Sunoco 2015 Annual Report Download - page 21

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ITEM 1A. RISK FACTORS
We believe that the following risk factors address the known material risks related to our business, partnership structure
and debt obligations, as well as the material tax risks to our common unitholders. If any of the following risks were to actually
occur, our business, results of operations, financial condition and cash flows, as well as any related benefits of owning our
securities, could be materially and adversely affected.
Energy Transfer Partners, L.P. ("ETP") is the controlling member of our general partner interest and receives all of our
incentive distribution rights. Additionally, ETP owns 67.1 million common units and 9.4 million Class B units, which
represents a 27.1 percent limited partner ownership interest in the Partnership. We are a consolidated subsidiary of ETP.
The risk factor information presented below reflects the impacts of these transactions, including the change in the general
partner ownership, and the ongoing business implications.
RISKS RELATED TO OUR BUSINESS
If we are unable to generate sufficient cash flow, our ability to pay quarterly distributions to our common unitholders at
current levels or to increase our quarterly distributions in the future, could be materially impaired.
Our ability to pay quarterly distributions depends primarily on cash flow, including cash flow from financial reserves and
credit facilities, and not solely on profitability, which is affected by non-cash items. As a result, we may pay cash distributions
during periods when we record net losses and may be unable to pay cash distributions during periods when we record net
income. Our ability to generate sufficient cash from operations is largely dependent on our ability to successfully manage our
businesses which may also be affected by economic, financial, competitive, and regulatory factors that are beyond our control.
To the extent we do not have adequate cash reserves, our ability to pay quarterly distributions to our common unitholders at
current levels could be materially impaired.
An increase in interest rates may cause the market price of our units to decline.
Like all equity investments, an investment in our units is subject to certain risks. In exchange for accepting these risks,
investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments.
Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted rates of return by purchasing
government-backed debt securities may cause a corresponding decline in demand for riskier investments generally, including
yield-based equity investments such as publicly traded limited partnership interests. Reduced demand for our units resulting
from investors seeking other investment opportunities may cause the trading price of our units to decline.
A material decrease in demand driven by unfavorable crude oil prices could materially and adversely affect our results of
operations, financial position or cash flows.
The volume of crude oil transported through our integrated pipelines, terminal facilities and acquisition and marketing
assets depends on the availability of attractively priced crude oil produced or received in the areas served by our assets. A
period of sustained crude oil price declines, as experienced in 2014 and 2015, could lead to a decline in drilling activity,
production and import levels in these areas. Similarly, a period of sustained increases in the price of crude oil supplied from any
of these areas, as compared to alternative sources of crude oil available to our customers, could materially reduce demand for
crude oil in the these areas. In either case, the volumes of crude oil transported through our pipelines, terminal facilities and
acquisition and marketing assets could decline, and it could likely be difficult to secure alternative sources of attractively priced
crude supply in a timely fashion or at all. If we are unable to replace any significant volume declines with additional volumes
from other sources, our results of operations, financial position or cash flows could be materially and adversely affected.
A material decrease in demand resulting from unfavorable natural gas liquids ("NGLs") prices could materially and
adversely affect our results of operations, financial position, or cash flows.
Any significant and prolonged change in the actual or expected demand for NGLs could have an adverse impact on the
volumes transported through our pipelines and/or terminals, or bought and sold through our acquisition and marketing assets.
Changes in demand could result from additional regulatory restrictions on the extraction of NGLs that would significantly
increase the cost of extraction and procurement; changes in technology affecting the mix of energy products available; or
changes in laws, regulations, or costs related to exportation. Any material decrease in demand could have a material adverse
effect on our results of operations, financial position, or cash flows.