How do ETPs earnings not get associated with the prices of commodities? A copy of their business overview is pasted below. The areas of concern are in processing where NGL prices are down in the 50% area and propane where they are one of the largest retailers in the US. Again propane is a very unpredicatable business as shown by 2 propane MLPs going BK.
I agree that ETP is well run and has an excellent business plan, but it has commodity exposure particularly with propane. If NG prices drop then they much cut propane to stay competitive.
Energy Transfer Partners, L.P., through its subsidiaries, engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. Its midstream operations focus on the gathering, compression, treating, blending, processing, and marketing of natural gas in the Austin Chalk trend of southeast Texas, the Permian Basin of west Texas, the Barnett Shale in north Texas, the Bossier Sands in east Texas, and the Uinta and Piceance Basins in Utah and Colorado. The company�s intrastate transportation and storage operations focus on transporting natural gas from various natural gas producing areas through connections with other pipeline systems. Its interstate transportation operations transports natural gas to the California border; and delivers natural gas from the east end of its system to Texas intrastate and Midwest markets. In addition, Energy Transfer Partners sells propane and propane-related products and services to residential, commercial, industrial, and agricultural customers.
Processing margins are down. This will not impact ETP in a significant way.
Propane accounts for approx 15% of ETP's operating income. ETP's sells propane on a retail basis. Their margins are likely to remain satisfactory.
ETP's fee based transportation business (interstate and intrastate pipelines) will increase in profitability during 2009 due to increased volumes (prior capex) and expected govt approved rate increases.
ETP will at least maintain its distribution and could make modest distribution increases in 2009 (3-5%) even in this market. When commodity prices improve (late 2009 or 2010) ETP will be in a position to significantly increase distributions.