Energy Transfer Partners’ 1Q15 Earnings Release: Key Transactions
Energy Transfer Partners' Distributions Increased for 7 Quarters
ETP-Regency Merger
In the last part of this series, we discussed Energy Transfer Partners’ (ETP) 1Q15 distribution growth. In this part, we’ll discuss the major transactions the ETP completed in first four months of 2015.
ETP and Regency Partners completed the previously announced merger in April 2015. The partnership is expected to benefit from the commercial synergies and cost savings realized in 2015 and years to follow—refer the above image. The estimated annual recurring savings are expected to be in the range of $160–$235 million per year. ETP’s management believes that most of the cost savings will be realized in the results before the end of 2015.
Bakken Pipeline transaction
In March, the partnership completed the Bakken Pipeline transaction. It entitles ETP to receive 30.8 million ETP common units held by Energy Transfer Equity (ETE). This will result in a decrease of ETE’s limited partner interest in ETP. Also, ETP will receive ETE’s 45% interest in the Bakken Pipeline project and $879 million in cash. In exchange, ETE will receive 90.05% of cash distributions of the general partner interest and IDRs (incentive distribution rights) of Sunoco Logistics (SXL) through 50.2 million class H units issued by ETP.
ETP and Sunoco Logistics are part of the Alerian MLP ETF (AMLP) and the First Trust North American Energy Infrastructure Fund (EMLP). Together, they account for ~12.47% of AMLP.
Dropdown to Sunoco
In April 2015, ETP completed the second dropdown to Sunoco LP. As a result of the dropdown, Sunoco LP acquired a 31.58% equity interest in Sunoco, LLC. Sunoco, LLC distributes ~5.3 billion gallons per year of motor fuel to customers in the East, Midwest, and Southwest regions of the US. ETP is going to pursue further dropdowns as opportunities arise.
M&A opportunities
In the 1Q15 earnings release, it was mentioned that ETP and other members of the Energy Transfer family might continue to analyze more M&A (mergers and acquisitions) opportunities in the current environment where the fractionation spread contracted and the commodity prices are low.
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