Regency Energy Partners reports increases in financial results

Regency Energy Partners LP (NYSE: RGP) on Feb. 15 announced its financial results for the fourth quarter and full year ended Dec.31, 2011.

For full-year 2011, adjusted EBITDA increased 29 percent to $422 million, compared to $327 million in 2010. Adjusted EBITDA increased by 13 percent for the fourth quarter of 2011, compared to the fourth quarter of 2010. The increases were primarily attributable to RGP’s acquisition of a 30 percent interest in the Lone Star Joint Venture in May 2011 and an increase in the adjusted segment margin in the Gathering and Processing segment due to increased volumes in south and west Texas. The full-year increase was also partly due to a full-year contribution from the MEP Joint Venture in 2011, compared to a partial-year contribution in 2010.

For full-year 2011, net income increased to $74 million, compared to a net loss of $11 million in 2010. Net income increased to $14 million for the fourth quarter of 2011, compared to a net loss of $9 million for the fourth quarter of 2010.

"Our acquisition of an interest in the Lone Star Joint Venture added a predominantly fee-based natural gas liquids platform to Regency's portfolio which when combined with increased volumes in south and west Texas, led to solid year-over-year adjusted EBITDA growth," said Mike Bradley, president and chief executive officer of Regency. 

Energy Transfer Partners, Regency Partners plan new fractionation unit

HOUSTON, Texas - Energy Transfer Partners, L.P. (NYSE: ETP) and Regency Energy Partners LP (NYSE: RGP) on Feb. 16 announced that their joint venture, Lone Star NGL LLC, will construct a second 100,000 barrel per day (b/d) natural gas liquids fractionation facility at Mont Belvieu, Texas.

Supported by multiple long-term contracts, the second fractionator is necessary to handle the increasing NGL barrels delivered via the partnerships' Woodford Shale, Eagle Ford Shale and Permian Basin infrastructure, including Lone Star's 570-mile West Texas Gateway NGL Pipeline.

Lone Star is on schedule to complete its West Texas Gateway NGL Pipeline and initial 100,000 b/d fractionator at Mont Belvieu in the first quarter of 2013, and expects this second fractionator to be completed in the first quarter of 2014. At an estimated cost of $350 million, the project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with significant access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana Gulf Coast.

"With the capacity of our first fractionator fully contracted, and increasing customer demand for NGL outlets, the addition of a second fractionator was necessary," said Greg Bowles, senior vice president of Lone Star. "Our two new fractionators and our West Texas Gateway system are all supported by long-term agreements. These assets, along with other projects we are pursuing in these prolific regions, demonstrate our strong commitment to providing full NGL services for our customers."

Three reasons to avoid Energy Transfer Partners

Energy Transfer Partners L.P. (NYSE: ETP) is the third-largest energy pipeline master limited partnership (MLP) in the U.S.

The dividend yield is relatively high due to the lack of dividend increases. The equity in early November was yielding close to 8.0 percent, which is high for the MLP pipeline sector.

The three principle reasons to avoid Energy Transfer Partners:

(1) The dividend has failed to grow. ETP insiders control the general partner, Energy Transfer Equity (NYSE: ETE). Energy Transfer Equity controls 26 percent of Energy Transfer Partners L.P. shares.

(2) The cost of equity capital is one of the highest in the MLP space. Although Energy Transfer Equity has stated it will make General Partner concessions, time will tell if this will in fact drop down to Energy Transfer Partners. Per ETE's SEC 10K, Energy Transfer Equity's only income is: "The Parent Company’s … direct and indirect investments in limited partner and general partner interests in ETP and Regency (NYSE: RGP), both of which are publicly traded master limited partnerships engaged in diversified energy-related services."

(3) The corporate restructurings, including deals with AmeriGas Partners and Southern Union, need time to digest and prove they will result in higher Energy Transfer Partners dividends.