Which Segment Will Drive Energy Transfer Partners’ 4Q15 Results?
What to Expect from ETE’s, ETP’s, and SXL’s 4Q15 Earnings
ETP’s Midstream segment
Energy Transfer Partners’ (ETP) Midstream segment, which mainly provides natural gas gathering and processing services, is the company’s largest segment in terms of EBITDA. The segment accounted for 21.2% of total partnership’s EBITDA in 3Q15. Midstream segment’s 3Q15 adjusted EBITDA decreased by 16.1% YoY (year-over-year) versus 3Q14. The trend is expected to continue in the fourth quarter driven by declines in the segment’s non-fee-based processing margins due to the fall in natural gas prices.
Enable Midstream Partners (ENBL), DCP Midstream Partners (DPM), and Summit Midstream Partners (SMLP) are among the peers that might experience similar declines at their natural gas processing businesses. ETP forms ~1.3% of the SuperDividend US ETF (DIV).
Liquids Transportation and Services segment
ETP’s Liquids Transportation and Services segment provides NGLs (natural gas liquids) to transportation and fractionation services. The segment saw its adjusted EBITDA increase by 17.8% YoY in 3Q15 over 3Q14, driven by improvement in the segment’s transportation margins. However, the segment’s performance might be negatively impacted by lower NGL demand, considering the warmer winter season in 2015 compared to 2014.
Interstate and Intrastate Transportation Segments
ETP’s Interstate and Intrastate Transportation and Storage segments, which are involved in natural gas transportation, storage, and sales, might experience a YoY decline in 4Q15 EBITDA due to lower transportation throughput volumes and lower sales revenue, driven by the decline in natural gas prices. However, the segments’ storage margins might continue to grow.
Investment in Sunoco Logistics segment
ETP’s Investment in Sunoco Logistics segment, which represents Sunoco Logistics Partners’ (SXL) crude oil and NGL (natural gas liquids) transportation, storage, and marketing business, grew by 17.5% YoY in 3Q15.
We’ll analyze SXL’s segment-wise operation performance in the next part.
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