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EX-31.1 - EXHIBIT 31.1 - Energy Transfer, LPetp-09302015xexx311.htm
EX-32.2 - EXHIBIT 32.2 - Energy Transfer, LPetp-09302015xexx322.htm
EX-31.2 - EXHIBIT 31.2 - Energy Transfer, LPetp-09302015xexx312.htm
EX-32.1 - EXHIBIT 32.1 - Energy Transfer, LPetp-09302015xexx321.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11727
ENERGY TRANSFER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware
 
73-1493906
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
8111 Westchester Drive, Suite 600, Dallas, Texas 75225
(Address of principal executive offices) (zip code)
(214) 981-0700
(Registrant’s telephone number, including area code)

3738 Oak Lawn Avenue, Dallas, Texas 75219
(Former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
 
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At October 30, 2015, the registrant had 501,945,249 Common Units outstanding.
 



FORM 10-Q
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
TABLE OF CONTENTS


i


Forward-Looking Statements
Certain matters discussed in this report, excluding historical information, as well as some statements by Energy Transfer Partners, L.P. (the “Partnership,” or “ETP”) in periodic press releases and some oral statements of the Partnership’s officials during presentations about the Partnership, include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may,” “will” or similar expressions help identify forward-looking statements. Although the Partnership and its general partner believe such forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, no assurance can be given that such assumptions, expectations, or projections will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Partnership’s actual results may vary materially from those anticipated, projected or expected, forecasted, estimated or expressed in forward-looking statements since many of the factors that determine these results are subject to uncertainties and risks that are difficult to predict and beyond management’s control. For additional discussion of risks, uncertainties and assumptions, see “Part I – Item 1A. Risk Factors” in the Partnership’s Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on March 2, 2015.
Definitions
The following is a list of certain acronyms and terms generally used in the energy industry and throughout this document:
 
/d
 
per day
 
 
 
 
Aqua – PVR
 
Aqua – PVR Water Services, LLC
 
 
 
 
 
AmeriGas
 
AmeriGas Partners, L.P.
 
 
 
 
 
AOCI
 
accumulated other comprehensive income (loss)
 
 
 
 
 
Bbls
 
barrels
 
 
 
 
Btu
 
British thermal unit, an energy measurement used by gas companies to convert the volume of gas used to its heat equivalent, and thus calculate the actual energy used
 
 
 
 
Capacity
 
capacity of a pipeline, processing plant or storage facility refers to the maximum capacity under normal operating conditions and, with respect to pipeline transportation capacity, is subject to multiple factors (including natural gas injections and withdrawals at various delivery points along the pipeline and the utilization of compression) which may reduce the throughput capacity from specified capacity levels
 
 
 
 
 
Citrus
 
Citrus, LLC
 
 
 
 
 
CrossCountry
 
CrossCountry Energy, LLC
 
 
 
 
 
ELG
 
Edwards Lime Gathering LLC
 
 
 
 
 
ETC Compression
 
ETC Compression, LLC
 
 
 
 
 
ETC FEP
 
ETC Fayetteville Express Pipeline, LLC
 
 
 
 
 
ETC OLP
 
La Grange Acquisition, L.P., which conducts business under the assumed name of Energy Transfer Company
 
 
 
 
 
ETC Tiger
 
ETC Tiger Pipeline, LLC
 
 
 
 
 
ETE
 
Energy Transfer Equity, L.P., a publicly traded partnership and the owner of ETP LLC
 
 
 
 
 
ETE Holdings
 
ETE Common Holdings, LLC, a wholly-owned subsidiary of ETE
 
 
 
 
 
ET Interstate
 
Energy Transfer Interstate Holdings, LLC
 
 
 
 
 
ETP Credit Facility
 
ETP’s $3.75 billion revolving credit facility
 
 
 
 
 
ETP GP
 
Energy Transfer Partners GP, L.P., the general partner of ETP
 
 
 
 
 
ETP Holdco
 
ETP Holdco Corporation
 
 
 
 
 
ETP LLC
 
Energy Transfer Partners, L.L.C., the general partner of ETP GP
 
 
 
 
Exchange Act
 
Securities Exchange Act of 1934
 
 
 
 
 
FEP
 
Fayetteville Express Pipeline LLC
 
 
 
 
 
FERC
 
Federal Energy Regulatory Commission


ii


 
 
 
 
 
FGT
 
Florida Gas Transmission Company, LLC
 
 
 
 
 
GAAP
 
accounting principles generally accepted in the United States of America
 
 
 
 
 
HPC
 
RIGS Haynesville Partnership Co. and its wholly-owned subsidiary, Regency Intrastate Gas LP
 
 
 
 
 
IDRs
 
incentive distribution rights
 
 
 
 
 
Lake Charles LNG
 
Lake Charles LNG Company, LLC (previously named Trunkline LNG Company, LLC), a subsidiary of ETE
 
 
 
 
 
LIBOR
 
London Interbank Offered Rate
 
 
 
 
 
LNG
 
liquefied natural gas
 
 
 
 
 
Lone Star
 
Lone Star NGL LLC
 
 
 
 
 
MEP
 
Midcontinent Express Pipeline LLC
 
 
 
 
 
MMBtu
 
million British thermal units
 
 
 
 
 
MTBE
 
methyl tertiary butyl ether
 
 
 
 
 
NGL
 
natural gas liquid, such as propane, butane and natural gasoline
 
 
 
 
 
NYMEX
 
New York Mercantile Exchange
 
 
 
 
ORS
 
Ohio River System LLC
 
 
 
 
 
OSHA
 
federal Occupational Safety and Health Act
 
 
 
 
 
OTC
 
over-the-counter
 
 
 
 
 
Panhandle
 
Panhandle Eastern Pipe Line Company, LP and its subsidiaries
 
 
 
 
 
PCBs
 
polychlorinated biphenyls
 
 
 
 
 
PES
 
Philadelphia Energy Solutions
 
 
 
 
 
PHMSA
 
Pipeline Hazardous Materials Safety Administration
 
 
 
 
 
Preferred Units
 
ETP Series A cumulative convertible preferred units
 
 
 
 
 
Regency
 
Regency Energy Partners LP
 
 
 
 
 
Regency OLP
 
Regency OLP GP LLC
 
 
 
 
 
Retail Holdings
 
ETP Retail Holdings LLC, a joint venture between subsidiaries of ETC OLP and Sunoco, Inc.
 
 
 
 
 
Sea Robin
 
Sea Robin Pipeline Company, LLC, a subsidiary of Panhandle
 
 
 
 
 
SEC
 
Securities and Exchange Commission
 
 
 
 
 
Southern Union
 
Southern Union Company
 
 
 
 
 
Sunoco GP
 
Sunoco GP LLC, the general partner of Sunoco LP
 
 
 
 
 
Sunoco Logistics
 
Sunoco Logistics Partners L.P.
 
 
 
 
 
Sunoco LP
 
Sunoco LP (previously named Susser Petroleum Partners, LP)
 
 
 
 
 
Sunoco Partners
 
Sunoco Partners LLC, the general partner of Sunoco Logistics
 
 
 
 
 
Susser
 
Susser Holdings Corporation
 
 
 
 
 
Transwestern
 
Transwestern Pipeline Company, LLC
 
 
 
 
 
Trunkline
 
Trunkline Gas Company, LLC, a subsidiary of Panhandle
Adjusted EBITDA is a term used throughout this document, which we define as earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, non-cash impairment charges, losses on extinguishments of debt, gain on deconsolidation and other non-operating income or expense items. Unrealized gains and losses on commodity risk management activities include unrealized gains and losses on commodity derivatives and inventory fair value adjustments (excluding lower of cost or market adjustments). Adjusted EBITDA


iii


reflects amounts for less than wholly-owned subsidiaries based on 100% of the subsidiaries’ results of operations and for unconsolidated affiliates based on the Partnership’s proportionate ownership.


iv


PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
 
September 30, 2015
 
December 31, 2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
858

 
$
663

Accounts receivable, net
2,413

 
3,360

Accounts receivable from related companies
428

 
139

Inventories
1,223

 
1,460

Exchanges receivable
38

 
44

Derivative assets
10

 
81

Other current assets
355

 
296

Total current assets
5,325

 
6,043

 
 
 
 
Property, plant and equipment
48,286

 
43,404

Accumulated depreciation and depletion
(5,465
)
 
(4,497
)
 
42,821

 
38,907

 
 
 
 
Advances to and investments in unconsolidated affiliates
5,119

 
3,760

Non-current derivative assets
15

 
10

Other non-current assets, net
738

 
786

Intangible assets, net
4,494

 
5,526

Goodwill
5,633

 
7,642

Total assets
$
64,145

 
$
62,674


The accompanying notes are an integral part of these consolidated financial statements.
1


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
 
September 30, 2015
 
December 31, 2014
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
2,037

 
$
3,348

Accounts payable to related companies
256

 
25

Exchanges payable
87

 
183

Derivative liabilities
2

 
21

Accrued and other current liabilities
2,100

 
2,099

Current maturities of long-term debt
1

 
1,008

Total current liabilities
4,483

 
6,684

 
 
 
 
Long-term debt, less current maturities
27,449

 
24,973

Non-current derivative liabilities
189

 
154

Deferred income taxes
3,768

 
4,246

Other non-current liabilities
1,144

 
1,258

 
 
 
 
Commitments and contingencies

 

Series A Preferred Units
33

 
33

Redeemable noncontrolling interests
15

 
15

 
 
 
 
Equity:
 
 
 
General Partner
306

 
184

Limited Partners:
 
 
 
Common Unitholders
17,303

 
10,430

Class H Unitholder
3,464

 
1,512

Class I Unitholder
15

 

Accumulated other comprehensive loss
(14
)
 
(56
)
Total partners’ capital
21,074

 
12,070

Noncontrolling interest
5,990

 
5,153

Predecessor equity

 
8,088

Total equity
27,064

 
25,311

Total liabilities and equity
$
64,145

 
$
62,674


The accompanying notes are an integral part of these consolidated financial statements.
2


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per unit data)
(unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
REVENUES
 
 
 
 
 
 
 
Natural gas sales
$
960

 
$
1,292

 
$
2,893

 
$
4,083

NGL sales
961

 
1,798

 
2,930

 
4,452

Crude sales
1,859

 
4,497

 
6,747

 
13,022

Gathering, transportation and other fees
1,026

 
904

 
2,999

 
2,546

Refined product sales
1,046

 
5,165

 
9,136

 
14,581

Other
749

 
1,277

 
3,762

 
3,364

Total revenues
6,601

 
14,933

 
28,467

 
42,048

COSTS AND EXPENSES
 
 
 
 
 
 
 
Cost of products sold
4,925

 
13,014

 
22,750

 
36,808

Operating expenses
535

 
547

 
1,805

 
1,378

Depreciation, depletion and amortization
471

 
410

 
1,451

 
1,206

Selling, general and administrative
94

 
152

 
389

 
372

Total costs and expenses
6,025

 
14,123

 
26,395

 
39,764

OPERATING INCOME
576

 
810

 
2,072

 
2,284

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
Interest expense, net of interest capitalized
(333
)
 
(299
)
 
(979
)
 
(868
)
Equity in earnings of unconsolidated affiliates
214

 
84

 
388

 
265

Losses on extinguishments of debt
(10
)
 

 
(43
)
 

Gain on sale of AmeriGas common units

 
14

 

 
177

Losses on interest rate derivatives
(64
)
 
(25
)
 
(14
)
 
(73
)
Other, net
32

 
(15
)
 
56

 
(36
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE
415

 
569

 
1,480

 
1,749

Income tax expense (benefit) from continuing operations
22

 
55

 
(20
)
 
271

INCOME FROM CONTINUING OPERATIONS
393

 
514

 
1,500

 
1,478

Income from discontinued operations

 

 

 
66

NET INCOME
393

 
514

 
1,500

 
1,544

Less: Net income (loss) attributable to noncontrolling interest
(24
)
 
78

 
182

 
219

Less: Net income (loss) attributable to predecessor

 
94

 
(34
)
 
97

NET INCOME ATTRIBUTABLE TO PARTNERS
417

 
342

 
1,352

 
1,228

General Partner’s interest in net income
277

 
135

 
779

 
373

Class H Unitholder’s interest in net income
66

 
59

 
184

 
159

Class I Unitholder’s interest in net income
15

 

 
80

 

Common Unitholders’ interest in net income
$
59

 
$
148

 
$
309

 
$
696

INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT:
 
 
 
 
 
 
 
Basic
$
0.11

 
$
0.44

 
$
0.70

 
$
1.91

Diluted
$
0.10

 
$
0.44

 
$
0.68

 
$
1.90

NET INCOME PER COMMON UNIT:
 
 
 
 
 
 
 
Basic
$
0.11

 
$
0.44

 
$
0.70

 
$
2.11

Diluted
$
0.10

 
$
0.44

 
$
0.68

 
$
2.10


The accompanying notes are an integral part of these consolidated financial statements.
3


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
(unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
393

 
$
514

 
$
1,500

 
$
1,544

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Reclassification to earnings of gains and losses on derivative instruments accounted for as cash flow hedges

 

 

 
6

Change in value of derivative instruments accounted for as cash flow hedges

 
3

 
1

 
(3
)
Change in value of available-for-sale securities
(1
)
 
1

 
(1
)
 
1

Actuarial gain (loss) relating to pension and other postretirement benefit plans

 
(1
)
 
45

 
(2
)
Foreign currency translation adjustments
1

 
(1
)
 
(1
)
 
(3
)
Change in other comprehensive income from unconsolidated affiliates

 

 
(2
)
 
(6
)
 

 
2

 
42

 
(7
)
Comprehensive income
393

 
516

 
1,542

 
1,537

Less: Comprehensive income (loss) attributable to noncontrolling interest
(24
)
 
78

 
182

 
219

Less: Comprehensive income (loss) attributable to predecessor

 
94

 
(34
)
 
97

Comprehensive income attributable to partners
$
417

 
$
344

 
$
1,394

 
$
1,221


The accompanying notes are an integral part of these consolidated financial statements.
4


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(Dollars in millions)
(unaudited)
 
 
 
Limited Partners
 
 
 
 
 
 
 
 
 
General Partner
 
Common Units
 
Class H Units
 
Class I Units
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interest
 
Predecessor Equity
 
Total
Balance, December 31, 2014
$
184

 
$
10,430

 
$
1,512

 
$

 
$
(56
)
 
$
5,153

 
$
8,088

 
$
25,311

Distributions to partners
(658
)
 
(1,352
)
 
(178
)
 
(65
)
 

 

 

 
(2,253
)
Predecessor distributions to partners

 

 

 

 

 

 
(202
)
 
(202
)
Distributions to noncontrolling interest

 

 

 

 

 
(247
)
 

 
(247
)
Units issued for cash

 
1,030

 

 

 

 

 

 
1,030

Subsidiary units issued for cash
1

 
117

 

 

 

 
1,156

 

 
1,274

Predecessor units issued for cash

 

 

 

 

 

 
34

 
34

Capital contributions from noncontrolling interest

 

 

 

 

 
617

 

 
617

Regency Merger

 
7,890

 

 

 

 

 
(7,890
)
 

Bakken Pipeline Transaction

 
(999
)
 
1,946

 

 

 
72

 

 
1,019

Sunoco LP Exchange Transaction

 
(52
)
 

 

 

 
(940
)
 

 
(992
)
Susser Exchange Transaction

 
(68
)
 

 

 

 

 

 
(68
)
Acquisition of noncontrolling interest

 
(26
)
 

 

 

 
(39
)
 

 
(65
)
Other comprehensive income, net of tax

 

 

 

 
42

 

 

 
42

Other, net

 
24

 

 

 

 
36

 
4

 
64

Net income
779

 
309

 
184

 
80

 

 
182

 
(34
)
 
1,500

Balance, September 30, 2015
$
306

 
$
17,303

 
$
3,464

 
$
15

 
$
(14
)
 
$
5,990

 
$

 
$
27,064


The accompanying notes are an integral part of these consolidated financial statements.
5


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(unaudited)
 
Nine Months Ended
September 30,
 
2015
 
2014
OPERATING ACTIVITIES
 
 
 
Net income
$
1,500

 
$
1,544

Reconciliation of net income to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
1,451

 
1,206

Deferred income taxes
22

 
(65
)
Amortization included in interest expense
(30
)
 
(48
)
Inventory valuation adjustments
(16
)
 
17

Unit-based compensation expense
59

 
50

Gain on sale of AmeriGas common units

 
(177
)
Losses on extinguishments of debt
43

 

Distributions on unvested awards
(12
)
 
(12
)
Equity in earnings of unconsolidated affiliates
(388
)
 
(265
)
Distributions from unconsolidated affiliates
263

 
224

Other non-cash
23

 
(31
)
Cash flow in operating assets and liabilities, net of effects of acquisitions and deconsolidations
(922
)
 
25

Net cash provided by operating activities
1,993

 
2,468

INVESTING ACTIVITIES
 
 
 
Cash proceeds from Bakken Pipeline Transaction
980

 

Cash proceeds from the Susser Exchange Transaction
967

 

Cash proceeds from sale of noncontrolling interest in Rover Pipeline LLC to AE-Midco Rover, LLC
64

 

Cash proceeds from the sale of AmeriGas common units

 
814

Cash paid for acquisition of a noncontrolling interest
(129
)
 

Cash transferred to ETE in connection with the Sunoco LP Exchange
(114
)
 

Cash paid for Susser Merger, net of cash received

 
(808
)
Cash paid for all other acquisitions
(475
)
 
(985
)
Capital expenditures, excluding allowance for equity funds used during construction
(6,531
)
 
(3,668
)
Contributions in aid of construction costs
27

 
34

Contributions to unconsolidated affiliates
(75
)
 
(271
)
Distributions from unconsolidated affiliates in excess of cumulative earnings
119

 
97

Proceeds from sale of discontinued operations

 
79

Proceeds from the sale of assets
20

 
22

Change in restricted cash
10

 
162

Other
(14
)
 
(11
)
Net cash used in investing activities
(5,151
)
 
(4,535
)
FINANCING ACTIVITIES
 
 
 
Proceeds from borrowings
14,808

 
9,224

Repayments of long-term debt
(11,620
)
 
(7,260
)
Units issued for cash
1,030

 
1,126

Subsidiary units issued for cash
1,274

 
593

Predecessor units issued for cash
34

 
962

Capital contributions from noncontrolling interest
583

 
19

Distributions to partners
(2,253
)
 
(1,430
)
Predecessor distributions to partners
(202
)
 
(446
)
Distributions to noncontrolling interest
(247
)
 
(169
)
Debt issuance costs
(54
)
 
(47
)
Other

 
2

Net cash provided by financing activities
3,353

 
2,574

Increase in cash and cash equivalents
195

 
507

Cash and cash equivalents, beginning of period
663

 
568

Cash and cash equivalents, end of period
$
858

 
$
1,075


The accompanying notes are an integral part of these consolidated financial statements.
6


ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollar and unit amounts, except per unit data, are in millions)
(unaudited)
1.
ORGANIZATION AND BASIS OF PRESENTATION
Organization
Energy Transfer Partners, L.P., a publicly traded Delaware master limited partnership, and its subsidiaries (collectively, the “Partnership,” “we,” “us,” “our” or “ETP”) are managed by our general partner, ETP GP, which is in turn managed by its general partner, ETP LLC. ETE, a publicly traded master limited partnership, owns ETP LLC. The consolidated financial statements of the Partnership presented herein include our operating subsidiaries described below.
Our activities are primarily conducted through our operating subsidiaries (collectively, the “Operating Companies”) as follows:
ETC OLP, a Texas limited partnership primarily engaged in midstream and intrastate transportation and storage natural gas operations. ETC OLP owns and operates, through its wholly and majority-owned subsidiaries, natural gas gathering systems, intrastate natural gas pipeline systems and gas processing plants and is engaged in the business of purchasing, gathering, transporting, processing, and marketing natural gas and NGLs in the states of Texas, Louisiana, New Mexico and West Virginia. ETC OLP’s intrastate transportation and storage operations primarily focus on transporting natural gas in Texas through our Oasis pipeline, ET Fuel System, East Texas pipeline and HPL System. ETC OLP’s midstream operations focus on the gathering, compression, treating, conditioning and processing of natural gas, primarily on or through our Southeast Texas System, Eagle Ford System, North Texas System and Northern Louisiana assets. Subsequent to its acquisition of Regency’s 30% equity interest in Lone Star, as discussed below, ETC OLP now owns 100% of Lone Star.
ET Interstate, a Delaware limited liability company with revenues consisting primarily of fees earned from natural gas transportation services and operational gas sales. ET Interstate is the parent company of:
Transwestern, a Delaware limited liability company engaged in interstate transportation of natural gas. Transwestern’s revenues consist primarily of fees earned from natural gas transportation services and operational gas sales.
ETC FEP, a Delaware limited liability company that directly owns a 50% interest in FEP, which owns 100% of the Fayetteville Express interstate natural gas pipeline.
ETC Tiger, a Delaware limited liability company engaged in interstate transportation of natural gas.
CrossCountry, a Delaware limited liability company that indirectly owns a 50% interest in Citrus, which owns 100% of the FGT interstate natural gas pipeline.
ETC Compression, a Delaware limited liability company engaged in natural gas compression services and related equipment sales.
ETP Holdco, a Delaware limited liability company that indirectly owns Panhandle and Sunoco, Inc. Panhandle and Sunoco, Inc. operations are described as follows:
Panhandle owns and operates assets in the regulated and unregulated natural gas industry and is primarily engaged in the transportation and storage of natural gas in the United States.
Sunoco, Inc. owns and operates retail marketing assets, which sell gasoline and middle distillates at retail locations and operates convenience stores primarily on the east coast and in the midwest region of the United States. Effective June 1, 2014, the Partnership combined certain Sunoco, Inc. retail assets with another wholly-owned subsidiary of ETP to form a limited liability company, Retail Holdings, owned by ETP and Sunoco, Inc.
Sunoco Logistics, a publicly traded Delaware limited partnership that owns and operates a logistics business, consisting of products, crude oil and NGL pipelines, terminalling and storage assets, and refined products, crude oil and NGL acquisition and marketing assets.
Effective July 1, 2015, ETE acquired 100% of the membership interests of Sunoco GP, the general partner of Sunoco LP, and all of the IDRs of Sunoco LP from ETP, and in exchange, ETE transferred to ETP 21 million ETP common units. These operations were reported within the retail marketing segment. In connection with this transaction, the Partnership deconsolidated Sunoco LP, and its remaining investment in Sunoco LP is accounted for under the equity method.
Regency OLP is a limited partnership engaged in the gathering and processing, compression, treating and transportation of natural gas; the gathering, transportation and terminalling of oil (crude and/or condensate, a lighter oil) received from


7


producers; and the management of coal and natural resource properties in the United States. Regency OLP focuses on providing midstream services in some of the most prolific natural gas producing regions in the United States, including the Eagle Ford, Haynesville, Barnett, Fayetteville, Marcellus, Utica, Bone Spring, Avalon and Granite Wash shales.
Our financial statements reflect the following reportable business segments:
intrastate transportation and storage;
interstate transportation and storage;
midstream;
liquids transportation and services;
investment in Sunoco Logistics;
retail marketing; and
all other.
Basis of Presentation
The unaudited financial information included in this Form 10-Q has been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2014 included in Exhibit 99.1 to the Partnership’s Form 8-K filed on August 12, 2015. In the opinion of the Partnership’s management, such financial information reflects all adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with GAAP. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.
Merger with Regency. On April 30, 2015, a wholly-owned subsidiary of the Partnership merged with Regency, with Regency surviving as a wholly-owned subsidiary of the Partnership (the “Regency Merger”). Each Regency common unit and Class F unit was converted into the right to receive 0.4124 Partnership common units. ETP issued 172.2 million Partnership common units to Regency unitholders, including 15.5 million units issued to Partnership subsidiaries. The 1.9 million outstanding Regency series A preferred units were converted into corresponding new Partnership Series A Preferred Units on a one-for-one basis.
In connection with the Regency Merger, ETE agreed to reduce the incentive distributions it receives from the Partnership by a total of $320 million over a five-year period. The IDR subsidy will total $80 million for the year ending December 31, 2015 and $60 million per year for the following four years.
The Regency Merger was a combination of entities under common control; therefore, Regency’s assets and liabilities were not adjusted. The Partnership’s consolidated financial statements have been retrospectively adjusted to reflect consolidation of Regency for all prior periods subsequent to May 26, 2010 (the date ETE acquired Regency’s general partner). Predecessor equity included on the consolidated financial statements represents Regency’s equity prior to the Regency Merger.


8


The following table presents the revenues and net income for the previously separate entities and the combined amounts presented herein:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015 (1)
 
2014
 
2015 (1)
 
2014
Revenues:
 
 
 
 
 
 
 
Partnership
$
6,601

 
$
13,618

 
$
27,384

 
$
38,879

Regency

 
1,483

 
1,300

 
3,524

Adjustments and eliminations

 
(168
)
 
(217
)
 
(355
)
Combined
$
6,601

 
$
14,933

 
$
28,467

 
$
42,048

 
 
 
 
 
 
 
 
Net income:

 
 
 
 
 
 
Partnership
$
393

 
$
447

 
$
1,582

 
$
1,519

Regency

 
107

 
(29
)
 
115

Adjustments and eliminations

 
(40
)
 
(53
)
 
(90
)
Combined
$
393

 
$
514

 
$
1,500

 
$
1,544

(1) 
Amounts attributable to Regency subsequent to the Regency Merger on April 30, 2015 are reflected in the Partnership amounts.
Use of Estimates
Certain prior period amounts have been reclassified to conform to the 2015 presentation. These reclassifications had no impact on net income or total equity.
The unaudited consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the consolidated financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates.
Excise Taxes
The Partnership records the collection of taxes to be remitted to government authorities on a net basis except for the retail marketing segment in which consumer excise taxes on sales of refined products and merchandise are included in both revenues and cost of products sold in the consolidated statements of operations, with no net impact on net income. Excise taxes collected by the retail marketing segment were $211 million and $632 million for the three months ended September 30, 2015 and 2014, respectively, and $1.71 billion and $1.74 billion for the nine months ended September 30, 2015 and 2014, respectively.
Subsidiary Common Unit Transactions. The Partnership accounts for the difference between the carrying amount of its investment in Sunoco Logistics and the underlying book value arising from the issuance or redemption of units by Sunoco Logistics (excluding transactions with us) as capital transactions.
Recent Accounting Pronouncement. In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”), which changed the requirements for consolidations analysis.  Under ASU 2015-02, reporting entities are required to evaluate whether they should consolidate certain legal entities.  ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and early adoption is permitted. The Partnership expects to adopt this standard for the year ending December 31, 2016, and we are currently evaluating the impact that it will have on the consolidated financial statements and related disclosures.
2.
ACQUISITIONS, DIVESTITURES AND RELATED TRANSACTIONS
Sunoco LP
In April 2015, Sunoco LP acquired a 31.58% equity interest in Sunoco, LLC from Retail Holdings for $816 million. Sunoco, LLC distributes approximately 5.3 billion gallons per year of motor fuel to customers in the east, midwest and southwest


9


regions of the United States. Sunoco LP paid $775 million in cash and issued $41 million of Sunoco LP common units to Retail Holdings, based on the five-day volume weighted average price of Sunoco LP’s common units as of March 20, 2015.
In July 2015, in exchange for the contribution of 100% of Susser from ETP to Sunoco LP, Sunoco LP paid approximately $970 million in cash and issued to ETP subsidiaries 22 million Sunoco LP Class B units valued at approximately $970 million. The Sunoco Class B units did not receive second quarter 2015 cash distributions from Sunoco LP and converted on a one-for-one basis into Sunoco LP common units on the day immediately following the record date for Sunoco LP’s second quarter 2015 distribution. In addition, (i) a Susser subsidiary exchanged its 79,308 Sunoco LP common units for 79,308 Sunoco LP Class A units, (ii) approximately 11 million Sunoco LP subordinated units owned by Susser subsidiaries were converted into approximately 11 million Sunoco LP Class A units and (iii) Sunoco LP issued 79,308 Sunoco LP common units and approximately 11 million Sunoco LP subordinated units to subsidiaries of ETP. The Sunoco LP Class A units were contributed to Sunoco LP as part of the transaction. Sunoco LP subsequently contributed, transferred, assigned and conveyed its interests in Susser to one of its subsidiaries.
Effective July 1, 2015, ETE acquired 100% of the membership interests of Sunoco GP, the general partner of Sunoco LP, and all of the IDRs of Sunoco LP from ETP, and in exchange, ETE transferred to ETP 21 million ETP common units (the “Sunoco LP Exchange”). In connection with ETP’s 2014 acquisition of Susser, ETE agreed to provide ETP a $35 million annual IDR subsidy for 10 years, which terminated upon the closing of ETE’s acquisition of Sunoco GP. In connection with the exchange and repurchase, ETE will provide ETP a $35 million annual IDR subsidy for two years beginning with the quarter ended September 30, 2015. In connection with this transaction, the Partnership deconsolidated Sunoco LP, including goodwill of $1.81 billion and intangible assets of $982 million related to Sunoco LP. The Partnership continues to hold 26.8 million Sunoco LP common units and 10.9 million Sunoco LP subordinated units accounted for under the equity method. The results of Sunoco LP’s operations have not been presented as discontinued operations and Sunoco LP’s assets and liabilities have not been presented as held for sale in the Partnership’s consolidated financial statements due to the continuing involvement among the entities.
Bakken Pipeline
In March 2015, ETE transferred 30.8 million Partnership common units, ETE’s 45% interest in the Bakken Pipeline project, and $879 million in cash to the Partnership in exchange for 30.8 million newly issued Partnership Class H Units of ETP that, when combined with the 50.2 million previously issued Class H Units, generally entitle ETE to receive 90.05% of the cash distributions and other economic attributes of the general partner interest and IDRs of Sunoco Logistics (the “Bakken Pipeline Transaction”). In connection with this transaction, the Partnership also issued to ETE 100 Class I Units that provide distributions to ETE to offset IDR subsidies previously provided to ETP. These IDR subsidies, including the impact from distributions on Class I Units, will be reduced by $55 million in 2015 and $30 million in 2016.
In October 2015, Sunoco Logistics completed the previously announced acquisition of a 40% membership interest (the “Bakken Membership Interest”) in Bakken Holdings Company LLC (“Bakken Holdco”). Bakken Holdco, through its wholly-owned subsidiaries, owns a 75% membership interest in each of Dakota Access, LLC and Energy Transfer Crude Oil Company, LLC, which together intend to develop the previously announced pipeline system to deliver crude oil from the Bakken/Three Forks production area in North Dakota to the Gulf Coast (the “Bakken Pipeline Project”). ETP transferred the Bakken Membership Interest to Sunoco Logistics in exchange for approximately 9.4 million Class B Units representing limited partner interests in Sunoco Logistics and the payment by Sunoco Logistics to ETP of $382 million of cash, which represented reimbursement for its proportionate share of the total cash contributions made in the Bakken Pipeline Project as of the date of closing of the exchange transaction.
Discontinued Operations
Discontinued operations for the nine months ended September 30, 2014 include the results of operations for a marketing business that was sold effective April 1, 2014.
3.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash on hand, demand deposits, and investments with original maturities of three months or less. We consider cash equivalents to include short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
We place our cash deposits and temporary cash investments with high credit quality financial institutions. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.


10


The net change in operating assets and liabilities, net of acquisitions and deconsolidations, included in cash flows from operating activities is comprised as follows:
 
Nine Months Ended
September 30,
 
2015
 
2014
Accounts receivable
$
523

 
$
(782
)
Accounts receivable from related companies
(467
)
 
(40
)
Inventories
(239
)
 
177

Exchanges receivable
5

 
4

Other current assets
(101
)
 
59

Other non-current assets, net
116

 
(23
)
Accounts payable
(988
)
 
512

Accounts payable to related companies
75

 
(10
)
Exchanges payable
(97
)
 
(14
)
Accrued and other current liabilities
122

 
157

Other non-current liabilities
47

 
(52
)
Derivative assets and liabilities, net
82

 
37

Net change in operating assets and liabilities, net of effects of acquisitions and deconsolidations
$
(922
)
 
$
25

Non-cash investing and financing activities are as follows:

Nine Months Ended
September 30,

2015
 
2014
NON-CASH INVESTING ACTIVITIES:
 
 
 
Accrued capital expenditures
$
963

 
$
399

Net gains from subsidiary common unit issuances
118

 
81

NON-CASH FINANCING ACTIVITIES:
 
 
 
Contribution of property, plant and equipment from noncontrolling interest
$
34

 
$

Issuance of common units in connection with the Regency Merger
9,250

 

Issuance of common units in connection with the Susser Merger

 
908

Issuance of Class H Units in connection with the Bakken Pipeline Transaction
1,946

 

Predecessor equity issuances of common units in connection with Regency’s acquisitions

 
4,281

Long-term debt assumed in Regency’s acquisitions

 
1,887

Long-term debt exchanged in Regency’s acquisitions

 
499

Redemption of common units in connection with the Bakken Pipeline Transaction
999

 

Redemption of common units in connection with the Sunoco LP Exchange
52

 

Redemption of common units in connection with the Lake Charles LNG Transaction

 
1,167



11


4.
INVENTORIES
Inventories consisted of the following:
 
September 30, 2015
 
December 31, 2014
Natural gas and NGLs
$
426

 
$
392

Crude oil
461

 
364

Refined products
95

 
392

Other
241

 
312

Total inventories
$
1,223

 
$
1,460

We utilize commodity derivatives to manage price volatility associated with our natural gas inventory. Changes in fair value of designated hedged inventory are recorded in inventory on our consolidated balance sheets and cost of products sold in our consolidated statements of operations.
5.
FAIR VALUE MEASURES
We have commodity derivatives, interest rate derivatives and embedded derivatives in the Preferred Units that are accounted for as assets and liabilities at fair value in our consolidated balance sheets. We determine the fair value of our assets and liabilities subject to fair value measurement by using the highest possible “level” of inputs. Level 1 inputs are observable quotes in an active market for identical assets and liabilities. We consider the valuation of marketable securities and commodity derivatives transacted through a clearing broker with a published price from the appropriate exchange as a Level 1 valuation. Level 2 inputs are inputs observable for similar assets and liabilities. We consider OTC commodity derivatives entered into directly with third parties as a Level 2 valuation since the values of these derivatives are quoted on an exchange for similar transactions. Additionally, we consider our options transacted through our clearing broker as having Level 2 inputs due to the level of activity of these contracts on the exchange in which they trade. We consider the valuation of our interest rate derivatives as Level 2 as the primary input, the LIBOR curve, is based on quotes from an active exchange of Eurodollar futures for the same period as the future interest swap settlements. Level 3 inputs are unobservable. Derivatives related to the Preferred Units were valued using a binomial lattice model. The market inputs utilized in the model include credit spread, probabilities of the occurrence of certain events, common unit price, dividend yield, and expected value, and are considered Level 3. During the nine months ended September 30, 2015, no transfers were made between any levels within the fair value hierarchy.
Based on the estimated borrowing rates currently available to us and our subsidiaries for loans with similar terms and average maturities, the aggregate fair value and carrying amount of our consolidated debt obligations as of September 30, 2015 was $26.08 billion and $27.45 billion, respectively. As of December 31, 2014, the aggregate fair value and carrying amount of our consolidated debt obligations was $26.91 billion and $25.98 billion, respectively. The fair value of our consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.


12


The following tables summarize the fair value of our financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 based on inputs used to derive their fair values:
 
 
 
Fair Value Measurements at
September 30, 2015
 
Fair Value Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Interest rate derivatives
$
22

 
$

 
$
22

 
$

Commodity derivatives:
 
 
 
 
 
 
 
Natural Gas:
 
 
 
 
 
 
 
Basis Swaps IFERC/NYMEX
5

 
5

 

 

Swing Swaps IFERC
4

 
4

 

 

Fixed Swaps/Futures
237

 
237

 

 

Forward Physical Swaps
2

 

 
2

 

Power:
 
 
 
 
 
 
 
Forwards
11

 

 
11

 

Futures
2

 
2

 

 

Natural Gas Liquids – Forwards/Swaps
57

 
57

 

 

Refined Products – Futures
25

 
25

 

 

Crude – Futures
1

 
1

 

 

Total commodity derivatives
344

 
331

 
13

 

Total assets
$
366

 
$
331

 
$
35

 
$

Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(183
)
 
$

 
$
(183
)
 
$

Embedded derivatives in the ETP Preferred Units
(6
)
 

 

 
(6
)
Commodity derivatives:
 
 
 
 
 
 
 
Natural Gas:
 
 
 
 
 
 
 
Basis Swaps IFERC/NYMEX
(4
)
 
(4
)
 

 

Swing Swaps IFERC
(5
)
 
(5
)
 

 

Fixed Swaps/Futures
(189
)
 
(189
)
 

 

Power:
 
 
 
 
 
 
 
Forwards
(12
)
 

 
(12
)
 

Futures
(1
)
 
(1
)
 

 

Natural Gas Liquids – Forwards/Swaps
(44
)
 
(44
)
 

 

Refined Products – Futures
(1
)
 
(1
)
 

 

Total commodity derivatives
(256
)
 
(244
)
 
(12
)
 

Total liabilities
$
(445
)
 
$
(244
)
 
$
(195
)
 
$
(6
)


13


 
 
 
Fair Value Measurements at
December 31, 2014
 
Fair Value Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Interest rate derivatives
$
3

 
$

 
$
3

 
$

Commodity derivatives:
 
 
 
 
 
 
 
Condensate – Forward Swaps
36

 

 
36

 

Natural Gas:
 
 
 
 
 
 
 
Basis Swaps IFERC/NYMEX
19

 
19

 

 

Swing Swaps IFERC
26

 
1

 
25

 

Fixed Swaps/Futures
566

 
541

 
25

 

Forward Physical Swaps
1

 

 
1

 

Power:


 
 
 
 
 
 
Forwards
3

 

 
3

 

Futures
4

 
4

 

 

Natural Gas Liquids – Forwards/Swaps
69

 
46

 
23

 

Refined Products – Futures
21

 
21

 

 

Total commodity derivatives
745

 
632

 
113

 

Total assets
$
748

 
$
632

 
$
116

 
$

Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(155
)
 
$

 
$
(155
)
 
$

Embedded derivatives in the Regency Preferred Units
(16
)
 

 

 
(16
)
Commodity derivatives:
 
 
 
 
 
 
 
Natural Gas:
 
 
 
 
 
 
 
Basis Swaps IFERC/NYMEX
(18
)
 
(18
)
 

 

Swing Swaps IFERC
(25
)
 
(2
)
 
(23
)
 

Fixed Swaps/Futures
(490
)
 
(490
)
 

 

Power:


 
 
 
 
 
 
Forwards
(4
)
 

 
(4
)
 

Futures
(2
)
 
(2
)
 

 

Natural Gas Liquids – Forwards/Swaps
(32
)
 
(32
)
 

 

Refined Products – Futures
(7
)
 
(7
)
 

 

Total commodity derivatives
(578
)
 
(551
)
 
(27
)
 

Total liabilities
$
(749
)
 
$
(551
)
 
$
(182
)
 
$
(16
)
The following table presents a reconciliation of the beginning and ending balances for our Level 3 financial instruments measured at fair value on a recurring basis using significant unobservable inputs for the nine months ended September 30, 2015.
Balance, December 31, 2014
$
(16
)
Net unrealized gains included in other income (expense)
10

Balance, September 30, 2015
$
(6
)
6.
NET INCOME PER LIMITED PARTNER UNIT
Net income for partners’ capital and statement of operations presentation purposes is allocated to the General Partner and Limited Partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to the General Partner, the holder of the IDRs pursuant to the Partnership Agreement, which are declared and paid following the close of each quarter. Earnings in excess of distributions are allocated to the General


14


Partner and Limited Partners based on their respective ownership interests. Earnings attributable to predecessor represents amounts allocated to the former Regency partners and have no impact on income from continuing operations per unit for the periods prior to the Regency Merger.
A reconciliation of income from continuing operations and weighted average units used in computing basic and diluted income from continuing operations per unit is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Income from continuing operations
$
393

 
$
514

 
$
1,500

 
$
1,478

Less: Income (loss) from continuing operations attributable to noncontrolling interest
(24
)
 
78

 
182

 
219

Less: Income (loss) from continuing operations attributable to predecessor

 
94

 
(34
)
 
97

Income from continuing operations, net of noncontrolling interest and predecessor income
417

 
342

 
1,352

 
1,162

General Partner’s interest in income from continuing operations
277

 
135

 
779

 
373

Class H Unitholder’s interest in income from continuing operations
66

 
59

 
184

 
159

Class I Unitholder’s interest in income from continuing operations
15

 

 
80

 

Common Unitholders’ interest in income from continuing operations
59

 
148

 
309

 
630

Additional earnings allocated to General Partner
(3
)
 

 
(7
)
 
(2
)
Distributions on employee unit awards, net of allocation to General Partner
(4
)
 
(3
)
 
(11
)
 
(9
)
Income from continuing operations available to Common Unitholders
$
52

 
$
145

 
$
291

 
$
619

Weighted average Common Units – basic
485.0

 
331.4

 
415.1

 
324.8

Basic income from continuing operations per Common Unit
$
0.11

 
$
0.44

 
$
0.70

 
$
1.91

 
 
 
 
 
 
 
 
Income from continuing operations available to Common Unitholders
$
52

 
$
145

 
$
291

 
$
619

Income attributable to Preferred Units
(4
)
 

 
(5
)
 

Diluted income from continuing operations available to Common Unitholders
$
48

 
$
145

 
$
286

 
$
619

Weighted average Common Units – basic
485.0

 
331.4

 
415.1

 
324.8

Dilutive effect of unvested employee unit awards
1.4

 
1.7

 
1.7

 
1.6

Dilutive effect of Preferred Units
0.9

 

 
0.9

 

Weighted average Common Units - diluted
487.3

 
333.1

 
417.7

 
326.4

Diluted income from continuing operations per Common Unit
$
0.10

 
$
0.44

 
$
0.68

 
$
1.90

Basic income from discontinued operations per Common Unit
$
0.00

 
$
0.00

 
$
0.00

 
$
0.20

Diluted income from discontinued operations per Common Unit
$
0.00

 
$
0.00

 
$
0.00

 
$
0.20



15


7.
DEBT OBLIGATIONS
Our debt obligations consist of the following:
 
September 30, 2015
 
December 31, 2014
ETP Senior Notes
$
19,440

 
$
10,890

Transwestern Senior Notes
782

 
782

Panhandle Senior Notes
1,085

 
1,085

Sunoco, Inc. Senior Notes
465

 
715

Sunoco Logistics Senior Notes(1)
3,975

 
3,975

Regency Senior Notes(2)

 
5,089

Revolving credit facilities:
 
 
 
ETP $3.75 billion Revolving Credit Facility due November 2019
665

 
570

Sunoco Logistics’ subsidiary $35 million Revolving Credit Facility due April 2015(3)

 
35

Sunoco Logistics $2.5 billion Revolving Credit Facility due March 2020
835

 
150

Sunoco LP $1.5 billion Revolving Credit Facility due September 2019(5)

 
683

Regency $2.5 billion Revolving Credit Facility due November 25, 2019(4)

 
1,504

Other long-term debt
31

 
223

Unamortized premiums, net of discounts and fair value adjustments
172

 
280

Total debt
27,450

 
25,981

Less: Current maturities of long-term debt
1

 
1,008

Long-term debt, less current maturities
$
27,449

 
$
24,973

(1) 
Sunoco Logistics’ 6.125% senior notes due May 15, 2016 were classified as long-term debt as of September 30, 2015 as Sunoco Logistics has the ability and intent to refinance such borrowings on a long-term basis.
(2) 
As discussed below, the Regency senior notes were redeemed and/or assumed by the Partnership.
(3) 
Sunoco Logistics’ subsidiary $35 million Revolving Credit Facility matured in April 2015 and was repaid with borrowings from the Sunoco Logistics $2.5 billion Revolving Credit Facility.
(4) 
On April 30, 2015, in connection with the Regency Merger, the Regency Credit Facility was paid off in full and terminated.
(5) 
In connection with ETE’s acquisition of Sunoco GP, the general partner of Sunoco LP, on July 1, 2015, ETP deconsolidated Sunoco LP.
The following table reflects future maturities of long-term debt for each of the next five years and thereafter. These amounts exclude $172 million in unamortized premiums and fair value adjustments:
2015 (remainder)
 
$
1

2016
 
375

2017
 
1,182

2018
 
2,485

2019
 
1,666

Thereafter
 
21,569

Total
 
$
27,278

ETP Senior Notes
In June 2015, ETP issued $650 million aggregate principal amount of 2.50% senior notes due June 2018, $350 million aggregate principal amount of 4.15% senior notes due October 2020, $1.0 billion aggregate principal amount of 4.75% senior notes due January 2026 and $1.0 billion aggregate principal amount of 6.125% senior notes due December 2045. ETP used the net proceeds of $2.98 billion from the offering to repay outstanding borrowings under the ETP Credit Facility, to fund growth capital expenditures and for general partnership purposes.


16


In March 2015, ETP issued $1.0 billion aggregate principal amount of 4.05% senior notes due March 2025, $500 million aggregate principal amount of 4.90% senior notes due March 2035, and $1.0 billion aggregate principal amount of 5.15% senior notes due March 2045. ETP used the $2.48 billion net proceeds from the offering to repay outstanding borrowings under the ETP Credit Facility, to fund growth capital expenditures and for general partnership purposes.
At the time of the Regency Merger, Regency had outstanding $5.1 billion principal amount of senior notes. On June 1, 2015, Regency redeemed all of the outstanding $499 million aggregate principal amount of its 8.375% senior notes due June 2019.
Panhandle previously agreed to fully and unconditionally guarantee (the “Panhandle Guarantee”) all of the payment obligations of Regency and Regency Energy Finance Corp. under their $600 million in aggregate principal amount of 4.50% senior notes due November 2023. On May 28, 2015, ETP entered into a supplemental indenture relating to the senior notes pursuant to which it became a co-obligor with respect to such payment obligations thereunder. Accordingly, pursuant to the terms of such supplemental indentures the Panhandle Guarantee was terminated.
On August 10, 2015, ETP entered into various supplemental indentures pursuant to which ETP has agreed to assume all of the obligations of Regency under the following series of outstanding senior notes of Regency and Regency Energy Finance Corp., of which ETP was previously a co-obligor or parent guarantor:
$400 million in aggregate principal amount of 5.750% Senior Notes due 2020;
$390 million in aggregate principal amount of 8.375% Senior Notes due 2020 (the “2020 Notes”);
$260 million in aggregate principal amount of 6.500% Senior Notes due 2021 (the “2021 Notes”);
$500 million in aggregate principal amount of 6.500% Senior Notes due 2021;
$700 million in aggregate principal amount of 5.000% Senior Notes due 2022;
$900 million in aggregate principal amount of 5.875% Senior Notes due 2022;
$600 million in aggregate principal amount of 4.500% Senior Notes due 2023; and
$700 million in aggregate principal amount of 5.500% Senior Notes due 2023.
The notes assumed from Regency are registered under the Securities Act of 1933 (as amended). The senior notes assumed from Regency may be redeemed at any time, or from time to time, pursuant to the terms of the applicable indenture and related indenture supplements related to the Regency senior notes. The balance is payable upon maturity and interest is payable semi-annually.
The Regency indentures contain various covenants that are similar to those of the indentures on ETP’s senior notes.
The senior notes assumed from Regency are fully and unconditionally guaranteed, on a joint and several basis, by all of the consolidated subsidiaries that were previously consolidated by Regency, except for ELG and its wholly-owned subsidiaries, Aqua – PVR and ORS.
On August 13, 2015, ETP redeemed in full the outstanding amount of the 2020 Notes and the 2021 Notes. The amount paid to redeem the 2020 Notes included a make whole premium of approximately $40 million and the amount paid to redeem the 2021 Notes included a make whole premium of approximately $24 million.
Revolving Credit Facilities
ETP Credit Facility
The ETP Credit Facility allows for borrowings of up to $3.75 billion and expires in November 2019. The indebtedness under the ETP Credit Facility is unsecured, is not guaranteed by any of the Partnership’s subsidiaries and has equal rights to holders of our current and future unsecured debt. As of September 30, 2015, the ETP Credit Facility had $665 million of outstanding borrowings.
Sunoco Logistics Credit Facilities
In March 2015, Sunoco Logistics amended and restated its $1.5 billion unsecured credit facility, which was scheduled to mature in November 2018. The amended and restated credit facility is a $2.5 billion unsecured revolving credit agreement (the “Sunoco Logistics Credit Facility”), which matures in March 2020. The Sunoco Logistics Credit Facility contains an accordion feature, under which the total aggregate commitment may be increased to $3.25 billion under certain conditions. As of September 30, 2015, the Sunoco Logistics Credit Facility had $835 million of outstanding borrowings.


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Compliance with Our Covenants
We were in compliance with all requirements, tests, limitations, and covenants related to our credit agreements as of September 30, 2015.
8.
SERIES A PREFERRED UNITS
In connection with the closing of the Regency Merger, Regency’s 1.9 million outstanding series A cumulative convertible preferred units were converted into corresponding newly issued ETP cumulative convertible series A preferred units on a one-for-one basis. If outstanding, the Preferred Units are mandatorily redeemable on September 2, 2029 for $35 million plus all accrued but unpaid distributions and interest thereon and are reflected as long-term liabilities in our consolidated balance sheets. The Preferred Units are entitled to a preferential quarterly cash distribution of $0.445 per Preferred Unit if outstanding on the record dates of the Partnership’s common unit distributions. Holders of the Preferred Units can elect to convert the ETP Preferred Units to ETP Common Units at any time in accordance with ETP’s partnership agreement. The number of common units issuable upon conversion of the Preferred Units is equal to the issue price of $18.30, plus all accrued but unpaid distributions and interest thereon, divided by the conversion price of $44.37. As of