Energy Transfer, LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Energy Transfer, LP	c20951e8vk.htm

Exhibit 99.1

ENERGY TRANSFER PARTNERS
REPORTS QUARTERLY RESULTS

Dallas – August 3, 2011 – Energy Transfer Partners, L.P. (NYSE:ETP) today reported Adjusted EBITDA, Distributable Cash Flow, and net income for the quarter ended June 30, 2011. Adjusted EBITDA for the three months ended June 30, 2011 totaled $388.1 million, an increase of $52.5 million from the three months ended June 30, 2010. Distributable Cash Flow for the three months ended June 30, 2011 totaled $223.3 million, an increase of $23.3 million from the three months ended June 30, 2010. Net income for the three months ended June 30, 2011 totaled $156.6 million, an increase of $113.8 million from the three months ended June 30, 2010.

Adjusted EBITDA for the six months ended June 30, 2011 totaled $859.4 million, an increase of $10.1 million from the six months ended June 30, 2010. Distributable Cash Flow for the six months ended June 30, 2011 totaled $560.4 million, a decrease of $24.2 million from the six months ended June 30, 2010. Net income for the six months ended June 30, 2011 totaled $403.8 million, an increase of $120.9 million from the six months ended June 30, 2010.

Related to ETP’s liquidity position, the Partnership had available capacity under its revolving credit facility of approximately $1.81 billion and $130.9 million of cash on hand as of June 30, 2011. The Partnership also raised approximately $2.2 billion from a combination of debt and equity offerings during the three months ended June 30, 2011, the proceeds from which were used to repay amounts outstanding under the Partnership’s revolving credit facility, to fund capital expenditures related to pipeline construction projects and for general partnership purposes.

An analysis of the Partnership’s segment results and other supplementary data is provided after the financial tables shown below. The Partnership has scheduled a conference call for 8:30 a.m. Central Time, Thursday August 4, 2011 to discuss the second quarter 2011 results. The conference call will be broadcast live via an internet web cast which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of the Partnership’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities, or other GAAP measures. A table reconciling Adjusted EBITDA and Distributable Cash Flow with appropriate GAAP financial measures is included in the summarized financial information included in this release. Beginning with the quarter ended September 30, 2010 and applied retroactively to all periods presented, the Partnership has revised the items included in commodity risk management activities in its reconciliation of net income to Adjusted EBITDA and net income to Distributable Cash Flow. (See notes under “Supplemental Information” for further information.)

Energy Transfer Partners, L.P. (NYSE:ETP) is a publicly traded partnership owning and operating a diversified portfolio of energy assets. ETP has pipeline operations in Arizona, Arkansas, Colorado, Louisiana, New Mexico, Utah and West Virginia and owns the largest intrastate pipeline system in Texas. ETP currently has natural gas operations that include more than 17,500 miles of gathering and transportation pipelines, treating and processing assets, and three storage facilities located in Texas. ETP also holds a 70 percent interest in Lone Star NGL LLC, a joint venture that owns and operates NGL storage, fractionation and transportation assets in Texas, Louisiana and Mississippi. ETP is also one of the three largest retail marketers of propane in the United States, serving more than one million customers across the country. For more information, visit the Energy Transfer Partners, L.P. web site at www.energytransfer.com.

Energy Transfer Equity, L.P. (NYSE:ETE) is a publicly traded partnership, which owns the general partner and 100 percent of the incentive distribution rights (IDRs) of ETP and approximately 50.2 million ETP limited partner units; and owns the general partner and 100 percent of the IDRs of Regency Energy Partners LP and approximately 26.3 million Regency limited partner units. For more information, visit the Energy Transfer Equity, L.P. web site at www.energytransfer.com.

The information contained in this press release is available on our website at www.energytransfer.com.

Contacts
Investor Relations:
Energy Transfer
Brent Ratliff
214-981-0700 (office)

Media Relations:
Vicki Granado
Granado Communications Group
214-599-8785 (office)
214-498-9272 (cell)

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ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)


	June 30,		December 31,
	2011		2010
ASSETS

CURRENT ASSETS	$	1,264,026	$	1,121,423

PROPERTY, PLANT AND EQUIPMENT, net		11,651,472		9,801,369

ADVANCES TO AND INVESTMENTS IN AFFILIATES		30,284		8,723
LONG-TERM PRICE RISK MANAGEMENT ASSETS		7,102		13,948
GOODWILL		1,189,518		781,233
INTANGIBLES AND OTHER ASSETS, net		499,001		423,296

Total assets	$	14,641,403	$	12,149,992


LIABILITIES AND EQUITY

CURRENT LIABILITIES	$	894,408	$	842,450

LONG-TERM DEBT, less current maturities		7,638,161		6,404,916
LONG-TERM PRICE RISK MANAGEMENT LIABILITIES		7,901		18,338
OTHER NON-CURRENT LIABILITIES		159,818		140,851

COMMITMENTS AND CONTINGENCIES

EQUITY:
Total partners’ equity		5,341,047		4,743,437
Noncontrolling interest		600,068		—

Total equity		5,941,115		4,743,437

Total liabilities and equity	$	14,641,403	$	12,149,992

ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit and unit data)
(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
REVENUES:
Natural gas operations	$	1,382,140		$	1,045,946		$	2,509,554		$	2,352,655
Retail propane		220,296			197,147			748,762			730,586
Other		25,659			24,613			57,356			56,446

Total revenues		1,628,095			1,267,706			3,315,672			3,139,687


COSTS AND EXPENSES:
Cost of products sold — natural gas operations		867,333			654,239			1,544,133			1,566,845
Cost of products sold — retail propane		134,728			110,282			445,592			415,263
Cost of products sold — other		6,567			6,336			13,360			13,614
Operating expenses		189,302			169,533			377,791			340,281
Depreciation and amortization		104,972			83,877			200,936			167,153
Selling, general and administrative		54,774			44,255			100,306			93,009

Total costs and expenses		1,357,676			1,068,522			2,682,118			2,596,165


OPERATING INCOME		270,419			199,184			633,554			543,522

OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized		(116,466	)		(103,014	)		(223,706	)		(207,976	)
Equity in earnings of affiliates		5,040			4,072			6,673			10,253
Gains (losses) on disposal of assets		(528	)		1,385			(2,254	)		(479	)
Gains on non-hedged interest rate derivatives		2,111			—			3,890			—
Allowance for equity funds used during construction		1,201			4,298			69			5,607
Impairment of investment in affiliate		—			(52,620	)		—			(52,620	)
Other, net		622			(5,893	)		1,972			(4,860	)


INCOME BEFORE INCOME TAX EXPENSE		162,399			47,412			420,198			293,447
Income tax expense		5,783			4,569			16,380			10,493


NET INCOME		156,616			42,843			403,818			282,954
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		8,388			—			8,388			—


NET INCOME ATTRIBUTABLE TO PARTNERS		148,228			42,843			395,430			282,954

GENERAL PARTNER’S INTEREST IN NET INCOME		105,892			90,599			213,431			190,598


LIMITED PARTNERS’ INTEREST IN NET INCOME (LOSS)	$	42,336		$	(47,756	)	$	181,999		$	92,356


BASIC NET INCOME (LOSS) PER LIMITED PARTNER UNIT	$	0.19		$	(0.26	)	$	0.89		$	0.48


BASIC AVERAGE NUMBER OF UNITS OUTSTANDING		208,615,415			186,649,074			201,259,140			187,531,919


DILUTED NET INCOME (LOSS) PER LIMITED PARTNER UNIT	$	0.19		$	(0.26	)	$	0.88		$	0.48


DILUTED AVERAGE NUMBER OF UNITS OUTSTANDING		209,675,032			186,649,074			202,364,488			188,362,188

SUPPLEMENTAL INFORMATION
(Dollars in thousands)
(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
				(Revised – see						(Revised – see
				note (b)						note (b)
				below)						below)
Reconciliation of net income to Adjusted EBITDA (a):
Net income	$	156,616		$	42,843		$	403,818		$	282,954
Interest expense, net of interest capitalized		116,466			103,014			223,706			207,976
Income tax expense		5,783			4,569			16,380			10,493
Depreciation and amortization		104,972			83,877			200,936			167,153
Non-cash compensation expense		10,600			7,404			20,789			14,600
(Gains) losses on disposals of assets		528			(1,385	)		2,254			479
Gains on non-hedged interest rate derivatives		(2,111	)		—			(3,890	)		—
Allowance for equity funds used during construction		(1,201	)		(4,298	)		(69	)		(5,607	)
Unrealized (gains) losses on commodity risk management activities (b)		(562	)		32,096			(7,654	)		91,385
Impairment of investment in affiliate		—			52,620			—			52,620
Proportionate share of unconsolidated affiliates’ interest, depreciation and allowance for equity funds used during construction		8,251			8,989			15,721			22,435
Adjusted EBITDA attributable to noncontrolling interest		(10,585	)		—			(10,585	)		—
Other, net		(622	)		5,893			(1,972	)		4,860

Adjusted EBITDA	$	388,135		$	335,622		$	859,434		$	849,348


Reconciliation of net income to Distributable Cash Flow (a):
Net income	$	156,616		$	42,843		$	403,818		$	282,954
Amortization of finance costs charged to interest		2,365			2,090			4,663			4,381
Deferred income taxes		(43	)		(1,278	)		1,592			155
Depreciation and amortization		104,972			83,877			200,936			167,153
Non-cash compensation expense		10,600			7,404			20,789			14,600
(Gains) losses on disposals of assets		528			(1,385	)		2,254			479
Unrealized gains on non-hedged interest rate derivatives		(7,529	)		—			(8,501	)		—
Allowance for equity funds used during construction		(1,201	)		(4,298	)		(69	)		(5,607	)
Unrealized (gains) losses on commodity risk management activities		(562	)		32,096			(7,654	)		91,385
Impairment of investment in affiliate		—			52,620			—			52,620
Distributions in excess of (less than) equity in earnings of unconsolidated affiliates, net		(2,802	)		10,269			1,885			20,378
Distributable Cash Flow attributable to noncontrolling interest		(10,146	)		—			(10,146	)		—
Maintenance capital expenditures		(29,493	)		(24,218	)		(49,130	)		(43,855	)

Distributable Cash Flow	$	223,305		$	200,020		$	560,437		$	584,643


(a)		The Partnership has disclosed in this press release Adjusted EBITDA and Distributable Cash Flow, which are non-GAAP financial measures. Management believes Adjusted EBITDA and Distributable Cash Flow provide useful information to investors as measure of comparison with peer companies, including companies that may have different financing and capital structures. The presentation of Adjusted EBITDA and Distributable Cash Flow also allows investors to view our performance in a manner similar to the methods used by management and provides additional insight into our operating results.


		There are material limitations to using measures such as Adjusted EBITDA and Distributable Cash Flow, including the difficulty associated with using either 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 or cash flows. In addition, our calculations of Adjusted EBITDA and Distributable Cash Flow 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.

		Definition of Adjusted EBITDA

		The Partnership’s definition of Adjusted EBITDA was revised as discussed in note (b) below. The Partnership defines Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, non-cash impairment charges, and other non-operating income or expense items. Unrealized gains and losses on commodity risk management activities includes unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Adjusted EBITDA reflects amounts for less than wholly owned subsidiaries and unconsolidated affiliates based on the Partnership’s proportionate ownership.

		Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric 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.

		Definition of Distributable Cash Flow

		The Partnership defines Distributable Cash Flow as net income, adjusted for certain non-cash items, less maintenance capital expenditures. Non-cash items include depreciation and amortization, deferred income taxes, non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, and non-cash impairment charges. Unrealized gains and losses on commodity risk management activities includes unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Distributable Cash Flow reflects amounts for less than wholly owned subsidiaries based on the Partnership’s proportionate ownership and also reflects earnings from unconsolidated affiliates on a cash basis.

		Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.

(b)		The Partnership has presented Adjusted EBITDA and Distributable Cash Flow in previous communications; however, the Partnership changed its definition for these non-GAAP measures in the quarter ended September 30, 2010 to remove lower of cost or market adjustments and the subsequent gross margin impact of such previously recognized inventory adjustments. These amounts had previously been included in unrealized gains and losses on commodity risk management activities, which now reflects unrealized gains and losses on non-hedged derivatives, fair value hedged derivatives and inventory, and the ineffective portion of cash flow hedges. The Partnership believes that with this change, Adjusted EBITDA and Distributable Cash Flow more accurately reflect the Partnership’s operating performance and therefore are more useful measures. This change has been applied retroactively to all periods presented. See “Non-GAAP Measures” available on the Partnership’s website at www.energytransfer.com for the reconciliation of net income to Adjusted EBITDA for prior periods (beginning with the fiscal year ended August 31, 2005) reflecting the changes described above.

REPORTABLE SEGMENTS (unaudited)


	Three Months Ended June 30, 2011
													All Other
													(including
	Intrastate									Retail Propane			unallocated
	Transportation							NGL		and Other			selling,
	and			Interstate				Transportation		Retail Propane			general and
	Storage			Transportation		Midstream		and Services		Related			administrative)			Eliminations			Total
Results by segment:
Revenues from external customers	$	643,653		$	104,850	$	516,499	$	90,771	$	243,973		$	28,349		$	—		$	1,628,095
Intersegment revenues		28,841			—		104,351		5,134		—			26,472			(164,798	)		—

Total revenues		672,494			104,850		620,850		95,905		243,973			54,821			(164,798	)		1,628,095
Cost of products sold		440,570			—		492,921		50,337		139,472			44,551			(159,223	)		1,008,628

Gross margin		231,924			104,850		127,929		45,568		104,501			10,270			(5,575	)		619,467
Operating expenses		49,496			25,671		24,847		6,336		79,680			3,418			(146	)		189,302
Depreciation and amortization		29,800			19,800		26,718		6,981		20,408			1,265			—			104,972
Selling, general and administrative		16,957			9,581		8,395		4,648		13,121			2,072			—			54,774

Segment operating income (loss)	$	135,671		$	49,798	$	67,969	$	27,603	$	(8,708	)	$	3,515		$	(5,429	)	$	270,419


Supplemental segment data:
Gains on non-hedged interest rate derivatives	$	—		$	—	$	—	$	—	$	—		$	2,111		$	—		$	2,111
Unrealized gains (losses) on commodity risk management activities		(121	)		—		673		—		10			—			—			562
Allowance for equity funds used during construction		—			1,201		—		—		—			—			—			1,201
Non-cash compensation expense		6,027			426		1,903		—		546			1,698			—			10,600
Equity in earnings of affiliates		(71	)		5,223		—		—		—			(113	)		—			5,039
Distributions from affiliates		1,203			1,036		—		—		—			—			—			2,239
Proportionate share of unconsolidated affiliates’ interest, depreciation and allowance for equity funds used during construction		—			8,251		—		—		—			—			—			8,251
Adjusted EBITDA attributable to noncontrolling interest		—			—		209		10,376		—			—			—			10,585
Distributable cash flow attributable to noncontrolling interest		—			—		204		9,942		—			—			—			10,146
Maintenance capital expenditures		10,219			7,614		5,303		1,259		3,430			1,668			—			29,493

Volumes by segment:
Natural gas transported (MMBtu/d)		11,322,195			2,712,947		—		—		—
NGLs produced (Bbls/d)		—			—		50,728		—		—
Equity NGLs produced (Bbls/d)		—			—		17,137		—		—
NGL transportation volumes (Bbls/d)		—			—		—		128,127		—
NGL fractionation volumes (Bbls/d)		—			—		—		14,806		—
Retail propane gallons (in thousands)		—			—		—		—		84,161


	Three Months Ended June 30, 2010
														All Other
														(including
	Intrastate										Retail Propane			unallocated
	Transportation								NGL		and Other			selling,
	and			Interstate					Transportation		Retail Propane			general and
	Storage			Transportation		Midstream			and Services		Related			administrative)			Eliminations			Total
Results by segment:
Revenues from external customers	$	530,174		$	70,079	$	407,123		$	—	$	220,126		$	40,204		$	—		$	1,267,706
Intersegment revenues		318,713			—		350,671			—		—			935			(670,319	)		—

Total revenues		848,887			70,079		757,794			—		220,126			41,139			(670,319	)		1,267,706
Cost of products sold		629,185			—		662,564			—		115,133			34,210			(670,235	)		770,857

Gross margin		219,702			70,079		95,230			—		104,993			6,929			(84	)		496,849
Operating expenses		47,369			20,200		19,033			—		79,970			3,045			(84	)		169,533
Depreciation and amortization		29,152			12,762		20,282			—		20,297			1,384			—			83,877
Selling, general and administrative		15,363			4,952		6,050			—		11,162			6,728			—			44,255

Segment operating income (loss)	$	127,818		$	32,165	$	49,865		$	—	$	(6,436	)	$	(4,228	)	$	—		$	199,184


Supplemental segment data:
Unrealized losses on commodity risk management activities	$	(23,334	)	$	—	$	(8,746	)	$	—	$	(16	)	$	—		$	—		$	(32,096	)
Allowance for equity funds used during construction		—			4,298		—			—		—			—			—			4,298
Non-cash compensation expense		3,587			418		513			—		1,321			1,565			—			7,404
Equity in earnings of affiliates		652			3,420		—			—		—			—			—			4,072
Distributions from affiliates		850			13,491		—			—		—			—			—			14,341
Proportionate share of unconsolidated affiliates’ interest, depreciation and allowance for equity funds used during construction		—			8,989		—			—		—			—			—			8,989
Maintenance capital expenditures		4,338			7,999		3,655			—		7,354			872			—			24,218

Volumes by segment:
Natural gas transported (MMBtu/d)		11,769,582			1,508,739		—			—		—
NGLs produced (Bbls/d)		—			—		51,140			—		—
Equity NGLs produced (Bbls/d)		—			—		20,693			—		—
Retail propane gallons (in thousands)		—			—		—			—		84,973


	Six Months Ended June 30, 2011
												All Other
												(including
	Intrastate								Retail Propane			unallocated
	Transportation						NGL		and Other			selling,
	and		Interstate				Transportation		Retail Propane			general and
	Storage		Transportation		Midstream		and Services		Related			administrative)			Eliminations			Total
Results by segment:
Revenues from external customers	$	1,232,331	$	209,951	$	929,694	$	90,771	$	801,188		$	51,737		$	—		$	3,315,672
Intersegment revenues		211,922		—		342,412		5,134		—			40,899			(600,367	)		—

Total revenues		1,444,253		209,951		1,272,106		95,905		801,188			92,636			(600,367	)		3,315,672
Cost of products sold		973,200		—		1,041,264		50,337		454,892			75,046			(591,654	)		2,003,085

Gross margin		471,053		209,951		230,842		45,568		346,296			17,590			(8,713	)		1,312,587
Operating expenses		95,295		52,415		49,254		6,336		167,865			6,856			(230	)		377,791
Depreciation and amortization		59,437		39,070		51,472		6,981		41,428			2,548			—			200,936
Selling, general and administrative		36,576		16,538		12,643		4,648		25,955			3,946			—			100,306

Segment operating income (loss)	$	279,745	$	101,928	$	117,473	$	27,603	$	111,048		$	4,240		$	(8,483	)	$	633,554


Supplemental segment data:
Gains on non-hedged interest rate derivatives	$	—	$	—	$	—	$	—	$	—		$	3,890		$	—		$	3,890
Unrealized gains (losses) on commodity risk management activities		6,710		—		1,172		—		(228	)		—			—			7,654
Allowance for equity funds used during construction		—		69		—		—		—			—			—			69
Non-cash compensation expense		11,146		849		3,520		—		1,887			3,387			—			20,789
Equity in earnings of affiliates		746		6,040		—		—		—			(113	)		—			6,673
Distributions from affiliates		2,472		6,087		—		—		—			—			—			8,559
Proportionate share of unconsolidated affiliates’ interest, depreciation and allowance for equity funds used during construction		—		15,721		—		—		—			—			—			15,721
Adjusted EBITDA attributable to noncontrolling interest		—		—		209		10,376		—			—			—			10,585
Adjusted DCF attributable to noncontrolling interest		—		—		204		9,942		—			—			—			10,146
Maintenance capital expenditures		18,136		9,426		10,157		1,259		7,524			2,628			—			49,130

Volumes by segment:
Natural gas transported (MMBtu/d)		11,477,624		2,482,807		—		—		—
NGLs produced (Bbls/d)		—		—		50,243		—		—
Equity NGLs produced (Bbls/d)		—		—		16,519		—		—
NGL transportation volumes (Bbls/d)		—		—		—		128,127		—
NGL fractionation volumes (Bbls/d)		—		—		—		14,806		—
Retail propane gallons (in thousands)		—		—		—		—		288,301


	Six Months Ended June 30, 2010
														All Other
														(including
	Intrastate										Retail Propane			unallocated
	Transportation								NGL		and Other			selling,
	and			Interstate					Transportation		Retail Propane			general and
	Storage			Transportation		Midstream			and Services		Related			administrative)			Eliminations			Total
Results by segment:
Revenues from external customers	$	1,132,530		$	138,348	$	1,025,830		$	—	$	781,281		$	61,698		$	—		$	3,139,687
Intersegment revenues		582,849			—		528,735			—		—			2,381			(1,113,965	)		—

Total revenues		1,715,379			138,348		1,554,565			—		781,281			64,079			(1,113,965	)		3,139,687
Cost of products sold		1,270,691			—		1,362,356			—		424,890			51,582			(1,113,797	)		1,995,722

Gross margin		444,688			138,348		192,209			—		356,391			12,497			(168	)		1,143,965
Operating expenses		89,330			36,261		36,863			—		171,702			6,293			(168	)		340,281
Depreciation and amortization		58,144			25,213		40,617			—		40,385			2,794			—			167,153
Selling, general and administrative		35,192			13,112		12,532			—		23,966			8,207			—			93,009

Segment operating income (loss)	$	262,022		$	63,762	$	102,197		$	—	$	120,338		$	(4,797	)	$	—		$	543,522


Supplemental segment data:
Unrealized gains (losses) on commodity risk management activities	$	(76,360	)	$	—	$	(11,677	)	$	—	$	(3,348	)	$	—			—		$	(91,385	)
Allowance for equity funds used during construction		—			5,607		—			—		—			—			—			5,607
Non-cash compensation expense		6,307			836		1,785			—		2,542			3,130			—			14,600
Equity in earnings of affiliates		1,373			8,880		—			—		—			—			—			10,253
Distributions from affiliates		1,990			28,641		—			—		—			—			—			30,631
Proportionate share of unconsolidated affiliates’ interest, depreciation and allowance for equity funds used during construction		—			22,435		—			—		—			—			—			22,435
Maintenance capital expenditures		8,618			11,719		6,985			—		14,543			1,990			—			43,855

Volumes by segment:
Natural gas transported (MMBtu/d)		11,563,460			1,533,194		—			—		—
NGLs produced (Bbls/d)		—			—		49,734			—		—
Equity NGLs produced (Bbls/d)		—			—		19,203			—		—
Retail propane gallons (in thousands)		—			—		—			—		302,584

Summary Analysis of Results by Segment
(tabular dollar amounts in thousands)

The reportable segment data included in the tables above and the analysis that follows is presented on a comparable basis to prior periods, except that, following Lone Star’s acquisition of LDH Energy Asset Holdings LLC (“LDH”) on May 2, 2011, (i) our midstream segment now includes Lone Star’s 20% interest in Sea Robin and (ii) we have added a NGL transportation and services segment, which includes all of Lone Star’s NGL transportation, storage and fractionation services.

Intrastate Transportation and Storage

Gross Margin. The components of our intrastate transportation and storage segment gross margin were as follows:


	Three Months Ended June 30,							Six Months Ended June 30,
	2011		2010		Change			2011		2010		Change
Transportation fees	$	157,672	$	154,754	$	2,918		$	300,338	$	295,552	$	4,786
Natural gas sales and other		18,390		15,950		2,440			63,589		55,960		7,629
Retained fuel revenues		36,680		37,385		(705	)		71,662		73,087		(1,425	)
Storage margin, including fees		19,182		11,613		7,569			35,464		20,089		15,375

Total gross margin	$	231,924	$	219,702	$	12,222		$	471,053	$	444,688	$	26,365

Intrastate transportation and storage gross margin changes were primarily due to the following factors:

•

Transportation fees increased during the three months ended June 30, 2011 primarily due to an increase in demand fees offset by a decrease in fees recognized as a result of lower interruptible transportation volumes. Transportation fees increased for the six months ended June 30, 2011 primarily due to increases in transportation volumes and demand fees.

•

Margin from the sales of natural gas and other activities increased for the three and six months ended June 30, 2011 primarily due to an increase from sales of NGLs offset by a decrease due to lower margins from system optimization activities.

Storage margin was comprised of the following:


	Three Months Ended June 30,									Six Months Ended June 30,
	2011			2010			Change			2011			2010			Change
Withdrawals from storage natural gas inventory (MMBtu)		647,373			871,203			(223,830	)		15,772,126			27,887,990			(12,115,864	)

Margin on physical sales	$	179		$	1,274		$	(1,095	)	$	10,691		$	65,652		$	(54,961	)
Fair value adjustments		3,309			6,301			(2,992	)		4,831			(62,254	)		67,085
Settlements of financial derivatives		(5,199	)		1,570			(6,769	)		571			(8,929	)		9,500
Unrealized gains (losses) on derivatives		12,750			(7,824	)		20,574			1,793			5,294			(3,501	)

Net impact of natural gas inventory transactions		11,039			1,321			9,718			17,886			(237	)		18,123
Revenues from fee-based storage		8,218			10,328			(2,110	)		17,819			21,627			(3,808	)
Other costs		(75	)		(36	)		(39	)		(241	)		(1,301	)		1,060

Total storage margin	$	19,182		$	11,613		$	7,569		$	35,464		$	20,089		$	15,375

For the three months ended June 30, 2011, storage margin increased primarily due to holding more inventory in our storage facility than was subject to the mark-to-market impact of the spread between the spot price and the forward prices narrowing during the period. For the six months ended June 30, 2011, storage margin increased primarily due to favorable changes in the spread between the spot price of natural gas compared to the forward price.

Operating Expenses. Intrastate transportation and storage operating expenses increased for the three months ended June 30, 2011 compared to the same period in the prior year primarily due to an increase in natural gas consumed for compression and an increase in ad valorem taxes. For the six months ended June 30, 2011 operating expenses increased primarily due to an increase in natural gas consumed for compression and an increase in employee related costs.

Depreciation and Amortization. Intrastate transportation and storage depreciation and amortization expense increased for the three and six months ended June 30, 2011 compared to the same periods in the prior year primarily due to the completion of pipeline projects in connection with the continued expansion of our pipeline system.

Selling, General and Administrative. Intrastate transportation and storage selling, general and administrative expenses increased for the three and six months ended June 30, 2011 compared to the same periods in the prior year as a result of an increase in allocated overhead expenses.

Interstate Transportation

Revenues. The increase in interstate transportation revenues for the three and six month periods ended June 30, 2011 compared to the same prior periods in the prior year was primarily due to increased transportation fees associated with the Tiger pipeline which was placed in service in December 2010. The increase was slightly offset by decreased transportation fees from the Transwestern pipeline as a result of lower transportation volumes.

Operating Expenses. Interstate transportation operating expenses increased during the three and six months ended June 30, 2011 compared to the same periods in prior year principally due to incremental operating expenses incurred on the Tiger pipeline which was placed in service in December 2010.

Depreciation and Amortization. Interstate transportation depreciation and amortization expense increased during the three and six months ended June 30, 2011 compared to the same periods in prior year primarily due to incremental depreciation associated with the Tiger pipeline which was placed in service in December 2010.

Selling, General and Administrative. Interstate transportation selling, general and administrative expenses increased during the three and six months ended June 30, 2011 compared to the same periods in the prior year primarily due to increased allocated and employee-related expenses related to the Tiger Pipeline which was placed in service in December 2010.

Midstream

Gross Margin. The components of our midstream segment gross margin were as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	2011			2010			Change		2011			2010			Change
Gathering and processing fee-based revenues	$	65,989		$	55,583		$	10,406	$	125,596		$	109,878		$	15,718
Non fee-based contracts and processing		65,427			50,226			15,201		111,797			97,496			14,301
Other		(3,487	)		(10,579	)		7,092		(6,551	)		(15,165	)		8,614

Total gross margin	$	127,929		$	95,230		$	32,699	$	230,842		$	192,209		$	38,633

Midstream gross margin increased for the three and six months ended June 30, 2011 compared to the same periods in prior year due to the following:

•

An increase in fee-based revenues due to increased gathering and processing volumes on our North Texas system and additional volumes due to recent acquisitions and other growth capital expenditures located in Louisiana.

•

Non fee-based contracts and processing margins increased primarily due to favorable NGL prices. In addition, our recently acquired interest in the Sea Robin processing plant (part of the Lone Star joint venture) provided additional margin compared with the same periods in the prior year.

•

The increase in other midstream gross margin primarily reflects the impacts from favorable NGL prices on activities where third party processing capacity is utilized.

Operating Expenses. For the three and six months ended June 30, 2011 compared to the same periods in the prior year, operating expenses increased primarily as a result of increases in maintenance and operating costs, ad valorem taxes, professional fees and employee related costs.

Depreciation and Amortization. For the three and six months ended June 30, 2011 compared to the same periods in the prior year, depreciation and amortization expense increased primarily due to incremental depreciation from the continued expansion of our Louisiana and South Texas assets.

Selling, General and Administrative. For the three and six months ended June 30, 2011 compared to the same periods in the prior year, selling, general and administrative expenses increased primarily as a result of an increase in professional fees.

NGL Transportation and Services

Gross Margin. The components of our NGL transportation and services segment gross margin were as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	2011			2010		Change			2011			2010		Change
Storage revenues	$	23,414		$	—		23,414		$	23,414		$	—	$	23,414
Transportation revenues		7,051			—		7,051			7,051			—		7,051
Processing and fractionation revenues		15,874			—		15,874			15,874			—		15,874
Other revenues		(771	)		—		(771	)		(771	)		—		(771	)

Total gross margin	$	45,568		$	—	$	45,568		$	45,568		$	—	$	45,568

We own a 70% controlling interest in Lone Star, which acquired all of the membership interests in LDH on May 2, 2011 and is primarily engaged in NGL transportation, storage and fractionation. Results reflected above represent 100% of Lone Star from May 2, 2011 to June 30, 2011.

Retail Propane and Other Retail Propane Related

Gross Margin. Gross margin decreased during the six months ended June 30, 2011 compared to the same period in the prior year primarily due to a decrease in sales volumes resulting from weather patterns. The decrease in volumes was partially offset by a favorable impact from mark-to-market adjustments of financial instruments in our commodity price risk management activities and an increase in other retail propane-related gross profit.

Operating Expenses. Operating expenses were lower for the six months ended June 30, 2011 compared to the same period in the prior year primarily due to decreases in performance-based bonus accruals and other general operating expenses.

Energy Transfer, LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 3, 2011

Attached files

Energy Transfer, LP Reports