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Energy Transfer Equity, L.P. Message Board

  • sommesound sommesound Nov 21, 2013 9:52 AM Flag

    Morgan Stanley Report

    Bull case target $115!

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    • Add em up! That is $230 a share! Investyourbuck!

      • 1 Reply to tom_rosplock
      • ETE and EPD Update from Morningstar

        Analyst Note 11/21/2013

        Energy Transfer Equity's stock was up big Wednesday after the company detailed plans for Trunkline LNG and its Lake Charles LNG export partnership with BG Group. We are placing our fair value estimate for ETE under review and expect to materially increase it. We also expect a modest increase to our fair value estimate for Energy Transfer Partners.

        ETP and ETE announced a deal in which ETE will acquire ETP's ownership interest in Trunkline LNG in exchange for the redemption of 18.71 million ETP units held by ETE, valued at roughly $1 billion. This does two things. First, it reduces ETP's unit count by 5%, which increases ETP's ability to increase limited partner distributions. ETP will also receive management fees from ETE in 2014 and 2015 and incentive distribution waivers in 2016-19, resulting in an additional $330 million for ETP's distributable cash. Second, by moving Trunkline LNG to ETE, the firms will have created an ideal platform from which to launch another master limited partnership, tentatively called ET LNG, which will ultimately house all LNG cash flows. ETE will now directly benefit from existing take-or-pay contracts with BG for Trunkline's regasification capacity, increasing ETE cash flows by $185 million in 2014 and 2015, $165 million in 2016-19, and $100 million thereafter. While this may sound like financial engineering, the math works, and we expect both firms to see higher per-unit distributable cash flow as a result.

        The firm also detailed how it will structure and monetize its Lake Charles LNG exports. As we've come to expect from Energy Transfer, the details are complex, but here the bottom line is straightforward: Should the Lake Charles LNG export facility move forward, ETE and ETP will receive roughly $885 million in annual cash flows for 25 years, with no volume or price risk. Such steady, ratable business not only will support ETE's wide economic moat, but also may lead to us to increase ETP's narrow moat to wide.

18.15+0.28(+1.57%)Aug 23 4:02 PMEDT