Energy Transfer Partners L.P.ETP

Morningstar Rating

Stock Research and Analysis

by Jason Stevens

We have long thought that Energy Transfer benefits from two savvy strategic moves. First, full-throttle investment in Barnett Shale takeaway capacity has begun to have an increasing impact on earnings, and second, entry into interstate transportation Read more

Bulls Say

Energy Transfer Partners is building Texas' largest-diameter natural gas pipelines, connecting the Barnett Shale with points east, and will soon boast more subscribed takeaway capacity than recent estimates indicate the Barnett will be able to produce.

We think Energy Transfer is taking the next step, broadening its Texas hydraulic model into interstate markets, which we believe will foster continued high returns and new project opportunities.

The Midcontinent Express and Fayetteville Express Pipelines will increase the value of Energy Transfer's existing pipeline network to shippers because of the additional market flexibility and access to the best going rate for natural gas.

The Tiger Pipeline will provide needed takeaway capacity to Haynesville shippers, and much of the total capacity is already reserved with long-term, firm transportation contracts, providing clear cash flow visibility for years to come. Read more

Bears Say

Energy Transfer is not a simple tollbooth operator. In some cases it takes possession of the natural gas, exposing it to both commodity price risk and counterparty credit risk.

Much of the partnership's business model depends on strong production out of the Barnett Shale and east Texas. Should geology or demand not pan out, Energy Transfer may find itself sitting on a bunch of expensive excess capacity.

The midstream business is sensitive to the spread in prices between natural gas and natural-gas liquids. A significant change in the spread could damp profitability.

Owning units in a master limited partnership can greatly increase personal tax-filing complexity

Owning units in a master limited partnership can greatly increase personal tax-filing complexity. Read more

Strategy

Energy Transfer seeks to grow rapidly by building or buying natural-gas gathering and transportation assets that connect to its network and to emerging production areas such as the Barnett Shale. Because Read more

Management

After Ray Davis' retirement in early 2007, Kelcy Warren is now CEO and chairman of Energy Transfer Partners and chairman of Energy Transfer Equity ETE, the general partner of Energy Transfer Partners. Under the master limited partnership structure, Read more

Profile

Energy Transfer Partners is a master limited partnership primarily engaged in natural-gas transportation and storage. The partnership operates more than 14,000 miles of Read more

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