[Abrupt Start] Energy Transfer Fourth Quarter 2013 Earnings Conference Call. Throughout the conference, you will remain on listen-only. (Operator Instructions) We will be accepting audio questions after the presentation. I would like to advise all parties that this conference is being recorded for replay purposes. Now, it's my pleasure in turning the presentation over to Mr. Martin Salinas. Please Proceed.

Thank you, operator, and good morning everyone. Welcome to Energy Transfer's fourth quarter 2013 earnings call. I am accompanied by Kelcy, Mackie, John, Jamie and other members of our senior management team who are available to help answer your questions after our prepared remarks. We are going to change the call up a little let's go - around [given] both ETP and ETE. I will make a few remarks about what a year 2013 was for us as well as update you on recent activities of our growth projects. I will also walk through ETP's fourth quarter results before handing over the call over to Jamie to discuss ETE's activities. We will then open up the call to take 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. With that, let's start with 2013, where we came into the year with a list of goals and objectives that we laid out to you on our Analyst Day back in November in 2012. On behalf of ETP and our employees, I am glad to report that we have achieved most, if not all of them. The one I would like to highlight the most though, is that five very long years and taking the multitude of obstacles and challenges, we increased our distribution rate to our unit holders in the third quarter and followed up with another increase in the fourth quarter, a sign that demonstrates that this management teams' confidence is sustaining distribution growth in 2014 and beyond, but this achievement wasn't possible without the steps we took to diversify our asset platform, including the Sunoco and Holdco acquisitions, the divestiture of non-core businesses like propane and the LDC and continuing to invest in high growth areas like our midstream and NGL businesses. Lastly we remained focused on maximizing our operations with further integration as we look to increase profitability by identifying and executing on additional commercial synergies and organic growth while at the same time managing our cost at a level consistent with our desire to be a low-cost service provider. We believe that with that we have accomplished in 2013, coupled with what opportunities we see in front of us, will certainly result in increased value to our unitholders for many years to come. And speaking of growth initiatives, we have invested significant capital over the last couple of years primarily to build out our midstream and NGL platforms, particularly since acquiring the Lone Star assets in 2011, as this is where we have seen the most needs for midstream services from our customers. In 2013 alone, we spent almost $950 million in these two segments to continue growing our asset footprint and service capabilities. And since the beginning of 2013, we brought online one billion cubic feet a day of natural gas processing capacity which includes the completion of the most recent phase of the Jackson County plant bringing the total processing capacity at Jackson to 800 million cubic feet per day. Also included is an incremental 200 million cubic feet per day of processing capacity at our Godley plant in North Texas. This is to accommodate the growing volumes from the Woodford. Additionally, we are excited about our most recent announcement in the Permian basin a nearly 130 million cubic feet per day processing plant which is expandable to 200 million cubic feet per day is located in Glasscock County and along with the associated gathering lines are expected to be in service in the third quarter of this year. The construction of these new midstream assets in the Permian basin will expand ETP's strategic initiative to expand our midstream services into one of the most active liquids rich plays in the country. As it relates to our NGL segment, we have experienced increased demand for transportation services on our NGL pipeline systems including our Lone Star NGL pipelines. With the continued growth in the Permian basin and Eagle Ford shale, our Lone Star NGL system transported over 180,000 barrels per day in the fourth quarter. That's an increase of over 35% from the fourth quarter of 2012. We expect that system reach at least 220,000 barrels per day by the end of this year. With the addition of our second fractionator at Mont Belvieu this past November, our fractionation capacity is now at 200,000 barrel per day. Like our midstream segment, we continue to evaluate the addition of more capacity, particularly in the areas of storage, fractionation and terminals for exporting products via water, truck and rail as demand for NGL latest services continue to grow throughout the world. From an economic perspective, I would also like to mention that our Mariner South project that we partnered with SXL on continues to advance and we expect to be exporting propane and butane by early 2015. We are very optimistic about the continued expansion and growth of our LPG export projects through Lone Star and SXL and we believe there continues to be significant growth opportunity in these segments of our business. On the pipeline front, we continue to evaluate our pipeline systems throughout the country to determine whether the transportation of a different commodity will be more profitable for our partnership. Our Trunkline conversion project is proceeding as we continue to negotiate with potential shippers for crude transportation service to SXL's legal Nederland terminal near Beaumont, Texas as well as other markets. In conjunction with the conversion of Trunkline, we are pursuing interconnects and developing projects upstream to facilitate the delivery of crude supplies into the Trunkline system. We continue to be very confident in this project and are hopeful to announce our progress in the very near future. Additionally we are on schedule to complete our Rio Bravo pipeline during the third quarter of this year. We call that, the pipeline which originates in South Texas and connects Trafigura terminal and the Corpus Christi, Texas is being converted from natural gas to crude service As we look at the landscape of our industry, our future looks promising given the growth opportunities we anticipate capitalizing on across all segments of our partnership. With natural gas price, we have experienced this winter, we are seeing some much anticipated desire from customers to [short] capacity along both, our intra and interstate pipelines, and we are excited by the widening bases of some of our interstate systems as well as the anticipated improvements in bases spreads across Texas and Louisiana. These are the LNG projects coming online, analyze as the market demand growth along the Gulf Coast and into Mexico, over the coming years. Also, we believe there are significant opportunities for pipeline projects out of the Eagle Ford and Marcellus shales, which will create an opportunity to not only solve the need for pipeline infrastructure out of these basins, but to connect those supplies to our existing interstate systems and in additional transportation revenue growth for our partnerships. Now let's turn our attention to ETP's fourth quarter 2013 results. Our consolidated adjusted EBIT for the quarter totaled $986 million, about a $38 million increase compared to the same period last year, and DCF or distributable cash flow attributable to our partners for the quarter increased $284 million to approximately $530 million. That's 115% more this time last year. Our growth in DCF came from a number of things, including overall growth in EBITDA from our operating segments, increased distributions from unconsolidated affiliates and certain tax initiatives we implemented in late 2013 to manage our cash taxes. With our very healthy coverage ratio of 1.09 times for the quarter, as we previously stated, we will continue to manage our distribution coverage and 1.05 times to not only balance distribution growth, but also enhance our financial strength and flexibility. On the topic of distribution growth, for the fourth quarter 2013, ETP paid its unit holders on a quarterly distribution basis a $0.19 per common unit. That's art $3.58 on an annualized basis, representing an increase of $0.06 per common unit on an annual basis from the previous quarter and an increase of $0.10 per common unit when comparing it to the distribution rate we paid this time last year. With respect to our operating segments, we addressed significant variances in our earnings release issued yesterday, so I won't rehash them on this call, but I would like to point out a few highlights. We continue to see very strong results from our Midstream and NGL segments, driven by the large investment we have made. Midstream EBITDA grew 30% quarter-over-quarter, when you excluded the SUGS' contribution to Regency and NGL EBITDA grew an outstanding 74%, primarily attributable to the increased transportation and frac capacity we put in service in 2012, and we are expect margin and cash flow to continue growing. Our crews have done a tremendous job in not only bringing these in service ahead of schedule, but also at or below budget and we are seeing the first of our hard work. What about our SXL and retail platforms? They both continued to deliver results above our expectations. Yesterday, SXL reported record earnings in 2013, as Mike Hennigan and his group continue to do a fantastic job in securing additional growth opportunities that we believe will result in strong distributable cash flow growth heading into 2014 and beyond. On the Retail side, Bob Owens and his team delivered another solid quarter of financial results. The next business acquired in October of 2013, is fitting in nicely with our existing footprint and it's performing as expected and were off to a good start in 2014 based on results today. We will continue to seek opportunity in a retail businesses, where it makes operating sense and fits within our overall objectives of growing DCF, while managing our investment grade credit ratings. With respect to liquidity and financing, ETP currently has approximately $263 million drawn on our $2.5 billion revolver. As always, we will continue to gauge capital markets and our CapEx programs to ensure we maintain an appropriate level of capacity under our revolver while managing our investment grade ratings. I would also like to point out that in January of this year, we had another successful AmeriGas offering, where we sold $9.2 million common units for net proceeds of approximately $380 million. That leaves us with approximately $12.9 million units, and we said repeatedly, we will continue to be good partners with as we manage the business the desire to exit of our remaining position. That wraps up my talking about ETE. I will now turn the call over to Jamie to discuss matters related to ETE.

Thank you, Martin. ETE experienced another solid quarter, as we have taken several initiatives to drive momentum across the entire family of partnerships. As we have consistently said, we remain relentlessly focused on creating and maximizing value to our unitholders. We have engaged and will continue to engage in a well-balanced plan to actively assist our operating partnerships in identifying, evaluating and pursuing strategic acquisitions and growth opportunities. Yesterday, we closed on the acquisition from ETP of Trunkline LNG, the entity that owns the LNG regasification facility in Lake Charles, Louisiana. The consideration was the redemption of 18.7 million ETP units held by ETE. The transaction was effective as of January 1, 2014. We now intend to move forward with the IPO of Trunkline LNG and we would anticipate being in the market in late summer or early fall of 2014. In December, we also filed a draft resource Report 13 with FERC for the Trunkline LNG export project which is a major milestone and clears the way for the projects' formal applications for FERC authorization which are expected to be filed by the end of this quarter. The resource Report 13 details engineering and design aspects of the LNG project including the selection of the APCI technology. Pending final investment decisions by both Energy Transfer and BG export as well as governmental approvals, construction is expected to start in 2015, with the commissioning and startup of the first train in early 2019. We expect the full 15 to 16 million tons per annum to be available by late 2020 as disclosed in our Analyst Day presentation. On the financing and capital allocation side, in early December ETE announced the completion of a comprehensive debt refinancing which reduced ETE's interest expense by $16 million annually and increased cash flow per unit by approximately $0.03 on an annualized basis. ETE commenced a tender offer for a portion of its outstanding notes due 2020 and in conjunction with the tender offer, ETE completed the public offering of 450 million of 5.875% senior notes due 2024 and new $1 billion term loan facility due December 2019 and a new $600 million revolving credit facility due 2018. ETE has now increased the size of its revolver from $600 million to $800 million to provide incremental liquidity. In December ETE also committed to acquire 400 million of Regency common units towards acquisition of the midstream business from Eagle Rock Energy Partners which demonstrated our commitment and confidence in Regency's future growth and value. We are very pleased with the 2013 transformation of Regency and believe that their platform will continue to generate significantly accretive organic and strategic opportunities going forward. We continue to view ETE as materially undervalued. As a result ETE announced in December a $1 billion common unit buyback program. Since January 1, we have been in the market and as of today's date, we have already acquired approximately 1.7 million units. Before turning to the fourth quarter and full-year results, I want to Martin's comments and say how extremely proud we are of ETP and its accomplishments in 2013. Of critical importance to all is its significantly stronger financial position that combines a healthy distributable cash flow coverage ratio with continued distribution growth. It is a tribute to all of the employees of ETP that the partnership is now wonderfully positioned for its next chapter of growth. That wraps up what we are doing from a transaction and project perspective, which now brings me to ETE's fourth quarter and full-year results. Distributable cash flow as adjusted was $185 million in quarter four 2013, compared to $193 million in quarter four 2012, a decrease of $8 million, primarily driven by $75 million cash dividends from ETP Holdco in the 2012 period and higher SG&A levels in 2013, that was not fully offset by increases in total cash distributions from ETP and SXL, know all, the [one-third] interest expense for the 2013 period. For the full year period, distributable cash flow as adjusted for the year ended December 31, 2013 were $719 million as compared to $668 million for the year ended December 31, 2012, an increase of $51 million. We continue to hear some noise in our G&A at the ETE level, which will settle out over time, and with the direct ownership of Trunkline LNG, the G&A levels of ETE will be slightly elevated, but this is [pure] historical levels. From a distribution perspective, in January, we completed a two-for-one split of outstanding common units. All units and per-unit amounts reported have been adjusted to give effect to the split. With that said, ETE announced its fifth consecutive quarterly distribution increase of 34.65 per common unit, or $1.385 on an annualized basis, representing a quarterly increase of $0.01 per common unit. Overall 2013 has been an incredible year for ETE and the whole Energy Transfer family partnerships, as evidenced by the great progress made by ETP and the resulting consecutive distribution increases, the transformation of Regency, the continued industry-leading growth and performance at SXL, the outperformance by the Sunoco Retail business and the continued progress made in developing the Lake Charles LNG export project. We entered 2014 with tremendous confidence knowing that the prospects for the entire family had never been stronger, and so far through the first six weeks of 2014, our conference has been affirmed, given all of the exciting things going on in general. We remain committed to growing across the family both, organically and strategically. Organically through development, mid-single digit EBITDA levels and with strategic acquisitions that while are typically more expensive, create immediate cash flow and help us expand and strengthen our platform. Operator, that concludes our prepared remarks. Let's open the line.

Thank you. Your question and answer session will now begin. (Operator Instructions) The first question comes from line of Dhiraj Rajendran from Credit Suisse. Please proceed.

Hi. Good morning. Can you guys hear me okay? Hi, sorry. A couple of quick questions. You talked M&A opportunities at the ETP level. Can you maybe touch on these types of things that you are you are looking at more specifically, also how valuations are looking versus 2013, any other color there?

This is Mackie. From a project standpoint, of course, we will continue to focus on build up the facilities we built in Eagle Ford, we are very close on that. We made an announcement about the rubble cryo out in West Texas to extend our midstream processing capabilities out there. In addition to that, there also is a significant need for pipeline infrastructure out of Marcellus and Utica and we are certainly very aggressive up there and believe that there is a great opportunity of not only to build a pipeline in that area but also to connect it to our existing interstate system. So that's certainly an area we are focused on. Then on our Trunkline conversion, we are looking for supply. So we are chasing every opportunity and every possible project that could bring deliveries to our Trunkline system. So we are pretty active through all the areas of the country.

Great, and just a quick follow-up. Can you maybe talk a little bit about recontracting on some of your key gas pipelines? In terms of what percentage is that for recontracting or renewal? How we should think about changes in transportation rates? Any color there would be very helpful.

You bet. In fact, it is one of the first times in a while. This is pretty exciting to talk about. If you look at on our interstate pipeline network and you look at the spreads, say on the Panhandle of Texas and Oklahoma and compare that to Henry Hub, then it is high, $0.75 to $0.80. You look at Marcellus and Utica, it has been as above $0.30. So it has created significant opportunities to utilize our existing capacity both that's available today and as contracts terminate over the coming years. We believe that we will be able to roll over and/or add new contracts to equal to or better rates than we are seeing today. A perfect example of that was, three or fourth months ago, we did some fairly long term deals, three to five year deals on our Panhandle system that combines Panhandle with Trunkline to deliver volumes down to the Gulf Coast. With Cheniere coming on in a couple year, with a significant growth along the Texas and the Louisiana Gulf Coast including what we believe will be significant growth in Mexico, we see nothing but very positive opportunities of bases widening and our idle capacity or, to your point, the contracts that are expiring we believe will roll over at equal to or better prices on our intrastate systems as well. So things are, for the first-time in a long time, finally fun to talk about as far as the bases on our pipeline systems.

Great, that's very helpful. Then one last quick one, if I may. Your interest intrastate volumes rose nicely sequentially. Could you talk a little bit about what might have driven that and how we should think about volumes in the 2014 as well? Thanks.

We are very pleased. Of course, this is the whole reason where wonderful thing have really gone well but, across our systems are volumes have gone up, other than on Tiger. Our volumes have dropped significantly on Tiger however as everybody knows that a 100% demand, so a zero revenue impact with that. But yes, our Panhandle system, our Trunkline system are both up in the fourth quarter and we continue to be very excited about not only maintaining the volumes but also increasing the volumes on our intrastate systems.

Great. Thanks very much.

Thank you. The next question comes from the line alternate Helen Ryoo of Barclays. Please proceed.

Thank you. Good morning. So just a follow-up to Mackie's last comment on the favorable hub trend you are seeing on the contracting side. Your intrastate segment EBITDA has been falling but do you feel this we have pretty much bottomed here? That there is not too much downside, given what you are seeing?

Yes, we do. I would have probably said that last quarter, but yes, our lean system or the areas where lean, shale gas continue to soften. No doubt about it. But it is more than made up in the rich areas, for example Eagle Ford we were up over a quarter BCF in this quarter and out it West Texas of course the Gulf up there is exponential over the coming year. So what we are seeing today immediately is widening of bases on our intrastate pipelines that we are securing a long-term transportation to fee-based transportation deals. We haven't seen the widening yet on the intrastates but there is a lot of activity, much of which on this call are aware of and some that aren't on the amount of demand growth along the Gulf Coast which is going to pull gas away from (inaudible) or away from Katy and create, in our opinion, a much wider spread across Texas and then in addition to that, with Cheniere and of course Lake Charles for four or five years but Cheniere in two years and other factors being built in Louisiana. We also believe there will be a widening of the spread between Texas and Louisiana, so once again, we are very excited about it finally moving in the right direction on all of our pipeline systems.

Okay. Thanks for the color there. Then just moving onto sort of the cost reduction initiatives you have talked about in the past. It seems like you are seeing some of that flowing into your numbers, but could you just remind us how much you have accomplished so far and that $160 million to $170 million number, that's something you expect to accomplish in 2014?

Yes, Helen. This is Martin. We are seeing the benefit of some of the initiatives we had taken really in the third quarter and fourth quarter. I would say there is probably another $40 million $50 million that we think we can capture in 2014. That will happen over the quarters. Not quarter one, per se, but for example we are converting some account systems and information systems from our retail businesses over into more current application, so things like that. The resilient thing that we got a good chunk that $160 million $170 million heading into fourth quarter in '14 and another $40 million to $60 million occur as we work through 2014.

Okay. Great. Then you announced the Permian processing project and are you able to talk about sort of the CapEx, the contract and return you expect? Is that a plan that's going to like get connect to Gateway? Then I guess lastly just asking why you guys are - that you decided to do that Energy Transfer rather than Regency given Regency has a bigger foothold out there.

Yes. Once again, we are very excited about [rebel] it's first time ETP has built and will own and operate a processing plant in West Texas since we sold the SUGS assets. This doesn't really overlap for the most part with the Regency systems, so we are not only competing head-to-head on this facility, but to answer the start of the question, we expect to spend anywhere between $250 million and $350 million. The reason that the range there as you noticed in our press release, we are initially building it to what we contracted, which is about 130,000 a day, but we can easily by any compression increase it to 200,000 a day. Not only we are excited about getting out there, but once again we are trying that to our downstream systems, so the residue gas well [rebel] will fall into our ET fuel system and the liquids will flow into our Lone Star system, so it's just one plus one the equal screen, so we are very excited and expect a lot of growth for ETP in West Texas.

Okay. Great. Great. Then just, I guess, question on the on Lake Charles LNG. It seems like that project is progressing well, but there were some talks about U.S. potentially exporting ethane. Is methane the future - is something you guys looked at? Is that something you may be able to be at that facility?

You said methane and ethane?

Sorry, so send up ethane as methane, so basically put it in the gas stream with the fact is ethane problem we have, I guess, there is some talk about potentially sending that out as methane.

Yes. I know that. We already SXL and through our facilities on Lone Star in Mont Belvieu, we are already involved in that. As far as exporting ethane, Mike Hennigan, spoke about this morning on SXL call, through SXL and Lone Star and the synergies that those two entities have together, we do expect to and are hopeful to be successful in some export projects for ethane. There's certainly a significant demand overseas for ethane and we see that as a growing part of our business.

Okay. Then just last, a housekeeping. Could you let us know what was the standalone debt at ETE level and what your leverage ratio looks like?

Helen, this Jamie. As of year-end, we are let's see, about three times. 3.5 times, I believe. Obviously, we bought back. We spent about $70 million buying back 1.7 million units, so obviously that incremental debt we have had on our balance sheet through from year-end obviously to the first six weeks of 2014 that we are still sitting 3.5 times.

So what was the ETE-only debt, that umber?

Right now, its 3.31, I think it is.

Okay, great. Thank you very much.

Thank you. The next line of question comes from the line of Michael Blum of Wells Fargo. Please proceed.

Good morning, everybody.

Hi, Michael.

Just a couple of, just going back on questions around the intrastate natural gas business Can we just talk about specifically which pipelines have the most contracts that are rolling over in the next 12 months? What that looks like?

Hi, Michael, this is Mackie again. It is pretty spread out. If you look at our (inaudible) pipes that we built over the years, o we have about on average 15% or so that is open. Then the contracts that we will be terminating over the next number of years amount to probably another 20% or 25%. The biggest impact on that is in the late-16 and mid-17 until we see that level where it is less than 25% that will be going over. But they are pretty spread out over a course, a lot of them 10 year, initially 10 year agreements that extended to another three or four years. But once again, to reiterate what we are seeing on interstate, and what we are starting to see on intrastate we believe there's a high likelihood that we will be able to recontract those in '16 and '17 at equal to or higher rates than we are charging. Just expand on that a little bit, in South Texas NGL, numerous opportunities there, both on forward haul and backhaul. The system is set up in such a the way where hydraulically we have always flowed Northeast to Katy and to ship channel and of course to the Gulf Coast. We are going to see that changing. We are going to see the hydraulics actually either backhaul or physically moving, compression and pushing gas to the South. So in effect, we will have revenues going East under our long-term deal and new revenues on the backhaul or bidirectional flow through new contracts that we have negotiate or already in continued negotiation to the South.

Okay. Great. That's very helpful. Can you also, this quarter it looked like distributions out of FTT were particularly strong, and I was just wondering if there is something, anything out of the ordinary going on there?

Mike, this is Martin. No, not really. Now and then, we try to catch up on some of our timing of payables and receivables just depending on our maintenance CapEx, but I wouldn't say there is anything unusual with respect to FTT for the quarter.

Okay, and then last question for me on retail marketing. You are budgeting roughly $150 million for CapEx. Are you just assuming you are continuing to make acquisitions. What is that capital going to be spent on?

This is Bob. Know that level will be organic growth within our existing units, upgrades to the existing facilities.

Okay. Great. Thank you.

Thank you for your questions. Ladies and gentlemen, that now concludes the question-and-answer session. I would now like to turn the conference over to Martin Salinas for closing remarks.

Great. Again, thanks everyone for your time this morning. Obviously a lot happening here in the Energy Transfer family and look towards a very exciting 2014. Thank you.

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day. Thank you.