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Which Segment Will Drive Energy Transfer Partners’ 1Q16 Results?

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ETP’s Midstream segment

Energy Transfer Partners’ (ETP) Midstream segment mainly provides natural gas gathering and processing services. The segment’s 4Q15 adjusted EBITDA fell 26.7% YoY (year-over-year) versus 4Q14. The trend is expected to continue in the first quarter of 2016, driven by a decline in the segment’s non-fee-based processing margins due to the fall in natural gas prices.

Average US natural gas prices by the end of 1Q16 were ~$2.0 per MMBtu (million British thermal units) versus ~$2.8 per MMBtu during the first quarter of 2015. Enable Midstream Partners (ENBL), Midcoast Energy Partners (MEP), and Summit Midstream Partners (SMLP) are exposed to natural gas prices through their natural gas processing businesses.

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ETP’s Liquids Transportation and Services segment

ETP’s Liquids Transportation and Services segment provides NGLs (natural gas liquids) transportation and fractionation services. The segment’s 1Q16 performance is expected to be driven by higher fractionation volumes and higher NGLs (natural gas liquids) volumes. This performance might be offset by a decline in crude oil throughput volumes due to the decline in Eagle Ford Production. According to the EIA’s drilling productivity data, the Eagle Ford’s three-month average crude oil production fell 23.6% YoY to 1.28 Mbpd (million barrels per day) in 1Q16 compared to 1.68 Mbpd in 1Q15.

ETP’s Interstate and Intrastate Transportation segments

ETP’s Interstate and Intrastate Transportation and Storage segments are involved in natural gas transportation, storage, and sales. They might see a YoY decline in their 1Q16 EBITDA[1. Earnings before interest, tax, depreciation, and amortization] due to a decline in transportation throughput volumes. However, this decline might be offset by higher storage volumes.

ETP’s Investment in Sunoco Logistics’ segment

ETP’s Investment in Sunoco Logistics segment represents Sunoco Logistics Partners’ (SXL) crude oil and NGLs (natural gas liquids) transportation, storage, and marketing business. We’ll analyze SXL’s operation performance by segment in the next article of this series. ETP forms 0.03% of the Global X SuperDividend U.S. ETF (DIV).

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