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Analyzing ETE and ETP’s 2Q17 Earnings

PART:
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Part 2
Analyzing ETE and ETP’s 2Q17 Earnings PART 2 OF 6

Which Segment Drove Energy Transfer Partners’ 2Q17 Performance

Midstream

The Midstream segment, which mainly provides natural gas gathering and processing services, was Energy Transfer Partners’ (ETP) best-performing segment in 2Q17. The segment’s 2Q17 performance was driven by higher processing margins due to a YoY increase in crude oil and NGLs (natural gas liquids) prices, strong Permian volumes, and the recent acquisition of PennTex Midstream. These factors were slightly offset by a decline in gathering and processing volume in some regions, including the Barnett Shale and Eagle Ford.

Which Segment Drove Energy Transfer Partners’ 2Q17 Performance

Crude oil transportation and services

Energy Transfer Partners’ Liquid transportation and services segment was split in two, and the Legacy ETP’s crude oil business merged with legacy SXL’s crude oil business to form Crude Oil Transportation and Services. The legacy ETP’s NGLs business merged with Legacy SXL’s NGLs and refined product business to form NGLs and refined products transportation and services.

The Crude Oil Transportation and Services segment was ETP’s second-best-performing segment in the second quarter with YoY EBITDA growth of 125%. The segment benefited from the placement of the Bakken Pipeline project into service, the Vitol acquisition, and strong Permian volumes. These factors were slightly offset by a decline at ETP’s crude oil acquisition and marketing business and higher SG&A (selling, general, and administrative expenses). We’ll talk more about the industry headwinds in the acquisition and marketing business later in this series.

NGLs and refined products transportation and services

Energy Transfer Partners’ NGLs and refined products transportation and services segment mainly provides refined products and NGLs (natural gas liquids) transportation and NGLs fractionation services. The segment’s 2Q17 performance was driven by higher fractionation volumes due to the ramp-up of lone-star fractionators, higher NGLs transportation volumes, and higher fractionation margins. These factors were partially offset by higher operating and SG&A expenses.

Intrastate Transportation

Energy Transfer Partners’ Intrastate segment’s 2Q17 performance was impacted by contract restructuring on the Tiger pipeline and higher operating expenses. These factors were partially offset by higher natural gas throughput volumes, mainly driven by the commencement of the Trans-Pecos and Comanche Trail pipelines to Mexico, higher natural gas sales, and higher natural gas prices.

Interstate Transportation

Energy Transfer Partners’ Interstate Transportation saw a 5.8% YoY decline in adjusted EBITDA in 2Q17 compared to 2Q16. The segment’s 2Q17 performance was impacted by lower throughput volumes along its Trunkline, Panhandle, and Transwestern pipelines, resulting from lower natural gas demand.

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