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ETP Lags on Q3 Earnings, Beats Rev

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Natural gas pipeline operator, Energy Transfer Partners LP (ETP - Free Report) , announced lower-than-expected third-quarter 2013 earnings. The unfavorable results were accountable to a significant upsurge in operating expenses.

ETP reported a profit from continuing operations of 51 cents per limited partner unit, falling behind the Zacks Consensus Estimate of 60 cents.  

However, the figure increased 96.2% year over year from 26 cents. Substantial improvement in transportation margin along with processing and fractionation margin aided the results.

Quarterly revenues of $11,902.0 million surpassed the Zacks Consensus Estimate of $11,480.0 million. Moreover, comparing year over year, sales witnessed a whopping increase of 560.5% as compared to $1,802.0 million posted in third-quarter 2012. Production hike in Eagle Ford Shale along with increased transportation volumes of natural gas liquid (NGL) led to the improvement.

Quarterly Cash Distribution

Last month, ETP announced third-quarter distribution of 90.5 cents per unit ($3.62 per unit annualized), representing a sequential increase of 1.3%. The distribution is payable on Nov 14, 2013, to the unitholders of record as of Nov 4, 2013.

EBITDA & Operating Income

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter were $942.0 million compared with $660.0 million in the year-ago quarter. The figure reflects significant performance from the NGL transportation and services business unit along with favorable outcome from investments in Sunoco Logistics Partners LP .

Operating income of $526.0 million was up 44.1% from the third quarter of 2012.

Operating Expense

ETP reported operating cost of $331.0 million for the third quarter of 2013, reflecting a significant year-over-year increase of 98.2%.

Distributable Cash Flow

ETP reported distributable cash flow of $527.0 million, up from $378 .0 million in the prior-year quarter.

Capital Expenditure

Maintenance capital expenditure totaled $62.0 million, down 10.1% year over year.

Balance Sheet

As of Sep 30, 2013, ETP had long-term debt (less current maturities) of $16,352.0 million. The debt-to-capitalization ratio was 49.1%.

Zacks Rank

ETP currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at oil and gas production pipeline master limited partnerships (MLP) like Pioneer Southwest Energy Partners LP and Magellan Midstream Partners LP (MMP - Free Report) that offer better prospects. Pioneer Southwest Energy sports a Zacks Rank #1 (Strong Buy) while Magellan Midstream retains a Zacks Rank #2 (Buy).

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