UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 10, 2009
Date of Report (Date of earliest event reported)
ENERGY TRANSFER EQUITY, L.P.
(Exact name of Registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation)
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001-32740
(Commission
File Number)
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30-0108820
(IRS Employer
Identification Number) |
3738 Oak Lawn Avenue
Dallas, TX 75219
(Address of principal executive
offices)
(214) 981-0700
(Registrant’s telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Results of Operations and Financial Condition. |
On August 10, 2009, Energy Transfer Equity, L.P. (the “Partnership”) issued a press release
announcing its financial and operating results for the second quarter ended June 30, 2009. A copy
of this press release is furnished as Exhibit 99.1 to this report and is incorporated herein by
reference.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item
2.02 and in the attached exhibit shall be deemed to be “furnished” and not be deemed to be “filed”
for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
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| Item 7.01 |
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Regulation FD Disclosure. |
2009 EBITDA Guidance
The Partnership owns the general partner of Energy Transfer Partners, L.P. (“ETP”), and
approximately 62.5 million ETP common units. On July 9, 2008, ETP issued EBITDA guidance for 2009
of $1.7 billion to $1.8 billion. Today, ETP is revising its EBITDA guidance for 2009 to a range of
$1.5 billion to $1.6 billion. This guidance is based on assumptions and estimates that we believe
are reasonable given our assessment of reasonably available information. Pipeline volume estimates
are based on historical trends, anticipated future operating performance and completion of internal
growth projects. In particular, this guidance is based on various assumptions and estimates
relating to the following significant factors that affect ETP’s EBITDA, as adjusted, in any
particular period:
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the amount of natural gas transported through our transportation pipelines and gathering
systems; |
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the level of throughput in our processing and treating operations; |
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the fees we charge and the margins we realize for our gathering, treating, processing,
storage and transportation services; |
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demand for natural gas from the consumer and industrial segments of the natural gas market; |
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the price of natural gas; |
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the natural gas price differentials between various receipt and delivery points on our
pipeline systems; |
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the relationship between natural gas prices and prices for natural gas liquids; |
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the weather in our operating areas; |
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the cost to us of the propane we buy for resale and the prices we receive for our propane; |
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the level of competition from other midstream companies, interstate pipeline companies,
propane companies and other energy providers; |
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the level of our operating costs; |
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prevailing economic conditions; and |
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the level of our hedging activities. |
Our natural gas transportation and midstream revenues are derived significantly from companies
that engage in natural gas exploration and production activities. Prices for natural gas and
natural gas liquids have fallen dramatically since July 2008. Many of our customers have been
negatively impacted by these declines in natural gas prices as well as current conditions in the
capital markets, which factors have caused several of our customers to decrease drilling levels
and, in some cases to shut in or consider shutting in natural gas production from some producing
wells.
In our intrastate and interstate natural gas operations, a significant portion of our revenue
is derived from long-term fee-based arrangements pursuant to which our customers pay us capacity
reservation charges regardless of the volume of natural gas transported; however, a portion of our
revenue is derived from charges based on actual volumes transported in addition to the excess of
fuel retention charged to our customers after consumption. As a result, our operating cash flows
from our natural gas pipeline operations are not tied directly to natural gas prices and natural
gas liquids prices; however, the volumes of natural gas we transport may be adversely affected by
reduced drilling activity of our customers, as well as shut in of production from producing wells,
as a result of lower natural gas prices. As a portion of our pipeline transportation revenue is
based on volumes transported and fuel retention, lower volumes of natural gas transported and lower
natural gas prices generally result in lower revenue from our intrastate and interstate natural gas
operations. During
the first six months of 2009, natural gas spot prices have ranged from $3.09 per MMbtu to
$5.25 per MMbtu, and the closing price on the New York Mercantile Exchange on August 7, 2009 for
natural gas to be delivered in September 2009 was $3.67 per MMbtu. As a result, drilling activity
in our core operating areas has declined and natural gas producers have shut in production from
some wells, which in turn has resulted in lower natural gas volumes transported on our intrastate
and interstate pipelines than we had initially forecasted for the first six months of 2009. As we
do not expect natural gas prices to increase materially during the remainder of 2009, we have
adjusted our internal estimates of natural gas transportation volumes and revenue accordingly.
ETP’s guidance does not reflect any forecasts for acquisitions that it may make after the date
of this report. For the remainder of 2009, ETP expects to spend between $250 million and $300
million on growth initiatives and between $480 million and $520 million in cash contributions to
joint ventures to construct large diameter interstate pipelines.
Our assumptions and future performance are both subject to risks and uncertainties and no
assurance can be given that actual EBITDA, as adjusted, performance will fall within the guidance
range. Please refer to the information under the caption “Forward-Looking Statements” below. The
EBITDA, as adjusted, guidance provided above is given as of the date hereof, based on information
known to ETP as of August 10, 2009.
Non-GAAP Financial Measures
EBITDA, as adjusted, is a non-GAAP financial measure. We encourage you to visit our website
at www.energytransfer.com (in particular the section entitled “Non-GAAP Measures” under the “ETP
Investor Info” tab), which presents a historical reconciliation of ETP’s EBITDA, as adjusted.
Management believes EBITDA, as adjusted, provides useful information to investors as a measure of
comparison with peer companies, including companies that may have different financing and capital
structures. The presentation of EBITDA, as adjusted, also allows investors to view ETP’s
performance in a manner similar to the methods used by management and provides additional insight
to ETP’s operating results.
ETP defines EBITDA, as adjusted, as total partnership earnings before interest, taxes,
depreciation, amortization and other non-cash items, such as compensation charges for unit
issuances to employees and other expenses. Non-cash compensation expense represents charges for the
value of the grants awarded under ETP’s compensation plans over the vesting terms of those plans
and are charges which do not, or will not, require cash settlement. Non-cash income or loss such as
the gain or loss arising from disposal of assets is not included when determining EBITDA, as
adjusted.
EBITDA, as adjusted, is used by management to determine ETP’s operating performance and, along
with other data, as internal measures for setting annual operating budgets, assessing financial
performance of our numerous business locations, as a measure for evaluating targeted businesses for
acquisition and as a measurement component of incentive compensation.
There are material limitations to using a measure such as EBITDA, as adjusted, including the
difficulty associated with using it as the sole measure to compare the results of one company to
another, and the inability to analyze certain significant items that directly affect a company’s
net income or loss. In addition, ETP’s calculation of EBITDA, as adjusted, may not be consistent
with similarly titled measures of other companies and should be viewed in conjunction with
measurements that are computed in accordance with GAAP, such as gross margin, operating income, net
income, and cash flow from operating activities.
Forward-Looking Statements
This report may include certain statements concerning expectations for the future that are
forward-looking statements as defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other factors that are difficult to
predict and many of which are beyond management’s control. An extensive list of factors that can
affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other
documents filed from time to time with the Securities and Exchange Commission. The Partnership
undertakes no obligation to update or revise any forward-looking