A Closer Look at Energy Transfer Partners LP (ETP)’s Earnings

The distributions
As I noted earlier this week, we already knew there was no distribution increase coming. Distributable cash flow is extremely important for a potential increase, however, and Energy Transfer did not disappoint. After reporting DCF of $339.5 million in the third quarter, ETP recorded $488 million in the fourth. That is a $169 million increase over the fourth quarter of 2011, and gives investors two straight quarters of year-over-year DCF growth.

CFO Martin Salinas reiterated Energy Transfer’s commitment to growing its distribution, and emphasized the importance of new projects and ETP’s Eagle Ford footprint to drive DCF growth .

A look ahead
Salinas specifically mentioned two projects that will contribute to future cash flows: the Trunkline conversion, and the sale of the partnership’s LDC assets.

I touched on the Trunkline conversion last September, but this is really the first official announcement regarding the switch from natural gas to crude oil on certain segments of the pipeline that runs from the Gulf Coast up to Patoka, Ill. The project is a 50/50 joint venture with Enbridge Inc (USA) (NYSE:ENB) and is intended to carry crude south from the hub at Patoka to the hub at St. James, La. If everything goes according to plan, this will be the first crude pipeline to connect the Midwest to St. James. Management expects the line to be in service in 2015.

Energy Transfer’s LDC assets are being acquired by the Laclede Group for $1 billion. The divestiture includes all the assets of Missouri Gas Energy and the New England Gas Company that ETP picked up in the Southern Union acquisition. The deal is expected to close in the third quarter of this year, and management expects to use the cash to deleverage.

Foolish takeaway
This was a great quarter for Energy Transfer Partners, and its performance will go a long way in encouraging investors that the partnership has the ability to right the ship and generate nice returns.

The article A Closer Look at Energy Transfer Partners’ Earnings originally appeared on Fool.com and is written by Aimee Duffy.

Fool contributor Aimee Duffy has no position in any stocks mentioned. If you have the energy, follow her onTwitter, where she goes by @TMFDuffy.The Motley Fool has no position in any of the stocks mentioned.

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