Energy Transfer 2015 Annual Report Download - page 116

Table of Contents
and extent of future environmental laws and regulations, inflation rates, terms of consent agreements or remediation permits with regulatory agencies and the
determination of the Partnership’s liability at the sites, if any, in light of the number, participation level and financial viability of the other parties. The
recognition of additional losses, if and when they were to occur, would likely extend over many years. Management believes that the Partnership’s exposure
to adverse developments with respect to any individual site is not expected to be material. However, if changes in environmental laws or regulations occur or
the assumptions used to estimate losses at multiple sites are adjusted, such changes could impact multiple facilities, formerly owned facilities and third-party
sites at the same time. As a result, from time to time, significant charges against income for environmental remediation may occur; however, management
does not believe that any such charges would have a material adverse impact on the Partnership’s consolidated financial position.
Deferred Income Taxes. ETP recognizes benefits in earnings and related deferred tax assets for net operating loss carryforwards (“NOLs”) and tax credit
carryforwards. If necessary, a charge to earnings and a related valuation allowance are recorded to reduce deferred tax assets to an amount that is more likely
than not to be realized by the Partnership in the future. Deferred income tax assets attributable to state and federal NOLs and federal tax alternative minimum
tax credit carryforwards totaling $155 million have been included in ETP’s consolidated balance sheet as of December 31, 2015. All of the deferred income
tax assets attributable to state and federal NOL benefits expire before 2035 as more fully described below. The state NOL carryforward benefits of
$122 million (net of federal benefit) begin to expire in 2016 with a substantial portion expiring between 2029 and 2035. The federal NOLs of $18 million
($6 million in benefits) will expire in 2032 and 2034. Federal alternative minimum tax credit carryforwards of $27 million remained at December 31, 2015.
We have determined that a valuation allowance totaling $121 million (net of federal income tax effects) is required for the state NOLs at December 31, 2015
primarily due to significant restrictions on their use in the Commonwealth of Pennsylvania. In making the assessment of the future realization of the deferred
tax assets, we rely on future reversals of existing taxable temporary differences, tax planning strategies and forecasted taxable income based on historical and
projected future operating results. The potential need for valuation allowances is regularly reviewed by management. If it is more likely than not that the
recorded asset will not be realized, additional valuation allowances which increase income tax expense may be recognized in the period such determination
is made. Likewise, if it is more likely than not that additional deferred tax assets will be realized, an adjustment to the deferred tax asset will increase income
in the period such determination is made.
Forward-Looking Statements
This annual report contains various forward-looking statements and information that are based on our beliefs and those of our General Partner, as well as
assumptions made by and information currently available to us. These forward-looking statements are identified as any statement that does not relate strictly
to historical or current facts. When used in this annual report, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “estimate,” “intend,”
“could,” “believe,” “may,” “will” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify
forward-looking statements. Although we and our General Partner believe that the expectations on which such forward-looking statements are based are
reasonable, neither we nor our General Partner can give assurances that such expectations will prove to be correct. Forward-looking statements are subject to a
variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our
actual results may vary materially from those anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on our
results of operations and financial condition are:
• the volumes transported on our pipelines and gathering systems;
• the level of throughput in our processing and treating facilities;
• the fees we charge and the margins we realize for our gathering, treating, 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 and the availability and price of NGL supplies;
• the level of domestic oil, natural gas and NGL production;
• the availability of imported oil, natural gas and NGLs;
• actions taken by foreign oil and gas producing nations;
• the political and economic stability of petroleum producing nations;
• the effect of weather conditions on demand for oil, natural gas and NGLs;
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