainallofthevariousmetrics--coverage,creditmetrics,etc.--wewillmakethosedecisionsatthetimeandwewillannouncethematthetime.

Butifwetrytogetoutandpreannounceonthese,youcanappreciatewhatthatreallydoes.Sojustkindofstayingconsistentwiththewaywe'vealwaysfundedourprojectsinthepast,whereweannouncethematthetimethatwegetwhatevernegotiated,iswhatwearegoingtocontinuetogo--aplanthatwearegoingtostickwith.


Darren,Iwouldaddthat--asyouandIhavespokenrecently,CTE'sjobtosupportthepartnershipsthatoperateunderneathit.AndsotherewillbecontinuedsupporttotheextentIDRholidaysforgrowthareappropriatethattheywillbegiven.AndothermeansthatETEcansupportETE'sgrowthandgetETEintolate2017,whereETEisprettyremarkablegrowthatthat--ETPhasprettyremarkablegrowthatthattime.Sojustnote,justrestassuredthatETEwilldowhatitneedstodo.

DarrenHorowitz (Analyst-RaymondJames):

Thankyou.

Operator :

TedDurbin,GoldmanSachs.

T edDurbin (Analyst-GoldmanSachs):

Thanks.Maybejusttakingthatonemorelevel.IsadistributioncutonthetableatallforeitherETPorETE,relativetotheleveragemetricsyouarelookingat?It'sachoicethatsomeotherpartnershipshavemade.MaybeyoucanputthatinthecontextofifandwhentheWilliamsdealgoesthrough,howyouthinkaboutthat.AndthenalsobalancingbetweenETEandETPandwhereyoumightmakethatdecision.


I'lltakethefirstpart.ThereisnocontemplateddistributioncutsatETPwhatsoever.We'venotlookedat




anyscenariowherethatwouldbeappropriateornecessary.It'sjustnot--wejustdon'tseethat.Youknow,likewesaidbefore,we'renotgoingtotalkabouttheWilliamstransaction.

Butyouknow,ETEisaveryhealthy.Our--distributioncutsarenotrequiredatETE.Andwetakeourobligationtoourunitholdersvery,veryseriously.Wehaveadutytomaintainourdistributions.Buteverybodyknowsobviouslythatthat'sanoption.TotheextentthatweneedaccesstodistributionstomaintainourfinancialhealthatETE,wouldwereachintothatbucket?Itwouldbethelastonethatwewouldreachto,butit'scertainlypossible.


Okay,Iappreciatethat,Kelcy.CanwejusttalkabouttheBakkenpipeline?Anditsoundslikeyouarestillconfidentinhittingthatlate2016in-servicedate.Itfeelslikeit'sastretchfrommyseat,atleastgiventhatyouhaven'tstartedconstructionasfarasIcantell.What'sleftthatneedstogetdoneonthepermittingsidetohitthatin-servicetime?


Ted,thisisMackieagain.Youknow,I'vegottosay,likewedoformostofourteams,wehaveoneofthebestteamsinthecountrybuildingthatpipeline,withJoeyMahmoudontheengineeringsideandLeeonthecommercialside.

Andthatprojecthasgoneexceptionallywellinavery,verydifficultenvironmentthroughoutthecountry.Westillareholdingtotheschedule.WehaveeverypermitotherthanapermitinIowa--materialpermitsandweareoptimisticandhopetohavethatpermitinMarch.Andassoonaswehavethatpermit,wewillbeginconstruction.Butrightnow,wedoexpecttobeflowingoilbyJanuary1of2017andit'sveryrealisticthatthat'sgoingtohappenatthispoint.


That'sgreat.Iappreciateit,Mackie.Andthenlastoneforme,justontheLoneStarExpress.Ithinkyouhadspokenaboutthatasbeingkindofa6Xmultipleoninvestedcapital.Areyoustillcomfortablewiththat,giventheenvironment?


Yes,weare.


I'llleaveitatthat.Thankyou.

Operator :

KristinaKazarian,DeutscheBank.

Krist inaKazarian (Analyst-DeutscheBank):

Nottobeatadeadhorsehere,butjustaclarificationquestiononETP'sIGrating.Sothe--Kelcy,thethoughtprocessisthatifETPhadtheriskofbeingdowngradedfromanothersiblingentityoraparententityandreadthrough,thattheparentwouldactuallybackuptheratingandhelpitouttoprotectthatbalancesheet.Isthatfair?


Thatisfair.





Okay,perfect.AndthenIknowyoutalkedaboutthisinananswertoadifferentquestion,butoverthewholecomplex,maybecanyoutouchaboutcounterpartyriskandthepotentialormagnitudeforcontractresetting,kindofliketheTigerline,whichweheardaboutyesterday?

T omLong (CFO):

I'lltakethefirstpartofthat.Youknow,withtheslidethatweusedinanalystday,whereweshowedthat86%wasbasicallyBBorhigheronourcreditratings,thathasreallyremainedveryconsistentinwherewearefromthatstandpoint.

Sowecontinuetostayobviouslyveryfocusedonthatandwelikethepositionsthatwehavewithourcounterpartycreditexposures.ButIwouldn't--we'vereallynotseenmuchmovementinthatandweknowthere'sbeenalotofchangeswiththeagencies.Butit'snotreallyimpactedasfarasourtopcreditexposuresatthispoint.


Andonthesecondpart,maybeaboutpotentialcontractresetting,likethroughoutallof2016acrossyourfleet?

T omLong (CFO):

Itellyouwhat,Mackie--goahead.I'msorry--secondpart,onemoretime.


ThesecondpartishowdoIthinkaboutcontractresettingpotentialsacrossthewholecomplexforcalendaryear2016?


Midstream,intrastate,interstate,thewholecomplex?

T omLong (CFO):

Yes.


Well,onourmidstream,mostofthecontractsinourmidstreamarelongtermnow.Anyplantthatwe'vebuiltrecentlyisunderatleast10or15yearfracs.OnallofourNGLbusiness,therearelong-termcontracts.Mostofourfraccontractsareatleast10yearsandprobablyamajorityofthemare15years.

Ontheinterstates,itvariesdependingontheinterstate.Theolderinterstates,theinterestingphenomenathereisthatasthecontractsrolloff,weactuallyareincreasingrates.Certainlynotchargingtariffonsomeofourpipelines,butcertainlyathigherratesthanwheretheyhavebeen.Youknow,forexample,we'vetakenoutourTrunklinepipeline,andontheexistingspacethatwestillhaveonTrunklinehasprovidedforhigherratesbecauseofdemandintheNortheastthiswinter.

Soallinall,wedon'thaveawholelotofexposure.AndasImentionedearlierinourdiscussionswithChesapeake,wearehavingsimilardiscussionswithothercompaniesthathavesimilartypepain.Andinthose,wearelookingatextendingcontractsthatareendinginthenextyearortwooutforatleast10or12moreyears.Soweareprettypleasedwithwherewesitacrossthecomplexofallofoursegmentsonthetimingofourcontracts.




Andourgoalisthroughthistoughperiodisextendingeverythingoutbecauseweprovidethatopportunitybyhelpingthem--someofthesecompanieswiththedifficultiestheyaregoingthroughtoday.


Perfect.Thanks,guys.Appreciatetheclarification.

Operator :

RobertBalsamo,UBS.

RobertBalsamo (Analyst-UBS):

Mostofmyquestionshavebeenanswered.Justaquickone.Ontheunconsolidatedaffiliates,itlookslikePESwasdownforthequarterduetocrackspreads,whichmakesense.Butthedistributionsseemtobestronginthesegment,unconsolidatedaffiliates.

AndIjustwonderifyoucouldtalkalittlebitaboutthat,ifthedistributioniskindofbeingmaintained.Looksliketheyarestillgrowing.Kindofhowtothinkaboutcashflowsanddistributionscomingfromthatsegment--PESandthenunconsolidatedaffiliatesoverall.

T omLong (CFO):

Yes,youbet.Youareright.Wedidhavesomepressurebecauseofthecrackspreadsthereinthatrefinery.Fromadistributionstandpoint,we'vealwaysbeenverymuchalignedwithourpartnerthere--bothofuswantingtomaximizedistributions.Andyouknow,kindoflikeIsaidinmypreparedremarks,wearegoingtoobviouslymaintainitandbereadytogowithanIPOatanytime.

ButIthinkdirectanswertoyourquestion,wewillalwaystrytomaximizedistributionsgoingforward.Butthatisgoingtobekindofupanddownwithwherethemarket--withwherecrackspreadsare.

RobertBalsamo (Analyst-UBS):

Okay,thankyou.That'sall.

Operator :

HelenRyoo,Barclays.

HelenRyoo (Analyst-BarclaysCapital):

Justcoupleofquickitems.Whenyousay--whenyouplantodothefullprojectfinancing,doyouneedFERCapprovaltolaunchit?Andalso,ifyouweretoget,let'ssay,50%projectfinanced,wouldthatreduceyour2016CapExby,let'ssay,about$1billion?

T omLong (CFO):

Yes,tothelastpartofyourquestion.Youarerightonthat.That's2016isrightat$1billioniswhatitwouldreduceitby.AsfarastheFERCapproval,no,wedonotneedFERCapprovaltogetprojectfinancingonthatpipe.


Okay.Sothisissomethingyoucouldlaunchanytime,basically?




T omLong (CFO):

Yes,yes.We'veactuallyalreadystartedthedialogueonit.


Okay,gotit.Andthenhowmuchofyourdapplespendingwasalreadyinyour2015CapEx?Isee$2billionofliquidCapExand,youknow,areyouabletoquantifyhowmuchofdapplehasalreadybeenspent?

T omLong (CFO):

Asfarasdapple,Ithinkwearerightatabout$1.7billion,$1.8billiononhowmuchhasbeenspenttodate.


IsthatnettoETP?

T omLong (CFO):

No.Thatwouldbethe[8.8billion]--yes,thefullamount.


Gotit,gotit,great.AndthenapologiesifImissedthis,butwhatdrovetheincreaseinmidstreamOpExinthequarter?Itwasupquitesteeplyand--.

T omLong (CFO):

Yes,whatyousawduringthefourthquarter,ofcourse,wasseveralplantsstartingupwhereyoustartedseeingsomeadditionalexpenses.Youprobablysawnearlyadditional$25million,$26millionworththatoccurredduringthequarter.

Iwouldsay,Helen,though,itisfairlynormaltokindofseeinthefourthquarter.Alotoftimesasyougetintoyearend,youwillseetheexpensescomeupsome.IguesswhatI'dliketosayisasyougointo2016andreallylookatthe,let'ssay,theearlyquarters,Iwouldsaythatthatnumberprobablypoppedupbyabouta$25millionnumberthatwewouldexpectnottonecessarilyseeaswerollinto2016.


Gotit.AndthenyourcommentsonPES,youmentionedthattheIPOisdelayed,butthatthisisanear-termmonetizationoption.Sowhenyouthinkaboutacoupleof,Iguessassetsyoucouldsell,andIassumethatincludesLakeCharles,doyouseethisassomethingmore--higherintherankintermsofprobability?Ormaybeyoucouldmorebroadlytalkaboutcertainassetsthatyoucouldselltohelpthebalancesheet.

T omLong (CFO):

Helen,youcanprobably,likeIsay,appreciateyouknowtalkingtoomuchspecificsbeforeyouactuallyhavea--youhaveaplanorhaveadealinplaceisalwaysdifficult.Inotherwords,usuallyyouwouldannouncethoseatthetimethatyouwouldactuallygoout.

ButIthinkwhenyoureallylook,clearlythisisoneyoucouldlookat--our33%ownershipinthat.ButIthinkwestillfeellikethatuntilyoureallygetittokindoftoanIPO,that'sprobablywhereyouaregoingtogetthehighestvalue.Soit'snotonethat's--let'sjustcallitripefordoingthat.




AndLNGwastheotheroneyoubroughtup.Clearlythat'sonethat--thatisanoptionoutthere,butyouheardtheupdatetoday.Weareveryexcitedatwherethatisandmovingforward.Butlikewisedon'tnecessarilyseethatasbeingsomethingyouwoulddotoday.

Andthen,youknow,Ithinktherewasother--evenacommentmadeearlieraboutoptionsaroundifanyoftheJVsyouwanted,tobringinanyotherpartners,etc.Youcouldobviouslydothat.ButIwilljustreiterateoncemorethatIthinkfromafundingstandpointontheprojectswiththe$4.2billion,whatwe'veaccomplishedonthatfront,wefeellikewe'vegotalotofleewayhereaswelookoutthrough2016.


Okay.AndthenmylastoneisjustonSUN,Iguessdealclosingdateseemslikeit'sgotpushedoutamonth.What'scausingthat?Andanyother--anyriskoffurtherdelaysthere?

T omLong (CFO):

No.Andlisten--Helen,reallythatoneisreallyprettymuchonschedulewithwherewe--itkindofanticipated.Rememberthatwefileour10-Ks--we'llprobablygetthemfiledbyatleastMonday.Andyoureallycouldnotfinishupthecarveoutfinancialstoclosethistransactionuntilafterthose10-Kswerefiled.

Sojustkeepinmind,that'sprobablya--whenwesayMarch,Iwouldliketotellyouthat'sprobablyaveryearlyMarch,meaningpossiblyasearlyasnextweek,even--bytheendoftheweekorso.Butweareworkingthroughthosefinancialsandthatisreallythecomponent.

Nothingisgoingtochangeasfarastheeffectivedateofthetransaction.It'sstillgoingtobeJanuary1of2016.SowhetherwedoitthefirstweekorthesecondweekofMarch,buttheonly--absolutelytheonlyholdupwasgettingthe10-Ksfiledandthengettingthecarveoutfinancials.


Understood.Thankyouverymuch.

Operator :

JohnEdwards,CreditSuisse.

JohnEdwards (Analyst-CreditSuisse):

Justacouplefollow-upsonthecounterpartyriskside.Justoutofthe--youindicatedIthinkitwas14%--86%isBBorhigher.Sooutoftheremaining14%,ifthoseBBorlowerwenttobankruptcy,Iamjustcurioushowmanyofthoserateswereperhapsabovemarket.Orhowyouwouldquantify,say,therevenuehitifthosecontractshadtoberenegotiated,likeinabankruptcysituation,youknow,somesortofrevenuequantificationwecouldlookat.


ThisisMackie.AndIwon'tgothroughspecificrisksorproducersinareas,butonethingthat'sveryhelpfuliswherealotofthisriskis,it'sonpartsofourgatheringsystemswhereit'sreallyhardtocompete.Certainly,inabankruptcy,theremaybesomerenegotiation,butwedon'tseeinalotofthesesituationsalotofriskbecauseourabilitytoeitherworkitoutwiththemorbecausetheremaynotbealotofoptionsoutthere.Andthepricethatwearemovingitforisthemarketprice.

Sonottalkingaboutanyspecificproducer.Wecanreducethatexposuresignificantlyjustbecauseof




howtheyaresituatedinoursystem.

T omLong (CFO):

AndJohn,whatI'dliketogoaheadandjustaddtothatfromtheabsolutekindofpercentage,ifyouwill--whenyougetdowntothatgroup,Imean,theexposure--andIknowwetalkedsomeabouttheChesapeake,butasfarasthecounterpartiesandwherethosepercentageslie,theyarereallysmall.It'sspreadoutoveralotofcounterpartiesandit's--thenumberiswelllessthan1%onanyonecustomer.


Okay,that'shelpful.Andthenjustfollowingup,Tom,onthebalancesheet,youindicatedyouaretargeting4.5timesexitingthisyear.I'mjustcuriouskindofyourlonger-termleveragetarget,whatyou'rethinkingabout.

T omLong (CFO):

Yes.Andonceagain,atETP,wedofeellikethatthe4.5timesisagoodplacetobe.Rememberthatthecreditfacilitycalculation,thewaywedothat,doesallowfortheinclusionofthematerialprojectadjustments,ifyouwill.Iknowwe'vetalkedaboutbefore.

Andsothat'showwegettothenumber.Inotherwords,thesearethecalculationsthatwewillbesendingouttothebanksatthis4.5times.Buttherealbeautyofthat:itdoesshowtheseprojectsastheycomeon,wheretheeconomicsare.AnditdoesgiveyoualineofsightofwherebothGAAPandNPAareheadedtobebasicallythesamenumberatthe4.5.

Soonceagain,aswegothrough2016andcompletealotofthisfunding,youknow,youaregoingtoseethatthat4.5,bothonaGAAPbasisaswellasa--withthematerialprojectadjustments,thatgapnarrowssignificantly.


Okay,that'shelpful.AndthenIguess--Iknowweallhavetojumptothenextcall,butjustmaybeyoucouldgivealittlebitofcolorontheimpairmentlosses.Imean,Ithinktherewasthe$339millionitemthere.

T omLong (CFO):

Yes,youbet.Itreallyisallaroundthecommodityprices,ifyouwill.Solet'sstartwiththeTranswesternpiecefirst.Thenumberwas$99million.Itreallywasaboutkindoflookingoutatwherethecommoditypriceswereonthat.Sothatwasthegoodwillimpairment.

Therestwasreallyallintherefineryservices.Inotherwords,intheliquidssegment.Andsamething:itrelatedtoactuallythespreadthatyouseeinthosecontractswehadbetweentheoff-gasprojectswehave.Andweactuallytookoneofthoseplantsthatcompletelyoutofservice.Sothatwasit.ItwastherefineryservicesandthentheTranswestern.Sothat'swhatmakesupthe$339million.


Okay,thanks.I'llfollow-upwiththerestofmyquestions.Butthankyouforthat.

Operator :

SelmanAkyol,Stifel.

SelmanAkyol(Analyst-StifelNicolaus):




Justacouplequickones.Mackie,goingbacktoyourearliercomments,youmentionedtherewassomedowntimeonplantsinthemidstreamsegment.Iwaswonderingisthereanywaytoquantifytheimpactonthat?


Iwouldn't--itwouldtakeawhiletogothroughkindofeveryspecificbecausewehaveissuesonseveralplants.Butforexample,inSouthTexas,we'vehadissuesonaplantthatmovesabout130,000aday.That'sbeendownoffandonandwe'rehopefullytotheendofthat,wherethatrunsreliably.

AndthensomeofourplantsoutinWestTexas,wecontinuetokindofworkthroughissues,butweareworkingthroughthose.Thathasalottodowithwhyweareseeingourvolumesincreaseonourprojectionsin2016aswekindoflineallthoseissuesout.


Igotyou.Andthenjustonemore.Iguessatthetimeof--whenyouguysacquiredRegency,youhadforecastedsomeprettygoodsynergies.AndI'mwondering:areyouseeinganyofthose?Aretheyyettocome?Isitjustbeingchewedupinthecommodityenvironment?Anycommentaryaroundthat?


No,weareseeingthemacrossthecountry.IfyoulookatWestTexas,we'vetalkedaboutOrla.Youknow,EnergyTransferisbuildingOrla,puttinginplace,tyingittotheRegencysystem.TheDelawarebasin,asImentionedearlier,ifyoutalkedwithsomeofthelargerproducersinthecountry,theybelievethat'ssomeofthebestrockintheworld.

Soaswekindofexpandoutourbusiness,theRegencyassetsandthebroadexpansionofallthosegatheringsystemsandalltheirplants,givesustheabilitytoprovideserviceswhilewearebuildingnewplants.SothesynergiesoutinthePermianBasininWestTexashavebeenextensive.

UpintheNortheast,ofcoursewithOhioRiver,weareseeingalotofvolumegrowththere.OnceRoverisupandtransportinggas,thatwillbeoneofthemainfeederstothatpipelineoraverysignificantsupplysource.AndthenwealsohavesomesynergyinEastTexasthatwearebenefitingfrom.Soyes,it'sbeenvery--areasofthecountrywe'vehadsignificantsynergiesthathavehelpedoutalot.


Allright.Thankyou.

Operator :

ChrisSighinolfi,Jefferies.

CoreyGoldman (Analyst-Jefferies):

ThisisCoreyfillinginforChris.Justrealquick,Tom,justtofollow-uponthelastquestion.Ithinkagain,youhadmentionedsomeplantoutagesandsomeNortheastvolumeshut-ins.CanyouquantifytheEBITDAimpacttherethatyousawin4Q?

T omLong (CFO):

Yes,thatimpactwasprobably$6millionto$7million.





Gotit,thanks.Andthenlastquestion.IthinkyouhadmentionedjustRevolutionwaspushedonequarterinto3Q.Buteffectively,whatwastheremainingcauseforthe$500millionindecrease.YoumentionedCapEx.Whichprojectsspecificallyarebeingdeferredorshiftedthere?

T omLong (CFO):

Letmegiveyoumoreofahighlevelversusmaybetalkingaboutthespecificprojects.Justtogiveyouasplitonthat$750million,Iwouldsayabout25%ofthatwasactualcuts.Theother75%ofitisreallymoredeferral,andyou'llseethatspendkindofoverthatkindofoccurin--over2017,maybealittlebitmoreofitinthefirsthalfof2017.

Youknow,Ithink--andMackietouchedonthis.ButIthinkyouhaveofcoursethegatheringsystemdowninSouthTexas.ButyoualsohadaWestTexasplantlikewisethat--andthat's--likeIsay,therestofitisreallymorearoundjustsomeofthedeferralontheprojectsthatarealreadythere.


ButnoothertiminghaschangedbesidesRevolution?


Noothertiminghaschanged.Well,Roveratonetime--gosh,IthinkattheanalystmeetingwewereoptimisticthatwewouldbeinbyAprilorMay.WherewestandwithFERC,wethoughtwewouldhavetheabilitytokindofpushtheJuly29dateupalittlebit.It'sclearthatthat'sveryunlikely,soweareplanningaccordinglyandsowehavemovedthatdateouttoJune.WeareconfidentthatwewillbeflowingmostofthepipelineinJuneandthencompleteitbyNovember.


Okay,great.Andsamethingonintrastate.Whatwasthereasonforthe$135millionshiftinCapExthere?

T omLong (CFO):

I'msorry,yousaidontheintrastate.


Yes,IthinkyoureiteratedTrans-Pecosisstillin1Q.Sojustwonderingnowwhatthemixshiftwasthere.

T omLong (CFO):

Yes.Andthatwasonthe--thatwasontheMexicoprojects.Anditreallydoesrelatetotheprojectfinancing.Becausewhatyouhaveisthelasttimewegavethenumber,wereallydidn'thavethatprojectfinancinginplace.Sowesincehavelockedthatupatverygoodratesandverylongterm.Butthat'swhatreallydrovethatonedownfromtheintrastate.


Gotit.Thanksguys.

Operator :

EricMcCarthy,Citadel.

EricMcCarthy(Analyst-CitadelSecuritiesLLC):




IwashopingyoucouldelaboratealittlebitfurtherontheChesapeakecontracts.Chesapeakedisclosed$50millioninsavingsinexchangeforsomeGMPcontracts.Whatbasindoesthatapplytoandwhat'sthe--doesitmakeupforthe$50millioninfull?Andwhat'stherampdownaroundthat?


ThisisMackieagain.AsImentionedearlier,wecan'treallygetintothedetailsofthat.Ithinkifyoulookattheircommentsmoreclosely,theyalsoconsummatedsomesimilartypeamendmentswithothercompanies.Sothat$50millionisn'tattributedtojustus,butit'sthroughoutseveralofthebasinsthattheyhavesignificantpositionsin.Someofwhichwedon'thavealotofbusinesswiththemtodayandsomeofwhichwedohavealotofbusinesswiththem.So--butgettingintoanymoredetailsthanthatwithourconfidentialityagreementwiththem,wecan'tdothat.

EricMcCarthy(Analyst-CitadelSecuritiesLLC):

Okay.That'saboutit.Thankyou.

Operator :

JohnKiani,TeilingerCapital.

JohnKiani(Analyst-TeilingerCapital):

Goodmorning,Tom.Justafewquestions,please.First,the$230milliontaxbenefitthatcontributedtoDCFthisquarter,tryingtounderstand--thecoveragelookedlikeitwasinthe0.8timesrangewithoutthat.Shouldweexpecttaxbenefitslikethisgoingforward?Howshouldwethinkaboutcoveragewithandwithoutthat,please?

T omLong (CFO):

Verygoodquestion,John.AndIguesswhatIwouldtellyouisthatifyoureallytakethat$230million,sincewedidn'treallybakeanythingontheothercomponentofthat,thatother$50million.Youtakethat$230million,reallyabout$120millioncameaboutfromthebonusdepreciation.SoIwouldn'tcountonthatagain.

Asfarasthe$80million,another$80millioncomponentcameaboutthroughjustloweroveralltaxableincomewastheothercomponent.Andthenyouhavethelast$24millionpiecethatrelatedreallytoastateincometaxthatwehadafavorableoutcomeon.

SoIthinkthewayIwouldlookatit,John,isthatifyoulookoutthrough2016,Iwouldn'tnecessarilybakeinanytypeofbenefit.Inotherwords,kindof--orexpenseeither.Inotherwords,Iwouldreallykindofleavethatonefairlyflat.

John,IthinktheotherthingI'dliketo--sinceyouareonthistopic,I'dliketogoaheadandaddtoitisisthatwhatwe'vereallykindoflookedatisreallyprobably--you'vealsohadmaintenancecapitalthatcameuptothe$142million.Ournormalkindofrunratethatwearelookingatnextyearisprobablycloserto$85millionaquarter.

Andthentheotherthingyouhadissomeoftheotherstuffthatwetalkedabouttodayfromsomeoftheoperational,etc.Allinall,IguessIcansayisthatifyoutookthe$230millionandthenyoubackedapproximately$80millionorsoofwhatIcallitemsthatwenttheotherway,youareprobablyatabout$150millioniswhereIwouldtakeyou.Andbaseduponthatmath,youareprobablyatabout0.9--alittlebitmore.Soanyway.Doesthathelp?





Yes,thatmakessense.Anotherquestion,please,iswhenyouthinkabouttheportfolio,andyoutalkedaboutthepotentialatsomepointforsomeassetsales,whatdoyouthinkaboutsomeofthebusinessesyouinheritedthroughalltheacquisitionsthataren'tnecessarilyaspipeline-like?Couldyousellthose?WhataboutlikethecoalbusinessthatcamewithPVR.Thingslikethatthatarejustnotasvisibleassomeofthelegacyassets.Whataboutthosebusinesses,please?


Yes,thisisKelcy,andyouarecorrect.Wedohaveemployeesthere,soIneedtobealittlebitcareful.Butthosetypeofbusinessesarebeinganalyzed.Andwearelookingatmonetizingthingsthatdonothavethepromiseforgreatcashflowgoingforwardordeferredcashflowinthefuture.Soyes,weare.


Okay,thanks.Andthenlastquestion,please.Kelcy,youmentionedthepotentialforsupportandIDRholidaysandthingslikethatforyoursubsidiarycompanies.OnethingI'mtryingtojustgetabetterhandleoniswiththeproformadebtbalanceforETEbeing$17billionto$18billion.

Andhowdoesthatwork?IguessI'mgettingalittleconfusedbecauseit'ssomewhatofazerosumgame.IfETEtakeslesscashintheformofIDRholidaysorsometypeofsupportforitssubsidiaries,howdoesitsustainandservicethattypeofdebtloadinitsowndistribution?AmImissingsomethingorshouldIthinkaboutitinadifferentway?


Thinkaboutitanotherway.There'sgoingtobetheneedforallofthepartnershipstoissuenewequitygoingforwardtofundtheirgrowth.AndtotheextentthatETEshouldwaiveIDRsonthosenewunitsthataregoingout,thenitwill.Soifyoufollowthat,that'snottakingmoneyoutofthecoffersofETE.It'sfuturedollarsthatwouldhavebeenearnedthathavebeenforgivenordeferred.


Right,right,okay.Thankyou;that'shelpful.

Operator :

ZevNijensohn,TheBostonCompany.

ZevNijensohn (Analyst-TheBostonCompanyAssetManagement):

Thanksfortakingmyquestion.Iwashopingyoucouldhelpmebackcheckmynumbers.AndI'dliketofocusspecificallyonadjustedEBITDA.Buthypothetically,ifyoudidn'tspendanotherdimeofCapExasofDecember31,2015,canyouquantifyhowmuchEBITDAonarunratebasisisonthecomefromprojectsthatwhereIguesseitherapproachingcompletionorwerecompleted,butnotfullyreflectedduringthefourthquarter?

T omLong (CFO):

Yes.Well,youknow,I'mnotgoingtoprobablygiveyouanabsolutedollaramountjustbecausewejustdon'tgiveguidancelikethat.Butyouknow,theseprojectsthatareallcomingonareinthe$10billionto$11billionrange.Ithinkwe'vealwayskindofgivenguidancethatwekindofgotkindofmidteentypereturns.I'mjustgivingyouabalanceacrossallofthem.

Andasyoualsoknow,someofthesethingsstartrampingupovertime.SoIthinkthat's--thathopefullyhelpsandthat'swhatyoucankindofuseasyourguidanceforeachoneofthesevariousprojectsand




howtheystartup.Andthenthetimingofwhenwe'retellingyoutheyarestartingup.


Okay.ThenifIswitchgearsforasecond,andIguessthisisaquestionmoreforKelcy,butifyouthinkaboutthingsfromareallong-term,long-balltypeperspective,whynotconsidercuttingthedividendentirelyatETinordertogiveyourselfalotofcoverageintermsoffundinginterestanddoingsomethingsimilartowhatKMIdid,sinceyou'renotnecessarilygettingcreditforitinthemarketrightnow?


Yes,well--andIhearyou.Andit'sourjobheretoprotectthedistribution.Ourunitholdersexpectustodothat.Wetakethatresponsibilityveryseriously.ButasIsaidearlier,ifthereisachancethatoneofthepartnershipswouldbeinperilforadowngradeinratings,ETEwilldowhatisrequiredtohelpthatoperatingpartnership.

Ofcourse,the800poundgorillaisETPandwewillbe--we'regoingtobetakingmovestohelpETPgettomiddleof2017,whichisallitneeds.Andthenit'scookingingreaseafterthat.SoIhearyou.Wewouldliketoreachintoeverybucketwe'vegotbeforewewouldreachintothatone,asImentionedbefore,butitisapossibility.


Thankyou.

Operator :

NormanHale,Stifel.

NormanHale (Analyst-StifelNicolaus):

Youknow,theprimarysourceofthepainfortheenergyindustry,whichhasfilteredintothemidstreamindustry,isproductprices.Whatdoyouguysseeasbeinganormalizationintermsofboththecrudeoilpriceandthenaturalgasprice?


Wow.Allofusarejustlikeyou.Wereadeverythingwecanread.Welistentootherpeople'sopinionsonthesubject.AndsoI'lljuststartandMackie,maybeyoucanhelpme.

I'lltalkaboutcrudeforasecond.Weare--there'ssomethingveryhealthygoingoninourindustryandit'sunfortunatelyispainful.Everytimewe'vehadoneofthesedownturns,thesecycles,theyendupbeingaveryhealthything.Butmygoodness,theyarepainful.

AndwhatImeanbythatisuntilweseemeaningfulreductionindrilling,whichtranslatesintoMackieandMattRamseymakingtheirjobharderandharder.Becausewhenthere'sjustlessvolumecomingon,yourvolumesinevitablyaregoingtobestressed.

Butuntilweseethat,Idon'tbelievewearegoingtoseemeaningfulimprovementincrudeoilprices.Ijustdon'tseeit.There'stoomuchsuccess.Theseguysaredrilling8,000-footlaterals,forGod'ssake.Imean,theirsciencehasimprovedsomuch.Butwearebeginningtoseethat.

It'ssad.Wearebeginningtoseeveryfewpeoplethataregoingfulloutanymore.Andthenthatultimatelywillcorrect.Ipersonallybelieveandthisis--boy,youcan--withthisandadollar,youcanmaybebuyhalfacupofcoffeesomewhere.Butthe--Ipersonallybelievethatwearegoingtoseethis




recovermorerapidthanpeoplethink.

Unfortunately,we'vegottofindthatbalance.We'vegottogetcrudeoilproductionwiththecrudeoilmarketinbalance,andthenIbelievetherewillbeinevitablecutscomingoutofournot-so-goodfriendsoverintheMiddleEast.Andthenwe'llbebackuponaride.

Now,Idon'tthink$100crudeishealthyforanybody.Idon'tbelieveitis.Ibelieve$60to$80crudeisavery,verygood.Soanyway,that'smyviewonthat.Mackie,what--?


Alsoyoulookatthemarketsideofit.It'sjust--it'sgoingtotaketime.IfyoulookatthegrowthintoMexico,justourprojectsalonearegoingtogrowandincreasethevolumesintoMexicosignificantlybeginningin2017.Andevenaswementionedearlier,somevolumeincreasesthisyear.

WiththeChinese--theChinamarketandalltheEasternmarkets,thedemandhasjustsloweddown.Ifdemandeverpicksbackup,thatwillhelptremendously.Butjustfrommyperspective,IthinkthatwithoutsomemajoroccurrenceintheMiddleEast,thisisjustgoingtotaketime.

Itisn'tgoingtobeimmediate,buttoKelcy'spoint,onceitdoesreturn,weareveryoptimisticthatitwillbeverydifficultforproducers,forservicecompaniestoreactquickenough.Andsowecouldseeaprettyquickmovementcertainlyontheoilsideandprobablybesustainedforsomeperiodoftime.It'sjust--whenisthatgoingtotakeplaceisthebigquestion.Howsoon?


Yes,I'lladd.Hey,bytheway,thisisourlastquestion,sowearealittlebitmorerelaxedonthisone.Sothisisgreat;wearefinishinguphere.Butyouknow,Mackie,theamountofvolumewearegoingtobemovingtoMexicowithin--by2018ishuge.It'shugeandthosethingsarechippingaway.Andthepointis,weareseeingdemandfornaturalgasimproving.


Today.Today.Ibelieveithappenedtoday.CheniereloadedtheirfirstLNGshipforthefirsttimeeverforexportingLNG.That'sgoingtoincrease.FreeportofcoursehelptogettoFID.Allthattakestime,butwiththemarketgrowththatwealreadyknowofandanykindofimprovementoverseas,it'sgoingtobe--there'splentyofsupplyrightnow.Themarketneedstogrowtoreallyhelpoursituation.

NormanHale (Analyst-StifelNicolaus):

Yes,Ihearyou.Thanks,guys.Ithinkyouguysaredoingagreatjobinareallytoughenvironment.Keepupthegoodwork.


Thankyou.Weappreciatethat.


Okay.Thanks,everybody,forthecall.Goodquestions.Andwe'llbetalkingtoyousoon.Thankyou.

Operator :

Thankyou.Ladiesandgentlemen,thisdoesconcludetoday'steleconference.

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