Good day, ladies and gentlemen and welcome to the Fourth Quarter 2010 Energy Transfer Partners Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will later conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Martin Salinas, Chief Financial Officer. Please proceed.

Hello everyone and thanks for joining us this morning. As we make a few comments about ETP and ETE’s financial results for the fourth quarter and year-ended December 31, 2010 as well as updating you on some of their commercial and operational initiatives that will provide growth to our partnerships in the upcoming years. I encourage you to visit our web site to access the earnings release we issued yesterday after the market closed. And during this call, we may make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our beliefs as well as certain assumptions and information available to us. And with me to answer the questions are Kelcy, John McReynolds, Mackie and other members of our senior management team. And before I go into our results, I would like to highlight a few of the achievements we had this quarter as we continue to expand our footprint in some of the most prolific shale plates in the United States. And after many months of talking about them, we are proud to say that both FEP and Tiger are not only online but flowing gas as well. We also recently received FERC approval for the Tiger expansion for full steam ahead there. As we depicted in our Analyst Day slides which are posted on our website, we expect cash flows from these pipelines to increase over the course of 2011 and reach their full contracted fee potential by the first quarter of 2012. And this growth will give us the confidence of resuming our distribution rate growth in the not-so distant future. We have also been working very hard in the Eagle Ford Shale. (inaudible) project was brought online in December and we are progressing quite nicely as planned on our Chisholm Pipeline. If you recall, we do expect constructions to start at the end of this month and be in service by the end of the second quarter of 2011. And just announced, the Rich Eagle Ford Mainline or REM is approximately 160-mile 30-inch pipeline will have an initial capacity of approximately 400 million cubic feet a day and will originate in Dimmitt County, Texas and extend into our Chisholm Pipeline. The rich gas gathering system will initially have the capacity of delivering 200 million cubic feet a day of natural gas into the Chisholm Pipeline for ultimate deliveries to our existing processing plants. In addition, we will also be constructing a new 120 million a day processing plants to help facilitate the additional need for processing capacity. The first phase of the REM project is expected to be in service by the fourth quarter of 2011. We also entered into a joint venture with Copano to build a 12-inch NGL pipeline or the Liberty pipeline that will primarily service for most of the needs in East Texas. And this pipeline is expected to be completed sometime this summer. I can’t emphasize enough how much the Eagle Ford Shale remains an area of intense focus for us and we expect to continue increase in our presence there to meet our producers’ needs. This will cause results in incremental distributable cash flow growth to ETP over the next several years. I also would like to touch on a couple of other areas where we are also seeing growth. In North Louisiana, in the Haynesville shale, now with Tiger up and running, we are seeing continued growth as our producers look to fill the committed Tiger capacity. We are currently gathering and transporting approximately 350 million cubic feet a day and expect to average over 450 million cubic feet a day over the course of 2011. And also in the fourth quarter, we brought in service our East Texas Lumberjack Pipeline which is currently flowing close to 100 million cubic feet a day of gas and we do expect to flow approximately 250 million by the end of 2011. And in the North East, we are currently transporting 60 million cubic feet a day on our Bobcat pipeline and anticipated demand volumes to grow to 200 million cubic feet a day by the end of third quarter of this year. We continue to actively negotiate additional pipeline projects in West Virginia and Pennsylvania and to further expand our capabilities in the Marcellus Shale. That about covers what we are currently working on. Now let’s move on to our results. For the fourth quarter, our adjusted EBITDA was $411 million, slightly higher than 2009 fourth quarter EBITDA and distributable cash flow was $284.4 million, a solid 10% increase comparing to the fourth quarter of 2009. And for the year, we reached yet another milestone in our partnership’s history by surpassing the $1.5 billion mark with adjusted EBITDA of $1.54 billion which represented a $63.5 million increase over last year. Our distributable cash flow also surpassed the $1 billion mark with $1.03 billion for 2010, that was about $71 million higher than 2009. And for the fourth quarter of 2010, we paid our unit holders $0.8938 or $3.575 on an annual basis per common unit on February the 14th. Our goal remains intact to grow the distribution rate in 2011 with the intent to be sooner versus later as we are now trying to see the cash flow rapping up from FEP and Tiger. Additionally, volumes continue to increase in our intrastate pipeline systems and we believe processing margins will remain favorable in 2011. Let us now look at what impacted our fourth quarter results beginning with our intrastate transportation and storage operations. We saw our intrastate transportation volumes continue to increase growing almost 18% from the 10.5 Bcf a day that we averaged in the fourth quarter of 2009 to a little over 12.5 Bcf in the fourth quarter of 2010. Now, looking at our annual average transportation volumes for 2010 compared to 2009, they were relatively flat but taking a closer look, it will show we experienced a nice rally in the latter half of 2010 with volumes in the system increasing by almost 2 Bcf a day compared to the last six months of 2009. As it relates to operating income for the fourth quarter, our intrastate operating income was a little less than $127 million compared to $216.4 million in 2009. We had a couple of factors impacting us that quarter. The biggest driver being our storage margin where we saw some pretty large swings in our storage related derivative activities. Now, much of that is due to timing as we do expect a true cash impact as we look to withdraw cash from Bammel, which is primarily during the first quarter of 2011. Additionally, we did see some increase in our transportation during the fourth quarter as a result of the increase volumes that I mentioned a little while ago. And on an annual basis, our intrastate operating income did decrease by $104 million from 2009 to 2010 that’s primarily due to $68 million of lower storage margins as a result of reduced storage spread and $45 million of lower transportation fees as a result of the average transportation rates being lower in addition to lower basis differentials. However, we did see an offset to these decreases due to higher margins on retain field and natural gas sales, which includes the effect of our hedging activities. As it relates to our Bammel storage facility, we have approximately 22 Bcf contracted in a fixed fee contract. That puts us at about 50% of our total storage capacity locked up under fee based arrangements. As of December 31, we had approximately 40 Bcf in the ground that we do intend to withdraw primarily during the first quarter of 2011 as I stated earlier. Turning to our attention to our interstate operations and again, what we do expect to see continued growth given FEP and Tiger coming online. For the quarter, operating income was roughly $36 million, which was down slightly from the fourth quarter of 2009. If you look at it on an annual basis, operating income was down about $3.9 million. Our interstate revenues were up over $22 million for the year as primarily driven by increased margins on operational GAAP sales on Transwestern and roughly $10.2 million in incremental revenue from our target pipeline. The increase in revenue though was offset by increased expenses including 9.6 million in ad valorem taxes and roughly 4.3 million in depreciation. Now, in addition to Tiger being brought online in December, FEP officially began full in service in January. I recall that we did go into interim intervals in the fourth quarter of 2010 and we are now recognizing income under these demand fee based contracts. And we are excited to have finally brought each pipeline project online ahead of schedule and under our initial estimated costs and I look forward to the significant growth which these two pipelines are expected to bring. As a reminder, FEP is a joint venture and these earnings will be reflected as equity in earnings and that’s not included in operating income on our operating statement. Now, let’s look at our midstream operations where we have seen very strong results with increases in volumes gathered, treated and processed primarily through our Godley plant. Operating income for the quarter increased $27.8 million, that’s primarily driven by increased gathering and processing volumes and of course, the continuation of a very strong NGL environment. In addition, we continue to experience significant growth in our fee based margins as a result of the investments we made not only in Louisiana but also in West Virginia over the course of the past year. And on an annual basis, these factors resulted in $86.2 million increase in operating income. Specifically increased volumes in our north Texas system increased our fee margin by over $24 million and also growth volume as a result of our capital investments in Louisiana and West Virginia did provide additional $28 million increase in our margins. Higher processing volumes at our Godley plant together with NGL prices that averaged roughly a quarter a gallon higher last year also increased our margins by roughly $63 million and we expect even further growth of the course of 2011 as a result of the growth projects announced primarily in the Eagle Ford Shale. Now, looking at our propane segment where our fourth quarter operating income was down about 6% compared to the fourth quarter of 2009. When looking at it on an annual basis, the roughly $49 million decrease in operating income was primarily driven by a large mark-to-market gain recorded in the prior year. Excluding the effects of the mark-to-mark adjustments, our propane results were actually relatively flat. We did start off the fourth quarter of 2010 with very mild temperatures but ended strongly as cold weather started to show up. In addition, we are off to very nice start for 2011 as we have seen pretty cold weather across the country over the last four to six weeks. That pretty much covers our operating results. I do want to go into a little bit on our CapEx before turning it over to ETE. From a growth CapEx perspective, we invested roughly $286 million in the fourth quarter, of which a $113 million related to Tiger and approximately $164 million on our intrastate transportation in midstream segment with the remainder in propane. That sums up to a total of $1.3 billion for the full year of 2011 invested in growth projects, again primarily on our intrastate and interstate operations. As it relates to maintenance, we had approximately $29 million in the fourth quarter and at the end of the year was slightly less than $100 million. Now, based on the projects, we’ve announced including REM and other potential developments, primarily in the Eagle Ford Shale, we’ve revised our estimated growth CapEx upwards mainly in our intrastate operations for 2011. And now, we expect it to be between $500 and $550 million for our midstream and interstate segments, roughly $250 million to $300 million in our interstate segment and approximately $25 million to $35 million for our propane operations. I now would like to point out that much of the spending for our interstate segment is due to a shift in the timing of cost for our Tiger projects. For 2011, we do expect maintenance expense to be roughly $120 million to $140 million and we also anticipate making contributions of approximately $200 million to $230 million to our joint ventures in 2011. And as it relates to our liquidity position in addition to the almost $50 million in cash we had on hand, we ended 2010 with $1.6 billion of available capacity under our revolver. That pretty much concludes ETP discussion points. I do want to make a couple of comments about ETE before going into your questions and answers. For ETE, we had approximately $118 million of distributable cash flow for the fourth quarter and $485 million for the entire year of 2010. That does exclude the effect of terminating interest rates swap in the third quarter which has a reminder was in connection with the ET debt refinancing. Now, regarding our distributions to ETE unit holders, we announced a quarterly distribution rate of $0.54 per unit at $2.16 on an annualized basis. That will be paid to our unit holders this Friday, February the 18th. Now, during 2010 ETE’s cash flows were impacted by a number of things including the recent fee transactions and debt refinancing we did in September. With these transactions now in our rearview mirror, we do expect ETE’s cash flows to grow and therefore the distribution rate as well primarily due to the growth initiatives that both ETP and Regency are pursuing. Operator, that pretty much covers my prepared remarks. Let’s open up the lines for questions now. Thank you.

(Operator Instructions) Your first question comes from the line of Darren Horowitz with Raymond James. Please proceed.

Hey, good morning guys.

Good morning, Darren.

Martin, I want to go back to a comment that you had mentioned as it relates to the announcement of REM. How are you guys now thinking about further build out in the Eagle Ford. Is it a situation where now you’re going to be focusing on expanding capacity at La Grange because you have got REM delivering 200 MMcf of volume and the Chisholm, obviously you could add another 100 at Chisholm but I think coming out of that you could have a lot of residual gas that might its find way across Oasis. So I’m just wondering what opportunities you see down the road?

This is Mackie. We see numerous opportunities at, I think, very exciting area for us. We are very pleased to make this announcement. We have positioned this 30-inch to the very heart of the Rich Eagle Ford play all the way from almost Mexico to our Chisholm Pipeline and certainly we’ll continue to have negotiation with producers all along the line. And we do anticipate or hopeful to make future announcements for additional capacity -- additional volumes.

Okay. Mackie, how do you think about further enhancing the downstream aspects of all these infrastructure? There is a lot of options as I am sure you know and isn’t the goal ultimately to have more fractionation capacity and distribution down, storage and distribution logistical distribution into the petrochemical arena. Is that where you want to be at kind of the other book end of all this?

Well, we want to be where we need to be to increase our distributions and our revenues of course and inline with locking up producers, it certainly requires locking up downstream NGL capacity, fractionation capacity and there is nothing that we are not looking at as far as expanding our NGL systems that we are now building and also potentially stepping into fractionation assets. But certainly anything from the wellhead all the way to fractionation we’re looking at as it fits our partnership needs.

Is there any opportunity for you to do anything out of Godley down to Bellevue?

Sure. We are under certain agreements that last for certain periods of time, but as volumes grow we anticipate them to grow up in the Barnett Shale. We will be looking for opportunities to expand downstream infrastructure there as well.

Okay. That’s it from me. Thanks guys.

Your next question comes from the line of Barrett Blaschke with RBC Capital Markets. Please proceed.

Hey guys. As you are building out on the Eagle Ford, any thoughts on kind of moving it a little bit north and expanding into the Granite Wash a little further?

We -- of course, we don’t have any assets upfront...

Right.

... right now as far intrastate or NGL lines, but we are looking as we always do to provide services for producers wherever they are looking for those services and if there is anything we can do in combination with others potentially up there, we certainly be a part of that.

Okay. Thank you.

Your next question comes from the line of Michael Blum with Wells Fargo. Please proceed.

Hey, good morning, everybody.

Hey, Michael.

Hey. Maybe just following up on Darren’s question, so where are you now as it relates to the volumes that come out of Chisholm, where are those going to get fractionated or is that still a piece of the puzzle you’re working on?

We have locked in a fairly significant amount of fractionation capacity. We’re also closed to closing additional capacity and we are in discussions with several other fractionators. So we’re very pleased with where we sit as far as the options we have. Well, first of all we’ve locked in, our fractionation capacity, the option we have for additional capacity today and where we are at on our negotiations with other [fractionation].

Okay. Turning to gas storage for a minute, can you just remind us the 22 Bcfe have contacted? What’s the length of the contracts on that capacity?

Yeah, Michael, this is Martin. The majority of that one is with Cedar Point that I believe goes through 2013 and 2014 and the other -- there’s probably another 10 to 12 Bcf and have some more between two and three-year contract.

Okay. Great. That’s all I had. Thank you.

Yeah. Thanks, Michael.

Your next question comes from the line of John Edwards with Morgan, Keegan. Please proceed.

Yeah. Good morning everybody.

Hey, John.

Hey, Martin, could you just -- you run through the numbers pretty quick. Can you -- what was the new total CapEx budget for 2011?

Yeah, John. Sure. By segment for our Interstate business, which alone covers the transportation storage and midstream, we’d now increase that CapEx upwards to roughly $500 million to $550 million.

Okay.

For 2011. For interstate that’s 250 to 300 and then propane 25 to 35.

Okay. And I think you’re talking about some -- I thought -- I heard you mentioned that there was some changes on fees with pipe -- renewal contracts on pipelines, that was a little bit on the downward side? Did I hear that right and what was the magnitude of change, if so?

Yeah, I don’t recall saying there has been a change in fees and...

Okay.

...on these cases -- we are just seeing, we saw some lower fees in 2010 versus 2009.

Okay.

...environment. There has been no restructuring downward.

Okay. All right. Okay. That’s all I have. Thank you very much.

Yeah. Thanks, John.

Your next question comes from the line of Louis Shammy with Zimmer Lucas. Please proceed.

Hi, guys. Congratulations on the new Eagle Ford projects.

Thanks, Louis.

I just had two kind of minor questions. First of on the storage margin, you’ve got 40 Bcf at Bammel that -- that you’re most likely you’re going to withdrawing in Q1? Do you guys have any commentary on what kind of spreads you’ve locked in on the volumes?

Yeah. I mean, on those, when you look at what the market, I guess, provided from an opportunity with respect to in 2010 as we were injecting gas into Bammel. Those spreads were certainly lower than what we have seen historically and you’ll probably -- I think on the average somewhere inside of $1 on -- a little bit locked-in. So -- it’s still making money for us, but certainly remember we have seen back when we saw there’s more volatility on the forward curve and it’s slightly better containing the markets then what we’re seeing today.

Okay. And then in terms of Tiger, what did you spend on that pipeline in 2010, how much of CapEx did you spend that year?

For Tiger, we spent about a little over, call it $820 million.

Got it. Okay. Thank you very much.

Yeah.

Your next question comes from the line of Yves Siegel with Credit Suisse. Please proceed.

Good morning, every body.

Hi.

Just a couple of quick ones. One -- put on your heels more and I think it and I apologize, but can you quantify what the dollar amount of maybe your project backlog may look like at this juncture if all of Mackie’s wish list come to fruition and how you make risk adjust that?

I got a lot of comments.

You feel like Austin Powers maybe?

Maybe, Mackie you want to take that one?

Well, as we said earlier just look into Eagle Ford, we’re extremely excited. We have put a lot of manpower into that play. We disappointed if we don’t significantly increased both our volumes and of course, our capital expenses. I don’t know how we’d really go about quantifying that but...

Mackie, let me say something. Yves, this is Kelcy. There is a slippery slope involved to keeping you guys well informed, which we fully intend to and are committed to do and showing our cards chart competition. As you know, the Eagle Ford is extremely competitive. We are very excited about our opportunities there. Very, very excited. But of course, we are not going to announce projects that not be completed, locked down at this point, but that we’re pretty optimistic that there is still be a lot of growth in Eagle Ford for us.

Is it fair to say given the magnitude of the dollars that you may commit to that -- you would have shipper commitments behind it like you have pretty much always done?

Absolutely.

And then how do you think about JVs as you look at the Eagle Ford and perhaps other areas and when I said JVs, I also sort of include Regency in that context as well?

Well, as you know we -- it has been a very big part of our growth and going forward we think we’ve learned a lesson. For the most part, we like to be the operator of the JV. I think there’s a very good chance that us and Regency will do some JVs together whether it be Eagle Ford or elsewhere. There is one particular project we bid on jointly recently, did not know how we sort out on that but we’re working together. So we’re optimistic building more of that, but JVs are necessary especially in the liquid side of our business where we don’t have much of a platform to speak out. Mackie and his team has done a great job of finding partnerships that will allow us to be competitive.

And my last one is, and you’d probably disagree, but I think you’ve done a really good job of not making acquisitions and not paying up for some of the assets out there? Having said that -- what do you -- how do you -- given the opportunities for organic projects and my presumption that acquisitions are going to be with pretty high multiples, how do think the landscape looks going forward?

Yves, we should have talked for we’ve got an office full of silver and bronze medals around here, as it relates to acquisitions. We’re very frustrated but we remain disciplined and we just can’t seem to make the deals. It’s very frustrating for us. We’ve asked the question, you didn’t ask us but we’ve asked this routinely about -- well, what if our cost of capital were lower? It has nothing to do with cost of capital. If you’re good at this business, you don’t pay the process that we’re seeing paid for some of these assets. It’s called discipline, it’s not cost of capital. So we’re frustrated, but we’re also pleased because we are still demonstrating growth to our unit holders through the lane of top line, which we think we’re as good as anybody in the business. But this we’ve certainly done about as much as anybody in the last few years and will continue to do that. But I just think -- I think the acquisition market, something will change. It always does in this industry, it always does and something will change and some people will stuff their toes and there will a purging of bad deals. They’ll come back on the market and we plan on hanging around when that occurs.

At a risk of just hanging on to long, my last -- my very last one is, anything have you concerned right now? What’s the top of the list I should stay of stuff that you’re concerned about? Me asking questions besides that.

You know, it maybe Mackie and Martin and Tom might like to stand with this. We are watching our government very carefully. When MLTs get mentioned in the same paper witness we pose that’s concerning. Beyond that guys what…

I felt that you hit the nail right on the head. There are a lot of things that we focused on for the last couple of years. We went back to carried interest and some of the capital trade discussions and what not. So still very, I think fragile and volatile environment and that’s something that we are going to continue to debate, (inaudible) attention to it. Hopefully educate others in our industry that this is something that needs to be done on a co-ordinated basis.

Thanks guys.

Your next question comes from the line of Helen Ryoo with Barclays Capital. Please proceed.

Thank you. Good morning.

Good morning, Helen.

Good morning. Just a couple of follow-ups on the Eagle Ford project. What is the start-up date of the processing plant? Is that fourth quarter ‘11 as well?

Well, for a little bit of clarity, we have an existing plant there. We have capacity in that. We are expanding that. That expansion should be completed in the second quarter and then the new plant that we are building on the Chisholm system also that should be in operation by the end of this year.

Okay. So there are 120 million per day that will be operational in fourth quarter of 2011.

Yeah, call it January of 2012.

Okay. Great. And then -- so is it -- where is the location of the plant and also could you talk about the downstream side, the NGL takeaway pipeline out of that plant?

You bet. Our La Grange plant is of course a large facility. They gather and has for years gathered and processed at Austin Chalk and other formations in that area. It is in Fayette County. The Chisholm plant that we will building is also will be in Fayette County and the pluses to all of that is to downstream intrastate outlet is Oasis. So all of this business does add additional revenues to our downstream interstate markets. Additionally, we are building an NGL line in the tailgate of La Grange and some Chisholm and that will also provide downstream revenue for our new NGL sector. So we’re really excited about all of the synergies that this project provides our partnership.

Okay. Great. And then lastly just on the 300 million total cost, what’s the breakdown between the processing side and the pipeline side? Could you provide the cost breakdown?

Yeah, Helen. I don’t have that in front of me. I can get that to you. I will say that out of that $300 million, roughly 230 to 245 will be spent in 2011 and then the remainder in 2012.

Okay. Okay. Great. Thank you.

Your next question comes from the line of Selman Akyol with Stifel Nicolaus. Please proceed.

Thank you. Good morning.

Good morning, Selman.

Couple of quick questions. In terms of natural gas storage in your fee-based component side of it, is there any inclination to move that up during 2011 or would you stay at approximately 50%?

Well, our goal is to get our storage capacity under fee-based contracts somewhere north of 80%. With that in mind, we’re not going to give -- we will not give it away based on where market conditions are. It’s just a slow price environment today, when you discussing these contracts, you’ll see arrangements with various storage customers. So we’ve taken position of using that for our own equity needs. Having said that absolutely we would engage discussions with the storage customers to secure more of that on the long-term fee-based bases.

Okay. But I guess, there is no set goals you exit 2011, is how much you would like to have under fee-based?

Again north of 80% if we can get that under our fees, it will give us an appropriate rate of return.

Okay. Do you have any additional comments -- in your opening comments you talked about expanding capabilities in Marcellus Shale, are there any additional color you can give to that?

Part of the initial color we provide is we’re looking at everything. It’s a little bit more difficult environment as we said in the past as far as [broadway], but we there is nothing we’re not looking at both in West Virginia and Pennsylvania and we’ll be disappointed if we aren’t building bigger pipes in longer distances over the coming year.

Okay. And then my last question is just kind of a small -- on your SG&A expenses for interstate and midstream, they seem to come down year-over-year? Is there anything going on there in particular?

Down year-over-year.

Eagle Ford, yeah.

Yeah, we had Selman, if you recall, we had this little thing went on with the FERC, until we had quite a bit legal fees hitting the books in 2009 that -- once we settled it that just kind of went away. That’s probably the biggest driver there.

Thank you so much.

Yeah.

And at this time, we have no further questions. I would now like to turn the call back over to Martin Salinas for any closing remarks.

Great. Again, thanks everyone for joining on the call and I look forward to a very exciting 2011 from ETE’s -- ETP’s perspective. Everybody have a good day.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.