Good day, ladies and gentlemen, and welcome to the Energy Transfer's second quarter earnings call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). I would now like to turn the conference over to your host for today Mr. Martin Salinas, Chief Financial Officer. Please proceed.

Thank you, operator, and good morning, everyone. Welcome to Energy Transfer's second quarter 2013 earnings call. Well, I am accompanied by Kelcy, Mackie, John McReynolds, Jamie Welch and other members of our management team who are available to help answer your questions after our prepared remarks. On today's call, I will start with a few comments about yesterday's announcement regarding ETP's effective exchange of 50% of SXL GP and IDRs for ETP common units owned by ETE followed by a brief update on the status of our projects and some news we received yesterday from the DoE, before touching on our second quarter 2013 results and taking your questions. During the call, I will make forward-looking statements within the meaning of Section 21E of the SEC Act of 1934 based on our beliefs, as well as certain assumptions and information available to us. I would also refer to adjusted EBITDA and distributable cash flow or DCF, both of which are non-GAAP financial measures. Reconciliations of net income to adjusted EBITDA and DCF are provided on our website for your reference. Let's start with the joint announcement we made yesterday, another positive step in our strategic plan which has the added benefit of accelerating the resumption of ETP's distribution growth. If you look at the diagram we included in the press release, ETP will regain approximately 50 million ETP common units held by ETE in exchange for newly issued Class H units that will track 50% of the underlying economics of the GP interest in IDRs of Sunoco Logistics. As stated in the press release, this transaction is expected to deliver significant accretion to ETP and we expect to raise ETP's distribution rate by $0.01 per quarter for the third and fourth quarters of 2013 and will continue to broad the distribution into 2014 and beyond while targeting a distribution coverage ratio of 1.05 times, which will rough balance not only distribution growth, but also enhance financial flexibility and strength. For ETE, this transaction will reinforces us to transition back to a pure play GP, while providing exposure to Sunoco Logistics' expected dynamic growth. Also, part of this transaction, we have adjusted the subsidy ETE previously granted to ETP, to a fixed dollar amount, which should make a impact of the IDR subsidy simpler for all to understand. From a project perspective, let me first start with our LNG liquefaction project. We will see [deal] approval yesterday for the export of up to 2 Bcf a day of natural gas for 20 years. This is a significant step forward for us. We have also made significant progress with BG on the overall project and we will share more details with everyone at the lifetime, but it's suffice to say, we are very excited about what this project for the: Energy Transfer family. We are also pleased to report that a 200 million cubic feet a day expansion of Agave plant, which is tied to our increased volumes from the Woodford willing to service in the second quarter of 2013. That means our total processing capacity to just over 2 Bcf across our midstream platform including another 400 million cubic feet a day that will go in service second quarter of 2014, and we remain on track to complete several other projects in our MGL and Midstream segments, both on budget and ahead of schedule including Lone Star's second 100,000 barrel a day fractionator, which should go into service in the fourth quarter of 2013 and the Rich Eagle Ford Mainline expansion, which should be in service in the first quarter of 2014. We [embarked] becoming a big player in the Eagle Ford several years ago with a vision of utilizing our then existing assets complemented with new organic growth projects and an acquisition or two. We couldn't be more pleased on with how this has played out for us and we are extremely proud of our employees and what they have accomplished from the commercial construction and operational aspects. And we will see the fruits of those hard work via increased cash flow for many years to come. As it relates to our crude oil pipeline conversion project, we started the open season and are currently in discussions with a number of key shippers and we remain committed to seeing this project through the commercial phase and into the construction phase. And since I am talking about projects, let me run through our second quarter cap expense, but formal growth capital to fund these and other projects was $454 million on a consolidated basis that includes $174 million at Sunoco Logistics. For the full year of 2013, we expect growth CapEx to total $1.7 billion and $1.8 billion, again on a consolidated basis that includes $685 million to $710 million for Sunoco Logistics. Regarding maintenance CapEx for Q2 2013, we spent just over $50 million on a consolidated basis, including $4 million at Sunoco Logistics. For the full year, we expect to spend between $360 million and $335 million on maintenance CapEx, inclusive of $60 million to $65 million at Sunoco Logistics. Now turning to the pending sale of the LDC business, on July 17th, we announced that the Missouri Public Service Commission has authorized a sale of this Missouri Gas Energy to Laclede Gas Company. With the issuance of this order and the satisfaction of other closing conditions, we expect the sales to close on or around [of this] year. The sale of the New England Gas asset is currently under consideration at the Massachusetts Department of Public Utilities, and that portion of the transaction is expected to close in late Q3 or early Q4 as we do not expect any issues arise. Regarding ETP's Q2 2013 results, consolidated EBITDA, on an adjusted basis for the quarter, was $1.07 billion, a record for us, by the way, compared to $642 million in Q2 of 2012 and DCF attributable to partners of ETP for the quarter was $442 million. That's $126 million increase from Q2 of 2012. For Q3 2013, ETP will pay its unitholders $0.8938 or $3.675 on an annualized basis per unit on August 14 to unitholders of record as of August 5. I would also like to highlight that we change our methodology for reporting distributable cash flow based on both the evolution of our organizational structure and feedback we receive from research analysts and investors. Whereas ETP previously reported DCF on a consolidated basis, which included a portion of cash flows which is the distributables and non-controlling interest, we have revised our presentation to highlight DCF attributable to the partners of ETP as we believe this more accurately depicts cash flows available for distribution to ETP unitholders. From a quarterly perspective, we provided explanations to variances between quarters presented in the earnings release issued yesterday afternoon. I would like to add a little more color to our results. First, our Midstream segment performed well. Excluding the impact of the (inaudible) transaction to Regency. We saw all margins and volume increase as a result of our continued expansion primarily in the Eagle Ford shale as I mentioned earlier along with the growth related to our Woodford Shale project where we are seeing Q2 volumes 0.5 Bcf a day higher than our Q1 volumes and we expect margins to continue increasing as more of our facilities are brought online. Our Interstate and Retail operations also performed well, despite some of the challenges in each of their respective environments. Our Interstate results reflect the impact of our strategic plan to further grow and diversify our cash flow stream while also growing our service capabilities geographically. We also recorded a $52 million pickup in our Interstate business in the buyout of a customer's contract. Our investment in SXL continues to outperform even beyond our expectations. We couldn't be more pleased with what Mike Hennigan and his team are team with the logistics business. Now let's talk about where we see opportunities to capture additional cash flow. While our NGO segments saw quarter-over-quarter increases, volume and margin were below our expectations as we experienced a difficult liquid price environment. However, we are expecting continued volume growth due to increased production throughout the remainder of the year along with further capacity expansion in our Midstream segment. Regarding Intrastate, we continue to face headwinds in this segment. While we had no control over commodity prices, we will continue to take actions to improve profitability. While we talk about profitability, we are also undertaking a rigorous cost reduction initiative across our entire organization. We have identified synergies as part of our acquisitions but believe there is more we can squeeze out of our operations and we expect to provide a little more clarity around this initiative before year-end, but we are targeting in excess of $150 million in additional cost reductions. With respect to liquidity, ETP had approximately $1.5 billion available on its revolving credit facility at quarter-end and subsequent to the quarter-end, ETP closed on the sale of 7.5 million APU common units for net proceed of approximately $346 million. Those proceeds were used to repay borrowings on our existing facility. As we have previously stated, we will continue to be good partners of AmeriGas as we balance our exit strategy with AmeriGas' growth initiatives. Now for ETE, where our distributable cash flow as adjusted was $180 million. That's $158 million increase from Q2 of last year. That's driven primarily by increased cash flows from its ownership in ETP as a result of the Holdco transaction that closed on April 30. From a distribution's perspective, we announced in July, ETE's third consecutive quarterly increase with a $0.04 increase going from $2.58 to $2.62 on an annual basis. This represents roughly 5% increase when compared to this time last year. And, as I stated before, we expect to continue growing ETE's distribution in an attractive way. With that operator, that concludes our prepared remarks. Let's open up the lines for questions. Thank you.

(Operator Instructions) Our first question comes from the line of Shneur Gershuni with UBS. Please proceed.

Congrats on the approval with respect to the LNG permit. One of the questions I guess I had with respect to it is, I was wondering if you can, A, remind us about the ownership structure with respect to the opportunity who owns what and so forth. As well as, I realize details are limited expression at this point in time, but are there other projects out that there's information on that you would direct it to us as a reasonable comparable?

Yes. This is Mackie. Our Trunkline project is owned 60% by ETE and 40% by ETP.

Would you push or would you say that the Cheniere project or [Sempra] or of the others that are out there as similar comparable projects dealers or do you think that yours would be unique and different than some of theirs?

Ours is similar in certain aspects. However comparing us to Cheniere, we have existing regasification facility, so we will be using the same footprint for our liquefaction project that already exist on our regasification and similar to Freeport, so those are more greenfield whereas ours is more brownfield. We already have the infrastructure as far as the pipelines taking volumes from regasification and we will be able to yield out and expand those pipelines to transport volumes into liquefaction facility from the liquefaction process, so that the primary difference of our project in the [approved] is that we are already there, already existing and we don't have to build the infrastructure to phase it.

Cool. One follow-up question if I may. I was wondering if you had any comment on the Trunkline opening season and sort of thoughts of how ETP would be financing its share I it comes to fruition.

On our Trunkline conversions to oil?

Yes. Correct.

Our crude pipeline, we are right now open season in, in about a week. However, there will be announced probably a day that we are extending it. We are continuing to negotiate with shippers to accommodate the shippers requested to deliver the barrels to the premium market and so we anticipate that extending to probably the end of September and we are very optimistic that we will fill up that pipeline where the initial market will be, whether it's St. James or another market remains to be seen, but things are going well from a financing perspective. We very likely will have a partner with that being SXL, bringing their expertise and their financial balance sheet, very likely will play a large role but that will be determined as time goes on after we see the project is initially and the commitments that we have.

Your next question comes from the line of Ted Durbin with Goldman Sachs. Please proceed.

If I could ask about the actual accretion about the (Inaudible), I think you said that press release it's about $0.25 to $0.35 accretive distribution by about a $0.01? I am just missing something there. I think there is a disconnect there.

Ted, this is Martin. We guided the Street of an increase for Q3 and Q4. Then as not only projects kick in related to what we are all working on today. Along with the continued growth in SXL, we expect to resume that growth at a little bit higher rate than the $0.01. As you saw in the press release, we are expecting that accretion to also build our coverage ratio up to 1.05 times that we believe is appropriate level for ETP. As part of the transaction, we also rightsized the net subsidies that ETE provided to us in previous transactions. We have kind of balanced that out a little bit in where we had (inaudible) come in from a roll off. We are been trying to smooth that out. So all that balanced out. So while we saw the accretion at that $0.25 to $0.35, we want to ease into the distribution increase while also hitting that 1.05 coverage ratio that we are targeting.

Got it, okay. Understood, it is based on coverage as well. Then the other question on that restructuring is, why not go ahead and do the entire 100% of the SXL GP, as the ultimate goal is to have ETE (inaudible) acquire 50% of this transaction?

Again, a balancing act, given what we see in the value in SXL will be from an ETP perspective. We still felt the desire to retain that 50% outside in SXL and balance that with the growth that we are seeing is from the ETP level. From an ETE perspective, also kind of the same thing. E think while we all agree we would have preferred a 100%, it is one of the things that we would step in at a 50% level today. See how things play out and I think ultimately, as we have stated before and as we have talked about in the press release the goal would be to get ETE back to be a pureplay GP and obviously with it now owning 100% of the GP and IDRs of both ETP and Regency and now effectively 50%, logically the next step would be to get to that 100% level, SXL level. We are just not ready to do that today.

Got it, and then the last one is on (inaudible) stakeholder. Just wondering on the contract (inaudible) would you be comfortable moving forward with potentially not all of the capacity contracts (inaudible) like when you have the entire amount contracted up for Eagle Ford, would BG be willing to take some (inaudible)? Just wondering what is the contract strategy out there?

Yes, this is Mackie again. No, we intend to 100% contract on a fee basis under a long-term agreement.

Your next question comes from the line of Stephen Maresca with Morgan Stanley. Please proceed.

I appreciate all that additional detail on the distributable cash flow. A couple. One first, a point of clarification. You mentioned the growth rate at ETE continuing at the same growth rate in 2014. Should I read that as, you will continue to raise it at that $0.01 a quarter that you mentioned for the remainder of this year? That will continue with ETE for 2014? Or is that not the way it really is? It could be more than that?

Yes, that's not the right way to read it. It could be more than that. I think you probably read a comment in there somewhere stable, we said we were going to resume a 1.0 coverage ratio. We think we are cleaning this up and simplifying ETE enough to get it back to that. We feel comfortable we can do that. So whatever the math suggest we do for our distributions, we will follow the math.

Okay, perfect. Then, another little point of clarification. Exhibit D on that release, that is right now, those numbers are jut now, what is the actual net IDR subsidy to ETP that is remaining? Is that right?

Yes, that is correct.

Okay, so after that schedule, there are no more subsidies for the IDRs between ETE and ETP?

That's right.

Wondering if you could just update us your latest thoughts on financing Lake Charles. Where are you thinking that could head in terms of the financing? Just some sort of color on how we should we be thinking about that? Then, also you mentioned you are still talking on more progress on BG. Is it something where we expect to hear something more this year on the commercial front?

It's Jamie Welch. So, let me take on the Lake Charles. With respect to financing, I think we will very much follow the model used by Cheniere as well as Freeport, in the way that we finance it, so the mix of bank debt, I presume. This is something that is more turnaround or a bond structure out-of-the-box. I think, given the depth of the bank market and probably an expected construction overnight build cost to between $9 billion to $10 billion. You are probably looking about $11 billion total financing. So, that will then mean a mix of debt and equity. Equity will be sourced from third-party outside investors, much like (Inaudible) done with Blackstone, and I think Freeport is doing right now as well for [train II]. I think it's given the universal embrace that has sort of captured and very much captured peoples' attention and focus on the on the LNG side. I don't expect it will have much in the way of challenges of trying to get this finance particularly given. We had some nuances as Mackie said relative to some of the other projects. Ours will be a soul sourced projects that BG will be our partner effectively, which will make it a little different than what obviously both, Freeport and Cheniere have followed. I think you will also see some nuances and differences the way that we approach both construction management and operations which we think will sort of all go well and the way people will look at our project. So, that I think should give you at least enough of a framework to basically think about how we are sort of going to plan to tackle it as far as timing is concerned, what our expectation is, we would like to get this thing done inside of two years from, so we are inside June 30, by 2015. I think as far as the BG side of the equation is concerned, we have had a lot of conversations for a long period of time on both, the liquefaction as well as the reset on the re-gas rates and I think you should expect, you certainly end of this year have very clear definition and specificity around the contractual relationship that will exist.

Okay. That was very helpful. Thank you. One follow-up. Timing in terms of when this potentially is online? Are we thinking something like a 2018 train?

I think it's '19 train, so basically 48 months depending upon what technology we use. Obviously, that is a decision for our partner and ourselves to sort of make, but I think 48 months is sort of pretty safe bet. Then if we do three trains, which is what we currently anticipating, you expected sort of nine month of the clip thereafter so effectively last in service that will be the end of 2020.

I would now like to turn the call back over to Martin Salinas for closing remarks.

Great. Again, thanks everyone for your time this morning and look forward to continued good news coming out of the Energy Transfer family.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.