Energy Transfer Operating, L.P. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - SUNOCO LOGISTICS PARTNERS LP--FORM 8-K - Energy Transfer Operating, L.P.	d8k.htm
EX-99.2 - SLIDE PRESENTATION - Energy Transfer Operating, L.P.	dex992.htm

Exhibit 99.1


		News Release
		Sunoco Logistics Partners L.P.
		1818 Market Street
		Philadelphia, Pa. 19103-3615

For further information contact:		For release: 5:00 p.m. October 27, 2010

Thomas Golembeski (media) 215-977-6298

Peter Gvazdauskas (investors) 215-977-6322

No. 21

Sunoco Logistics Partners L.P. Increases Distribution and Reports

Earnings for Third Quarter 2010

PHILADELPHIA, October 27, 2010 – Sunoco Logistics Partners L.P. (NYSE: SXL) (the “Partnership”) today announced net income attributable to owners for the third quarter 2010 of $193 million ($5.57 per unit diluted), compared with $48 million ($1.13 per unit diluted) for the third quarter 2009. Net income for the third quarter 2010 includes a $128 million non-cash gain on the Partnership’s acquisition of additional interests in two of its joint venture pipelines. Excluding the gain, the Partnership had net income of $64 million ($1.64 per unit diluted) for the third quarter 2010. Highlights of the third quarter 2010 include:

•

Distributable cash flow of $70 million for the quarter compared to $54 million for the prior year period

•

Increased distribution 10 percent compared to prior year period

•

Completed acquisitions totaling $243 million for a butane blending business and additional interests in three joint venture pipelines

Sunoco Partners LLC, the general partner of the Partnership, declared a cash distribution for the third quarter 2010 of $1.17 per limited partnership unit ($4.68 annualized) to be paid on November 12, 2010 to unitholders of record on November 8, 2010. This represents the twenty-second consecutive quarterly distribution increase and provides 1.4 times coverage of the cash distribution.

“Our strong quarterly earnings reflect our growing, ratable throughput and terminalling business supplemented by our ability to take advantage of crude oil market opportunities in the contango market structure,” said Lynn L. Elsenhans, Chairman and Chief Executive Officer. “On the business development front, we completed four acquisitions during the quarter, and we continue to execute our organic expansion strategy in our existing platforms. We are projecting over $435 million in total capital expenditures in 2010, a Sunoco Logistics record which should provide incremental earnings and increase our base business in the future.”

“We continue to feel very optimistic about the strength of our ratable business, as well as our organic growth projects, and we are giving guidance at this time that we will increase our annual distribution by 6% in 2011. We believe this increase represents a very competitive distribution growth level,” said Lynn L. Elsenhans, Chairman and Chief Executive Officer.

DETAILS OF THIRD QUARTER SEGMENT RESULTS


	Three Months Ended September 30, (in thousands)
	2010		2009		Variance
Refined Products Pipeline System	$	13,230	$	13,280	$	(50	)
Terminal Facilities		23,578		20,710		2,868
Crude Oil Pipeline System		52,207		25,891		26,316

Operating Income	$	89,015	$	59,881	$	29,134

Interest expense, net		19,645		11,421		8,224
Provision for income taxes		3,868		—		3,868
Gain on investments in affiliates		128,451		—		128,451

Net Income	$	193,953	$	48,460	$	145,493
Net income attributable to noncontrolling interests		1,099		—		1,099

Net income attributable to Sunoco Logistics Partners L.P.	$	192,854	$	48,460	$	144,394

Refined Products Pipeline System

Operating income for the third quarter 2010 was unchanged from the prior year period. Lower pipeline volumes, driven primarily by the permanent shut-down of Sunoco’s Eagle Point refinery, resulted in reduced revenues compared to the prior year’s quarter. Higher equity income from the Partnership’s joint venture interests and increased pipeline operating gains offset the reduction in volumes.

Terminal Facilities

The increase in operating income was due primarily to increased volumes and fees at the refined products terminals and additional volumes at the Nederland terminal facility. These increases were partially offset by reduced refinery terminal volumes driven by the permanent shut-down of Sunoco’s Eagle Point refinery, higher operating expenses related to the new tankage at the Partnership’s Nederland facility along with the integration of butane blending operations and a refined products terminal acquired in September 2009.

Crude Oil Pipeline System

The increase in operating income was primarily due to higher lease acquisition results related to increased contango profits in 2010. Increased pipeline volumes and incremental earnings associated with the Partnership’s acquisitions of additional joint venture interests further contributed to the increase in operating income for the quarter.

Financing Update

The increase in net interest expense was primarily attributable to the offering of $500 million of Senior Notes completed during the first quarter of 2010. At September 30, 2010, the Partnership’s total debt balance was $1.3 billion, including $150 million of borrowings under its revolving credit facilities and a $100 million promissory note from Sunoco which was used to partially finance the Partnership’s butane blending business acquisition.

Special Items

During the quarter, the Partnership recognized a $128 million non-cash gain in connection with its acquisitions of additional interests in the Mid-Valley Pipeline Company and the West Texas Gulf Pipe Line Company. The gain resulted from an adjustment to record its previous ownership interest at fair value in accordance with acquisition accounting rules.

CAPITAL EXPENDITURES


	Nine Months Ended September 30, (in thousands)
	2010		2009
Maintenance capital expenditures	$	24,991	$	15,326
Expansion capital expenditures		331,114		143,477

Total	$	356,105	$	158,803

Expansion capital for 2010 includes approximately $243 million in acquisitions of a butane blending business and additional ownership interests in three joint venture pipelines previously held by the Partnership. Expansion capital for 2010 also includes projects to expand services at the Partnership’s refined products terminals, increase tankage at the Nederland facility and expand upon the Partnership’s refined products platform in the southwest United States. The Partnership expects to invest $145 to $160 million in expansion capital for 2010, excluding major acquisitions. Additionally, the Partnership expects maintenance capital spending to total approximately $40 million during 2010.

INVESTOR CALL

An investor call with management regarding our third quarter results is scheduled for Thursday morning, October 28 at 8:30 am EDT. Those wishing to listen can access the call by dialing (USA toll free) 1-888-889-4955; International (USA toll) 1-312-470-0130 and request “Sunoco Logistics Partners Earnings Call, Conference Code – Sunoco Logistics”. This event may also be accessed by a webcast, which will be available at www.sunocologistics.com. A number of presentation slides will accompany the audio portion of the call and will be available to be viewed and printed shortly before the call begins. Individuals wishing to listen to the call on the Partnership’s web site will need Windows Media Player, which can be downloaded free of charge from Microsoft or from Sunoco Logistics Partners’ conference call page. Please allow at least fifteen minutes to complete the download. Audio replays of the conference call will be available for two weeks after the conference call beginning approximately two hours following the completion of the call. To access the replay, dial 1-800-294-7481. International callers should dial 1-203-369-3233.

ABOUT SUNOCO LOGISTICS

Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia, is a master limited partnership formed to acquire, own and operate refined products and crude oil pipelines and terminal facilities. The Refined Products Pipeline System consists of approximately 2,200 miles of refined products pipelines located in the northeast, midwest and southwest United States and equity interests in four refined products pipelines. The Terminal Facilities consist of approximately 10 million shell barrels of refined products terminal capacity and approximately 23 million shell barrels of crude oil terminal capacity (including approximately 20 million shell barrels of capacity at the Nederland Terminal on the Gulf Coast of Texas). The Crude Oil Pipeline System consists of approximately 5,400 miles of crude oil pipelines, located principally in Oklahoma and Texas.

Portions of this document constitute forward-looking statements as defined by federal law. Although Sunoco Logistics Partners L.P. believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the Partnership’s business prospects and performance causing actual results to differ from those discussed in the foregoing release. Such risks and uncertainties include, by way of example and not of limitation: whether or not the transactions described in the foregoing news release will be cash flow accretive; increased competition; changes in demand for crude oil and refined products that we store and distribute; changes in operating conditions and costs; changes in the level of environmental remediation spending; potential equipment malfunction; potential labor issues; the legislative or regulatory environment; plant construction/repair delays; nonperformance by major customers or suppliers; and political and economic conditions, including the impact of potential terrorist acts and international hostilities. These and other applicable risks and uncertainties have been described more fully in the Partnership’s Form 10-Q filed with the Securities and Exchange Commission on August 4, 2010. The Partnership undertakes no obligation to update any forward-looking statements in this release, whether as a result of new information or future events.

Sunoco Logistics Partners L.P.

Financial Highlights

(in thousands, except units and per unit amounts)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2010⁽¹⁾			2009			2010⁽¹⁾			2009
Income Statement:
Sales and other operating revenue	$	1,876,147		$	1,420,064		$	5,585,526		$	3,740,794
Other income		7,232			8,759			24,385			21,298

Total revenues		1,883,379			1,428,823			5,609,911			3,762,092
Cost of products sold and operating expenses		1,762,368			1,342,002			5,296,195			3,450,490
Depreciation and amortization expense		16,400			12,240			44,869			35,328
Selling, general and administrative expenses		15,596			14,700			51,766			47,616

Total costs and expenses		1,794,364			1,368,942			5,392,830			3,533,434

Operating income		89,015			59,881			217,081			228,658
Interest cost and debt expense		20,913			12,592			56,962			36,278
Capitalized interest		(1,268	)		(1,171	)		(3,232	)		(3,629	)
Gain on investments in affiliates		128,451			—			128,451			—

Income Before Provision for Income Taxes		197,821			48,460			291,802			196,009

Provision for income taxes		3,868			—			3,868			—

Net Income	$	193,953		$	48,460		$	287,934		$	196,009
Net Income attributable to noncontrolling interests		1,099			—			1,099			—

Net Income attributable to Sunoco Logistics Partners L.P.	$	192,854		$	48,460		$	286,835		$	196,009

Calculation of Limited Partners’ interest:
Net Income attributable to Sunoco Logistics Partners L.P.	$	192,854		$	48,460		$	286,835		$	196,009
Less: General Partner’s interest		(14,717	)		(13,368	)		(35,472	)		(38,885	)

Limited Partners’ interest in Net Income	$	178,137		$	35,092		$	251,363		$	157,124

Net Income per Limited Partner unit:
Basic	$	5.60		$	1.13		$	8.03		$	5.22

Diluted	$	5.57		$	1.13		$	7.99		$	5.19

Weighted Average Limited Partners’ units outstanding:
Basic		31,797,082			30,981,265			31,291,262			30,084,613

Diluted		31,955,360			31,190,187			31,462,963			30,288,345

(1) Acquiring a controlling interest in the Mid-Valley Pipeline Company and the West Texas Gulf Pipe Line Company required the Partnership to consolidate results of these entities beginning in the third quarter 2010. Consolidated results from these acquisitions have been included from the acquisition date.

Sunoco Logistics Partners L.P.

Financial Highlights

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Capital Expenditure Data (in thousands):
Maintenance capital expenditures	$	10,713	$	6,304	$	24,991	$	15,326
Expansion capital expenditures		269,217		82,100		331,114		143,477

Total	$	279,930	$	88,404	$	356,105	$	158,803


	September 30, 2010		December 31, 2009
Balance Sheet Data (in thousands, at period end):

Cash and cash equivalents	$	2,000	$	2,000

Revolving credit facilities ⁽¹⁾	$	149,750	$	268,972
Note from affiliate - due May 2013		100,000		—
Senior Notes		1,098,088		599,452

Total Long-term Debt	$	1,347,838	$	868,424

Sunoco Logistics Partners L.P. Partners’ equity	$	957,529	$	861,614
Noncontrolling interests		78,105		—

Total Equity	$	1,035,634	$	861,614

⁽¹⁾	As of September 30, 2010, the Partnership had unutilized borrowing capacity of $308 million under its revolving credit facilities.

Sunoco Logistics Partners L.P.

Financial and Operating Statistics

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Operating Income ($ in thousands)
Refined Products Pipeline System	$	13,230	$	13,280	$	33,442	$	34,442
Terminal Facilities		23,578		20,710		73,976		63,145
Crude Oil Pipeline System		52,207		25,891		109,663		131,071

Total Operating Income	$	89,015	$	59,881	$	217,081	$	228,658

Operating Highlights

Refined Products Pipeline System:
Total shipments (barrel miles per day) ⁽¹⁾⁽²⁾		50,411,601		56,848,807		51,253,071		58,145,900
Revenue per barrel mile (cents)		0.641		0.612		0.645		0.596

Terminal Facilities:
Terminal throughput (bpd):
Refined products terminals		505,465		465,206		483,966		462,969
Nederland terminal		780,313		559,874		730,551		619,297
Refinery terminals		459,174		609,020		475,897		597,191

Crude Oil Pipeline System:
Crude oil pipeline throughput (bpd)⁽²⁾⁽³⁾		1,556,365		610,856		1,501,307		648,183
Crude oil purchases at wellhead (bpd)		187,953		176,643		187,779		183,047
Gross margin per barrel of pipeline throughput (cents) ⁽³⁾⁽⁴⁾		46.4		46.4		41.5		77.5
Average crude oil price (per barrel)	$	76.21	$	68.29	$	77.65	$	57.13

⁽¹⁾	Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped.

⁽²⁾	Excludes amounts attributable to equity ownership interests which are not consolidated.

⁽³⁾	Includes 602 thousand bpd from the Partnership’s consolidation of Mid-Valley Pipeline Company and West Texas Gulf Pipe Line Company from the acquisition date.

⁽⁴⁾

Represents total segment sales and other operating revenue minus cost of products sold and operating expenses and depreciation and amortization divided by crude oil pipeline throughput. Gross margin and throughput volumes for Mid-Valley Pipeline Company and West Texas Gulf Pipe Line Company have been included from the acquisition date.

Sunoco Logistics Partners L.P.

Non-GAAP Financial Measures

(in thousands, unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Net Income attributable to Sunoco Logistics Partners L.P.	$	192,854		$	48,460		$	286,835		$	196,009
Add: Interest expense, net		19,645			11,421			53,730			32,649
Add: Depreciation and amortization		16,400			12,240			44,869			35,328
Add: Provision for income taxes		3,868			—			3,868			—
Less: Gain on investments in affiliates		(128,451	)		—			(128,451	)		—

EBITDA⁽¹⁾		104,316			72,121			260,851			263,986
Less: Interest expense, net		(19,645	)		(11,421	)		(53,730	)		(32,649	)
Less: Maintenance capital expenditures		(10,713	)		(6,304	)		(24,991	)		(15,326	)
Less: Provision for income taxes		(3,868	)		—			(3,868	)		—

Distributable cash flow⁽¹⁾	$	70,090		$	54,396		$	178,262		$	216,011

⁽¹⁾

Management of the Partnership believes EBITDA and distributable cash flow information enhances an investor’s understanding of a business’ ability to generate cash for payment of distributions and other purposes. EBITDA and distributable cash flow do not represent and should not be considered an alternative to net income or cash flows from operating activities as determined under United States generally accepted accounting principles (GAAP) and may not be comparable to other similarly titled measures of other businesses. Reconciliations of these measures to the comparable GAAP measure are provided in the tables accompanying this release.

Adjusted Net Income Attributable to Sunoco Logistics Partners L.P.


	Three Months Ended September 30,			Nine Months Ended September 30,
	2010			2010
Net Income attributable to Sunoco Logistics Partners L.P.	$	192,854		$	286,835
Less: Gain on investments in affiliates		(128,451	)		(128,451	)

Adjusted Net Income attributable to Sunoco Logistics Partners L.P.	$	64,403		$	158,384
Less: General Partner’s interest		(12,148	)		(32,903	)

Limited Partners’ interest in Net Income	$	52,255		$	125,481

Net Income per Limited Partner unit:
Basic	$	1.64		$	4.01

Diluted	$	1.64		$	3.99

Weighted Average Limited Partners’ units outstanding:
Basic		31,797,082			31,291,262

Diluted		31,955,360			31,462,963

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