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Energy Transfer Partners, L.P. Message Board

  • fyrisle fyrisle Jul 16, 2007 9:41 AM Flag

    Lehman's on ETP

    Lehman's Bros has raised ETP's target price to $68. A portion of the summary says "Anchored by strong fundamentals, contributions from recent expansion projects and continued development of large-scale projects, we continue to believe ETP should capture a premium valuation to sector based on superior organic growth prospects driving a stronger and more consistent long term growth rate." The report can be found at http://finance.groups.yahoo.com/group/mlp_research/.

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    • I checked. Distributable dividends I believe are about $300 MM annually. So a $300MM fine amounts to 1 year of dividends. Not too pretty.

    • Here's more detail :

      EQUITY RESEARCH July 27, 2007 United States of America
      Energy & Power
      Energy Transfer Partners LP (ETP - US$ 61.24) 1-Overweight

      Company Update
      Main PT Pending Outcome of FERC/CFTC Inv

      Investment Conclusion

      � ETP has been under investigation by FERC and CFTC regarding certain physical and financial natural gas trades that occurred during 2003-2005. FERC has issued a show cause order giving ETP 30 days to respond to allegations. CFTC has filed a complaint with U.S. District Court. We believe worst case would be both commissions fine ETP for total of $377 million. Assuming fines were financed w/debt, this would impact our current PT of $68 by $3. PT based on dist run rate of $3.74 and 5.5% yield. Incr int exp of $0.19 would decr dist run rate to $3.55. We are maintaining our current PT and estimates pending outcome of investigations. We would note ETP released stmt today defending their position.

      Summary

      � Timing of final outcomes difficult to predict.
      Although FERC may be resolved faster than
      CFTC given procedures involved.

      � We believe headline risk will continue to weigh on
      stock near-term, but LT fundamentals remain intact.

      Stock Rating Target Price

      New: 1-Overweight New: US$ 68.00
      Old: 1-Overweight Old: US$ 68.00
      Sector View: 2-Neutral

 
ETP
51.20-0.22(-0.43%)Jul 31 4:06 PMEDT