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What to Notice in ETE’s and ETP’s 4Q17 Results


Dec. 4 2020, Updated 10:52 a.m. ET

Leverage position

Energy Transfer Partners’ (ETP) and Energy Transfer Equity’s (ETE) high leverage have remained a worry for several quarters. ETP ended 3Q17 with total outstanding debt of $34.3 billion, which represents a 4.3% increase compared to its total debt by the end of 2016. Energy Transfer Equity reported total outstanding debt of $45.2 billion at the consolidated level. 

The limited partnership is expected to end 2017 with a YoY (year-over-year) increase of total outstanding debt. On the other hand, Kinder Morgan (KMI) and Williams Companies (WMB) reduced their total outstanding debt by $1.8 billion and $2.5 billion, respectively, in 2017. For details on KMI’s plan for 2018, read Kinder Morgan Reduced Net Debt by $1.8 Billion in 2017.

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Based on the partnership’s TTM EBITDA[1. earnings before interest, tax, depreciation, and amortization] (period ending September 30) and total outstanding debt, the net-debt-to-EBITDA multiple was ~5.5x. The strong EBITDA growth in the recent quarters has helped ETP in lowering its leverage. However, the partnership’s leverage remains above the industry standards despite recent measures.

This warranted a further strengthening of its balance sheet position, which the partnership did. It recently announced the sale of its compression business to USA Compression Partners (USAC) in a deal valued at $1.8 billion. This is expected to bring down the partnership’s leverage in 2018.

However, this could have a low impact at the level of Energy Transfer Equity, which has agreed to acquire USAC’s GP (general partner) and USAC common units for $250 million in cash.

Project updates

Investors are expected to anticipate any updates on the final phase of Energy Transfer Partners’ Rover Pipeline project. The partnership has successfully placed Phase 1A and Phase 1B of the Rover project by the end of 2017. This increased total transportation capacity of Rover Pipeline to 1.7 bcfpd (billion cubic feet per day).

The partnership is expecting to place the final phase of the project by the first quarter of 2018. Once fully complete, the pipeline will have a total takeaway capacity of 3.25 bcfpd (billion cubic feet per day) from Marcellus and Utica Shale plays to “markets across the United States as well as into the Union Gas Dawn Storage Hub in Ontario, Canada,” as noted in the related press release.

Apart from the Rover pipeline, ETP is expecting to bring online some other major projects in 2018, including the Revolution System, Mariner East 2 pipeline, Phase 2 of the Bayou Bridge, and Lone Star Frac V.

In the next article, we’ll analyze Energy Transfer Partners’ recent market performance.


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