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A Sneak Peek at Energy Transfer Partners’ Segments in 4Q16

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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 4Q16 performance might be negatively impacted by an expected fall in gathering and processing volumes.

The fall is due to a production decline in some regions, including the Eagle Ford Shale and the Barnett Shale. That could be slightly offset by resilient Permian volumes and higher processing margins.

According to the monthly drilling productivity report released by the EIA (U.S. Energy Information Administration), natural gas production in the Eagle Ford region fell 19.4% YoY (year-over-year) in 4Q16 compared to 4Q15. At the same time, the Permian region rose 14.1% YoY.

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ETP’s Liquids Transportation and Services segment

ETP’s Liquids Transportation and Services segment provides NGL (natural gas liquids) transportation and fractionation services. The segment’s 4Q16 performance is expected to be driven by higher fractionation volumes and higher NGL transportation volumes.

ETP’s Interstate and Intrastate Transportation segments

ETP’s Interstate and Intrastate Transportation and Storage segments, which are involved in natural gas transportation, storage, and sales, might benefit from higher natural gas demand and prices. Average natural gas prices in 4Q16 were $3.18 per MMBtu (million British thermal unit) compared to $2.23 per MMBtu in 4Q15, a rise of 42.6%. The Interstate segment’s performance might be negatively impacted by the restructuring of the Tiger pipeline.

ETP’s investment in the Sunoco Logistics segment

ETP’s investment in the Sunoco Logistics segment represents Sunoco Logistics Partners’ (SXL) crude oil, refined products, and NGL transportation, storage, and marketing business. We’ll analyze SXL’s segmental performance in a later part of this series.

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