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Energy Transfer Partners’ balance sheet reveals its growth strategy

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Energy Transfer Partners’ balance sheet

Continuing our analysis of Energy Transfer Partners’ (ETP) financial statements, here, we’ll see how its balance sheet has evolved over the last seven years.

A balance sheet gives you a snapshot of a company’s assets, liabilities, and net assets (or equity) on a particular date—usually the end of a quarter or year.

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Assets

Energy Transfer Partners’ assets have grown about 8x, from just under $8 billion at the end of 2007 to just under $50 billion as of 3Q14.

In comparison, Enterprise Product Partners (EPD), Plains All American Pipeline (PAA), Magellan Midstream Partners (MMP), and Markwest Energy Partners (MWE) had balance sheet sizes of ~$43 billion, ~$22 billion, ~$5.3 billion, and ~$10.5 billion, respectively, at the end of 3Q14.

These five companies are the top five holdings of the Alerian MLP ETF (AMLP), together accounting for ~40% of the fund. ETP alone accounts for just under 8% of AMLP.

Here too, we can see the effect of Energy Transfer Partners’ 2012 acquisitions. Its assets have tripled from just over $15.5 billion at the end of 2011.

The acquisitions’ effect on Energy Transfer Partners’ business segments is also clear, with Intrastate Transport & Storage and its interest in Sunoco Logistics (SXL) showing the largest bumps.

Indeed, the acquisition seems to have helped ETP build its cash reserves too, which have ballooned from ~$100 million in 2011 to ~$1.1 billion at the end of 3Q14.

Liabilities and equity

Energy Transfer Partners’ liabilities and equity too show a similar “step-change” following its recent acquisitions.

One thing in particular to note here would be the jump in Energy Transfer Partners’ equity. It has risen despite very small contributions from retained earnings

MLPs pay most of their earnings out as distributions to unitholders. This also means that, in order to fund fresh acquisitions and capital investments to grow distributable cash flows, MLPs like Energy Transfer Partners must issue fresh equity or debt.

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