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Midstream in Motion
Energy Transfer Partners 2 0 1 2 A N N U A L R E P O R T
E N E R G Y T R A N S F E R

Table of contents

  • Page 1
    Energy Transfer Partners 2 0 1 2 A N N U A L R E P O R T Midstream in Motion ENERGY TRANSFER

  • Page 2
    ... Transfer Partners is one of the largest and most diversified midstream energy partnerships in the country with a market capitalization of more than $14 billion. The acquisitions of Sunoco and Southern Union in 2012 broadened our service platform to provide unmatched logistics and transportation...

  • Page 3
    ... to close in third quarter of 2013), the contribution of Southern Union Gathering Company to Regency Energy Partners in second quarter of 2013, and ETP's acquisition of Energy Transfer Equity's interest in ETP Holdco in the second quarter of 2013 have set the stage for simplifying our partnership...

  • Page 4
    ... are just approximate as of 12-31-12 except for market capitalization, which is as of 1-31-13. Energy Transfer Partners 2012 Business Highlights Propane Business Southern Union Merger Sunoco Acquisition Completed contribution of propane business to AmeriGas Partners. Acquired Southern Union's 50...

  • Page 5
    ... forms with about 200 miles of natural gas pipelines in East Texas and 20 employees. 2005 Energy Transfer acquires Houston Pipeline System. 2010 Energy Transfer begins its rapid expansion into natural gas liquids through the acquisition of LDH Energy (now Lone Star NGL) and organic growth projects...

  • Page 6
    ...Eagle Ford Shale S OUTHERN U NION C OMPANY A SSETS 1 Pipelines Storage Trunkline LNG Map Legend E NERGY T RANSFER PARTNERS A SSETS Pipelines Processing Storage Treating Notes: (1) Part of ETP Holdco which is 100% Owned by ETP - noting the Southern Union Assets * Map is a general depiction of Energy...

  • Page 7
    ... 1-11727 ENERGY TRANSFER PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware (state or other jurisdiction of incorporation or organization) 73-1493906 (I.R.S. Employer Identification No.) 3738 Oak Lawn Avenue, Dallas, Texas 75219 (Address of principal executive offices...

  • Page 8
    ... UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SELECTED FINANCIAL DATA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CHANGES...

  • Page 9
    ..., LLC ETC Fayetteville Express Pipeline, LLC La Grange Acquisition, L.P., which conducts business under the assumed name of Energy Transfer Company ETC Tiger Pipeline, LLC Energy Transfer Equity, L.P., a publicly traded partnership and the owner of ETP LLC Energy Transfer Interstate Holdings, LLC...

  • Page 10
    ... of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs Sea Robin Pipeline Company, LLC Securities and Exchange Commission Southern Union Company Pan Gas Storage, LLC (d.b.a. Southwest Gas) Southern Union Gas Services Sea...

  • Page 11
    ... Contents Sunoco Sunoco Logistics Tcf Titan Transwestern Trunkline Sunoco, Inc. Sunoco Logistics Partners L.P. trillion cubic feet Titan Energy Partners, L.P. Transwestern Pipeline Company, LLC Trunkline Gas Company, LLC Adjusted EBITDA is a term used throughout this document, which we define as...

  • Page 12
    ... is managed by its general partner, Energy Transfer Partners, L.L.C. ("ETP LLC"), which is owned by Energy Transfer Equity, L.P., another publicly traded master limited partnership ("ETE"). The activities in which we are engaged, all of which are in the United States, and the wholly owned operating...

  • Page 13
    ... of December 31, 2012: Unless the context requires otherwise, the Partnership, the Operating Companies, and their subsidiaries are collectively referred to in this report as "we," "us," "ETP," "Energy Transfer" or "the Partnership." Significant Achievements in 2012 and Beyond Strategic Transactions...

  • Page 14
    ... NGL Pipeline was placed in service on December 4, 2012. The 130-mile Justice NGL Pipeline, extending from the Jackson County processing facility to Mont Belvieu, which was also recently placed in service, provides capacity for NGL barrels from the Eagle Ford Shale and from Lone Star's West Texas...

  • Page 15
    ... to build in Jackson County, Texas, a facility supported by multiple 10-year contracts with producers as part of our Eagle Ford Shale projects. Additionally, Regency plans to provide NGL barrels to this facility for fractionation. As part of this project, Lone Star is developing additional storage...

  • Page 16
    ... pipeline system that extends from south Texas through the Gulf Coast to south Florida. Our interstate transportation and storage segment includes Panhandle, a wholly owned subsidiary of Southern Union, which is owned by Holdco. Panhandle owns and operates a large natural gas open-access interstate...

  • Page 17
    ..., power generating companies, electric and natural gas utilities, energy marketers, industrial end-users located primarily in the Gulf Coast and southwestern United States, and petrochemicals. With respect to customer demand for the products and services it provides, SUGS' business is not generally...

  • Page 18
    ... as a fee. The major customers on our NGL pipelines include Targa Resources Partners LP, Louis Dreyfus Highbridge Energy LLC (subsequently renamed Castleton Commodities International, LLC) and The Williams Companies, Inc. Investment in Sunoco Logistics The Partnership's interests in Sunoco Logistics...

  • Page 19
    ... outstanding equity interests of a natural gas compression equipment business with operations in Arkansas, California, Colorado, Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas. We own a 32% limited partner interest in AmeriGas, which is engaged in retail propane marketing. We acquired this...

  • Page 20
    ...interstate natural gas pipeline Bi-directional capabilities The Transwestern pipeline is an open-access interstate natural gas pipeline extending from the gas producing regions of West Texas, eastern and northwestern New Mexico, and southern Colorado primarily to pipeline interconnects off the east...

  • Page 21
    ... customers include local distribution companies, producers, marketers, electric power generators and industrial end-users. Transwestern transports natural gas in interstate commerce. Panhandle Eastern Pipeline • • Capacity of 2.8 Bcf/d Approximately 6,000 miles of interstate natural gas pipeline...

  • Page 22
    ... gas and NGLs to a variety of markets in West Texas and New Mexico. SUGS is owned by a subsidiary of Holdco. North Texas System Approximately 160 miles of natural gas pipeline One natural gas processing plant (the Godley plant) with aggregate capacity of 480 MMcf/d One natural gas conditioning...

  • Page 23
    ...570 miles of NGL transmission pipeline The West Texas Gateway Pipeline, owned by Lone Star, began service in December 2012 and transports NGLs produced in the Permian and Delaware Basins in West Texas and the Eagle Ford Shale to Mont Belvieu, Texas. Other NGL Pipelines • • Capacity ranging from...

  • Page 24
    ... to logistics services, Sunoco Logistics owns acquisition and marketing assets which are used to facilitate the purchase and sale of crude oil and refined products. Its portfolio of geographically diverse assets earns revenues in 30 states located throughout the United States. Sunoco Logistics also...

  • Page 25
    ...crude oil to a number of third-party refineries. Crude Oil Acquisition and Marketing Sunoco Logistics' crude oil acquisition and marketing activities include the gathering, purchasing, marketing and selling of crude oil primarily in the mid-continent United States. The operations are conducted using...

  • Page 26
    ... LPGs in both directions at the same time and has a propane truck loading rack. Refined Products Pipelines Sunoco Logistics owns and operates approximately 2,500 miles of refined products pipelines in selected areas of the United States. The refined products pipelines transport refined products from...

  • Page 27
    ... the operation of convenience stores in 25 states, primarily on the east coast and in the midwest region of the United States. The highest concentrations of outlets are located in Connecticut, Florida, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Virginia. Retail...

  • Page 28
    ... following table sets forth information concerning Sunoco's Company-operated APlus® convenience stores at December 31, 2012: Number of stores Merchandise sales (thousands of dollars/store/month) Merchandise margin (% sales) Business Strategy We have designed our business strategy with the goal of...

  • Page 29
    ... our existing and acquired assets while supporting our investment grade credit ratings. Competition Natural Gas The business of providing natural gas gathering, compression, treating, transporting, storing and marketing services is highly competitive. Since pipelines are generally the only practical...

  • Page 30
    ... gas companies from unduly preferring or unreasonably discriminating against any person with respect to pipeline rates or terms and conditions of service. Under the terms of a prior settlement, Transwestern was required to file a new NGA Section 4 general rate case no later than October 1, 2011...

  • Page 31
    ... by an intrastate natural gas pipeline on behalf of a local distribution company or an interstate natural gas pipeline. The rates and terms and conditions of some transportation and storage services provided on the Oasis pipeline, HPL System, East Texas pipeline and ET Fuel System are subject to...

  • Page 32
    ... Operations Section of the Department of Natural Resources' Office of Conservation is generally responsible for regulating intrastate pipelines and gathering facilities in Louisiana and has authority to review and authorize natural gas transportation transactions and the construction, acquisition...

  • Page 33
    ... transportation and gathering services performed by intrastate pipelines and gatherers, which prohibit such entities from unduly discriminating in favor of their affiliates. Many of the producing states have adopted some form of complaint-based regulation that generally allows natural gas producers...

  • Page 34
    .... Environmental Matters General. Our operation of processing plants, pipelines and associated facilities, including compression, in connection with the gathering, processing, storage and transmission of natural gas and the storage and transportation of NGLs, crude oil and refined products is subject...

  • Page 35
    ... capital expenditures or plant operating and maintenance expense. We currently own or lease sites that have been used over the years by prior owners and by us for various activities related to gathering, processing, storage and transmission of natural gas, NGLs, crude oil and refined products. Solid...

  • Page 36
    ... result of changing the intended use of a property or a sale to a third party could result in a higher cost remediation strategy in the future. Sunoco currently owns or operates certain retail gasoline outlets where releases of petroleum products have occurred. Federal and state laws and regulations...

  • Page 37
    ... our business, financial condition or results of operations. Spills. Our operations can result in the discharge of regulated substances, including NGLs, crude oil or refined products. The Federal Water Pollution Control Act of 1972, also known as the Clean Water Act, and comparable state laws impose...

  • Page 38
    ... large greenhouse gas sources in the United States on an annual basis, beginning in 2011 for emissions occurring after January 1, 2010. On November 30, 2010, the EPA revised its greenhouse gas reporting rule to include onshore oil and natural gas production, processing, transmission, storage and...

  • Page 39
    ... 3, 2012, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, became effective. Under the new law, the DOT and other federal agencies are required to conduct a number of studies or develop rules over the next two years regarding the expansion of integrity management, use of...

  • Page 40
    ... the amount of natural gas, crude oil and refined products transported in our pipelines and gathering systems; the level of throughput in our processing and treating operations; the fees we charge and the margins we realize for our services; the price of natural gas, NGLs, crude oil and refined...

  • Page 41
    ... in planning for and reacting to changes in our business; our and our subsidiaries' ability to obtain additional financing for working capital, capital expenditures, acquisitions and general partnership, corporate or limited liability company purposes, as applicable, may be limited; we may be at...

  • Page 42
    ... and is dependent principally on the cash distributions from its general and limited partner equity interests in us and in Regency and from its 60% equity interest in ETP Holdco Corporation, which owns Southern Union and Sunoco, to service such indebtedness. Any distributions by us to ETE will be...

  • Page 43
    ... at the time he or she became a limited partner if the liabilities could not be determined from the partnership agreement. We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets. We are a holding company, and our subsidiaries conduct all of...

  • Page 44
    ...ETE also owns the general partner of Regency, a publicly traded partnership with which we compete in the natural gas gathering, processing and transportation business. The directors and officers of our General Partner and its affiliates have fiduciary duties to manage our General Partner in a manner...

  • Page 45
    ... engaging in other businesses or activities, including those that might be in direct competition with us. Regency competes with us with respect to our natural gas operations. Additionally, two directors of Regency GP LLC currently serve as directors of LE GP, LLC, the general partner of ETE. Risks...

  • Page 46
    ... transportation and storage of natural gas. The principal elements of competition among pipelines are rates, terms of service, access to sources of supply and the flexibility and reliability of service. Natural gas and NGLs also competes with other forms of energy, including electricity, coal, fuel...

  • Page 47
    ... new sources of supply. In order to maintain or increase throughput levels on our gathering systems and transportation pipeline systems and asset utilization rates at our treating and processing plants, we must continually contract for new natural gas supplies and natural gas transportation services...

  • Page 48
    ...processing, transportation and storage operations are largely dependent upon natural gas commodity prices, price spreads between two or more physical locations and market demand for natural gas and NGLs. For a portion of the natural gas gathered at our systems, we purchase natural gas from producers...

  • Page 49
    ... of the current grants, that all of the rights-of-way will be obtained in a timely fashion or that we will acquire new rights-of-way as needed. Further, whether we have the power of eminent domain for our pipelines varies from state to state, depending upon the type of pipeline and the laws of the...

  • Page 50
    ...net assets. Accounting principles generally accepted in the United States require us to test goodwill for impairment on an annual basis or when events or circumstances occur, indicating that goodwill might be impaired. Long-lived assets such as intangible assets with finite useful lives are reviewed...

  • Page 51
    ... volumes of natural gas on pipelines in our ET Fuel System. We also have an eight-year fee-based transportation contract with Luminant Energy Company LLC ("Luminant") to transport natural gas on the ET Fuel System. We also extended two natural gas storage contracts with Luminant to store natural gas...

  • Page 52
    ... to approximately 2.4 Bcf/d of firm transportation service in the Tiger pipeline project. Transwestern generates the majority of its revenues from long-term and short-term firm transportation contracts with natural gas producers, local distribution companies and end-users. Additionally, Panhandle...

  • Page 53
    ... business and operations of our interstate pipelines, including terms and conditions of service; the types of services interstate pipelines may or must offer their customers; construction of new facilities; acquisition, extension or abandonment of services or facilities; reporting and information...

  • Page 54
    ...market for our products. The rates, terms and conditions of service for the interstate services we provide in our intrastate gas pipelines and gas storage are subject to FERC regulation under Section 311 of the NGPA. Our HPL System, East Texas pipeline, Oasis pipeline and ET Fuel System provide such...

  • Page 55
    ... for transportation and storage services in tariffs filed with the TRRC, although such rates are deemed just and reasonable under Texas law unless challenged in a complaint. We are subject to other forms of state regulation, including requirements to obtain operating permits, reporting requirements...

  • Page 56
    ... on our business, results of operations, cash flows and financial condition. On December 17, 2012, Southern Union entered into definitive purchase and sale agreements with subsidiaries of the Laclede Group, Inc. to sell the assets of its Missouri Gas Energy and New England Gas Company Divisions...

  • Page 57
    ... includes New Source Performance Standards ("NSPS") to address emissions of sulfur dioxide and volatile organic compounds ("VOCs"), and a separate set of emission standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities. The...

  • Page 58
    ... trade programs work by requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing plants, to acquire and surrender emission allowances. The number of allowances available for purchase may be reduced over time in an effort...

  • Page 59
    ...price of our Common Units. Some of our operations involve risks of personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow. For example, natural gas facilities operate at high pressures, sometimes in excess...

  • Page 60
    ... of acquired assets or businesses; changes in laws and regulations, including safety, tax, consumer protection and accounting matters; competitive pressures from the same and alternative energy sources; failure to acquire new customers and retain current customers thereby reducing or limiting any...

  • Page 61
    ... in the future development and production of natural gas reserves in the vicinity of Southern Union's facilities, which could adversely affect our business, financial condition, results of operations and cash flows. Our business is subject to federal, state and local laws and regulations that...

  • Page 62
    ... our cost of operations, they also reduce our direct control over the services rendered. It is uncertain what effect such diminished control will have on the quality or quantity of products delivered or services rendered, on our ability to quickly respond to changing market conditions, or on our...

  • Page 63
    ...-tax return to its unitholders. Current law may change so as to cause Sunoco Logistics to be treated as a corporation for federal income tax purposes or to otherwise subject it to a material amount of entity-level taxation. States are evaluating ways to subject partnerships to entity level taxation...

  • Page 64
    ...business taxable income." Distributions to non-U.S. persons will be reduced by withholding taxes, generally at the highest applicable effective tax rate, and non-U.S. persons will be required to file United States federal and state income tax returns and generally pay United States federal and state...

  • Page 65
    ... Partner. Although we may from time to time consult with professional appraisers regarding valuation matters, including the valuation of our assets, we make many of the fair market value estimates of our assets ourselves using a methodology based on the market value of our Common Units as a means...

  • Page 66
    ... to file all federal, state and local tax returns. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES A description of our properties is included in "Item 1. Business." We own an office building for our executive office in Dallas, Texas and office buildings in Houston and San Antonio...

  • Page 67
    ... relief , punitive damages and attorneys' fees. As of December 31, 2012, Sunoco was a defendant in two lawsuits involving one state and Puerto Rico. These cases are venued in a multidistrict proceeding in a New York federal court. Both cases assert natural resource damage claims. In addition...

  • Page 68
    ... are currently in place, management may evaluate whether to retire the Class E Units at a future date. In conjunction with the Sunoco merger, we amended our partnership agreement to create the Class F Units. The number of Class F Units issued was determined at the closing of the Sunoco merger and...

  • Page 69
    ... our credit facilities and in all cases used solely for working capital purposes or to pay distributions to partners. Available Cash is more fully defined in our Partnership Agreement, which is an exhibit to this report. Operating Surplus and Capital Surplus General. All cash distributed to our...

  • Page 70
    ... distributions of Available Cash from operating surplus for any quarter in the following manner: • First, 100% to all Common Unitholders, Class E Unitholders, Class F Unitholders and the general partner, in accordance with their percentage interests, until each Common Unit has received $0.25 per...

  • Page 71
    ...Union). In December 2012, Southern Union entered into a purchase and sale agreement with the Laclede Entities, pursuant to which Laclede Missouri has agreed to acquire the assets of Missouri Gas Energy division and Laclede Massachusetts has agreed to acquire the assets of the New England Gas Company...

  • Page 72
    ... gas compression services through ETC Compression; a limited partner interest in AmeriGas; natural gas distribution operations through Southern Union; and an approximate 30% non-operating interest in a refining joint venture. Recent Developments Sunoco Merger On October 5, 2012, Sam Acquisition...

  • Page 73
    ... 2012, Southern Union entered into a purchase and sale agreement with the Laclede Entities, pursuant to which Laclede Missouri has agreed to acquire the assets of the Missouri Gas Energy division and Laclede Massachusetts has agreed to acquire the assets of the New England Gas Company division...

  • Page 74
    ... companies. The HPL System purchases natural gas at the wellhead for transport and selling. Other pipelines with access to West Texas supply, such as Oasis and ET Fuel, may also purchase gas at the wellhead and other supply sources for transport across our system to be sold at market on the east...

  • Page 75
    ... consumers, other marketers and pipeline companies, thereby generating gross margins based upon the difference between the purchase and resale prices of natural gas, less the costs of transportation. • NGL transportation and services - NGL transportation revenue is principally generated from fees...

  • Page 76
    ... system. These differentials are a driver of volumes from certain of our customers and we also can capture price differentials on our open capacity. We do not expect a significant change in price differentials between locations our assets are connected to during 2013 based on current supply, demand...

  • Page 77
    ... ETE acquired Southern Union). This change only impacted interim periods in 2012, and no prior annual amounts have been adjusted. Consolidated Results Years ended December 31, 2012 2011 Segment Adjusted EBITDA Intrastate transportation and storage Interstate transportation and storage Midstream NGL...

  • Page 78
    ... operations. Other, net. Other, net increased in 2012 primarily due to Southern Union's recognition of a net curtailment gain of $15 million related to its postretirement benefit plans. Income Tax Expense. Income tax expense increased primarily due to the acquisitions of Southern Union and Sunoco...

  • Page 79
    ... pro forma financial information for the year ended December 31, 2012. Southern Union Historical $ 443 Holdco Pro Forma Adjustments $ (12,174) ETP Historical REVENUES COSTS AND EXPENSES: Cost of products sold - natural gas operations Depreciation and amortization Selling, general and administrative...

  • Page 80
    ... forma financial information for the year ended December 31, 2011. Southern Union Historical $ 1,997 Holdco Pro Forma Adjustments $ (16,528) ETP Historical REVENUES COSTS AND EXPENSES: Cost of products sold - natural gas operations Depreciation and amortization Selling, general and administrative...

  • Page 81
    ... measures used by senior management in deciding how to allocate capital resources among business segments. The tables below identify the components of Segment Adjusted EBITDA, which is calculated as follows: • Gross margin, operating expenses, and selling, general and administrative. These line...

  • Page 82
    ... Business" and Notes 1 and 12 to our consolidated financial statements. In addition, following the acquisition of all of the membership interests in LDH on May 2, 2011, we have added an NGL transportation and services segment, which includes all of Lone Star's results of operations. Selling, General...

  • Page 83
    ... cost of consumed fuel is included in operating expenses. Retention revenue decreased $51 million due to less retained volumes and a $37 million decline in the average of natural gas spot prices. • Storage margin was comprised of the following: Years Ended December 31, 2012 2011 Change (11,629...

  • Page 84
    ... Transportation and Storage Years Ended December 31, 2012 2011 Natural gas transported (MMBtu/d) ETP Legacy Assets Southern Union transportation and storage Natural gas sold (MMBtu/d) Revenues Operating expenses, excluding non-cash compensation, amortization and accretion expenses Selling, general...

  • Page 85
    ... and processing Equity NGLs produced (Bbls/d) ETP Legacy Assets Southern Union gathering and processing Revenues Cost of products sold Gross margin Unrealized (gains) losses on commodity risk management activities Operating expenses, excluding non-cash compensation expense Selling, general and...

  • Page 86
    ... Non-Cash Compensation Expense. Midstream selling, general and administrative expenses increased primarily due to consolidation of Southern Union's gathering and processing operations effective March 26, 2012. In addition, additional assets placed into service in the Eagle Ford Shale also caused...

  • Page 87
    ... Star West Texas Gateway pipeline and the Lone Star Fractionator I were both placed in service in December 2012; therefore, the operating expense impact in 2012 was not significant. Selling, General and Administrative Expenses, Excluding Non-Cash Compensation Expense. NGL Transportation and Storage...

  • Page 88
    ... of those operations to AmeriGas Partners, L.P. ("AmeriGas") in January 2012. Our investment in AmeriGas was reflected in the other segment subsequent to that transaction; Southern Union's local distribution operations beginning March 26, 2012; Our natural gas compression operations; and, Sunoco...

  • Page 89
    ... and storage Interstate natural gas transportation and storage Midstream NGL transportation and services All other Total Segment Adjusted EBITDA Depreciation and amortization Interest expense, net of interest capitalized Gains on non-hedged interest rate derivatives Non-cash compensation expense...

  • Page 90
    ... the Texas margins tax resulting from increased operating income. Non-Cash Compensation Expense. The increase in non-cash compensation expense was due to an increase in the number of restricted unit awards granted. Allowance for Equity Funds Used During Construction. Allowance for equity funds used...

  • Page 91
    ... measures used by senior management in deciding how to allocate capital resources among business segments. The tables below identify the components of Segment Adjusted EBITDA, which is calculated as follows: • Gross margin, operating expenses, and selling, general and administrative. These line...

  • Page 92
    ... Business" and Notes 1 and 14 to our consolidated financial statements. In addition, following the acquisition of all of the membership interests in LDH on May 2, 2011, we have added an NGL transportation and services segment, which includes all of Lone Star's results of operations. Selling, General...

  • Page 93
    ... revenues include gross volumes retained as a fee at the current market price; the cost of consumed fuel is included in operating expenses. Retention revenue decreased $14 million due to less volumes and a decline in average natural gas spot prices, which averaged $4.03/MMBtu in 2011 compared to an...

  • Page 94
    ... affiliates Segment Adjusted EBITDA Volumes. Transported volumes for our interstate transportation and storage segment increased primarily due to an increase in transported volumes of 1,270,656 MMBtu/d on the Tiger pipeline in 2011. The Tiger pipeline was placed in service in December 2010, and...

  • Page 95
    ... volumes at our La Grange plant as a result of more favorable processing conditions and more production by our customers in the Eagle Ford Shale area in south Texas. The decrease in equity NGL production was primarily due to a higher concentration of volumes billed under fee-based contracts in 2011...

  • Page 96
    ...- - Change $ 132,862 16,475 397 218 179 (39) (13) 127 $ $ We own a controlling interest in Lone Star, which acquired all of the membership interests in LDH on May 2, 2011. Results reflected above represent 100% of those of acquired businesses that are engaged in NGL transportation, storage and...

  • Page 97
    ...: Growth Low Growth capital expenditures: ETP Legacy Assets: Midstream and intrastate transportation and storage NGL transportation and services (1) Interstate transportation and storage Holdco: Southern Union transportation and storage Southern Union gathering and processing Sunoco retail marketing...

  • Page 98
    ... debt or equity securities prior to that time as we deem prudent to provide liquidity for new capital projects, to maintain investment grade credit metrics or other partnership purposes. Sunoco Logistics' primary sources of liquidity consist of cash generated from operating activities and borrowings...

  • Page 99
    ..., in 2012 we paid net cash of $1.25 billion for acquisitions, primarily including amounts related to Citrus and Sunoco. We also received net cash proceeds of $1.44 billion from the contribution of the Propane Business. Year Ended December 31, 2011 Cash used in investing activities in 2011 was...

  • Page 100
    ... Total Year Ended December 31, 2012: ETP Legacy Assets: Midstream Intrastate transportation and storage NGL transportation and services Interstate transportation and storage Holdco: Southern Union transportation and storage Southern Union gathering and processing Retail Marketing $ 1,096 18 1,291...

  • Page 101
    ...statements). Net proceeds from the offerings were used to repay outstanding borrowings under the ETP Credit Facility, to fund capital expenditures, acquisitions, and capital contributions to joint ventures, as well as for general partnership purposes. In 2011, we had a net increase in our debt level...

  • Page 102
    ... in May 2016. Borrowings under the Southern Union Credit Facility are available for working capital, other general company purposes and letter of credit requirements. The interest rate and commitment fee under the Southern Union Credit Facility are calculated using a pricing grid, which is based on...

  • Page 103
    ... (as defined in such credit agreement); engage in business substantially different in nature than the business currently conducted by the Partnership and its subsidiaries; engage in transactions with affiliates; and enter into restrictive agreements; The credit agreement relating to the ETP Credit...

  • Page 104
    ...make certain loans, acquisitions and investments; make any material change to the nature of its business; or enter into a merger or sale of assets, including the sale or transfer of interests in the Operating Partnership's subsidiaries. The credit facilities also limit Sunoco Logistics, on a rolling...

  • Page 105
    ... liabilities. Cash Distributions We expect to use substantially all of our cash provided by operating and financing activities from the Operating Companies to provide distributions to our Unitholders. Under our Partnership Agreement, we will distribute to our partners within 45 days after the end of...

  • Page 106
    .... The natural gas industry conducts its business by processing actual transactions at the end of the month following the month of delivery. Consequently, the most current month's financial results for the midstream, NGL and intrastate transportation and storage segments are estimated using volume...

  • Page 107
    ..., generally payable monthly. Excess fuel retained after consumption is typically valued at market prices. Our intrastate transportation and storage segment also generates revenues and margin from the sale of natural gas to electric utilities, independent power plants, local distribution companies...

  • Page 108
    ... through mark-to-market or the physical withdrawal of natural gas. NGL storage and pipeline transportation revenues are recognized when services are performed or products are delivered, respectively. Fractionation and processing revenues are recognized when product is either loaded into a truck or...

  • Page 109
    ... use of natural gas in industrial and power generation activities, management expects supply and demand to exist for the foreseeable future. We have in place a rigorous repair and maintenance program that keeps the pipelines and the natural gas gathering and processing systems in good working...

  • Page 110
    ... its defined benefit postretirement plans through AOCI. The calculation of the net periodic benefit cost and benefit obligation requires the use of a number of assumptions. Changes in these assumptions can have a significant effect on the amounts reported in the financial statements. The Partnership...

  • Page 111
    ..., processing, storage and transportation services; the prices and market demand for, and the relationship between, natural gas and NGLs; energy prices generally; the prices of natural gas and NGLs compared to the price of alternative and competing fuels; the general level of petroleum product demand...

  • Page 112
    ...or operating risks incidental to the gathering, treating, processing and transporting of natural gas and NGLs; competition from other midstream companies and interstate pipeline companies; loss of key personnel; loss of key natural gas producers or the providers of fractionation services; reductions...

  • Page 113
    ... our consolidated statements of operations. We use futures and basis swaps, designated as fair value hedges, to hedge our natural gas inventory stored in our Bammel storage facility. Changes in the spreads between the forward natural gas prices designated as fair value hedges and the physical Bammel...

  • Page 114
    ... for natural gas, thousand megawatt for power, gallons for propane and barrels for natural gas liquids and refined products. Dollar amounts are presented in millions. December 31, 2012 Notional Volume Fair Value Asset (Liability) Effect of Hypothetical 10% Change December 31, 2011 Notional Volume...

  • Page 115
    ... 31, December 31, 2012 2011 $ - - 400 400 600 75 450 $ 350 500 300 - 500 - - Entity ETP ETP ETP ETP ETP Southern Union Southern Union (1) (2) Term May 2012(2) August 2012(2) July 2013(2) July 2014(2) July 2018 November 2016 November 2021 Type (1) Forward starting to pay a fixed rate of 2.59% and...

  • Page 116
    ...Chief Executive Officer and Chief Financial Officer of our General Partner, concluded that our disclosure controls and procedures were adequate and effective as of December 31, 2012. Management's Report on Internal Control over Financial Reporting The management of Energy Transfer Partners, L.P. and...

  • Page 117
    ... Company Accounting Oversight Board (United States), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2012, and our report dated March 1, 2013 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP Dallas, Texas...

  • Page 118
    Table of Contents Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or Rule 15d-15(f)) that occurred in the three months ended December 31, 2012 that has materially affected, or is reasonably...

  • Page 119
    ... directs all of our activities. The activities of our General Partner are managed and directed by its general partner, ETP LLC. Our officers and directors are officers and directors of ETP LLC. ETE, as the sole member of ETP LLC, is entitled under the limited liability company agreement of ETP LLC...

  • Page 120
    ... 31.2 to this annual report. In 2012, our CEO provided to the NYSE the annual CEO certification regarding our compliance with the NYSE corporate governance listing standards. Conflicts Committee Our Partnership Agreement provides that the Board of Directors may, from time to time, appoint members of...

  • Page 121
    ... of our General Counsel at Energy Transfer Partners, L.P., 3738 Oak Lawn Avenue, Dallas, Texas 75219 or [email protected]. Communications are distributed to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances...

  • Page 122
    ... Executive Officer and has more than 25 years in the natural gas industry. Mr. Warren also has relationships with chief executives and other senior management at natural gas transportation companies throughout the United States, and brings a unique and valuable perspective to the Board of Directors...

  • Page 123
    ...in the energy industry and his service as a senior executive at several energy-related companies, in addition to his contacts in the industry gained through his involvement in energy-related organizations. Compensation of the General Partner Our General Partner does not receive any management fee or...

  • Page 124
    ... units. All of our employees are employed by and receive employee benefits from our Operating Companies. Compensation Discussion and Analysis Named Executive Officers We do not have officers or directors. Instead, we are managed by the board of directors of our General Partner, and the executive...

  • Page 125
    ... Partners, L.P. Enbridge Energy Partners, L.P Sunoco Logistics Partners L.P. Atmos Energy Corporation El Paso Corporation Spectra Energy Partners, LP Targa Resources Partners LP NuStar Energy L.P. Southern Union Company The compensation analysis provided by Mercer covered annual salary, annual...

  • Page 126
    ... pipeline project and the construction of a new processing facility in the Eagle Ford Shale in South Texas that was placed in service in December 2012. In addition, the Compensation Committee recognized the increased scope of Mr. McCrea's responsibilities following the acquisitions of Southern Union...

  • Page 127
    ... The Compensation Committee did not accelerate the vesting of unit awards to any named executive officers in 2012. Subsidiary Equity Awards. In addition to their roles as officers of our General Partner, Messrs. Salinas and McCrea also serve as officers and directors of the general partner of Sunoco...

  • Page 128
    ...on the Compensation Committee during 2012. During 2012, none of the members of the committee was an officer or employee of us or any of our subsidiaries or served as an officer of any company with respect to which any of our executive officers served on such company's board of directors. In addition...

  • Page 129
    ... management of ETP. Based on this review and discussion, we have recommended to the board of directors of our General Partner that the Compensation Discussion and Analysis be included in this annual report on Form 10-K. The Compensation Committee of the Board of Directors of Energy Transfer Partners...

  • Page 130
    ... Kelcy L. Warren (4) Chief Executive Officer Martin Salinas, Jr. Chief Financial Officer Marshall S. (Mackie) McCrea, III President and Chief Operating Officer Thomas P. Mason Senior Vice President, General Counsel and Secretary Richard Cargile President of Midstream Operations Year 2012 2011...

  • Page 131
    ... of unvested awards as of December 31, 2012 multiplied by the closing price of our Common Units on December 31, 2012. The amounts above do not include the equity awards granted to certain named executive officers in equity of ETE held by a partnership controlled by Mr. McReynolds. These awards are...

  • Page 132
    ... Energy Partners, L.P., a change in control means a "change in control" as defined in the 2004 Unit Plan, but a change in control will also be considered to have occurred if any single party, other than Kelcy Warren, acquires either: (a) more than 90% of the then-outstanding limited partner units...

  • Page 133
    ... any change in control event within the meaning of Treasury Regulation Section 1.409A-3(i)(5). Director Compensation Table The Compensation Committee periodically reviews and makes recommendations regarding the compensation of the directors of our General Partner. In 2012, non-employee directors of...

  • Page 134
    ... Address of Beneficial Owner (1) Kelcy L. Warren Marshall S. (Mackie) McCrea , III Martin Salinas, Jr. Thomas P. Mason Richard Cargile Bill W. Byrne Paul E. Glaske Michael K. Grimm Ted Collins, Jr. All Directors and Executive Officers as a Group (9 Persons) ETE (4) Heritage Holdings, Inc. (5) Sunoco...

  • Page 135
    ... service fees related to the provision of various general and administrative services for Regency which was acquired by ETE in 2010. Immediately following the closing of the Partnership's acquisition of Sunoco, ETE contributed its interest in Southern Union into Holdco, an ETP-controlled entity...

  • Page 136
    ... the service organization control report on Southern Union's centralized data center. Includes fees in 2011 for attestation engagements of subsidiary entities in connection with the contribution of the Partnership's retail propane operations to AmeriGas Partners, L.P. in January 2012. Includes fees...

  • Page 137
    ...Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as a part of this Report: (1) (2) (3) Financial Statements - see Index to Financial Statements appearing on page F-1. Financial Statement Schedules - None. Exhibits - see Index to Exhibits set...

  • Page 138
    ... this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENERGY TRANSFER PARTNERS, L.P. By By Energy Transfer Partners GP, L.P, its general partner. Energy Transfer Partners, L.L.C., its general partner /s/ Kelcy L. Warren By: Kelcy L. Warren Chief Executive Officer...

  • Page 139
    ... dated as of March 23, 2012, to the Amended and Restated Agreement and Plan of Merger, by and among Energy Transfer Partners, L.P., Citrus ETP Acquisition L.L.C., Energy Transfer Equity, L.P., Southern Union Company, and CrossCountry Energy, LLC dated July 19, 2011. 2.7 Amendment No. 1, dated as of...

  • Page 140
    ...of Energy Transfer Partners GP, L.P. Amendment No. 2, dated March 26, 2012, to the Third Amended and Restated Agreement of Limited Partnership of Energy Transfer Partners GP, L.P., dated as of April 17, 2007. Fourth Amended and Restated Limited Liability Company Agreement of Energy Transfer Partners...

  • Page 141
    ... Storage LP, as Sellers, and La Grange Acquisition, L.P., as Buyer, and AEP Asset Holdings LP, AEP Leaseco LP, Houston Pipe Line Company, LP and HPL Resources Company LP, as Companies. Purchase and Sale Agreement, dated as of September 14, 2006, among Energy Transfer Partners, L.P. and EFS-PA, LLC...

  • Page 142
    ...& Young LLP opinion on internal controls over financial reporting of Sunoco Logistics Partners LP. Statement of Policies Relating to Potential Conflicts among Energy Transfer Partners, L.P., Energy Transfer Equity, L.P. and Regency Energy Partners LP dated as of April 26, 2011. 134 (39) 10.62 (40...

  • Page 143
    ...Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010; (iii) our Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010; (iv) our Consolidated Statement of Partners' Capital for the years ended December 31, 2012, 2011...

  • Page 144
    ... by reference to Exhibit 2.1 to the Registrant's Form 8-K filed July 20, 2011. Incorporated by reference to Exhibit 1.1 to the Registrant's Form 8-K filed January 17, 2012. Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed November 1, 2004. Incorporated by reference to...

  • Page 145
    ... Exhibit 10.2 to Registrant's Form 8-K filed on March 28, 2012. Incorporated by reference to Exhibit 10(t) to Southern Union's Annual Report on Form 10-K for the year ended December 31, 2006. Incorporated by reference to Exhibit 10(q) to Southern Union's Annual Report on Form 10-K for the year ended...

  • Page 146
    ... FINANCIAL STATEMENTS Energy Transfer Partners, L.P. and Subsidiaries Page F-2 F-3 F-5 F-6 F-7 F-8 F - 10 Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets - December 31, 2012 and 2011 Consolidated Statements of Operations - Years Ended December 31, 2012, 2011 and...

  • Page 147
    ... FIRM Partners Energy Transfer Partners, L.P. We have audited the accompanying consolidated balance sheets of Energy Transfer Partners, L.P. (a Delaware limited partnership) and subsidiaries (the "Partnership") as of December 31, 2012 and 2011, and the related consolidated statements of operations...

  • Page 148
    Table of Contents PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in millions) December 31, 2012 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable, net of allowance for doubtful ...

  • Page 149
    ... MANAGEMENT LIABILITIES DEFERRED INCOME TAXES OTHER NON-CURRENT LIABILITIES COMMITMENTS AND CONTINGENCIES (Note 10) EQUITY: General Partner Limited Partners: Common Unitholders (301,485,604 and 225,468,108 units authorized, issued and outstanding as of December 31, 2012 and 2011, respectively) Class...

  • Page 150
    Table of Contents ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in millions, except per unit data) Years Ended December 31, 2012 REVENUES: Natural gas sales NGL sales Crude sales Gathering, transportation and other fees Refined product sales Other ...

  • Page 151
    Table of Contents ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in millions) Years Ended December 31, 2012 2011 2010 $ 1,648 $ 697 $ 617 Net income Other comprehensive income (loss), net of tax: Reclassification to earnings of gains and ...

  • Page 152
    ..., 2011 Distributions to partners Distributions to noncontrolling interest Units issued for cash Capital contributions from noncontrolling interest Sunoco Merger (See Note 3) Holdco Transaction (See Note 3) Issuance of units in other acquisitions (excluding Sunoco) Non-cash compensation expense, net...

  • Page 153
    ... of Contents ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in millions) Years Ended December 31, 2012 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ Reconciliation of net income to net cash provided by operating activities: Impairments...

  • Page 154
    ...Limited Partner units Capital contribution from General Partner Capital contributions received from noncontrolling interest Distributions to partners Distributions to noncontrolling interest Redemption of units Debt issuance costs Net cash provided by financing activities... financial statements. F-9

  • Page 155
    ..., processing, and marketing natural gas and NGLs in the states of Texas, Louisiana, New Mexico and West Virginia. Our intrastate transportation and storage operations primarily focus on transporting natural gas in Texas through our Oasis pipeline, ET Fuel System, East Texas pipeline and HPL System...

  • Page 156
    ...Delaware limited liability company engaged in natural gas compression services and related equipment sales. Sunoco Logistics is a publicly traded Delaware limited partnership that owns and operates a logistics business, consisting of refined products and crude oil pipelines, terminalling and storage...

  • Page 157
    ...the pipeline, or (iv) a combination of the three, generally payable monthly. Fuel retained for a fee is typically valued at market prices. Our intrastate transportation and storage segment also generates revenues and margin from the sale of natural gas to electric utilities, independent power plants...

  • Page 158
    ... systems and storage operations are subject to the jurisdiction of FERC in accordance with the Natural Gas Act of 1938 and Natural Gas Policy Act of 1978, it does not currently apply regulatory accounting policies in accounting for its operations. In 1999, prior to its acquisition by Southern Union...

  • Page 159
    ..., net of effects of acquisitions, dispositions and deconsolidation $ Non-cash investing and financing activities and supplemental cash flow information are as follows: Years Ended December 31, 2012 2011 2010 NON-CASH INVESTING ACTIVITIES: Accrued capital expenditures AmeriGas limited partner...

  • Page 160
    ... or other forms of collateral. Management believes that the portfolio of receivables, which includes regulated electric utilities, regulated local distribution companies and municipalities, is subject to minimal credit risk. Our interstate transportation and storage operations establish an...

  • Page 161
    ...is calculated under guidelines prescribed by the FERC and capitalized as part of the cost of utility plant for interstate projects. It represents the cost of servicing the capital invested in construction work-in-process. AFUDC is segregated into two component parts - borrowed funds and equity funds...

  • Page 162
    ...periods presented in these consolidated financial statements. Changes in the carrying amount of goodwill were as follows: Intrastate Transportation and Storage Interstate Transportation and Storage NGL Transportation and Services Investment in Sunoco Logistics Midstream Retail Marketing All Other...

  • Page 163
    ...: Years Ended December 31, 2012 2011 2010 36 $ 24 $ 20 Reported in depreciation and amortization $ Estimated aggregate amortization expense for the next five years is as follows: Years Ending December 31: 2013 2014 2015 2016 2017 $ 87 86 86 86 86 We review amortizable intangible assets for...

  • Page 164
    ... use of natural gas in industrial and power generation activities, management expects supply and demand to exist for the foreseeable future. We have in place a rigorous repair and maintenance program that keeps the pipelines and the natural gas gathering and processing systems in good working...

  • Page 165
    ... current liabilities $ $ 143 84 197 67 77 14 - 48 630 Deposits or advances are received from our customers as prepayments for natural gas deliveries in the following month. Prepayments and security deposits may also be required when customers exceed their credit limits or do not qualify for open...

  • Page 166
    .../Futures Options - Puts Options - Calls Forward Physical Swaps Power: Forwards Futures Options - Calls Natural Gas Liquids - Swaps Refined Products Total commodity derivatives Total Assets Liabilities: Interest rate derivatives Commodity derivatives: Natural Gas: Basis Swaps IFERC/NYMEX Swing Swaps...

  • Page 167
    ... products to customers, including compensation for operations personnel, insurance costs, vehicle maintenance, advertising costs, purchasing costs and plant operations. Selling, general and administrative expenses include all partnership related expenses and compensation for executive, partnership...

  • Page 168
    ... 2011 and 2010, our qualifying income met the statutory requirement. The Partnership conducts certain activities through corporate subsidiaries which are subject to federal, state and local income taxes. Holdco, formed via the Holdco Transaction (see Note 3), which includes Sunoco and Southern Union...

  • Page 169
    ... General Partner and Limited Partners based on their respective ownership interests. 3. ACQUISITIONS AND RELATED TRANSACTIONS: 2012 Transactions Southern Union Merger On March 26, 2012, ETE completed its acquisition of Southern Union. Southern Union is the surviving entity in the merger and operates...

  • Page 170
    ... 2012, Sunoco's interests in Sunoco Logistics were transferred to the Partnership. Sunoco Logistics is a publicly traded limited partnership that owns and operates a logistics business consisting of a geographically diverse portfolio of complementary pipeline, terminalling and crude oil acquisition...

  • Page 171
    ... to Sunoco Logistics. Includes ETP's acquisition of Citrus. As a result of the Holdco Transaction, we recognized $38 million of merger-related costs during the year ended December 31, 2012 related to Southern Union. Southern Union's revenue included in our consolidated statement of operations was...

  • Page 172
    ..., ETP-Regency LLC was renamed Lone Star. Lone Star owns and operates a natural gas liquids storage, fractionation and transportation business. Lone Star's storage assets are primarily located in Mont Belvieu, Texas, and its West Texas Pipeline transports NGLs through an intrastate pipeline system...

  • Page 173
    ... income (loss) per Limited Partner unit Diluted net income (loss) per Limited Partner unit $ $ $ The pro forma consolidated results of operations include adjustments to include the results of Lone Star beginning January 1, 2010 and Southern Union and Sunoco beginning January 1, 2011; include the...

  • Page 174
    ... Gas Company in Panola County, Mississippi. Summarized Financial Information The following tables present aggregated selected balance sheet and income statement data for our unconsolidated affiliates, FEP, AmeriGas and Citrus (on a 100% basis) for all periods presented: December 31, 2012 2011...

  • Page 175
    ... from continuing operations Limited Partners' interest in income from continuing operations Additional earnings allocated from General Partner Distributions on employee unit awards, net of allocation to General Partner Income from continuing operations available to Limited Partners $ $ $ 249,039...

  • Page 176
    ...Southern Union $700 million Revolving Credit Facility due May 20, 2016 Other Unamortized premiums, discounts and fair value adjustments, net Panhandle Debt 6.05% Senior Notes due August 15, 2013... rate at December 31, 2012) Unamortized premiums, discounts and fair value adjustments, net Sunoco ...

  • Page 177
    ... control event or an event of default, as defined. The balance is payable upon maturity. Interest is paid semi-annually. Note Payable - ETE On March 26, 2012, Southern Union received $221 million from ETE to pay certain expenses in connection with the Merger, including (i) payments made to employees...

  • Page 178
    ... May 20, 2016. Borrowings under the Southern Union Credit Facility are available for working capital, other general company purposes and letter of credit requirements. The interest rate and commitment fee under the Southern Union Credit Facility are calculated using a pricing grid, which is based on...

  • Page 179
    ...credit rating, by itself, cause an event of default under any of Southern Union's lending agreements. Financial covenants exist in certain of Southern Union's debt agreements that require Southern Union to maintain a certain level of net worth, to meet certain debt to total capitalization ratios and...

  • Page 180
    ...of 5.0 to 1, which can generally be increased to 5.5 to 1 during an acquisition period. The Partnership's ratio of total debt to EBITDA was 2.0 to 1 at December 31, 2012, as calculated in accordance with the credit agreements. The $35 million Credit Facility limits West Texas Gulf, on a rolling four...

  • Page 181
    ... ETP Credit Facility. (3) Proceeds were used to fund capital expenditures and capital contributions to joint ventures, and for general partnership purposes. Equity Distribution Program From time to time, we have sold Common Units through an equity distribution agreement. Such sales of Common Units...

  • Page 182
    ... Holdings, Inc. Although no plans are currently in place, management may evaluate whether to retire some or all of the Class E Units at a future date. Class F Units In conjunction with the Sunoco Merger, we amended our partnership agreement to create the Class F units. The number of Class F units...

  • Page 183
    ... benefits Total $ $ 8. UNIT-BASED COMPENSATION PLANS: ETP Unit-Based Compensation Plan We have issued equity incentive plans for employees, officers and directors, which provide for various types of awards, including options to purchase ETP Common Units, restricted units, phantom units...

  • Page 184
    ... Logistics' Unit-Based Compensation Plan Sunoco Logistics' general partner has a long-term incentive plan for employees and directors, which permits the grant of restricted units and unit options of Sunoco Logistics covering an additional 0.9 million Sunoco common units. As of December 31, 2012...

  • Page 185
    ... was formed via the Sunoco Merger and the Holdco transactions (see Note 3), includes Sunoco and Southern Union and their subsidiaries. Includes Oasis Pipeline Company, Inland Corporation, Mid-Valley Pipeline Company and West Texas Gulf Pipeline Company. The latter three entities were acquired in...

  • Page 186
    ... tax liability as follows: December 31, 2012 (123) $ (1,420) (1,989) (73) (1) (3,606) $ Net deferred income tax liability, beginning of year Southern Union acquisition Sunoco acquisition Tax provision (including discontinued operations) Other Net deferred income tax liability Holdco and other...

  • Page 187
    ...than $1 million. At December 31, 2012, we have interest and penalties accrued of $5 million, net of tax. In general, ETP and its subsidiaries are no longer subject to examination by the Internal Revenue Service for tax years prior to 2009, except Sunoco and Southern Union which are no longer subject...

  • Page 188
    ... Company, AmeriGas Finance Corp. and UGI Corp., pursuant to which ETP will provide contingent, residual support of the Supported Debt as defined in the CRSA. NGL Pipeline Regulation We have interests in NGL pipelines located in Texas. We believe that these pipelines do not provide interstate service...

  • Page 189
    ... and executing, through an unfair and conflicted process, a merger agreement that provides inadequate consideration and that contains impermissible terms designed to deter alternative bids. Each complaint also names as defendants Sunoco, ETP, ETP GP, ETP LLC, and Sam Acquisition Corporation...

  • Page 190
    ...Texas naming as defendants ETP, ETP GP, ETP LLC, the boards of directors of ETP LLC (collectively with ETP GP and ETP LLC, the "ETP Defendants"), certain members of management for ETP and ETE, ETE, and Southern Union. The lawsuit is styled W. J. Garrett Trust v. Bill W. Byrne, et al., Cause No. 2011...

  • Page 191
    ... passed through the recovery mechanism since 2005, the year when a partner in the firm, the Company's former Vice Chairman, President and Chief Operating Officer, joined Southern Union's management team; (ii) the prudence of any and all legal fees that were charged by the Bishop, London & Dodds firm...

  • Page 192
    ... operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in the business of transporting, storing, gathering, treating, compressing, blending and processing natural gas, natural gas liquids and other products...

  • Page 193
    ... state laws that regulate the protection of the health and safety of employees. In addition, OSHA's hazardous communication standard requires that information be maintained about hazardous materials used or produced in our operations and that this information be provided to employees, state...

  • Page 194
    ... products sold in the consolidated statement of operations. We are also exposed to commodity price risk on NGLs and residue gas we retain for fees in our midstream segment whereby the Company generally gathers and processes natural gas on behalf of producers, sells the resulting residue gas and NGL...

  • Page 195
    ... Fixed Swaps/Futures Options - Puts Options - Calls Natural Gas Liquid (Bbls): Forwards/Swaps Refined Products (BBls) (1) December 31, 2011 Notional Volume Maturity (30,980,000) 19,650 (1,509,300) 1,656,400 2013-2014 2013 2013 2013 (151,260,000) - - - 2012-2013 - - - 150,000 (83,292,500) 27,077...

  • Page 196
    ... 31, 2012 and 2011, none of which are designated as hedges for accounting purposes: Entity ETP ETP ETP ETP ETP Southern Union Southern Union (1) (2) Term May 2012(2) August 2012(2) July 2013(2) July 2014(2) July 2018 November 2016 November 2021 Type (1) Forward starting to pay a fixed rate of...

  • Page 197
    ... from each of the major credit rating agencies. If Southern Union's debt were to fall below investment grade, Southern Union would be in violation of these provisions, and the counterparties to the derivative instruments could potentially require Southern Union to post collateral for certain of the...

  • Page 198
    ... are determined as a percentage of compensation and range from 3.5% to 12%. Southern Union contributions are generally 100% vested after five years of continuous service. Southern Union contributions to Retirement Power Accounts during the period from Acquisition (March 26, 2012) to December 31...

  • Page 199
    ...length of service or negotiated non-wage based formulas for union employees. The 2012 postretirement benefits expense for Southern Union reflects the impact of curtailment accounting as postretirement benefits for all active participants who did not meet certain criteria were eliminated. The Company...

  • Page 200
    ...Benefits Benefits Change in benefit obligation: Benefit obligation at acquisition date Service cost Interest cost Amendments Benefits paid, net Curtailments Actuarial (gain)/loss and other Benefit obligation at end of period Change in plan assets: Fair value of plan assets at acquisition date Return...

  • Page 201
    ... Net periodic benefit cost (1) $ 3 $ 15 (21) 2 - (1) 1 3 (5) - (15) (16) $ 9 8 $ 2 (14) Subsequent to the Southern Union Merger, Southern Union amended certain of its other postretirement employee benefit plans, which prospectively restrict participation in the plans for the impacted active...

  • Page 202
    ...data and historical returns are reviewed to ensure reasonableness and appropriateness. The assumed health care cost trend rates used to measure the expected cost of benefits covered by Southern Union and Sunoco's other postretirement benefit plans are shown in the table below: December 31, 2012 7.78...

  • Page 203
    ...merger arbitrage/event driven, credit, and short selling strategies, to generate long-term capital appreciation through a portfolio having a diversified risk profile with relatively low volatility and a low correlation with traditional equity and fixed-income markets. These investments can generally...

  • Page 204
    ...with certain natural gas and NGLs sales and transportation services and compression equipment, and Regency provides us with certain contract compression services. These related party transactions are generally based on transactions made at market-related rates. Sunoco Logistics has an agreement with...

  • Page 205
    ... and changed in 2012. Our financial statements currently reflect six reportable segments, which conduct their business exclusively in the United States of America, as follows intrastate natural gas transportation and storage; interstate natural gas transportation and storage; midstream; NGL...

  • Page 206
    ... the NGL transportation and services segment did not exist prior to the LDH Acquisition and formation of Lone Star. The following tables present the financial information by segment for the following periods: Years Ended December 31, 2011 2010 2012 Revenues: Intrastate transportation and storage...

  • Page 207
    ... Total cost of products sold Depreciation and amortization: Intrastate transportation and storage Interstate transportation and storage Midstream NGL transportation and services Investment in Sunoco Logistics Retail marketing All other Total depreciation and amortization Equity in earnings of...

  • Page 208
    Table of Contents Years Ended December 31, 2012 2011 2010 Segment Adjusted EBITDA Intrastate transportation and storage Interstate transportation and storage Midstream NGL transportation and services Investment in Sunoco Logistics Retail marketing All other Total Segment Adjusted EBITDA ...

  • Page 209
    ..., 2012 2011 2010 Additions to property, plant and equipment including acquisitions, net of contributions in aid of construction costs (accrual basis): Intrastate transportation and storage Interstate transportation and storage Midstream NGL transportation and services Investment in Sunoco Logistics...

  • Page 210
    ...Partners and General Partner. Based on this allocation approach, net income per Limited Partner unit (basic and diluted) for the three months ended June 30, 2012 was approximately zero, after taking into account distributions to be paid with respect to incentive distribution rights and employee unit...

  • Page 211
    ... increase in Adjusted EBITDA for 2012 reï¬,ects a partial-year contribution from acquisitions completed during the year. Energy Transfer Partners Adjusted EBITDA by Operating Segment 2008 Intrastate Midstream Interstate Propane Intrastate NGL Q4 2012 Interstate Investment in SXL Midstream Retail...

  • Page 212
    ENERGY TRANSFER Energy Transfer Partners, L.P. 3738 Oak Lawn Avenue Dallas, Texas 75219 214.981.0700 phone 214.981.0703 fax NYSE: ETP www.energytransfer.com