energy transfer partners (etp) earnings report: q4 2015
TRANSCRIPT
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
©2014TheStreet,Inc.Al l R ightsReserved Page1of25
EnergyTransferPartners(ETP)EarningsReport:Q42015ConferenceCallTranscriptThefollowingEnergyTransferPartnersconferencecalltookplaceonFebruary25,2016,09:00AMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
TomLong;EnergyTransferPartners;CFOMackieMcCrea;EnergyTransferPartners;President&COOKelcyWarren;EnergyTransferPartners;Chairman&CEO
OtherPart icipants
BrandonBlossman;TudorPickeringHolt;AnalystJeremyTonet;JPMorgan;AnalystMichaelBlum;WellsFargo;AnalystDarrenHorowitz;RaymondJames;AnalystTedDurbin;GoldmanSachs;AnalystKristinaKazarian;DeutscheBank;AnalystRobertBalsamo;UBS;AnalystHelenRyoo;BarclaysCapital;AnalystJohnEdwards;CreditSuisse;AnalystSelmanAkyol;StifelNicolaus;AnalystCoreyGoldman;Jefferies;AnalystEricMcCarthy;CitadelSecuritiesLLC;AnalystJohnKiani;TeilingerCapital;AnalystZevNijensohn;TheBostonCompanyAssetManagement;AnalystNormanHale;StifelNicolaus;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
WelcometotheEnergyTransferPartnersfourth-quarter2015earningsconferencecall.
(OperatorInstructions)
Asareminder,thisconferenceisbeingrecorded.
IwouldnowliketoturntheconferenceovertoMr.TomLong,ChiefFinancialOfficerforEnergyTransferPartners.Thankyou,Mr.Long.Youmaynowbegin.
T omLong (CFO):
Thankyou,Operator.Goodmorning,everyone.WelcometoEnergyTransferPartners'andEnergyTransferEquity'sfourth-quarter2015earningscall.Thankyouforjoiningustoday.
IwillbeginwithadiscussionofEnergyTransferPartners'fourth-quarterresults,followedbyagrowthprojectupdate,afinancingandliquidityupdate,andanETPdistributiondiscussion.ThenIwillprovideabriefupdateonthemergerwithWilliamsandlastly,anoverviewofEnergyTransferEquity'sfourth-quarter
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
©2014TheStreet,Inc.Al l R ightsReserved Page2of25
earningsandotherhighlights.
I'malsojoinedtodaybyKelcyWarren;MackieMcCrea;MattRamsey,whoisETP'snewPresidentandChiefOperatingOfficer;JohnMcReynolds;andothermembersofourseniormanagementteamwhoareheretohelpansweryourquestionsafterourpreparedremarks.
Asareminder,wewillbemakingforward-lookingstatementswithinthemeaningofSection21EoftheSecuritiesExchangeActof1934.Thesearebasedonourbeliefsaswellascertainassumptionsandinformationcurrentlyavailabletous.IalsorefertoadjustedEBITDAanddistributablecashflow,orDCF,bothofwhicharenon-GAAPfinancialmeasures.You'llfindareconciliationofournon-GAAPmeasuresonourwebsite.
NowforETP'sfourth-quarterresults.PleasenoteasaresultoftheRegencymerger,whichwasacombinationofentitiesundercommoncontrol,ETP'sfinancialresultshavebeenretrospectivelyadjustedtoreflecttheconsolidationofRegency.
AdjustedEBITDAonaconsolidatedbasistotaled$1.36billion,whichisadecreaseof$168millioncomparedtothefourthquarterof2014.Wehadcontinuedstronggrowthintheliquidsegment,butsawmidstreamEBITDAdecrease.Andinthefourthquarterof2014,wehadunusuallystrongretailperformance.
DCFattributabletothepartnersofETP,asadjusted,totaled$959million,anincreaseof$165millionfromayearago.Wehadacurrenttaxbenefitfrombonusdepreciation,partiallyoffsetbyhighermaintenancecapital.
Nowlet'sgoovertheindividualsegmentresults.Inthemidstreamsegment,adjustedEBITDAwas$264million,down$96millioncomparedtothesameperiodayearago.Thisdecreasewasprimarilydrivenbylowercommodityprices.Thesewerepartiallyoffsetbyhigherthroughputvolumes,anincreaseinfee-basedrevenues,andlowerG&A.Therewerealsoseveralplantoutages,themajorityofwhichhavebeenresolved,andcontinuedvolumeshut-insintheNortheast.
Gatheredgasvolumestotaledover10millionMMBtusperday,whichisa5%increaseversusthesameperiodlastyear,primarilyduetohighervolumesintheEagleFord,Permian,andCottonValleyregionsaswellastheKingRanchacquisition.
NGLproductionalsoincreasedinthefourthquarterby67,000barrelsperdayto444,000barrelsperdaycomparedtothefourthquarterof2014.AndEquityNGLsdecreasedinthefourthquarterby1,000barrelsperdayto29,000barrelsperday.
Intheliquids,transportation,andservicessegment,adjustedEBITDAincreasedby40%to$222millioncomparedtothesameperiodlastyear.TheincreaseinadjustedEBITDAwasduetohigherthroughputattheLoneStarfractionatorsandWestTexasNGLpipelineaswellasincreasesinstoragemarginduetotherampupofMarinerSouthandrelatedstoragefees.Wealsoincreasedmargininseveralotherareas.
NGLandcrudetransportationvolumesonourwhollyownedandjointventurepipelinesincreased20%to474,000barrels.ThiswasduetoincreasedvolumesoutoftheEagleFordandPermianaswellasthecommissioningofacrudeoiltransportationpipelineattheendof2014.TherewasalsoanincreaseinvolumesonourNGLpipelinesfromourplantsinSoutheastTexas.
Averagedailyfractionatedvolumesincreased22%to250,000barrelscomparedtothefourthquarteroflastyearduetothestartupofoursecondfractionatoratMontBelvieu,whichwascommissionedinlate2013.
Inourintrastatesegment,adjustedEBITDAincreasedslightlyyearoveryearto$122million.Thiswasdue
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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totheincreasedtransportationfeesandnewlyinitiatedlong-termdemandcontractsforMexicoexportvolumesonourHoustonpipelinesystem.Also,whiletransportedvolumesdecreasedto7.9millionMMBtusperdayfromlowerproductionintheBarnettShale,weexpectthistrendtoreverseduetovolumegrowthin2016relatedtoincreaseddemandfromMexicoandtheGulfCoastLNGfacilities.
Inourinterstatesegment,adjustedEBITDAwas$283million,down$24millionfromayearago,partiallyduetotheexpirationofatransportationratescheduleontheTranswesternpipelineandtherepurposingofTrunkline's30-inchlinefortheBakkenpipelineproject.Therewere,however,increaseddeliveriesontheTranswesternpipelineduetosustainedcoolingdemandandincreasedcustomerdemand.
MovingtoSunocoLogistics,whohadanothergreatquarter,withEBITDAof$317million.Thiswas$80millionhigherthanSXL'sfourthquarterof2014.Movingtoretail,asareminder,duetoETP'ssaleofits100%membershipinterestofSunocoGPLLCandalloftheIDRsofSunocotoETE,ETPnolongerconsolidateSunocoforaccountingpurposes.
ETP'sremainingproportionateinvestmentinSUNisaccountedforundertheequitymethod.Thischangeimpactsthecomparabilityoftheretailsegmentresultsversuspriorperiods.
Forthefourthquarterof2015,adjustedEBITDAfortheretailsegmentisreportedasETP's100%ownershipoftheassetsinSunoco,Inc.,andincludesadjustedEBITDArelatedtounconsolidatedaffiliates,whichiscomprisedofour68.4%interestinSunocoLLC,thewholesaledistributionbusiness,andourinvestmentinSunocoLPbasedonETP'spercentageownershipofoutstandingLPunit.Forthefourthquarter,theretailsegmentcontributed$119millionofadjustedEBITDA.
Goingforward,asaresultofourdropdownofourremaininginterestinSunocoLLCtoSUNLP,whichisexpectedtocloseinMarch,wewillnotreportretailresultsasitsownsegment.Instead,ourinvestmentinSUNLPwillbereportedintheallothersegmentandbrokenoutinourdisclosuresrelatedtosupplementalinformationonunconsolidatedaffiliates.
Forthecurrentallothersegment,adjustedEBITDAdecreasedto$33million,down$17millionversusayearagoduetoweakerrefiningcrackspreadsfromourinvestmentinPES.AsitrelatestothePESIPO,thishasbeenpostponedandwillrestartwhenmarketconditionsimprove.Westillviewthisinterestasanattractivenear-termmonetizationoptionforETP.
Nowlet'smovetoourgrowthprojects,whereI'llprovideabriefupdate.StartingwiththeBakkenpipelineproject,ourjointventurewithSXLandP66,weareobtainingthenecessarypermitsandregulatoryauthorizationsforthisproject.Weexpecttoreceivetheremainingstateagencyauthorizationsinthenextfewmonths.
Thisshouldprovideuswithsufficienttimetoconstructtheprojectbythefourthquarterthisyear.OurprojectmanagementgrouphasdoneanoutstandingjobkeepingBakkenonschedule.
NextonBayouBridge,anotherjointventurewithSXLandP66,constructionisnearlycompleteontheNederlandtoLakeCharlessegmentofthepipeline,whichisexpectedtobemechanicallycompleteinMarch.BayouBridgesuccessfullyconcludeditsexpansionopenseasoninNovember,addingincrementalcommittedshippervolumestotheproject.
Basedonthesecommitments,thesegmentfromLakeCharlestoSt.Jamesismovingforwardandiscurrentlyinthepermittingandright-of-wayacquisitionphase.WecontinuetoanticipatethedeliveriestoSt.Jameswillcommenceinthesecondhalfof2017.
OntheRovergaspipeline,wereceivedthedraftEISfromFERClastFriday,withfinalEISscheduledforthe
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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endofJulyandtheFERCcertificateinthebeginningofthefourthquarterofthisyear.WeanticipatebeinginservicetotheMidwesthubnearDefiance,Ohio,byJuneof2017.AndtomarketsinMichiganandUnionGasDawnhubbyNovemberof2017.
LoneStar'sFracIIIwasplacedintoserviceinmid-Decemberontimeandunderbudget.LoneStar'sthree100,000-barrel-per-dayfractionatorshaveaveraged339,000barrelsperdaytodate.FracIVremainsonscheduletobeinservicebyDecemberof2016.
TheLoneStarExpressNGLpipelineremainsonschedule,withPhaseItostartupinthesecondquarterandfinalcompletionexpectedtobeinthethirdquarterofthisyear.Itisalsoexpectedtocomeinunderbudget.
TheTrans-PecosandComancheTrailpipelines,whichwillexpandourintrastatepipelinecapacitytocarrygasfromthePermianBasintoMexico,remainontracktobeinserviceinthefirstquarterof2017.Wehavecompletedtheprojectfinancingandexpecttocommenceconstructiononbothprojectsinthenextseveralweeks.
OntheEdinburghandOasispipelinesinSouthTexas,volumestoMexicocontinuetogrowasourdemandfeecontractexpandsfrom530millioncubicfeetperdayto930millioncubicfeetperday,effectiveMarch1.Boththe24-inchVolunteerpipelineandthe200-million-cubic-foot-per-dayEastTexascryoplant,alsoknownastheAlamoplant,cameonlineinJanuaryof2016.
Onthe2.1BcfperdayUticaOhioRiverexpansion,asareminder,PhaseIwasplacedinserviceinmid-OctoberlastyearandPhasesIIandIIIcameonlineattheendofDecember.Theprojectisnowfullyinservice,deliveringvolumesintobothREXandTETCOandweexpectvolumestocontinuetogrowthroughouttheyear.
AndontheRevolutionproject,thepipelineandplantaswellasthefractionationfacilityareexpectedtobeinserviceinthethirdquarterof2017.Asareminder,ourprojectprovidesshipperswithuniqueend-to-endsolution,withsignificantlyimprovednetbackeconomicscomparedtotheirotheralternatives.
Our200millioncubicfeetperdayOrlacryoprocessingplantintheDelawareBasinisexpectedtocomeonlineinAprilandbefullwithin30days.Wehaveadditional200millioncubicfootperdaycryoprocessingplant,thePantherplant,whichisinthePermianBasinthatisexpectedtocomeonlineinthefourthquarterofthisyear.
NowmovingontoCapEx,ETPinvestedover$1.2billionduringthefourthquarterinorganicgrowthprojects,withthemajorityallocatedtoourliquidstransportationandservices,midstream,andinterstatesegments.Forfullyear2015,ETPinvestedapproximately$5.6billioningrowthCapExprojects.
For2016,aswementionedinourdistributionpressrelease,wehaveidentifiedapproximately$750millionofCapExthatcouldbedeferredorcutfromouroriginalforecast.Asaresult,wenowexpecttospendapproximately$4.2billiononorganicgrowthcapitalfor2016.Thisisnetofanadditional$325millionthatisexpectedtobefinancedatthejointventurelevelwithnonrecoursedebt.
AmajorityoftheCapExreductionisrelatedtothemidstreamsegment,wherewehaveplacednewprocessingplantsandotherprojectsonhold.Inaddition,wehavedeferredsomeprojectsatLoneStaranddelayedandreducedcostintheinterstatesegment.WecontinuetoforeseesignificantEBITDAgrowthin2017fromthecompletionofourprojectbacklogandamajorityoftheseprojectsarebackedbylong-termfee-basedcontracts.
Duringthefourthquarter,wespent$142milliononmaintenancecapitalexpenditures,andforfullyear2015,wespent$394million.Asyoucansee,fourth-quartermaintenancecapitalwashigherthannormal.
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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Accordingly,for2016,weexpecttospendapproximately$345milliononmaintenancecapitalexpenditures.
Beforemovingontodiscussingourdistribution,let'stakeaquicklookatourliquiditypositionaswellasourfundingstrategyfor2016.WeendedthequarterwithadebttoEBITDAratioof4.5timesforourcreditfacility.AsofDecember31,2015,therewas$1.36billioninoutstandingborrowingunderthe$3.75billionfacility.Andweissuedapproximately$400millionofequityduringthefourthquarterof2015underourATMandDRIPprograms.
Takingalookatourcurrentfundingstrategyfor2016,withtheexpectedclosingofthepreviouslyannounceddropdownoftheremaininginterestinSunocoLLCandthelegacySunocoretailbusinesstoSunocoLPinMarch,theoutstandingbalanceunderETP'srevolverwillbeclosetozero.Asaresultofthistransaction,alongwiththe$750millionreductionin2016,growthcapitalfundingandotherpotentialassetsales,andtheprojectfinancings,wedonotexpecttoneedtoaccessthefixedincomemarketin2016ortoneedtoissueETPcommonunitsin2016.
Whilewedonotneedtheequitymarketstofundourgrowth,weexpecttoopportunisticallyutilizetheATMfromtimetotimeinordertomanageourleverage.Inaddition,ETErecentlyagreedtoextendthe$95millionannualmanagementfeepaidtoETPthrough2016.Collectively,theseactionsarefullyconsistentwithourgoalofmaintainingETP'sinvestment-graderating,whichweconsideratoppriority.
WehavealsokickedoffinitialdiscussionsregardingprojectfinancingoftheBakkenpipeline.ThismeasurewouldmateriallyreducethedirectspendingrequiredtofinancethisprojectandwouldsubstantiallyreduceETP'sandSXL's2016capitalfundingrequirements.
NowIwouldliketotouchonourrecentdistributionannouncement.InJanuary,weannouncedadistributionof$1.055percommonunitforthefourthquarteror$4.22percommonunitonanannualizedbasis.Thiswasflatcomparedtoourthird-quarterdistributionandwaspaidonFebruary16tounitholdersofrecordasofthecloseofbusinessonFebruary8.
Asitrelatestopotentialdistributionincreasesgoingforward,thisisatimewhencoverageandliquidityarevaluedmorebytheequitymarketsandratingagenciesthandistributiongrowth.Wewillcontinuetoevaluateourdistributiononaquarterlybasisandwillbeprudentasitrelatestobalancingcoverageandliquiditywithdistributiongrowth.
NowforabriefupdateonourmergerwithWilliams.AsaresultoftheFTC'ssecondrequestforadditionalinformation,weenteredintoatimingagreementwiththeFTConDecember14,underwhichwehaveagreednottoconsummatetheproposedacquisitionpriorto60daysaftersubstantialcompliancewiththesecondrequest.ETEandWilliamscontinuetoworkcooperativelywiththestaffoftheFTCasitconductsitsreviewoftheproposedacquisition.
Inaddition,onFebruary1,wereceivedcommentstoourS4ProxythatwepreviouslyfiledwiththeSEC.Weareintheprocessofworkingthroughthosecomments,someofwhichrelatetotheinformationthatwillbeincludedintheETEandWilliams10-KsandexpecttofileanamendmenttotheS4shortlyafterfilingourrespective10-Ks.
ThependingmergeralsoremainssubjecttotheapprovalofWilliamsstockholdersandothercustomaryclosingconditions.Asaresult,wenowexpectclosingtooccursometimeinthesecondquarter.
Asitrelatestotheintegrationplanning,werecentlyannouncedthatDonChappelhasacceptedtheroleofCEOofWPZpost-closingofthemerger.Inaddition,ourintegrationcommitteehasbeendiligentlyworkingthroughtheintegrationplanning.Weintendtoactivelyimplementasharedservicesmodelandcontinuetoexpectsubstantialsynergiesasaresultofthemerger.
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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Asareminder,wehaveacommitmentfora$6.05billionbridgeloaninplacewithasyndicateofbankstofundthecashportionofthemerger.Thisiseffectivelyatwo-yearloan.Wehavehadextensivediscussionswiththeratingagenciesandweareevaluatingseveralalternativefinancingplansinternally.Wewillprovidemoredetailsonthisattheappropriatetime.
Withthatupdate,wewillnotbetakingquestionsonthecalltodayrelatedtothemerger.Weappreciateyourcooperationinthisregard.
MovingonnowtoETE,IwillbeginwithETE'sfourth-quarterresults,followedbyaliquidityfinancingupdateandaLakeCharlesLNGupdate.Wewillthentakeyourquestions.
Turningtothefinancialresults,firstofall,wearepleasedwiththefourth-quarterresultsofSXL,Sunoco,andETP.Asareminder,effectiveJuly1,2015,ETEacquired100%ofthemembershipinterestofSunocoGPLLC,thegeneralpartnerofSunocoLP,andalloftheIDRsofSunocoLPfromETP.SoSunocostillappearsintheconsolidatedfinancialstatementsforETE.
ETE'scashflowscamefromthegeneralpartnerandIDRsandLPinterestsatETP,90%oftheeconomicsoftheGP,andtheIDRsfromSXLthroughtheClassHunits,throughtheownershipoftheLakeCharlesLNG,and100%oftheGPandIDRsofSunocoLP.Ourdistributablecashflowasadjustedforthefourthquartertotaled$343million,anincreaseof$100millioncomparedtothesameperiodlastyear.
DCFasadjustedperunitforthefourthquarterwas$0.32perunitoranincreaseof45%comparedtothefourthquarterof2014.DistributionsfromETPaccountedfor68%ofETE'stotalcashflowsinthelatestquarter.SXLcontributed17%,LakeCharlesLNGapproximately11%,andSunocoLPcontributed4%.
ETEannouncedlastmonthaquarterlydistributionof$0.285perunit.Thisequatesto$1.14perunitonanannualizedbasis.Ourdistributablecashflowcoveragewas1.15timesforthefourthquarter.ItwaspaidonFebruary19tounitholdersofrecordasofcloseofbusinessofFebruary8.
Let'slooknowatliquidityandfinancing.ETEcontinuestohaveahealthyliquidityposition.WeendedthequarterwithadebttoEBITDAratioof2.96timesforourcreditfacility.AsofDecember31,2015,therewere$860millioninoutstandingborrowingsunderthefacility.Therefore,attheendofthefourthquarterof2015,theoverallETEstand-alonedebtwas$6.33billionwithablendedinterestrateof4.8%andwithnopendingmaturitiesuntilalmost2019.
NowturningtoLakeCharleswhichtoremindeveryoneisowned60%byETEand40%byETP.Progresscontinuedtobemadeduringthefourthquarter.WereceivedourfinalFERCauthorizationinDecembertosite,construct,andoperatethefacility,andwereceivedourfinalapprovalfromtheUSArmyCorpsofEngineerslastFriday.
OnFebruary15,ShellcompleteditsacquisitionofBG.Andlastweek,weheldourkickoffmeetingfortheprojectfinancing,andpreliminaryresponsesfromlendershasbeenstrong.WeremainontargettoreachaffirmativeFIDontheprojectin2016,withtheconstructionexpectedtostartimmediatelythereafterandfirstLNGexportsanticipatedinearly2021.
Beforeopeningthecalluptoyourquestions,Iwouldjustliketosaythatourbusinesscontinuestodemonstrateresiliencyincommoditymarketsthathavebeenchallengingaswellasthebenefitsofourdiversifiedbusinessmodel.Ourprojectbacklogisbuiltonlong-termthird-partydemandfeesthatgiveusvisibilityintofutureEBITDAgrowth,particularlyin2017.Theseprojectsaretrackingonscheduleandonbudget.
ETP'sfinancingneedsfor2016areexpectedtobemetwithouttheneedtoaccesstheequityordebtmarkets,andourcounterpartiesarestrong,high-qualitycompanies,orhavesecurityforperformance
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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thatiswellstructuredtomitigaterisk.ETE'spriorityistosupportitscoreoperatingsubsidiariesanditwilltakethestepsnecessarytoensuretheymaintaintheirfinancialhealthandinvestment-graderatings.
Weremainveryfocusedonprojectexecution,costmanagement,andimprovingourbalancesheetstrengthbyloweringourleverageandincreasingcoverage.Theunderlyingfundamentalsofourbusinessarestrongandwebelievewewillbeinagreatpositionforgrowthwhenthecurrentmarketconditionsimprove.
Beforewebegintakingyourquestions,IjustwanttoreiteratethatwewillnotbetakingquestionsonthecalltodayrelatedtothependingmergerwithWilliamsorrelatedmatters.Thankyouonceagainforyourcooperation.
Withthat,Operator,thatconcludesourpreparedremarks.Pleaseopenthelineupforquestions.
QUESTIONS&ANSWERS
Operator :
(OperatorInstructions)
BrandonBlossman,TudorPickeringHolt.
BrandonBlossman (Analyst-TudorPickeringHolt):
Let'sstartonLakeCharles.HastherebeenanyconversationswithShellpost-close?Andwhatdoesthattimelinelooklikeorwhat'stheprocesstogettoFIDoverthecourseof2016?
Unidentif iedCompanyRepresentative :
There'sbeennodirectconversationswithShell,butBGmetwithShelllastweekandthoseconversationscontinue.ThisweekandthefeedbackfromourcounterpartsatBGsaidthemeetingswereveryfavorableandwe'vebeentoldtoproceedasplanned.
BrandonBlossman (Analyst-TudorPickeringHolt):
Great.Thatsoundsverypositive.Okay,let's--asfaraswecantrackthrough2016andinto2017,whatconceptuallyorphilosophically--howdoyouaddressthekindofintermittentuseoftheATMprogramforequityversuskindofdistributionthoughtsasyouconsiderkindofratingagencyactionandyourinvestment-gradecreditrating?
T omLong (CFO):
Youbet.Asyouknow,theATMhasalwaysbeenreallyagoodtool.Wehaveobviouslygonelighteronitaswe'vemovedintotheselowerprices.Butclearlywewanttoleaveitasanoptionoutthere.Andwithtryingtomanageonceagainourleverageratioandour--asfarasourcreditmetrics,allofourcreditmetrics.
Sothereasonwhywewanttoleavethatis--inplaceisnotbecauseofthefundingneedsthatwehave,butonceagainjustbecausewewanttojustmakesurethatwearestayingdownthemiddleofthefairway.
BrandonBlossman (Analyst-TudorPickeringHolt):
Okay.Fairenough.Andthenjustadetailedaccountingquestion.OnthebonusdepreciationaddtoDCFinthefourthquarter,whatperiodwasthatfor?
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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T omLong (CFO):
Thebonusdepreciationwasfor2015.
BrandonBlossman (Analyst-TudorPickeringHolt):
Fullyear2015?
T omLong (CFO):
Yes.Buttherewassomecarrybackinto2014and2013.
BrandonBlossman (Analyst-TudorPickeringHolt):
Thankyouverymuch.That'sallformeforrightnow.
Operator :
JeremyTonet,JPMorgan.
JeremyT onet (Analyst-JPMorgan):
Justwanttoturntothemidstreamsegment,ifwecould.Andwaswonderingifyoucouldprovideanymorethoughtsasfarashowthingsaretrendinginto2016.Andwesawadeclineinthequarter.DoyouthinkthingshavebaselinedandgrowthCapExcomingintoservicecankindofstemthat?Orhowdoyouthinkaboutthatthesedays?Andappreciatethere'salotofuncertaintywithproducerbudgetsatthispoint.
MackieMcCrea(President&COO):
Thanks,Jeremy.ThisisMackie.Aswelookatthechallengingtimeswe'reinandyoulookatourvolumes,theyareactuallyupifyoucomparethefourthquarterof2014to2015.CertainlysomeofthatisrelatedtoKingRanch,butevenwithoutKingRanch,asawhole,somedown,someup.Asawhole,ourvolumesareupacrosstheboard.InfactifyoutakeoutNorthTexas,theBarnettShale,ourvolumesareupsignificantly,notonlyonmidstream,butalsoonourintrastate.
Inadditiontothat,aswekindoftakeaforwardlookinto2016,onceagaininverychallengingtimes,thethingweconcentrateonthemostisvolumes.AsKelcyhasalwayssaid,wecan'tcontrolbasis.Wecan'tcontrolcommodityprices,butwecanbeaggressiveandmorecompetitiveonvolumes.Andweactuallyareseeingvolumegrowthin2016comparedtothefourthquarterof2015,ranginganywherefrom4%toashighas17%dependingonthebasin.
Sothethingsthatwecancontrol,wearepleasedwith,especiallyintheenvironmentwearein.Andwecan'tworryaboutthethingswedon'tcontrol.
JeremyT onet (Analyst-JPMorgan):
Gotyou.Fairenough.Andasfarasthemidstreamreductionsthere,wouldyoubeabletosharemorecoloronwhichplantswerebeingdeferred?AndwasRevolutionpartofthatCapExreduction?
MackieMcCrea(President&COO):
I'mnotsureaCapExreduction,butwe've--westillareontracktohaveRevolutioninbythethirdquarterof2017.Ithasbeenpushedbackalittlebittobeinlinewiththedownstreampipelines.
TheotherplantthatTomtalkedaboutearlierwasOrla.It'scomingonsoon.Weareverypleasedwiththatplant.It'sveryrareyoubringaplantonandit'sfullwithin30days.Pantherwillbeverysimilaratthe
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
©2014TheStreet,Inc.Al l R ightsReserved Page9of25
endofthisyear.Itwillrampupfairlyquickly.Anyotherplantsthatwehavecontemplated,wehaveputonholduntilwehaveaccretivecontractstosupportthem.
JeremyT onet (Analyst-JPMorgan):
Soundsgreat.Thanksforthat.AndjustasfarastheJVpotentialasfarasmanagingthebalancesheetandasfarasprojectfinancingatDakotaAccess,doyouneedagreementfromalloftheJVpartnerstheretodothat?AndareyoulookingforanyotherJVsongrowthprojectsthatyouhavetofurtherstrengthenyourbalancesheet?
T omLong (CFO):
Weare--firstoff,firstpart--Ithinkthelastpartofyourquestionthere--yes,wedoneedtheconsentoftheJVpartners,which,asyouknow,that'sP66isour25%partneronthatone.Whatwe'relookingatthereiswe'renotlookingatnecessarilypushingtheleverageupreallyhighonthat.Wearereallyjustkindoflookingatkindofa50-50financingonthatproject.I'msorry.ThesecondpartofyourquestionwasaroundtheJV?
JeremyT onet (Analyst-JPMorgan):
Well,for--asfarasthistypeofafinancing,bringinginJVpartnersforanyotherprojects--isthatapossibilityatthistime?
T omLong (CFO):
Yes,Iwouldsaythatthatisapossibility.We'reclearlyfocusedontheprojectfinancingsideofitiswhatwearefocusedonrightnow.Butyes,thatisapossibility.
JeremyT onet (Analyst-JPMorgan):
Gotyou.Thankyou.Andthenjustonelastonefromme.Intheliquidsegment,itlooksliketherewasaninventoryliquidation.Couldyoujustprovidealittlebitmorecoloronwhatwashappeningthere?
T omLong (CFO):
Areyoutalkingaboutkindofthegoodwillandtheimpairment?Isthatwhatyouarereferringto?
JeremyT onet (Analyst-JPMorgan):
Inothermargin?Inothermargin,Ithinktherewasalittlebitofanincreasethisquarter,soIwasjustwonderingaboutthat.
T omLong (CFO):
Listen,I'llhavetogetbacktoyouonthatothermarketing.Iapologize.Ithoughtyouwereaskingaquestion.Letmegetbacktoyouonthatone.
JeremyT onet (Analyst-JPMorgan):
Great,appreciateit.Thankyou.
Operator :
MichaelBlum,WellsFargo.
MichaelBlum(Analyst-WellsFargo):
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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Canyougobackto,IguessMackie,someofyourcommentsyouwerejustmakingaboutyouroutlookforvolume?Iknowatyourinvestorday,yousaidthatyouweren'treallyseeingvolumedeclinesandyouactuallyexpectedsomeincreases.
Soyoujustthrewoutarange:4%to17%growth.Canyoujustkindofwalkusthroughbybasinkindofwhatyou'reseeingthereandwhat'sdrivingvolumegrowth?
MackieMcCrea(President&COO):
Sure,youbet.Onethingweareverypleasedwithisalotofourdollars,alotofourcapitalhasbeenfocusedintwoofthebetterbasinsinthecountry,thatbeingEagleFordandprobablythebestbasinintheworldwithPermianDelaware.Sowecertainlyare--seesignificantgrowththere.AsImentionedaminuteago,we'llhave200,000adayflowingthroughourOrlafacilitybyMayorso.Sothat'sanincreasealonejustatthatonefacility.
Also,we'veseensignificantgrowthupintheNortheastonourOhioRiversystem.Itcameonlastyear,startedrampinguptowardtheendoftheyear,anditsexceedingourexpectationsinthefirstquarter.Andweprojectthatthatwillcontinuethroughout2016.Onceagain,evenintheseverydifficultenvironments.
AsImentionedearlier,BarnettShale--BarnettShale,itisonaslowdecline.Thereservesarethere.Ourpipestherearewaitingwheneverthepricesmakessense,buteveryotherareaforthemostpart--Revelisgrowingthevolumesthere.SouthTexas,we'vehadsomedowntimeonsomeplantsthat,asTomalludedto,wehavethoseupandrunning.Sowe'llseevolumesatleasthold,ifnotgainalittlebitintheEagleFord.
Soallinall,asImentionedearlier,otherthanafewexceptions,weareprettyexcitedorpleasedwithwhereweseevolumegrowththisyearcomparedtoourcompetitorsandinthisverydifficultenvironment.
MichaelBlum(Analyst-WellsFargo):
Okay,great.AndthenasI'msureyouknow,ChesapeakemadesomecommentsontheircallaboutsomerecontractingonTiger,itlookslike.Butitseemslikethereissomesortofquidproquoandyou'llbeseeingabenefitsomewhereinyourgatheringsystem.Iwaswonderingifyoucouldjustprovidealittlemoredetailsandmaybeifyoucouldquantifyforushowthattradeoccurred.
MackieMcCrea(President&COO):
Youbet.Youknow,it'sfunny.Whenallthisstartedhappening,KelcyandItalked.Thereisalwayssomelemonadewiththelemons,andthat'swhatwetrytodo.We'vebuiltourrelationshipwithcreatingorworkingwithproducersontheirneeds.Andclearly,there'salotofpainontheE&Pside--onallthesides.
AndwehaveinthatsituationbeenabletohelpoutChesapeakeintheshorttermbyshiftingdemandcharges,wheresomeoftheirbusinessismorecommoditynowwithusintheshortterm,andbyextendingcontractsthatwereendingoverthenextthreetofiveyearsformanyyearsout.Andthenalsoaddingsignificantbusinessinthefuture.
SoweareverypleasedwithChesapeake.Weenjoy--haveenjoyedworkingwiththem.Wedobelievetheywillmakeitthroughthesetoughtimesandwelookforwardtobeingkindoftheirpartnerofchoiceiswhatwehopeastheycontinuetodrilloutsomeofthebetterrockthattheyhavecontroloforhaveleasesonthroughoutthecountry.
MichaelBlum(Analyst-WellsFargo):
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Okay.Soweshouldseethatbenefitshowupinlateryearsinthemidstreamsegment?Justtryingtofigureoutwheretheoffsetis.
MackieMcCrea(President&COO):
Yes.You'llseemoreofit--Ican'tgetintoalotofdetailshere,butcertainlyyou'llseemoreofitmoreinthemidstreamandeveninsomedifferentbasins.
MichaelBlum(Analyst-WellsFargo):
Okay.AndthenjustonRover,canyoujustreminduskindofwhatpercentofthatpipeiscurrentlycontracted?Andalsohowmuchcapitalhasbeenspenttodate?
MackieMcCrea(President&COO):
I'llletTomspeaktothecapitalonthemath.It'slike97%,Ibelieve.97%,98%.Wehave150,000leftor3.25%,whateverthemathisthere.Ithinkit'sabout97%or98%ondemandcharge.AndontheCapExthat'sbeenspent?
T omLong (CFO):
OntheCapEx,Michael,I'llgetbackwithyou.Ibelieveweareprobablyatabout$2billionorso.ButItellyouwhat--I'llgetbackwithyouonthat,seewhat'stheabsolutelatestonthat.
MichaelBlum(Analyst-WellsFargo):
Okay,great.Andmylastquestionisreally--Idon'tknowifyoucanorwillcomment,butobviouslythere'sbeenalotofspeculationwiththedepartureofJamie.AndIjustwantedtoknowifthere'sanythingyoucouldshareintermsofthecircumstanceswiththatwholesituation?Thanks.
KelcyWarren (Chairman&CEO):
Michael,thisisKelcy.IthinktoberespectfultoJamie,I'llkeepthistoaminimum.Andwe'vetalkedtomany,manythatareonthiscall.Jamieisaverytalentedguy,butthedecisionwasmadebymethatweneededtomakeamoveandwedid.AndTomLongisnowourCFO.
MichaelBlum(Analyst-WellsFargo):
Great.Thankyou.
Operator :
DarrenHorowitz,RaymondJames.
DarrenHorowitz (Analyst-RaymondJames):
Tom,ifIcould,Ijusthaveonequestion.Iwanttogobacktoyourdiscussionaroundthebalancesheet.Andobviouslywhatthemarketistellingusistheywantmoretransparency,notjustintothetiming,butthemagnitudeofenhancingliquidityandreducingleverage.
You'vetalkedaboutyouroptions,likemonetizingpartoftheBakkenpipe,maybedeferringmoreCapEx.Obviously,that$2.2billioninproceedsfromthesaleofSunocointeresthelps.ButthereareotheroptionsandI'mwonderinghowyouguysrankthoseintermsofpriorityorintermsofwhatcouldhavethebiggestbenefittothebalancesheet.
IfyouthinkaboutSUN,it'sobviouslycountercyclical.Historically,you'vesaidnotacorebusiness.Andit
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helpsbothETEandETPwithregardtotheGPandtheLPinterest.AndI'mthinkingaboutifyoucouldjustprovidesomecolorhowyouviewthosemonetizationoptions,what'schangedinthemarketplace,andifyoucouldprovideanytransparencyonthetimingandyourforecastforwhereyouwantleveragetobeexitingthisyear,especiallyifthisfundamentalorcostofcapitalchallengecontinuesinto2017.
T omLong (CFO):
Okay.No,youbet.Letmekindofstartwiththelastpart.Ourtargetisstilltomaintaina4.5timesleverageratio,soobviouslyatyearend.Andthisisperthecreditfacility.That'showwecontinuetomanagethataswelookout.Andwestillthinkthat'saverygoodtarget,andofcourse,asyouknow,wearerightinthemiddleofalotofpre-funding.
Soweknewthatthatwasgoingtoputsomepressureontheleverage,butitwasalsogoingtoputsomepressureonthecoverage.Youknow,therealcomfortingthingtousistheseprojectsareallcomingonlatethisyear,earlynextyear.Sothat'swhatwe'vebeenworkingtowardingettingkindofthelastportionsofthisfunded.
Backtotheprioritization,IguessIwouldsaywedohavethoseoptions.It'sreallykindofdifficulttoprioritizetheminthesensethatthemarketissodynamic.Youknow,asyoulookatvariousoptions,differentdays,differentthingsmovearoundonyou.Andit's--we'regoingtoprobablystayconsistentwithwhatwe'vealwaysdoneinthepast,andthatisto--aswegetandmakeacertaindecisionastowhat'sthebestfortheCompany,fromonceagainallofthevariousmetrics--coverage,creditmetrics,etc.--wewillmakethosedecisionsatthetimeandwewillannouncethematthetime.
Butifwetrytogetoutandpreannounceonthese,youcanappreciatewhatthatreallydoes.Sojustkindofstayingconsistentwiththewaywe'vealwaysfundedourprojectsinthepast,whereweannouncethematthetimethatwegetwhatevernegotiated,iswhatwearegoingtocontinuetogo--aplanthatwearegoingtostickwith.
MackieMcCrea(President&COO):
Darren,Iwouldaddthat--asyouandIhavespokenrecently,CTE'sjobtosupportthepartnershipsthatoperateunderneathit.AndsotherewillbecontinuedsupporttotheextentIDRholidaysforgrowthareappropriatethattheywillbegiven.AndothermeansthatETEcansupportETE'sgrowthandgetETEintolate2017,whereETEisprettyremarkablegrowthatthat--ETPhasprettyremarkablegrowthatthattime.Sojustnote,justrestassuredthatETEwilldowhatitneedstodo.
DarrenHorowitz (Analyst-RaymondJames):
Thankyou.
Operator :
TedDurbin,GoldmanSachs.
T edDurbin (Analyst-GoldmanSachs):
Thanks.Maybejusttakingthatonemorelevel.IsadistributioncutonthetableatallforeitherETPorETE,relativetotheleveragemetricsyouarelookingat?It'sachoicethatsomeotherpartnershipshavemade.MaybeyoucanputthatinthecontextofifandwhentheWilliamsdealgoesthrough,howyouthinkaboutthat.AndthenalsobalancingbetweenETEandETPandwhereyoumightmakethatdecision.
KelcyWarren (Chairman&CEO):
I'lltakethefirstpart.ThereisnocontemplateddistributioncutsatETPwhatsoever.We'venotlookedat
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anyscenariowherethatwouldbeappropriateornecessary.It'sjustnot--wejustdon'tseethat.Youknow,likewesaidbefore,we'renotgoingtotalkabouttheWilliamstransaction.
Butyouknow,ETEisaveryhealthy.Our--distributioncutsarenotrequiredatETE.Andwetakeourobligationtoourunitholdersvery,veryseriously.Wehaveadutytomaintainourdistributions.Buteverybodyknowsobviouslythatthat'sanoption.TotheextentthatweneedaccesstodistributionstomaintainourfinancialhealthatETE,wouldwereachintothatbucket?Itwouldbethelastonethatwewouldreachto,butit'scertainlypossible.
T edDurbin (Analyst-GoldmanSachs):
Okay,Iappreciatethat,Kelcy.CanwejusttalkabouttheBakkenpipeline?Anditsoundslikeyouarestillconfidentinhittingthatlate2016in-servicedate.Itfeelslikeit'sastretchfrommyseat,atleastgiventhatyouhaven'tstartedconstructionasfarasIcantell.What'sleftthatneedstogetdoneonthepermittingsidetohitthatin-servicetime?
MackieMcCrea(President&COO):
Ted,thisisMackieagain.Youknow,I'vegottosay,likewedoformostofourteams,wehaveoneofthebestteamsinthecountrybuildingthatpipeline,withJoeyMahmoudontheengineeringsideandLeeonthecommercialside.
Andthatprojecthasgoneexceptionallywellinavery,verydifficultenvironmentthroughoutthecountry.Westillareholdingtotheschedule.WehaveeverypermitotherthanapermitinIowa--materialpermitsandweareoptimisticandhopetohavethatpermitinMarch.Andassoonaswehavethatpermit,wewillbeginconstruction.Butrightnow,wedoexpecttobeflowingoilbyJanuary1of2017andit'sveryrealisticthatthat'sgoingtohappenatthispoint.
T edDurbin (Analyst-GoldmanSachs):
That'sgreat.Iappreciateit,Mackie.Andthenlastoneforme,justontheLoneStarExpress.Ithinkyouhadspokenaboutthatasbeingkindofa6Xmultipleoninvestedcapital.Areyoustillcomfortablewiththat,giventheenvironment?
MackieMcCrea(President&COO):
Yes,weare.
T edDurbin (Analyst-GoldmanSachs):
I'llleaveitatthat.Thankyou.
Operator :
KristinaKazarian,DeutscheBank.
Krist inaKazarian (Analyst-DeutscheBank):
Nottobeatadeadhorsehere,butjustaclarificationquestiononETP'sIGrating.Sothe--Kelcy,thethoughtprocessisthatifETPhadtheriskofbeingdowngradedfromanothersiblingentityoraparententityandreadthrough,thattheparentwouldactuallybackuptheratingandhelpitouttoprotectthatbalancesheet.Isthatfair?
KelcyWarren (Chairman&CEO):
Thatisfair.
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Krist inaKazarian (Analyst-DeutscheBank):
Okay,perfect.AndthenIknowyoutalkedaboutthisinananswertoadifferentquestion,butoverthewholecomplex,maybecanyoutouchaboutcounterpartyriskandthepotentialormagnitudeforcontractresetting,kindofliketheTigerline,whichweheardaboutyesterday?
T omLong (CFO):
I'lltakethefirstpartofthat.Youknow,withtheslidethatweusedinanalystday,whereweshowedthat86%wasbasicallyBBorhigheronourcreditratings,thathasreallyremainedveryconsistentinwherewearefromthatstandpoint.
Sowecontinuetostayobviouslyveryfocusedonthatandwelikethepositionsthatwehavewithourcounterpartycreditexposures.ButIwouldn't--we'vereallynotseenmuchmovementinthatandweknowthere'sbeenalotofchangeswiththeagencies.Butit'snotreallyimpactedasfarasourtopcreditexposuresatthispoint.
Krist inaKazarian (Analyst-DeutscheBank):
Andonthesecondpart,maybeaboutpotentialcontractresetting,likethroughoutallof2016acrossyourfleet?
T omLong (CFO):
Itellyouwhat,Mackie--goahead.I'msorry--secondpart,onemoretime.
Krist inaKazarian (Analyst-DeutscheBank):
ThesecondpartishowdoIthinkaboutcontractresettingpotentialsacrossthewholecomplexforcalendaryear2016?
MackieMcCrea(President&COO):
Midstream,intrastate,interstate,thewholecomplex?
T omLong (CFO):
Yes.
MackieMcCrea(President&COO):
Well,onourmidstream,mostofthecontractsinourmidstreamarelongtermnow.Anyplantthatwe'vebuiltrecentlyisunderatleast10or15yearfracs.OnallofourNGLbusiness,therearelong-termcontracts.Mostofourfraccontractsareatleast10yearsandprobablyamajorityofthemare15years.
Ontheinterstates,itvariesdependingontheinterstate.Theolderinterstates,theinterestingphenomenathereisthatasthecontractsrolloff,weactuallyareincreasingrates.Certainlynotchargingtariffonsomeofourpipelines,butcertainlyathigherratesthanwheretheyhavebeen.Youknow,forexample,we'vetakenoutourTrunklinepipeline,andontheexistingspacethatwestillhaveonTrunklinehasprovidedforhigherratesbecauseofdemandintheNortheastthiswinter.
Soallinall,wedon'thaveawholelotofexposure.AndasImentionedearlierinourdiscussionswithChesapeake,wearehavingsimilardiscussionswithothercompaniesthathavesimilartypepain.Andinthose,wearelookingatextendingcontractsthatareendinginthenextyearortwooutforatleast10or12moreyears.Soweareprettypleasedwithwherewesitacrossthecomplexofallofoursegmentsonthetimingofourcontracts.
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Andourgoalisthroughthistoughperiodisextendingeverythingoutbecauseweprovidethatopportunitybyhelpingthem--someofthesecompanieswiththedifficultiestheyaregoingthroughtoday.
Krist inaKazarian (Analyst-DeutscheBank):
Perfect.Thanks,guys.Appreciatetheclarification.
Operator :
RobertBalsamo,UBS.
RobertBalsamo (Analyst-UBS):
Mostofmyquestionshavebeenanswered.Justaquickone.Ontheunconsolidatedaffiliates,itlookslikePESwasdownforthequarterduetocrackspreads,whichmakesense.Butthedistributionsseemtobestronginthesegment,unconsolidatedaffiliates.
AndIjustwonderifyoucouldtalkalittlebitaboutthat,ifthedistributioniskindofbeingmaintained.Looksliketheyarestillgrowing.Kindofhowtothinkaboutcashflowsanddistributionscomingfromthatsegment--PESandthenunconsolidatedaffiliatesoverall.
T omLong (CFO):
Yes,youbet.Youareright.Wedidhavesomepressurebecauseofthecrackspreadsthereinthatrefinery.Fromadistributionstandpoint,we'vealwaysbeenverymuchalignedwithourpartnerthere--bothofuswantingtomaximizedistributions.Andyouknow,kindoflikeIsaidinmypreparedremarks,wearegoingtoobviouslymaintainitandbereadytogowithanIPOatanytime.
ButIthinkdirectanswertoyourquestion,wewillalwaystrytomaximizedistributionsgoingforward.Butthatisgoingtobekindofupanddownwithwherethemarket--withwherecrackspreadsare.
RobertBalsamo (Analyst-UBS):
Okay,thankyou.That'sall.
Operator :
HelenRyoo,Barclays.
HelenRyoo (Analyst-BarclaysCapital):
Justcoupleofquickitems.Whenyousay--whenyouplantodothefullprojectfinancing,doyouneedFERCapprovaltolaunchit?Andalso,ifyouweretoget,let'ssay,50%projectfinanced,wouldthatreduceyour2016CapExby,let'ssay,about$1billion?
T omLong (CFO):
Yes,tothelastpartofyourquestion.Youarerightonthat.That's2016isrightat$1billioniswhatitwouldreduceitby.AsfarastheFERCapproval,no,wedonotneedFERCapprovaltogetprojectfinancingonthatpipe.
HelenRyoo (Analyst-BarclaysCapital):
Okay.Sothisissomethingyoucouldlaunchanytime,basically?
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T omLong (CFO):
Yes,yes.We'veactuallyalreadystartedthedialogueonit.
HelenRyoo (Analyst-BarclaysCapital):
Okay,gotit.Andthenhowmuchofyourdapplespendingwasalreadyinyour2015CapEx?Isee$2billionofliquidCapExand,youknow,areyouabletoquantifyhowmuchofdapplehasalreadybeenspent?
T omLong (CFO):
Asfarasdapple,Ithinkwearerightatabout$1.7billion,$1.8billiononhowmuchhasbeenspenttodate.
HelenRyoo (Analyst-BarclaysCapital):
IsthatnettoETP?
T omLong (CFO):
No.Thatwouldbethe[8.8billion]--yes,thefullamount.
HelenRyoo (Analyst-BarclaysCapital):
Gotit,gotit,great.AndthenapologiesifImissedthis,butwhatdrovetheincreaseinmidstreamOpExinthequarter?Itwasupquitesteeplyand--.
T omLong (CFO):
Yes,whatyousawduringthefourthquarter,ofcourse,wasseveralplantsstartingupwhereyoustartedseeingsomeadditionalexpenses.Youprobablysawnearlyadditional$25million,$26millionworththatoccurredduringthequarter.
Iwouldsay,Helen,though,itisfairlynormaltokindofseeinthefourthquarter.Alotoftimesasyougetintoyearend,youwillseetheexpensescomeupsome.IguesswhatI'dliketosayisasyougointo2016andreallylookatthe,let'ssay,theearlyquarters,Iwouldsaythatthatnumberprobablypoppedupbyabouta$25millionnumberthatwewouldexpectnottonecessarilyseeaswerollinto2016.
HelenRyoo (Analyst-BarclaysCapital):
Gotit.AndthenyourcommentsonPES,youmentionedthattheIPOisdelayed,butthatthisisanear-termmonetizationoption.Sowhenyouthinkaboutacoupleof,Iguessassetsyoucouldsell,andIassumethatincludesLakeCharles,doyouseethisassomethingmore--higherintherankintermsofprobability?Ormaybeyoucouldmorebroadlytalkaboutcertainassetsthatyoucouldselltohelpthebalancesheet.
T omLong (CFO):
Helen,youcanprobably,likeIsay,appreciateyouknowtalkingtoomuchspecificsbeforeyouactuallyhavea--youhaveaplanorhaveadealinplaceisalwaysdifficult.Inotherwords,usuallyyouwouldannouncethoseatthetimethatyouwouldactuallygoout.
ButIthinkwhenyoureallylook,clearlythisisoneyoucouldlookat--our33%ownershipinthat.ButIthinkwestillfeellikethatuntilyoureallygetittokindoftoanIPO,that'sprobablywhereyouaregoingtogetthehighestvalue.Soit'snotonethat's--let'sjustcallitripefordoingthat.
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AndLNGwastheotheroneyoubroughtup.Clearlythat'sonethat--thatisanoptionoutthere,butyouheardtheupdatetoday.Weareveryexcitedatwherethatisandmovingforward.Butlikewisedon'tnecessarilyseethatasbeingsomethingyouwoulddotoday.
Andthen,youknow,Ithinktherewasother--evenacommentmadeearlieraboutoptionsaroundifanyoftheJVsyouwanted,tobringinanyotherpartners,etc.Youcouldobviouslydothat.ButIwilljustreiterateoncemorethatIthinkfromafundingstandpointontheprojectswiththe$4.2billion,whatwe'veaccomplishedonthatfront,wefeellikewe'vegotalotofleewayhereaswelookoutthrough2016.
HelenRyoo (Analyst-BarclaysCapital):
Okay.AndthenmylastoneisjustonSUN,Iguessdealclosingdateseemslikeit'sgotpushedoutamonth.What'scausingthat?Andanyother--anyriskoffurtherdelaysthere?
T omLong (CFO):
No.Andlisten--Helen,reallythatoneisreallyprettymuchonschedulewithwherewe--itkindofanticipated.Rememberthatwefileour10-Ks--we'llprobablygetthemfiledbyatleastMonday.Andyoureallycouldnotfinishupthecarveoutfinancialstoclosethistransactionuntilafterthose10-Kswerefiled.
Sojustkeepinmind,that'sprobablya--whenwesayMarch,Iwouldliketotellyouthat'sprobablyaveryearlyMarch,meaningpossiblyasearlyasnextweek,even--bytheendoftheweekorso.Butweareworkingthroughthosefinancialsandthatisreallythecomponent.
Nothingisgoingtochangeasfarastheeffectivedateofthetransaction.It'sstillgoingtobeJanuary1of2016.SowhetherwedoitthefirstweekorthesecondweekofMarch,buttheonly--absolutelytheonlyholdupwasgettingthe10-Ksfiledandthengettingthecarveoutfinancials.
HelenRyoo (Analyst-BarclaysCapital):
Understood.Thankyouverymuch.
Operator :
JohnEdwards,CreditSuisse.
JohnEdwards (Analyst-CreditSuisse):
Justacouplefollow-upsonthecounterpartyriskside.Justoutofthe--youindicatedIthinkitwas14%--86%isBBorhigher.Sooutoftheremaining14%,ifthoseBBorlowerwenttobankruptcy,Iamjustcurioushowmanyofthoserateswereperhapsabovemarket.Orhowyouwouldquantify,say,therevenuehitifthosecontractshadtoberenegotiated,likeinabankruptcysituation,youknow,somesortofrevenuequantificationwecouldlookat.
MackieMcCrea(President&COO):
ThisisMackie.AndIwon'tgothroughspecificrisksorproducersinareas,butonethingthat'sveryhelpfuliswherealotofthisriskis,it'sonpartsofourgatheringsystemswhereit'sreallyhardtocompete.Certainly,inabankruptcy,theremaybesomerenegotiation,butwedon'tseeinalotofthesesituationsalotofriskbecauseourabilitytoeitherworkitoutwiththemorbecausetheremaynotbealotofoptionsoutthere.Andthepricethatwearemovingitforisthemarketprice.
Sonottalkingaboutanyspecificproducer.Wecanreducethatexposuresignificantlyjustbecauseof
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howtheyaresituatedinoursystem.
T omLong (CFO):
AndJohn,whatI'dliketogoaheadandjustaddtothatfromtheabsolutekindofpercentage,ifyouwill--whenyougetdowntothatgroup,Imean,theexposure--andIknowwetalkedsomeabouttheChesapeake,butasfarasthecounterpartiesandwherethosepercentageslie,theyarereallysmall.It'sspreadoutoveralotofcounterpartiesandit's--thenumberiswelllessthan1%onanyonecustomer.
JohnEdwards (Analyst-CreditSuisse):
Okay,that'shelpful.Andthenjustfollowingup,Tom,onthebalancesheet,youindicatedyouaretargeting4.5timesexitingthisyear.I'mjustcuriouskindofyourlonger-termleveragetarget,whatyou'rethinkingabout.
T omLong (CFO):
Yes.Andonceagain,atETP,wedofeellikethatthe4.5timesisagoodplacetobe.Rememberthatthecreditfacilitycalculation,thewaywedothat,doesallowfortheinclusionofthematerialprojectadjustments,ifyouwill.Iknowwe'vetalkedaboutbefore.
Andsothat'showwegettothenumber.Inotherwords,thesearethecalculationsthatwewillbesendingouttothebanksatthis4.5times.Buttherealbeautyofthat:itdoesshowtheseprojectsastheycomeon,wheretheeconomicsare.AnditdoesgiveyoualineofsightofwherebothGAAPandNPAareheadedtobebasicallythesamenumberatthe4.5.
Soonceagain,aswegothrough2016andcompletealotofthisfunding,youknow,youaregoingtoseethatthat4.5,bothonaGAAPbasisaswellasa--withthematerialprojectadjustments,thatgapnarrowssignificantly.
JohnEdwards (Analyst-CreditSuisse):
Okay,that'shelpful.AndthenIguess--Iknowweallhavetojumptothenextcall,butjustmaybeyoucouldgivealittlebitofcolorontheimpairmentlosses.Imean,Ithinktherewasthe$339millionitemthere.
T omLong (CFO):
Yes,youbet.Itreallyisallaroundthecommodityprices,ifyouwill.Solet'sstartwiththeTranswesternpiecefirst.Thenumberwas$99million.Itreallywasaboutkindoflookingoutatwherethecommoditypriceswereonthat.Sothatwasthegoodwillimpairment.
Therestwasreallyallintherefineryservices.Inotherwords,intheliquidssegment.Andsamething:itrelatedtoactuallythespreadthatyouseeinthosecontractswehadbetweentheoff-gasprojectswehave.Andweactuallytookoneofthoseplantsthatcompletelyoutofservice.Sothatwasit.ItwastherefineryservicesandthentheTranswestern.Sothat'swhatmakesupthe$339million.
JohnEdwards (Analyst-CreditSuisse):
Okay,thanks.I'llfollow-upwiththerestofmyquestions.Butthankyouforthat.
Operator :
SelmanAkyol,Stifel.
SelmanAkyol(Analyst-StifelNicolaus):
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Justacouplequickones.Mackie,goingbacktoyourearliercomments,youmentionedtherewassomedowntimeonplantsinthemidstreamsegment.Iwaswonderingisthereanywaytoquantifytheimpactonthat?
MackieMcCrea(President&COO):
Iwouldn't--itwouldtakeawhiletogothroughkindofeveryspecificbecausewehaveissuesonseveralplants.Butforexample,inSouthTexas,we'vehadissuesonaplantthatmovesabout130,000aday.That'sbeendownoffandonandwe'rehopefullytotheendofthat,wherethatrunsreliably.
AndthensomeofourplantsoutinWestTexas,wecontinuetokindofworkthroughissues,butweareworkingthroughthose.Thathasalottodowithwhyweareseeingourvolumesincreaseonourprojectionsin2016aswekindoflineallthoseissuesout.
SelmanAkyol(Analyst-StifelNicolaus):
Igotyou.Andthenjustonemore.Iguessatthetimeof--whenyouguysacquiredRegency,youhadforecastedsomeprettygoodsynergies.AndI'mwondering:areyouseeinganyofthose?Aretheyyettocome?Isitjustbeingchewedupinthecommodityenvironment?Anycommentaryaroundthat?
MackieMcCrea(President&COO):
No,weareseeingthemacrossthecountry.IfyoulookatWestTexas,we'vetalkedaboutOrla.Youknow,EnergyTransferisbuildingOrla,puttinginplace,tyingittotheRegencysystem.TheDelawarebasin,asImentionedearlier,ifyoutalkedwithsomeofthelargerproducersinthecountry,theybelievethat'ssomeofthebestrockintheworld.
Soaswekindofexpandoutourbusiness,theRegencyassetsandthebroadexpansionofallthosegatheringsystemsandalltheirplants,givesustheabilitytoprovideserviceswhilewearebuildingnewplants.SothesynergiesoutinthePermianBasininWestTexashavebeenextensive.
UpintheNortheast,ofcoursewithOhioRiver,weareseeingalotofvolumegrowththere.OnceRoverisupandtransportinggas,thatwillbeoneofthemainfeederstothatpipelineoraverysignificantsupplysource.AndthenwealsohavesomesynergyinEastTexasthatwearebenefitingfrom.Soyes,it'sbeenvery--areasofthecountrywe'vehadsignificantsynergiesthathavehelpedoutalot.
SelmanAkyol(Analyst-StifelNicolaus):
Allright.Thankyou.
Operator :
ChrisSighinolfi,Jefferies.
CoreyGoldman (Analyst-Jefferies):
ThisisCoreyfillinginforChris.Justrealquick,Tom,justtofollow-uponthelastquestion.Ithinkagain,youhadmentionedsomeplantoutagesandsomeNortheastvolumeshut-ins.CanyouquantifytheEBITDAimpacttherethatyousawin4Q?
T omLong (CFO):
Yes,thatimpactwasprobably$6millionto$7million.
CoreyGoldman (Analyst-Jefferies):
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
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Gotit,thanks.Andthenlastquestion.IthinkyouhadmentionedjustRevolutionwaspushedonequarterinto3Q.Buteffectively,whatwastheremainingcauseforthe$500millionindecrease.YoumentionedCapEx.Whichprojectsspecificallyarebeingdeferredorshiftedthere?
T omLong (CFO):
Letmegiveyoumoreofahighlevelversusmaybetalkingaboutthespecificprojects.Justtogiveyouasplitonthat$750million,Iwouldsayabout25%ofthatwasactualcuts.Theother75%ofitisreallymoredeferral,andyou'llseethatspendkindofoverthatkindofoccurin--over2017,maybealittlebitmoreofitinthefirsthalfof2017.
Youknow,Ithink--andMackietouchedonthis.ButIthinkyouhaveofcoursethegatheringsystemdowninSouthTexas.ButyoualsohadaWestTexasplantlikewisethat--andthat's--likeIsay,therestofitisreallymorearoundjustsomeofthedeferralontheprojectsthatarealreadythere.
CoreyGoldman (Analyst-Jefferies):
ButnoothertiminghaschangedbesidesRevolution?
MackieMcCrea(President&COO):
Noothertiminghaschanged.Well,Roveratonetime--gosh,IthinkattheanalystmeetingwewereoptimisticthatwewouldbeinbyAprilorMay.WherewestandwithFERC,wethoughtwewouldhavetheabilitytokindofpushtheJuly29dateupalittlebit.It'sclearthatthat'sveryunlikely,soweareplanningaccordinglyandsowehavemovedthatdateouttoJune.WeareconfidentthatwewillbeflowingmostofthepipelineinJuneandthencompleteitbyNovember.
CoreyGoldman (Analyst-Jefferies):
Okay,great.Andsamethingonintrastate.Whatwasthereasonforthe$135millionshiftinCapExthere?
T omLong (CFO):
I'msorry,yousaidontheintrastate.
CoreyGoldman (Analyst-Jefferies):
Yes,IthinkyoureiteratedTrans-Pecosisstillin1Q.Sojustwonderingnowwhatthemixshiftwasthere.
T omLong (CFO):
Yes.Andthatwasonthe--thatwasontheMexicoprojects.Anditreallydoesrelatetotheprojectfinancing.Becausewhatyouhaveisthelasttimewegavethenumber,wereallydidn'thavethatprojectfinancinginplace.Sowesincehavelockedthatupatverygoodratesandverylongterm.Butthat'swhatreallydrovethatonedownfromtheintrastate.
CoreyGoldman (Analyst-Jefferies):
Gotit.Thanksguys.
Operator :
EricMcCarthy,Citadel.
EricMcCarthy(Analyst-CitadelSecuritiesLLC):
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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IwashopingyoucouldelaboratealittlebitfurtherontheChesapeakecontracts.Chesapeakedisclosed$50millioninsavingsinexchangeforsomeGMPcontracts.Whatbasindoesthatapplytoandwhat'sthe--doesitmakeupforthe$50millioninfull?Andwhat'stherampdownaroundthat?
MackieMcCrea(President&COO):
ThisisMackieagain.AsImentionedearlier,wecan'treallygetintothedetailsofthat.Ithinkifyoulookattheircommentsmoreclosely,theyalsoconsummatedsomesimilartypeamendmentswithothercompanies.Sothat$50millionisn'tattributedtojustus,butit'sthroughoutseveralofthebasinsthattheyhavesignificantpositionsin.Someofwhichwedon'thavealotofbusinesswiththemtodayandsomeofwhichwedohavealotofbusinesswiththem.So--butgettingintoanymoredetailsthanthatwithourconfidentialityagreementwiththem,wecan'tdothat.
EricMcCarthy(Analyst-CitadelSecuritiesLLC):
Okay.That'saboutit.Thankyou.
Operator :
JohnKiani,TeilingerCapital.
JohnKiani(Analyst-TeilingerCapital):
Goodmorning,Tom.Justafewquestions,please.First,the$230milliontaxbenefitthatcontributedtoDCFthisquarter,tryingtounderstand--thecoveragelookedlikeitwasinthe0.8timesrangewithoutthat.Shouldweexpecttaxbenefitslikethisgoingforward?Howshouldwethinkaboutcoveragewithandwithoutthat,please?
T omLong (CFO):
Verygoodquestion,John.AndIguesswhatIwouldtellyouisthatifyoureallytakethat$230million,sincewedidn'treallybakeanythingontheothercomponentofthat,thatother$50million.Youtakethat$230million,reallyabout$120millioncameaboutfromthebonusdepreciation.SoIwouldn'tcountonthatagain.
Asfarasthe$80million,another$80millioncomponentcameaboutthroughjustloweroveralltaxableincomewastheothercomponent.Andthenyouhavethelast$24millionpiecethatrelatedreallytoastateincometaxthatwehadafavorableoutcomeon.
SoIthinkthewayIwouldlookatit,John,isthatifyoulookoutthrough2016,Iwouldn'tnecessarilybakeinanytypeofbenefit.Inotherwords,kindof--orexpenseeither.Inotherwords,Iwouldreallykindofleavethatonefairlyflat.
John,IthinktheotherthingI'dliketo--sinceyouareonthistopic,I'dliketogoaheadandaddtoitisisthatwhatwe'vereallykindoflookedatisreallyprobably--you'vealsohadmaintenancecapitalthatcameuptothe$142million.Ournormalkindofrunratethatwearelookingatnextyearisprobablycloserto$85millionaquarter.
Andthentheotherthingyouhadissomeoftheotherstuffthatwetalkedabouttodayfromsomeoftheoperational,etc.Allinall,IguessIcansayisthatifyoutookthe$230millionandthenyoubackedapproximately$80millionorsoofwhatIcallitemsthatwenttheotherway,youareprobablyatabout$150millioniswhereIwouldtakeyou.Andbaseduponthatmath,youareprobablyatabout0.9--alittlebitmore.Soanyway.Doesthathelp?
JohnKiani(Analyst-TeilingerCapital):
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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Yes,thatmakessense.Anotherquestion,please,iswhenyouthinkabouttheportfolio,andyoutalkedaboutthepotentialatsomepointforsomeassetsales,whatdoyouthinkaboutsomeofthebusinessesyouinheritedthroughalltheacquisitionsthataren'tnecessarilyaspipeline-like?Couldyousellthose?WhataboutlikethecoalbusinessthatcamewithPVR.Thingslikethatthatarejustnotasvisibleassomeofthelegacyassets.Whataboutthosebusinesses,please?
KelcyWarren (Chairman&CEO):
Yes,thisisKelcy,andyouarecorrect.Wedohaveemployeesthere,soIneedtobealittlebitcareful.Butthosetypeofbusinessesarebeinganalyzed.Andwearelookingatmonetizingthingsthatdonothavethepromiseforgreatcashflowgoingforwardordeferredcashflowinthefuture.Soyes,weare.
JohnKiani(Analyst-TeilingerCapital):
Okay,thanks.Andthenlastquestion,please.Kelcy,youmentionedthepotentialforsupportandIDRholidaysandthingslikethatforyoursubsidiarycompanies.OnethingI'mtryingtojustgetabetterhandleoniswiththeproformadebtbalanceforETEbeing$17billionto$18billion.
Andhowdoesthatwork?IguessI'mgettingalittleconfusedbecauseit'ssomewhatofazerosumgame.IfETEtakeslesscashintheformofIDRholidaysorsometypeofsupportforitssubsidiaries,howdoesitsustainandservicethattypeofdebtloadinitsowndistribution?AmImissingsomethingorshouldIthinkaboutitinadifferentway?
KelcyWarren (Chairman&CEO):
Thinkaboutitanotherway.There'sgoingtobetheneedforallofthepartnershipstoissuenewequitygoingforwardtofundtheirgrowth.AndtotheextentthatETEshouldwaiveIDRsonthosenewunitsthataregoingout,thenitwill.Soifyoufollowthat,that'snottakingmoneyoutofthecoffersofETE.It'sfuturedollarsthatwouldhavebeenearnedthathavebeenforgivenordeferred.
JohnKiani(Analyst-TeilingerCapital):
Right,right,okay.Thankyou;that'shelpful.
Operator :
ZevNijensohn,TheBostonCompany.
ZevNijensohn (Analyst-TheBostonCompanyAssetManagement):
Thanksfortakingmyquestion.Iwashopingyoucouldhelpmebackcheckmynumbers.AndI'dliketofocusspecificallyonadjustedEBITDA.Buthypothetically,ifyoudidn'tspendanotherdimeofCapExasofDecember31,2015,canyouquantifyhowmuchEBITDAonarunratebasisisonthecomefromprojectsthatwhereIguesseitherapproachingcompletionorwerecompleted,butnotfullyreflectedduringthefourthquarter?
T omLong (CFO):
Yes.Well,youknow,I'mnotgoingtoprobablygiveyouanabsolutedollaramountjustbecausewejustdon'tgiveguidancelikethat.Butyouknow,theseprojectsthatareallcomingonareinthe$10billionto$11billionrange.Ithinkwe'vealwayskindofgivenguidancethatwekindofgotkindofmidteentypereturns.I'mjustgivingyouabalanceacrossallofthem.
Andasyoualsoknow,someofthesethingsstartrampingupovertime.SoIthinkthat's--thathopefullyhelpsandthat'swhatyoucankindofuseasyourguidanceforeachoneofthesevariousprojectsand
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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howtheystartup.Andthenthetimingofwhenwe'retellingyoutheyarestartingup.
ZevNijensohn (Analyst-TheBostonCompanyAssetManagement):
Okay.ThenifIswitchgearsforasecond,andIguessthisisaquestionmoreforKelcy,butifyouthinkaboutthingsfromareallong-term,long-balltypeperspective,whynotconsidercuttingthedividendentirelyatETinordertogiveyourselfalotofcoverageintermsoffundinginterestanddoingsomethingsimilartowhatKMIdid,sinceyou'renotnecessarilygettingcreditforitinthemarketrightnow?
KelcyWarren (Chairman&CEO):
Yes,well--andIhearyou.Andit'sourjobheretoprotectthedistribution.Ourunitholdersexpectustodothat.Wetakethatresponsibilityveryseriously.ButasIsaidearlier,ifthereisachancethatoneofthepartnershipswouldbeinperilforadowngradeinratings,ETEwilldowhatisrequiredtohelpthatoperatingpartnership.
Ofcourse,the800poundgorillaisETPandwewillbe--we'regoingtobetakingmovestohelpETPgettomiddleof2017,whichisallitneeds.Andthenit'scookingingreaseafterthat.SoIhearyou.Wewouldliketoreachintoeverybucketwe'vegotbeforewewouldreachintothatone,asImentionedbefore,butitisapossibility.
ZevNijensohn (Analyst-TheBostonCompanyAssetManagement):
Thankyou.
Operator :
NormanHale,Stifel.
NormanHale (Analyst-StifelNicolaus):
Youknow,theprimarysourceofthepainfortheenergyindustry,whichhasfilteredintothemidstreamindustry,isproductprices.Whatdoyouguysseeasbeinganormalizationintermsofboththecrudeoilpriceandthenaturalgasprice?
KelcyWarren (Chairman&CEO):
Wow.Allofusarejustlikeyou.Wereadeverythingwecanread.Welistentootherpeople'sopinionsonthesubject.AndsoI'lljuststartandMackie,maybeyoucanhelpme.
I'lltalkaboutcrudeforasecond.Weare--there'ssomethingveryhealthygoingoninourindustryandit'sunfortunatelyispainful.Everytimewe'vehadoneofthesedownturns,thesecycles,theyendupbeingaveryhealthything.Butmygoodness,theyarepainful.
AndwhatImeanbythatisuntilweseemeaningfulreductionindrilling,whichtranslatesintoMackieandMattRamseymakingtheirjobharderandharder.Becausewhenthere'sjustlessvolumecomingon,yourvolumesinevitablyaregoingtobestressed.
Butuntilweseethat,Idon'tbelievewearegoingtoseemeaningfulimprovementincrudeoilprices.Ijustdon'tseeit.There'stoomuchsuccess.Theseguysaredrilling8,000-footlaterals,forGod'ssake.Imean,theirsciencehasimprovedsomuch.Butwearebeginningtoseethat.
It'ssad.Wearebeginningtoseeveryfewpeoplethataregoingfulloutanymore.Andthenthatultimatelywillcorrect.Ipersonallybelieveandthisis--boy,youcan--withthisandadollar,youcanmaybebuyhalfacupofcoffeesomewhere.Butthe--Ipersonallybelievethatwearegoingtoseethis
CompanyName:EnergyT ransferPartnersLPCompanyTicker:ET PSector:BasicMaterialsIndustry:Energy
EventDescription:Q42015EarningsCallMarketCapasofEventDate:14.84BPriceasofEventDate:27.14
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recovermorerapidthanpeoplethink.
Unfortunately,we'vegottofindthatbalance.We'vegottogetcrudeoilproductionwiththecrudeoilmarketinbalance,andthenIbelievetherewillbeinevitablecutscomingoutofournot-so-goodfriendsoverintheMiddleEast.Andthenwe'llbebackuponaride.
Now,Idon'tthink$100crudeishealthyforanybody.Idon'tbelieveitis.Ibelieve$60to$80crudeisavery,verygood.Soanyway,that'smyviewonthat.Mackie,what--?
MackieMcCrea(President&COO):
Alsoyoulookatthemarketsideofit.It'sjust--it'sgoingtotaketime.IfyoulookatthegrowthintoMexico,justourprojectsalonearegoingtogrowandincreasethevolumesintoMexicosignificantlybeginningin2017.Andevenaswementionedearlier,somevolumeincreasesthisyear.
WiththeChinese--theChinamarketandalltheEasternmarkets,thedemandhasjustsloweddown.Ifdemandeverpicksbackup,thatwillhelptremendously.Butjustfrommyperspective,IthinkthatwithoutsomemajoroccurrenceintheMiddleEast,thisisjustgoingtotaketime.
Itisn'tgoingtobeimmediate,buttoKelcy'spoint,onceitdoesreturn,weareveryoptimisticthatitwillbeverydifficultforproducers,forservicecompaniestoreactquickenough.Andsowecouldseeaprettyquickmovementcertainlyontheoilsideandprobablybesustainedforsomeperiodoftime.It'sjust--whenisthatgoingtotakeplaceisthebigquestion.Howsoon?
KelcyWarren (Chairman&CEO):
Yes,I'lladd.Hey,bytheway,thisisourlastquestion,sowearealittlebitmorerelaxedonthisone.Sothisisgreat;wearefinishinguphere.Butyouknow,Mackie,theamountofvolumewearegoingtobemovingtoMexicowithin--by2018ishuge.It'shugeandthosethingsarechippingaway.Andthepointis,weareseeingdemandfornaturalgasimproving.
MackieMcCrea(President&COO):
Today.Today.Ibelieveithappenedtoday.CheniereloadedtheirfirstLNGshipforthefirsttimeeverforexportingLNG.That'sgoingtoincrease.FreeportofcoursehelptogettoFID.Allthattakestime,butwiththemarketgrowththatwealreadyknowofandanykindofimprovementoverseas,it'sgoingtobe--there'splentyofsupplyrightnow.Themarketneedstogrowtoreallyhelpoursituation.
NormanHale (Analyst-StifelNicolaus):
Yes,Ihearyou.Thanks,guys.Ithinkyouguysaredoingagreatjobinareallytoughenvironment.Keepupthegoodwork.
MackieMcCrea(President&COO):
Thankyou.Weappreciatethat.
KelcyWarren (Chairman&CEO):
Okay.Thanks,everybody,forthecall.Goodquestions.Andwe'llbetalkingtoyousoon.Thankyou.
Operator :
Thankyou.Ladiesandgentlemen,thisdoesconcludetoday'steleconference.
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