Energy Transfer LP (NYSE:ET) Q1 2018 Earnings Conference Call - Final Transcript

May 10, 2018 • 09:00 am ET

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Energy Transfer LP (NYSE:ET) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, ladies and gentlemen, and welcome to Energy Transfer's First Quarter 2018 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Mr. Tom Long. Please go ahead, sir.

Executive
Thomas E. Long

Thank you, operator. Good morning, everyone, and welcome to Energy Transfer's first quarter 2018 earnings call, and thank you for joining us today. I'm also joined by Kelcy Warren, Mackie McCrea, Matt Ramsey, John McReynolds, and other members of the senior management team, who are here to help answer your questions after the prepared remarks. I'll begin today with an overview of our most recent announcements, followed by a discussion of our latest developments on Rover, Mariner East 2, Permian Express 3, Bakken, and other growth projects. Then I will turn our focus to a discussion of Energy Transfer Partners first quarter results, followed by a CapEx discussion, liquidity and funding update, and lastly a distribution discussion.

As a reminder, we will be making forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These are based on our beliefs, as well as certain assumptions and information currently available to us. I will also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non-GAAP financial measures. You will find a reconciliation of our non-GAAP measures on our website. Before turning to recent developments and a growth project update, I just want to start by saying that we are pleased by Energy Transfer's very strong first quarter. ETP's adjusted EBITDA increased by 30% and DCF attributable to the partners of ETP, as adjusted, also increased nearly 30% over the first quarter of last year, pro forma for the merger between ETP and SXL.

I will provide more details later on in the call, but this increase is due to significantly higher results from the Crude Oil Transportation and Services segment, as well as strong growth in the Midstream, NGL and Refined Products, and Interstate segments. I'm also pleased to say that last week we received authorization from FERC to place additional sections of Phase 2 of Rover into service, which allows for the full commercial operation capability of the Market Zone North Segment. We expect construction of Rover will be complete this month. As on ME1, last week we received unanimous vote from the Pennsylvania Public Utility Commission to resume operations on the pipeline. As a result, ME1 is back up and running. I will provide more detailed updates on our growth projects a bit later on the call. Now turning to our most recent developments. We are pleased to say that on April 2 we closed our previously announced sale of our Contract Compression business to USA Compression Partners for approximately $1.7 billion, consisting of $1.232 billion in cash, 19.2 million USAC common units, and 6.4 million Class B units.

ETP used the cash proceeds to reduce leverage, thereby strengthening ETP's balance sheet. At the same time, ETE acquired all the equity interest in USAC's general partner and