ETP Keeping Sunoco Retail Network

Published in CSP Daily News

Energy Transfer Partners "likes" the business, management

By  Greg Lindenberg, Online Editor

DALLAS -- The fate of Sunoco's 4,988-station retail network, the subject of intense speculation since Energy Transfer Partners LP (ETP) announced the purchase of Philadelphia-based Sunoco Inc. last spring, seems to be settled.

Many industry observers have been expecting ETP--a master limited partnership (MLP)--to sell Sunoco's retail assets. merchandise from the station's convenience stores do not qualify for MLP treatment.

In reporting earnings for the fourth quarter ended Dec. 31, 2012, ETP chairman and CEO Kelcy Warren on Tuesday said that the company has "no plans ... at all" to sell the Sunoco retail network.

"We've been pretty consistent. We like the retail business. We really like the management a lot. I personally have had an opportunity to be a little more involved in that business of late ... it's a business that we believe is extremely well run and [a] sustainable business for creating distributable cash flow for our unitholders," he told analysts during the company's earnings conference call. "The fundamental risk we take does not work to exit that business. So those businesses do not trade for a multiple that would come even close to being accretive to our unitholders to exit the business."

ETP completed the acquisition of Sunoco in October.

"Sunoco Retail had a very strong fourth quarter with adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $109 million," said ETP CFO Martin Salinas

ETP's adjusted EBITDA for the three months ended Dec. 31, 2012, totaled $948 million, an increase of $455 million over the three months ended Dec. 31, 2011. Distributable cash flow for the three months ended Dec. 31, 2012, totaled $488 million, an increase of $169 million over the three months ended Dec. 31, 2011. Income from continuing operations for the three months ended Dec. 31, 2012, totaled $334 million, an increase of $118 million from the three months ended Dec. 31, 2011.

Adjusted EBITDA for the year ended Dec. 31, 2012, totaled $2.74 billion, an increase of $963 million over the year ended Dec. 31, 2011. Distributable cash flow for the year ended Dec. 31, 2012, totaled $1.49 billion, an increase of $335 million over the year ended Dec. 31, 2011. Income from continuing operations for the year ended Dec. 31, 2012, totaled $1.76 billion, an increase of $1.06 billion over the year ended Dec. 31, 2011.

Dallas-based ETP is owns and operates a large and diversified portfolio of energy assets. It has natural gas operations that include approximately 24,000 miles of gathering and transportation pipelines, treating and processing assets and storage facilities. It also owns the general partner interests, 100% of the incentive distribution rights and a 32.4% limited partnership interest in Sunoco Logistics Partners LP, which operates a geographically diverse portfolio of crude oil and refined products pipelines, terminalling and crude oil acquisition and marketing assets. ETP also holds a 70% interest in Lone Star NGL, a joint venture that owns and operates natural gas liquids storage, fractionation and transportation assets in Texas, Louisiana and Mississippi. In addition, ETP holds controlling interest in ETP Holdco Corp., which owns Southern Union Co. and Sunoco Inc. ETP's general partner is owned by Energy Transfer Equity LP.

Sunoco Logistics Partners LP, Philadelphia, is an MLP that owns and operates a logistics business consisting of a geographically diverse portfolio of complementary crude oil & refined product pipeline, terminalling and acquisition and marketing assets.