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ETP Continued to Beat Analyst Estimates in 4Q17

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ETP’s 4Q17 and 2017 adjusted EBITDA

Energy Transfer Equity (ETE) and its subsidiary, Energy Transfer Partners (ETP), reported their 4Q17 earnings on February 21, 2018. Energy Transfer Partners’ adjusted EBITDA rose to $1.9 billion in 4Q17 from $1.5 billion in 4Q16, a YoY (year-over-year) increase of 30.5%. Moreover, the partnership beat its 4Q17 EBITDA estimate by a huge margin of 10.2%.

Peer Williams Partners (WPZ) posted a 3.3% YoY increase in adjusted EBITDA in 4Q17. For post-earnings analysis of Williams Partners and Williams Companies (WMB), read Analyzing Williams Companies and Williams Partners’ 4Q17 Results.

The YoY growth in ETP’s 4Q17 EBITDA was driven by a strong performance across four out of five of its business segments, particularly its Crude Oil Transportation and Services segment. We’ll look into this more in the next article.

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For fiscal 2017, the partnership reported adjusted EBITDA of $6.7 billion compared to $5.7 billion in 2016, a 17.1% YoY increase. Energy Transfer Partners’ 2017 EBITDA growth is comparable to the industry median of 19%. Moreover, the partnership’s annual EBITDA growth is higher than that of most of its peers including Enterprise Products Partners (EPD) and Kinder Morgan (KMI).

Strong organic expansion, higher commodity margins, strong Permian volumes, and the PennTex Midstream acquisition were some of the factors that positively impacted ETP’s operating performance in 2017. The above positives were offset by higher operation and maintenance expenses and a decline in throughput volumes along some pipeline systems.

ETP’s 4Q17 distributable cash flows

Energy Transfer Partners’ distributable cash flows increased to $1.3 billion in 4Q17 compared to $958 million in 4Q16, a YoY increase of 40.1%. ETP’s huge YoY distributable cash flows growth was mainly driven by strong EBITDA growth, which drove the partnership’s distribution coverage higher to 1.30x in 4Q17.

In the next article, we’ll look into Energy Transfer Equity’s 4Q17 distributable cash flows.

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