Energy Transfer 2010 Annual Report Download - page 150

In August 2009, we acquired Energy Transfer Group, L.L.C. (“ETG”), as described in Note 12. In
connection with this transaction, we assumed liabilities of $33.5 million and recorded goodwill of $1.7
million.
2008
During the year ended December 31, 2008, HOLP and Titan collectively acquired substantially all of the
assets of 20 propane businesses. The aggregate purchase price for these acquisitions totaled $96.4 million,
which included $76.2 million of cash paid, net of cash acquired, liabilities assumed of $8.2 million, 53,893
Common Units issued valued at $2.2 million and debt forgiveness of $9.8 million. The cash paid for
acquisitions was financed primarily with ETP’s and HOLP’s revolving credit facilities. We recorded $15.3
million of goodwill in connection with these acquisitions.
4. INVESTMENTS IN AFFILIATES:
Midcontinent Express Pipeline LLC
On May 26, 2010, we completed the transfer of the membership interests in ETC Midcontinent Express
Pipeline III, L.L.C. (“ETC MEP III”) to ETE pursuant to the Redemption and Exchange Agreement between
us and ETE, dated as of May 10, 2010 (the “MEP Transaction”). ETC MEP III owns a 49.9% membership
interest in Midcontinent Express Pipeline LLC (“MEP”), our joint venture with Kinder Morgan Energy
Partners, L.P. (“KMP”) that owns and operates the Midcontinent Express pipeline. In exchange for the
membership interests in ETC MEP III, we redeemed 12,273,830 ETP Common Units that were previously
owned by ETE. We also paid $23.3 million to ETE upon closing of the MEP Transaction for adjustments
related to capital expenditures and working capital changes of MEP. Subsequent to September 30, 2010, we
received a cash closing adjustment of $8.2 million from ETE. We also granted ETE an option that cannot be
exercised until May 27, 2011, to acquire the membership interests in ETC Midcontinent Express Pipeline II,
L.L.C. (“ETC MEP II”). ETC MEP II owns a 0.1% membership interest in MEP. In conjunction with this
transfer of our interest in ETC MEP III, we recorded a non-cash charge of approximately $52.6 million
during 2010 to reduce the carrying value of ETC MEP III’s investment in MEP to its estimated fair value.
As part of the MEP Transaction, on May 26, 2010, ETE completed the contribution of the membership
interests in ETC MEP III and the assignment of its rights under the option to acquire the membership
interests in ETC MEP II to a subsidiary of Regency Energy Partners LP (“Regency”) in exchange for
26,266,791 Regency common units. In addition, ETE acquired all of the equity interest in the general
partner entities of Regency from an affiliate of GE Energy Financial Services, Inc.
Fayetteville Express Pipeline LLC
We are party to an agreement with KMP for a 50/50 joint development of the Fayetteville Express pipeline,
an approximately 185-mile natural gas pipeline that originates in Conway County, Arkansas, continues
eastward through White County, Arkansas and terminates at an interconnect with Trunkline Gas Company
in Panola County, Mississippi. In December 2009, FEP, the entity formed to construct, own and operate this
pipeline, received FERC approval of its application for authority to construct and operate this pipeline. We
are the operator of the pipeline, which has an initial capacity of 2.0 Bcf/d. As of December 31, 2010, FEP
has secured binding commitments for a minimum of 10 years for transportation of approximately 1.85 Bcf/
d. The new pipeline will interconnect with Natural Gas Pipeline Company of America (“NGPL”) in White
County, Arkansas, Texas Gas Transmission in Coahoma County, Mississippi and ANR Pipeline Company
in Quitman County, Mississippi. NGPL is operated and partially owned by Kinder Morgan, Inc. Kinder
Morgan, Inc. owns the general partner of KMP.
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