ENERGY TRANSFER Analyst Day Presentation Wednesday, November 20, 2013
INTRODUCTIONS Kelcy Warren CEO & Chairman Mackie McCrea President & Chief Operating Officer, ETP Bob Owens President, Sunoco Retail Martin Salinas Chief Financial Officer, ETP Jamie Welch Group Chief Financial Officer…
INTRODUCTION & PARTNERSHIP UPDATE Kelcy Warren
WE HAVE MADE SIGNIFICANT PROGRESS TOWARD ACHIEVING OUR GOALS OF THE PAST YEAR Our Goals What Weve Accomplished Increase LP Unit Distributions Increased ETPs distributions beginning in Q3 2013 Enhance Value Through Announced…
ENERGY TRANSFER TODAY - A LEADING MIDSTREAM ENERGY PLATFORM Energy Transfer Asset Overview ETP SXL RGP Sunoco Retail Locations includes Distributers, Dealers, and Co-ops Growth Projects Eastern Gulf Crude Access Pipeline…
ENERGY TRANSFERS TRANSFORMATION INTO A DIVERSIFIED ENERGY PARTNERSHIP Intrastate/Midstream & Propane Largest intrastate pipeline system in Texas and Heritage Propane Interstate Pipeline Build-out Diversified into stable, long-term…
COMMERCIAL OVERVIEW & GROWTH UPDATE Mackie McCrea
WHAT WILL DRIVE ETPS FUTURE GROWTH W. Texas Gateway Kenedy & Chisholm In Service Lone Star Frac I Godley Expansion Jackson Plant (1-3) Lone Star Frac II REM Expansion & Jackson 4 Under Development West Texas Cryo…
ETPS SIGNIFICANT GROWTH IN EAGLE FORD
ETPS EAGLE FORD STRATEGY FROM 2010 THROUGH 2013 AND BEYOND Advance Advance Extending Initial System Processing Gathering Vertical Step-out Integration & Takeaway Footprint Value Chain Capacity San Cajos 38 miles REM 215 miles…
ETP EAGLE FORD RICH GAS FOOTPRINT Mt. Belvieu Fracs 1 & 2 200 Mbpd Justice 20 REM 30 & 42 340 Mbpd Kenedy 200 MMcf/d Jackson 800 MMcf/d REM Expansion 12
EAGLE FORD PROCESSING CAPACITY UP BY 175% 4.7 Bcfd New Capacity Producing 550 Mbpd NGL 2010 2.7 Bcf/d Total 2014E 7.4 Bcf/d Total EPD 1,523 DPM 760 ETP 1,340 EPD 623 CPNO 1,325 DPM 1,160 CPNO 525 XOM 488 TEAK 400 XOM…
NGLS RECENT AND FUTURE GROWTH
NGL GROWTH OVERVIEW Recent growth Acquired LDH Energy assets in May 2011 210 Mbpd raw make pipeline expansion (Gateway) in-service November 2012 1st 100 Mbpd fractionator in-service December 2012 2nd 100 Mbpd fractionator in-service…
MARINER SOUTH PROJECT Joint project between SXL and Lone Star Will integrate SXLs existing Nederland terminal and pipeline from Mont Belvieu with Lone Stars Mont Belvieu fractionation and storage facilities Will create a world…
NEDERLAND TERMINAL 20
SUNOCO LOGISTICS FOOTPRINT Marcus Hook Terminal Nederland Terminal Explorer (JV) Eagle Point Terminal West Shore (JV) SXL Crude Wolverine (JV) SXL Refined Product Yellowstone (JV) MVPL (JV) WTG (JV) Inland (JV) Organic…
RIO BRAVO CRUDE PIPELINE PROJECT Conversion of HPL gas pipeline Convert 84 miles of gas pipelines to crude service Construct meter stations, pump stations, interconnects and 3 miles of new pipe Re-connect gas production and…
EASTERN GULF CRUDE ACCESS PROJECT TRUNKLINE 30 CONVERSION First direct crude oil pipeline to the Eastern Gulf Coast refinery market from the Midwest Project status: Received FERC approval of abandonment in November 2013…
Interstate Pipeline INTERSTATE PIPELINEAssets ASSETS Fayetteville Express Florida Gas Transmission Midcontinent Express Panhandle Eastern Sea Robin Tiger Pipeline Transwestern Trunkline Gas 24
ETP NATURAL GAS PIPELINES WELL POSITIONED TO BENEFIT FROM LNG EXPORTS
LAKE CHARLES LNG FACILITY PIPELINE HEADER SYSTEM 26
VALUE CREATION THROUGH ACQUISITION & INTEGRATION Opportunistic acquisitions position Sunoco to generate incremental DCF for ETP through expansion and synergies/efficiencies: Enabling of supply chain improvements in both fuel and…
POSITIONING FOR THE FUTURE OF TRANSPORTATION FUELS Evolving automotive fleet CNG LNG Hybrids Other opportunities 33
ETP FINANCE UPDATE Martin Salinas
EXECUTING ON OUR FINANCIAL GOALS & OBJECTIVES Resume Distribution Growth Increased quarterly distribution to 0.905 per unit (3.62 annualized) for Q3 2013 Targeting ongoing distribution growth in a sustained manner Achieve &…
DIVERSIFICATION & GROWTH HAVE CREATED A STRONGER PLATFORM Adjusted EBITDA by Operating Segment Interstate Intrastate Midstream NGL ( millions) Retail Marketing Crude / Refined Products Propane Other 4,000 199 2010 LTM Q3 2013…
SXL CONTINUES TO BE A STRONG CONTRIBUTOR TO THE ENERGY TRANSFER PLATFORM Relative Price Performance (left axis) Annualized Yield (right axis) SXL has delivered impressive results over the past year 160% 5.0% Q3 2013 LP Distributions…
ETP 2014 CAPITAL EXPENDITURES OUTLOOK millions Growth Maintenance Low High Low High Intrastate Transportation & Storage 170 190 25 30 Interstate Transportation & Storage 40 60 115 130 Midstream 325 375 10 15 1 NGL Transportation…
FINANCING & LIQUIDITY SUMMARY ETP will continue to fund its operations in a balanced manner, consistent with past practices We will be opportunistic in accessing the capital markets to finance growth and manage debt maturities across…
ETP DEBT MATURITY PROFILE Maturities by Year Weighted Avg. ( millions) Interest Rate by Year of Maturity 1,250 10% 9.1% 9% 8.0% 1,000 7.5% 8% 6.9% 6.8% 6.6% 6.6% 6.5% 7% 6.3% 6.2% 6.0% Overall 5.6% 750 6% Weighted Avg.…
ETPS UNIT PRICE HAS PERFORMED WELL OVER THE PAST 12 MONTHS LTM Relative Price Performance ETP KMP EPD PAA 140% 130% 120% 110% 100% 90% 11/12/12 2/11/13 5/13/13 8/12/13 11/12/13 Source: Bloomberg as of…
BUT THERE IS STILL OPPORTUNITY TO IMPROVE OUR COST OF EQUITY Annualized LP Unit Yield Comparison ETP KMP EPD PAA 9% 8% 7% 6% 5% 4% 3% 11/13/10 11/13/11 11/12/12 11/12/13 Source: Bloomberg as of…
AND OUR COST OF DEBT 10-Year Note Yield Comparison ETP KMP EPD PAA 6% 5% 4% 3% 2% 11/13/10 11/13/11 11/12/12 11/12/13 Source: Management and bank estimates as of 11/13/13 43
WE SEEK TO LOWER OUR COST OF CAPITAL AND MANAGE OUR CAPITAL STRUCTURE IN A PRUDENT MANNER Strategic initiatives have created positive Illustrative Impact of Recent Transactions momentum for ETP Excluding Including Transactions…
WE CONTINUE TO DRIVE DOWN COSTS AND EXTRACT SYNERGIES FROM RECENT ACQUISITIONS With the acquisitions of LDH Energy (Lone Star), SUG and SUN behind us, the integration of these assets was our primary focus in 2013 Integration is now…
ETP CONTRACT OVERVIEW Primary Revenue Mix % Fee-Based Demand fees consisting of fixed fees for the reservation of an agreed amount Intrastate Transportation & of throughput capacity Transportation fees based on the actual throughput…
COMMODITY EXPOSURE Significant fee-based cash flows minimize Commodity Price Sensitivity volatility from commodity price movements Hypothetical As of October 31, 2013, weve hedged 70% of Price 2014 our 2013 and 40% of our 2014…
LNG OVERVIEW Jamie Welch
CURRENT LAKE CHARLES ORGANIZATIONAL STRUCTURE 60% ETE 40% ETP Southern Union Company 100% owned by ETP 100% Energy Transfer BG LNG Export, LLC Trunkline LNG Holdings LLC 100% 80% Liquefaction 20% Department of…
LAKE CHARLES OPERATING ASSETS TRUNKLINE LNG OVERVIEW Terminal was completed in 1982 It is located on an approximately 400-acre site in the Lake Charles Harbor and Terminal District (adding another 200 acres for liquefaction) Three…
LAKE CHARLES OPERATING ASSETS WATERWAY, DOCKAGE, & SEND-OUT SYSTEM Trunkline LNG is connected to Trunkline Gas Pipeline System 51
REGAS EXCHANGE TRANSACTION (a) (b) Exchange Redemption ETP Purchases Repayment of 1.0 bn ETP Subsequently 18.71 mm ETP Trunkline LNG Company intercompany note Transfers Trunkline LNG Common Units LLC from SUG Company LLC to ETE Held by…
TRANSACTION RATIONALE: REGAS EXCHANGE Transaction is immediately DCF per unit accretive to ETP and ETE and is expected to be credit ratings neutral Trunkline LNG is expected to form the starting nucleus of a new stand alone public MLP…
CASH FLOW SUMMARY: LONG TERM TAKE OR PAY CONTRACTS WITH BG EBITDA ( in millions) 186 185 185 165 Continues to 2044 100 2012 2013 2014-2015 2016-2019 2020-2030 There is NO debt at Trunkline LNG: Balance sheet is…
LAKE CHARLES LIQUEFACTION
LAKE CHARLES LNG Adding liquefaction transforms TLNG into a bi-directional facility capable of exporting and importing LNG Liquefaction will operate as Lake Charles LNG By taking advantage of the four LNG storage tanks and the marine…
LAKE CHARLES LNG PROPOSED 3 TRAIN OPERATION DATES Train 1: March 31, 2019 (45 months) 6 9 month Train 2: December 31, 2019 (54 months) sequence per train Train 3: September 30, 2020 (63 months) Capacity up to 16 mtpa 2.6 Bcf/d from…
PROJECT DEVELOPMENT TIMELINE FEED Study DOE FTA & non-FTA Approvals EPC Bid Preparation FID In-Service mid-2019 Pre-FEED Study Complete Definitive EPC Award FERC Pre-Filing Approved Agreements Construction Full In-service PDA…
PROJECT COMPARISON: KEY VITALS Sabine Pass Liquefaction (Trains 1 4) Lake Charles (Trains 1 3) Credit metrics Investment grade metrics Investment grade metrics post-completion EPC contractor Bechtel TBD Construction Chenieres…
DEBT FINANCING Strategic financing discussions will commence in Summer 2014 Situation Overview Lake Charles LNG benefits from a favorable contractual structure and BGs position as arguably the most successful portfolio player in the…
DEBT FINANCING Lake Charles LNG intends to maximize commitments from the commercial banks in order to secure the lowest flexible funding costs Debt Strategy Capital markets options would be considered for upfront deposits or lump…
DEBT FINANCING ALTERNATIVES Lake Charles LNG has a number of alternatives available to execute a large scale project financing Loan markets Bond markets Commercial Institutional Term Loan Private placement 144A capital markets Deal…
EQUITY FINANCING Equity process will commence prior to finalizing debt commitments As Lake Charles LNG finalizes its equity strategy, potential equity partners considered will depend on: Investment structure: private project-level…
SOURCES AND USES ( in millions) Sources of funds Amount Percent Uses of funds Amount Percent Equity Investment 1,600 15.0% EPC contract 9,000 82.0% Cash flows from Trains 1 & 2 1,000 10.0% Development expenses 200 2.0%…
FINANCING ASSUMPTIONS Project costs of 9.2 billion unlevered (actual expected cost escalated to Mid 2015), resulting in 11 billion in total costs when financed with equity, debt and cash flows during construction 1.6 billion of total…
DISTRIBUTABLE CASH FLOW BENEFIT TO ETE AND ETP From 2021 onwards, Annual Distributable Cashflow to ETE and ETP expected to be 885 million ETE POTENTIAL EQUITY ETP MARKET VALUE UPSIDE 765 million 470 million per annum4 per…
POTENTIAL MLP OPTION
POTENTIAL MLP TRANSACTION Creation of MLP structure for Trunkline LNG Company LLC and IPO of Common Units of ET LNG LP 60% 100% ETE Public Common Units and Sub Units ET LNG Common Units MLP GP issued for cash 40% in IPO ETP…
EXPECTED LAKE CHARLES LNG CONTRIBUTION TO ET LNG MLP (a) (b) Exchange Exchange ETE and ETP Contribute Class A PIK Units of ET LNG MLP issues 3rd Party Energy Transfer LNG ET LNG MLP issued Class B PIK Units to a Investor(s) Export, LLC…
POTENTIAL ET LNG MLP OPTIMIZATION FOR LAKE CHARLES LNG Potential to reduce 1.6 billion required equity investment for Liquefaction Construction Utilize leverage capacity at ET LNG MLP since TLNG has no debt Use of ET LNG MLP IPO…
DISTRIBUTABLE CASHFLOW IMPACT OF ET LNG MLP Less project debt amortization for Lake Charles LNG Increases overall distributable cashflow Likely credit rating benefit Expected lower interest rate on debt (8.4 bn aggregate debt)…
ETE FINANCE UPDATE Jamie Welch
ETE FINANCIAL GOALS & OBJECTIVES Continue to Grow Quarterly Distribution Increases Facilitate Growth at Underlying MLP Achieve & Maintain 1.00x Significant Distribution Distribution Coverage Growth Maintain & Improve…
ETES CASHFLOWS HAVE SIGNIFICANTLY GROWN AND DIVERSIFIED ETEs structure aligns its interest in maintaining and increasing LP distributions at ETP, RGP and SXL over time Cash distribution increases to unitholders, as well as cash…
ILLUSTRATIVE DISTRIBUTIONS TO ETE ( in millions) 2014E ETP interests (1) LP 116 GP 21 2.19 / unit based on 316.5 million IDR 695 ETP units IDR relinquishments (109) Distributions from ETP interests 723 RGP interests (2) LP 52 GP…
IDR SUBSIDIES AND MANAGEMENT FEES: PRO FORMA REGAS EXCHANGE ( in millions) 2014E 2015E 2016E 2017E 2018E 2019E Total Regas-related management fees 75.0 75.0 - - - - 150.0 Regas GP subsidies - - 50.0 50.0 45.0 35.0 180.0 Existing…
ETE FINANCING UPDATE On October 30th, ETE launched a tender offer for a portion of its 7.5% Senior Notes due October 2020 612 MM of Notes were validly tendered by the early tender deadline Accepted 600 MM of Notes tendered at a total…
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