Energy Transfer 2012 Annual Report Download - page 3

Dear Fellow Unitholders:
In looking back at 2012, it was a time of remarkable change for
Energy Transfer Partners -- the transformation from a leading natural
gas transmission company to one of the largest and most diversified
midstream energy companies in the country -- all while
remaining focused on delivering value for our Unitholders. With
incredible focus and fortitude, we delivered to the marketplace an
energy partnership with an unmatched logistics and transportation
services platform for natural gas, natural gas liquids, crude oil and
refined products.
A Strategic Transformation
Energy Transfer commenced several initiatives to expand services
in response to changing market dynamics with an emphasis on
geographic, business-line and fee-based diversification.
Key 2012 Milestones include:
• Exited a noncore business through the contribution of our
propane business to AmeriGas at an attractive valuation; the
transaction also reduced our exposure to the weather-sensitive
propane business.
• In connection with Energy Transfer Equity’s acquisition of
Southern Union, we acquired Southern Union’s 50% interest
in Florida Gas Transmission. This strategic acquisition expanded
our geographic reach into Florida with an emphasis on regu-
lated, stable fee-based income.
• Completed the Sunoco acquisition, which included the general
partner interests, Incentive Distribution Rights, a 32.4% limited
partner interest in Sunoco Logistics Partners (SXL), and the
Sunoco-branded gasoline and convenience store retail business.
• Expanded our business platform to include transporting
heavier hydrocarbons
• Retail business generates stable cash flows from
approximately 5,000 retail locations in the United States
• Assumed control of Southern Union assets through the
formation of ETP Holdco to maximize commercial and
operational strategies
• Announced an agreement to sell the regulated utilities, which
continues efforts to streamline our asset portfolio through the
divestiture of noncore assets.
• Eagle Ford Shale and Permian Basin NGL build-out of more than
$2.1 billion of predominantly fee-based projects, on time and
on budget, to diversify Energy Transfer into higher margin rich
gas and liquids business. Projects included:
• Red River Pipeline
• Mont Belvieu Fractionator I
• West Texas Gateway Pipeline
• Justice Pipeline
• Kenedy Processing Plant (Karnes County Processing Plant)
Looking Ahead
Having completed several major transactions in 2012, our core
focus is to continue delivering on our promise to simplify our
structure to provide greater transparency, while optimizing our
assets and resuming distribution growth.
Simplify Structure: The announced sale of Southern Union’s
regulated utilities (expected 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
structure, which in turn provides greater transparency for our
Unitholders.
Optimize Our Assets: We have a significant number of strategic
initiatives in progress, including the continued infrastructure
build-out in the Eagle Ford Shale and Permian Basin, the Trunkline
pipeline conversion from natural gas to crude oil service, and the
Trunkline LNG export project. In addition, an extremely important
growth target for our partnership is the exportation of liquefied
petroleum gas (LPG) in response to the continued growth in
North American LPG production and the increasing demand
internationally for LPG supplies. In order to capitalize on this
business opportunity, we intend to construct an LPG export/import
facility on the Gulf Coast as a joint project between our affiliate
partnership, SXL, and our Lone Star NGL joint venture with Regency.
Resume Distribution Growth: In closing, it is important to take this
opportunity to emphasize again our commitment to providing
increased value by returning to an environment of distribution
growth for our Unitholders. Even though we have been able to
maintain a strong payout of distributions to our Unitholders
($3.575 per common unit on an annualized basis) during a time
when many have not, we understand that increasing distributions is
a must for us going forward.
We thank you for believing in us.
Unitholder Letter
Kelcy L. Warren
Chairman of the Board and Chief Executive Officer