Now that ETP has completed the acquisition of SUN, and gained control of SXL, it is time for the Energy Transfer family of companies to begin the necessary restructuring to remove corporate complexity.
This clean up will encompass all of the entities, ETE, ETP, RGP and SXL.
The first items that seem likely to happen are the divestiture of the Sun gas stations. This is not a core business and was simply an asset that came with SUN. ETP clearly coveted the GP of SXL and the slew of SXL units. It also seems likely that ETP will divest the ownership stake in the refinery, again, not a core holding.
It also seems likely that the regulated utilities that were acquired from Southern Union would be prime candidates to be sold.
Next, once the lock up ends, it would be nice to see ETP divest the APU holdings.
Then, they must begin to decide how they fold SXL and RGP into the mix. It seems likely that RGP will end up within ETP. Same thing with SXL. While RGP and SXL are not heavily encumbered with high IDR loads, the IDR loads could be waived by ETE at ETP.
This process will take some time, but it seems obvious that it is important that ETP begin as quickly as possible.
I took notes on what has been noted in this posting (and others) ... let's see how this aligns with the Conference Call ... I beleive the SUN gas stations will be hard to unload ... the Refinery is a question mark too, given BP had a time unloading Texas City and Carson, I sgree a Clean up is in the works, but how long will it take? I'm thinking a distribution increase will come second to the clean up, therefore increase latter part of 2013 (3rd Qtr)
They cannot sell the refinery because they already put it in a JV. Since it is on the books at a bvalue of ZERO, anything coming out of Carlysle deal is to the good. They should be able to show a profit of about $100M to ETP on its operation now with the oil cost reduction and incentives they got from PA. The retail stations will generate some UBTI and are already in a special "holdco" entity. I know nothing about how one sells hundreds of gas stations. The ETP press release where they dropped down the SUG assets out of ETE was a big plus. What I wonder is SXL. No distribution declaration yet?
CS analyist put out an interesting report and basically said it is a buy because of the assety distributions. I think you and I wil be a bit disappointed with tomorrow as the SUG assets did not arrive until the last couple days of the quarter. Most of the discussion in the peresentation wil be regarding new organic projects that are going on line. Will we get analyist coverage tomorrow morning? Did not last time and tomorrow you have president election results. The analyists wil want answers to the questions asked here.
What makes you think ETP wil pay any "special dividends". They need about $2B in capital in the coming two years for their capital growth needs. $$ received will simply be used to deleverage, reduce debt, and/or reduce the need to issue more new common units. Also maybe to simplify the capital structure. Would that not make more sense for a company that has not raised their distribution in 4+ years?
They already discussed part of what you suggest when I spoke with them last week. They already said the APU units will be sold when the lock up expires. ETE has waived about $20M in IDRs for another year.
The refinery is going to sit there for a while. The Carlysle deal gives ETP a great deal with a 50% non-operated equity interest and Carlysle is a company that has a stated goal of turning things around and selling out. Would guess a couple years and that goes away with significant profits. Interesting that Carlysle already reached a deal to get oil from the Bakken and cost the cost by over $20bbl. That saves some $200K a DAY in costs. Was SUN stupid or locked into a contract? Guess we will never know. Bottom line is with the changes in supply cost and incentives by PA the refinery will be profitable. Marcus Hook was originally on the line as a property to be sold. Now with MWE using it to export propane would think there is potential to expand as permitting already in place and hard to get for LNG/propane terminals.
I understood that there was big discussion on the retail stations. Sandy will put that on hold for a while. Again they moved the stations into "holdco" and thet eliminates any hurry to take a discounted sale. Better IMO to wait and get a good price.
FWIW - I have added to my position. The yield puts a floor unless ETP really messes up. Thier plan going forward makes sense and consolidation will happen. ETP/ETE is now my third largest MLP holding and am willing to wait for the rewards in 2014 or 2015.