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
Date of Report (date of earliest event reported): May 9, 2006
ENERGY TRANSFER EQUITY, L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 001-32740 | 30-0108820 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS. Employer Identification No.) |
2828 Woodside Street
Dallas, Texas 75204
(Address of principal executive offices, including zip code)
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
On May 9, 2006, Energy Transfer Equity, L.P. (“ETE”) issued a press release announcing an increase in its quarterly distribution to unitholders. A copy of this press release is being filed as an exhibit hereto and is incorporated by reference herein.
On May 9, 2006, Energy Transfer Partners, L.P. (“ETP”) and ETE will hold an analyst conference at which ETP will discuss its business overview, current construction projects, future expansion plans, and recently updated guidance for fiscal year 2006 and ETE will discuss its corporate structure, business overview, and distributable cash flow. The information to be presented at the meeting is available on ETP’s and ETE’s website at www.energytransfer.com and is being filed as an exhibit hereto and is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
| (d) | The following exhibits are filed herewith: |
| Exhibit No. | Description | |
| 99.1 | Press release dated May 9, 2006, announcing an increase in the quarterly distribution to unitholders. | |
| 99.2 | Presentation at May 9, 2006, analyst meeting. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENERGY TRANSFER EQUITY, L.P. | ||
| By: |
LE GP, LLC, its general partner | |
| By: |
/s/ John W. McReynolds | |
| John W. McReynolds, President and Chief Financial Officer | ||
Dated: May 9, 2006
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated May 9, 2006. | |
| 99.2 | Presentation at May 9, 2006 Analyst Meeting. | |
Exhibit 99.1
PRESS RELEASE
ENERGY TRANSFER EQUITY, L.P.
DECLARES 19% INCREASE IN DISTRIBUTION TO ITS UNITHOLDERS
Dallas, Texas – May 9, 2006 – Energy Transfer Equity, L.P. (NYSE:ETE) announces a $0.15 per unit increase in the annual cash distributions payable on the Partnership’s outstanding limited partner units. This latest increase will go into effect with the Partnership’s next quarterly distribution for the quarter ending May 31, 2006, raising the annual distribution rate per unit to $0.95. The quarterly distribution of $0.2375 per unit (an annualized rate of $0.95 per common unit) will be paid on July 19, 2006 to holders of record as of close of business on June 30, 2006. This is a 19% increase in the annual rate of ETE’s unitholder distribution.
Energy Transfer Equity, L.P. owns the general partner of Energy Transfer Partners, L.P. (NYSE:ETP). Energy Transfer Partners, L.P. owns a diversified portfolio of energy assets, including natural gas operations consisting of approximately 11,700 miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas. Energy Transfer Partners, L.P. is also one of the five largest U.S. retailers of propane, serving more than 700,000 customers in 34 states.
This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements include the projected annual cash distribution rate and 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 prospectus dated February 3, 2006, 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 statement to reflect new information or events.
Energy Transfer Equity, L.P.
John W. McReynolds, President
214-981-0700
www.energytransfer.com
| Company: |
Energy Transfer Equity, L.P. (NYSE:ETE) | |||||
| Record Date: |
June 30, 2006 | |||||
| Payment Date: |
July 19, 2006 | |||||
| Amount Payable: |
$0.2375 per unit | |||||
 May 2006 May 2006 Analyst Conference Analyst Conference Energy Transfer Equity, LP Energy Transfer Equity, LP Energy Transfer Partners, LP Energy Transfer Partners, LP Exhibit 99.2 Exhibit 99.2 99.2 |
  2 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 reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of ETP and ETE, causing actual results to differ from those discussed during this presentation. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in the prospectus. Any forward-looking statements made are subject to all of the risks and uncertainties, many of which are beyond management’s control, involved in transportation, gathering, compression, treating, processing, storage and marketing of natural gas and in the propane business. These risks include the risks described in the prospectus. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the actual results and plans of ETP and ETE could differ materially from those anticipated, estimated, projected or expected. ETP and ETE undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events. Legal Disclaimer Legal Disclaimer |
  3 Agenda Overview Asset Profile ETP Corporate Structure Investment Highlights Propane Overview Project Update Midstream Overview Financial Review Energy Transfer Equity, LP Summary |
  4 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 marketers in the United States with concentration in highest population growth areas Annual Revenue (FYE 2005) $6.2 B Total Assets
(2/28/06) $4.4 B Book Equity (2/28/06) $1.8 B Enterprise Value (1) $6.1 B Equity Market Cap. (1) $4.6 B Units Outstanding (2/28/06) 110,625,711 EBITDA (Fiscal 2006) $710 million (2) ETP Financial Summary Assets: Midstream (80% of ETP EBITDA): Pipelines (active miles) 11,700 Storage (working space) 78 Bcf Processing 240 MMcf/d Treating 3,500 gpm Aggregate Throughput Capacity 7.6 Bcf/d Propane (20% of ETP EBITDA): Propane Customers > 700,000 Propane Service Locations 321 Geographic Footprint: Market Hubs 5 Producing Regions 5 Interstate Pipeline Connections > 10 Propane Operations 34 States Employees Midstream Operations ~565 Propane Operations ~2,730 Operational Metrics (1) Unit price as of May 5, 2006; excludes value of GP and ETE. (2) Public guidance. |
  5 ETP Corporate Structure Public Unitholders Energy Transfer Equity, L.P. Energy Transfer Partners, L.P. 110,625,711 Units Outstanding 67.1% Limited Partner Interest La Grange Acquisition, L.P Natural Gas Midstream Operations Heritage Operating, L.P. Propane Operations Heritage Holdings Inc 50% Incentive Distribution Rights 32.9% Limited, Partner Interest 2% General Partner Interest |
  6 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 sheet
Low risk, high rate of return growth opportunities Low construction price to EBITDA multiples Long-term contracts already in place Excellent access to public debt and equity markets Significant liquidity History of consistent distribution growth Experienced management with substantial equity ownership
|
  7 Propane Overview Asset Overview Keys to Success Customer Mix Titan Acquisition |
  8 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, subject to weather volatility
that impacts volumes Focus on higher-margin residential customers Record fiscal 2004 and 2005 operating and financial performance Realized 2%-3% internal growth excluding acquisitions Trend of increasing margins due to higher vehicle fuel costs, steel costs, benefit, and insurance cost Own our own assets Purchase land, buildings and vehicles We own 90% of customer tanks Retail Gallons Sold (Millions) 126 147 160 181 330 330 376 398 406 0 50 100 150 200 250 300 350 400 450 |
  9 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 excess of budget with all employees Growth of 1% to 3% at 4.0x multiple Acquisitions Disciplined approach with specific criteria Attractive multiples at base level of deal flow Low event risk as combining acquired operations with current locations
under seasoned Region Manager Expense Control Districts operate as independent profit centers with entrepreneurial
attitude Robust budgetary process with monthly
accountability Compensation based on local wage rates
– no company-wide pay scale |
  10 Diversified Customer Base Residential 56.0% Other 13.0% Industrial/Commercial/ Agricultural 31.0% Gallons by Retail Class |
  11 Titan Acquisition 200 million gallons 146 district locations 325,000 customers 33 states $.10 -.15 accretive per unit Closing June 1, 2006 |
  12 Project Update |
  13 Project Update 42” Expansion and Loop New Addition South Loop $895 million total capital to be spent $320 already incurred |
  14 Midstream Overview System Map with Expansions Competitive Advantages US Natural Gas Supply/ Demand Discussion Supply Discussion Producer Economics 2006 Volume and Margin Review |
  Energy Transfer System Map |
  16 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 |
  Natural Gas Supply - Texas *Texas produced 28% of estimated domestic production in 2004 *Source: www.eia.doe.gov |
            US Natural Gas Consumption 17.5% 17.5% 8.3% 8.3% 6% 6% 5% 5% 11% 11% Source: EIA – 2004 Natural Gas Total Consumption |
  US Natural Gas Supply/ Demand |
  20 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 |
  21 Volume/Margin 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 147,079,476 131,566,320 147,768,428 275,561,668 701,975,892 Avg. rate 0.253 $
0.210 $
0.233 $
0.428 $
0.282 $
Billed volume/d 6,325,163 6,822,597 6,906,392 6,991,537 6,816,996 ETP Midstream Volume/ Margin Analysis |
  22 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 |
  23 Liquidity Long term assets supported by long term fixed rate debt MLP structure more efficient with fixed rate debt Floating/Fixed Rate Debt Mix (exluding Working Capital Facilities) 100.0% Fixed Floating/Fixed Rate Mix (including Working Capital Facilities) 7.7% 92.3% Fixed Floating Balance Available Balance Facility As Of Capacity Fiscal Fiscal Fiscal Fiscal Fiscal Size 02/28/06 02/28/06 2006 2007 2008 2009 2010 Energy Transfer Partners, L.P. $750MM Senior Notes $750,000 $750,000 $0 $0 $0 $0 $0 $0 $400MM Senior Notes $400,000 $400,000 $0 $0 $0 $0 $0 $0 $900MM Revolving Credit Facility $900,000 $100,000 $800,000 $0 $0 $0 $0 $0 Heritage Operating, L.P. Private Placement Notes $292,971 $292,971 $0 $30,406 $34,806 $41,949 $40,899 $39,785 Seller Notes $2,460 $2,460 $0 $393 $569 $502 $428 $321 Revolving Credit Facility (1) $75,000 $21,197 $53,803 $0 $21,197 $0 $0 $0 Other (Non Competes) $14,492 $14,492 $0 $2,063 $4,251 $3,973 $2,279 $1,040 Total Consolidated Energy Transfer Partners, L.P.$2,434,923 $1,581,120 $853,803 $32,862 $60,823 $46,424 $43,606 $41,146 (1) Heritage Operating is currently negotiating a new Credit Facility to replace the
existing Credit Facility which expires December 31, 2006 Required Principal
Payments Energy Transfer Partners, L.P. Schedule of Required Principal Payments ($ in 000's) |
  24 Liquidity (cont.) $350.0 $52.1 $106.0 $132.4 $194.2 $336.4 $0 $50 $100 $150 $200 $250 $300 $350 $400 Jan- 04 Feb- 04 Mar- 04 Apr- 04 May- 04 Jun- 04 Jul- 04 Aug- 04 Sep- 04 Oct- 04 Nov- 04 Dec- 04 Jan- 05 Feb- 05 Mar- 05 Apr- 05 May- 05 Jun- 05 Jul- 05 Aug- 05 Sep- 05 Oct- 05 Nov- 05 Dec- 05 Jan- 06 Feb- 06 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 Net Equity Issued Monthly Average Price per Unit |
  25 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) (120,255) $ Distributable Cash Flow to LP 417,745 $ LP Unit Distributions 282,096 $ Excess Distributable Cash Flow 135,649 $ Distribution Coverage Ratio 1.48 X |
  26 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 $ |
  27 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 Coverage Ratio 1.15 X |
  28 Class E Units Number of Class E Units Number of Class E Units 8,853,832 8,853,832 Maximum Distribution Rate for Class E Units (per Common Unit) Maximum Distribution Rate for Class E Units (per Common Unit) Distribution Distribution •Class E Unit •Class E Unit $3,120,976 $3,120,976 •General Partner •General Partner 877,550 877,550 Total Total $3,998,526 $3,998,526 Class E Unit distribution treated as Treasury Unit thus distribution is
returned to ETP. Class E Unit distribution treated as
Treasury Unit thus distribution is returned to ETP. Net
outbound cash related to Class E Units is $877,550 per year based on $2.55 ETP Net outbound cash related to Class E Units is $877,550 per year based on
$2.55 ETP distribution rate. distribution rate. |
  29 Distribution Review ETP Distribution History $1.30 $1.40 $1.50 $1.65 $1.75 $1.85 $1.95 $2.00 $2.20 $2.35 $2.55 $1.00 $1.40 $1.80 $2.20 $2.60 $3.00 |
  30 Energy Transfer Equity, LP ETE Corporate Structure Statistics Distributable Cash Flow ETE DCF @ ETP DCF Increases |
  31 ETE Corporate Structure Management and Affiliates Public Unitholders LE GP, LLC Energy Transfer Equity, L.P. 137,216,912 Common Units Outstanding 81.8% Limited Partner Interest 17.7% Limited Partner Interest 50% Incentive Distribution Rights 32.9% Limited Partner Interest 2% General Partner Interest 0.5% General Partner Interest |
  32 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 |
  33 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 Units 137,216,912 DCF/ Unit 0.95 $
|
  34 ETE Distributions @ ETP DCF Increases ETE DCF Estimates $0.95 $1.02 $1.09 $1.23 $1.16 $1.29 $1.36 $0.70 $0.90 $1.10 $1.30 $1.50 $2.55 $2.65 $2.75 $2.85 $2.95 $3.05 $3.15 ETP DCF/ Unit |
  35 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 sheet
Low risk, high rate of return growth opportunities Low construction price to EBITDA multiples Long-term contracts already in place Excellent access to public debt and equity markets Significant liquidity History of consistent distribution growth Experienced management with substantial equity ownership
|