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Executives

Martin Salinas – CFO

Kelcy Warren – Chairman and CEO

Jerry Langdon – Chief Administrative and Compliance Officer

Analysts

Michael Blum – Wachovia

Darren Horowitz – Raymond James

Yves Segal [ph] – Royal Capital

John Edwards – Morgan Keegan

Andy Shapiro – Palley Asset Management

Ron Londe – Wachovia

Barrett Blaschke – RBC Capital

William Adams – Venco [ph]

Energy Transfer Partners L.P. (ETP) Q3 2008 Earnings Call Transcript November 11, 2008 9:00 AM ET

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Energy Transfer earnings conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host, Martin Salinas, please go ahead.

Martin Salinas

Thank you, Lisa, and good morning, everyone. Thank you for joining Energy Transfer’s third quarter earnings call. As a reminder, we did file the Energy Transfer Partners and Energy Transfer Equity’s 10-Qs for the third quarter filed with the SEC yesterday. You can obtain a copy by visiting our Web site at www.energytransfer.com.

During the call, we will be making forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our beliefs as well as assumptions and information available to us. Although we believe these statements to be reasonable, we can’t give assurance that such expectations will be proven correct.

As with prior calls, we will make a few brief comments about the results for the quarter. I’ll also address our CapEx, along with what we expect in the year end, and how that plays with our – plays into our liquidity.

I would like to remind everyone that we will be holding our annual analyst conference in Dallas next week, on November 19th. And we do look forward to seeing everyone there. Kelcy, along with other senior management, are available to answer your questions following my comments as well as John McReynolds, ETE’s President and CFO, is here to address any related – any ETE related questions.

Before I (inaudible) quarter our results, I would like everyone that we did have a very busy quarter. As you recall, we did price our equity offering in July of $348 million at a unit price of $39.45. These proceeds were used to repay revolver borrowings.

In addition to that, we also completed a number of projects, the San Juan loop, our Phoenix pipeline, the Maypearl to Malone pipeline, our Carthage loop, Paris loop, and Southern Shale loop. All of which, added to incremental cash flow for the quarter.

In addition to that, we also announced two joint ventures, one with OGE that led to the Enogex asset in Oklahoma, along with our contribution of the trans-western pipeline and our interest in MEC, the joint venture with Kinder Morgan. We also announced the Fayetteville Shale pipeline joint venture, a 50/50 partnership with Kinder Morgan.

Moving on to the results for the quarter, we reported net income of $221 million, a 62% increase over the three-month period ended August 31st, 2007. And EBITDA of $330, a 49% increase over the three-month ended August 31st, 2007, and ahead of our internal expectations. For the nine months ended, we reported net income of $715 million, an increase of 18% over the prior period. And EBITDA represented a 30% increase over the nine-month period ended August 31st, 2007.

Looking at our segments, and first of all with the interest rate operations, our mid term operations provided operating margin of 10% higher than the prior year, and 72% for the nine-month period. This was attributed to strong volumes coming from our government processing assets, both in the North Texas systems as well as on our Southeast Texas systems, both fee based income and increased margin from our comparable processing margins. These were offset by trading losses. And as we discussed in the second quarter earnings, we no longer engage in these activities.

Moving into our transportation and storage operations, we had another strong quarter, both in volume as well as in margins. The margin for the segment was $230 million for the quarter, compared to $129 million in 2007, a 78% increase. On a year-to-date basis, we are up over 30% period-over-period. We continue to see strong demand for our pipeline capacity and (inaudible) to continue to push gas to the eastern markets.

When we look at 2008 and 2007, we also experienced incremental revenues from assets that was placed into service starting with the first 42 – I’m sorry, the original 42-inch (inaudible) and Carthage pipeline, which the last phase of this project was completed in March of 2007. Since then, we have also started a number of other pipeline projects in (inaudible). We expect our fee based revenues to continue to increase as we complete other pipeline expansion projects within the next six to nine months.

Moving on to our interstate and our trans-western pipeline, turning in another strong – another solid quarter with earnings (inaudible) our total expectations. We also benefited from the San Juan loop that was completed in July, as I mentioned earlier.

Moving on to propane, our propane operating margin was $18 million lower than 2007. This is (inaudible) to mark-to-market losses on hedges based on fixed price commitments for the 2008, 2009 winter season. This is non-cash, and we do expect to realize the profit on these sales once the propane is delivered to the customers. Excluding the impact of the mark-to-market losses, propane’s operating loss was $18 million. And I would like to remind everyone that these results are expected as most of propane’s operating activities occurred in the winter months, typically, from October to March.

Moving on to our balance sheet and (inaudible) on our CapEx, our CapEx for this quarter was $890 million related to our interest rate operations. These dollars are primarily to complete the projects I’ve mentioned earlier, along with CapEx related to our Texas independent pipelines. For our interstate, we spent $609 million, and this is primarily due to the Phoenix project; and $84.5 million on propane. As we look to close out the remainder of the year, we do expect expenditures for the fourth quarter to range between $325 million and $345 million. But the majority of this should be expensed on the previously announced intrastate projects, along with our Phoenix project.

As a result of the challenging credit markets, we have scaled back our 2009 CapEx to a range of $585 to $635 million, which consists, principally, of completing the Texas independent pipeline project as well as the Phoenix project.

Related to our joint ventures with Kinder Morgan, first, we anticipate cash flows for the MEP pipeline in 2009 at $230 million to $250 million to fund amounts in excess of a $1.4 billion project financing facility as well as the expenses paid to get the total capacity from 1.5 Bcf to 1.8 Bcf today. Secondly, we expect to fund between $190 million and $207 million in 2009 for our 50% share at Fayetteville Shale pipeline. This could change, however, as both Kinder Morgan and Energy Transfer intends to seek third party plus financing for this project.

There continues to be ample opportunities for growth projects around our assets. And we will continue to evaluate each project on a growth forward basis as we do monitor the current market conditions.

Moving over to our debt levels, our debt levels grew to $5.5 billion from $4.9 billion from June 30th. This is since we did a CapEx spending I just touched on offset by the equity offering we did in July. As of 9/30, we had approximately $1.4 billion drawn on our credit facility, and have available liquidity, including cash on hand, of $1.1 billion. We believe this will allow us to not have to access the capital markets until mid to late 2009 based on our revised CapEx forecast. This is not (inaudible) the ETP-OGE joint venture transaction. On a pro forma basis with this joint venture transaction, the timing of access in the market could move to the first half of 2010.

Continuing on with the topic of liquidity, we have taken a very disciplined and prudent approach to managing our business. And it becomes more relevant to the challenging times that we are in. Although our considerable cash for the quarter warranted an increase, we did keep our distribution rate the same as the quarter ended June 30th at $89.375 per unit, or $3.575 per unit on an annualized basis. We believe this will allow us to continue to maintain our liquidity position while retaining excess cash, increasing our distribution coverage ratio, and enhancing our credit metrics.

Moving on to ETE, the ETE turned in as expected cash distribution to be the same for the quarter at $108 million, and expect to pay out $170 in distribution for (inaudible) unit holders based on its announced distribution rate and LIBOR cents per unit for $1.92 on annualized basis. For those looking at ETE’s liquidity position, it does have a $500 million revolving credit facility that expires on February of 2011, and available liquidity, including cash on hand of $100 million, or $378 million as of September 30th, 2008.

There is no doubt that we are in the midst of low, and if not the worst, market conditions this country has seen. We continue to focus on what we do best, provide our customers with access from prolific supply basins from multiple market access points, all these while maintaining our strong balance sheet and liquidity position. I want to remind you that we have put together an integration of network and pipelines through strategic acquisitions and internal growth projects that not only provided a well diversified asset base, but also generated a significant amount of fee based earnings for the long term contracts. We believe ETP is well positioned to continue to deliver strong operating results and execute our growth strategy as our fundamental business is unchanged. And we continue to see demand for our pipeline capacity and diversified asset base.

Before we start taking your questions and in recognition of Veterans Day, we would like to take a moment to acknowledge those who have served our great country. I’m proud of them along with those who have fallen victims to preserve the very freedom we take comfort in everyday. Thank you.

We look forward to seeing everyone in Dallas for a little over a week. I would now like to open up the call to answer your questions. Thank you. Lisa, would you please open the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) And our first question comes from the line of Michael Blum from Wachovia. Please go ahead.

Michael Blum – Wachovia

Hi. Good morning.

Martin Salinas

Good morning, Michael.

Michael Blum – Wachovia

A couple of questions, one, understanding the whole process in terms of – not major distribution, I do understand it. I’m just curious for what your thoughts are in terms of distribution growth for the remainder of ’08 and looking into 2009.

Kelcy Warren

Yes. Michael, this is Kelcy. We really struggled with your question. When we made the decision not to increase it, a couple of things occurred. We called in all of our top management in the company, and then asked to look at every discretionary dollar that we were spending when the capital markets kind of went upside down. We looked at those projects. We cut several projects. We changed several projects in the way of our proposals that we were bidding to our customers. And we have now streamlined the amount of dollars that are going out the door to be very high return top projects.

With that same logic, Michael, we decided, it’s very difficult for us to send that message to our people that are running the business, and then turn around and push the money out the door at this time. That’s not to say, however, that these dollars – they’ll come back out. These dollars will end up being distributed to our unit holders. So I don’t want to send the message to anybody that the company is – the partnership, I’m sorry, is doing any worse than it was. The partnership is very healthy. We’re meeting our guidance. The numbers reflect that. Our future looks extremely good. It’s questionable what our access to capital might be.

However, I will tell you, we’re – we don’t intend to really change our philosophy on distributions to our unit holders. We do, however, during this questionable period of time, intend to increase our coverage ratio, hopefully, for not that long, actually.

Michael Blum – Wachovia

Okay. Second question, could you just give me some update on the OGE JV, anything? Any new progress to that, basically, proceeding as planned?

Kelcy Warren

Yes, it is. We have now received the HSR approval. And we are working with our partners to establish a credit facility. And the progress is going along as planned. We are pleased with that partnership, and look forward to getting it completed.

Michael Blum – Wachovia

Okay. And then, do you think, looking forward, in terms of the cost of building these new pipeline projects, do you see the potential with fuel prices coming down and maybe the labor market softening a little bit? Would you actually see lower costs on some of these projects relative to what you’re budgeting right now?

Kelcy Warren

Absolutely. Unfortunately, not only the projects that are under construction presently, and when I say under construction, where there is prop on the ground and lines are being double-jointed and ditches are being dug. We’re not going to see any reduction in cost on those. However, projects like the Fayetteville Shale pipeline that we announced just recently, absolutely. We’re going to see costs we believe to be substantially less than where they were when we originally did the project.

Michael Blum – Wachovia

Thank you.

Kelcy Warren

Thank you, sir.

Operator

Thank you. And next we’ll go to the line of Darren Horowitz with Raymond James. Please go ahead.

Darren Horowitz – Raymond James

Good morning. Thank you. On the MEP line, when you talked about using third party financing for this project, can you give us a little bit more color there, and then you potentially think about this strategy for the MEP line?

Martin Salinas

Hey, Darren. It’s Martin. I was referring to the FEP line, and we would seek third party project financing similar to what we did with MEP.

Darren Horowitz – Raymond James

Okay, okay. I appreciate the clarity. On the propane side of the business, as you guys tend to enter your seasonally strong period, can you give us a little color on what you expect as it relates to margins, maybe a little insight as to (inaudible) and demand especially with moderating prices?

Kelcy Warren

Yes. We expect margins to be higher. We’re seeing, I would say, nationally we’re seeing conservation in the propane sector, as you might expect. The prices have gone up so much. We’re hoping to have a normal winter in terms of degree days. But we’re just completing our budgeting process now. And Bill Powers, he runs our propane group. He’s actually shown us a budget that reflects higher margins than we’ve seen in the past.

Darren Horowitz – Raymond James

Okay. I appreciate it, Kelcy. And then finally, just one kind of big picture question hitching off of what Michael asked. When you’re balancing this moderation and sequential distribution growth with a lot of the excess cash flows you’re retaining as well as whatever flexibility you have on the hedge side, can you give us a little bit more insight as to – through this challenging period, what type of coverage ratio you want to have? And any sort of adjustment as it relates to how you would allocate capital? Do you use it to pay down debt or financing new projects?

Kelcy Warren

Yes. First of all, for a company of our scale, I think, the coverage ratio that we’re quickly moving towards is inappropriate. I think you’re going to see us being at 1.3 coverage ratio margin as we end – enter the first quarter, something like that. That’s way too high for a partnership of our scale. We recognize that. But we are – we’re being conservative, and we admit it.

By the way, and we’ve said this over and over again, that if you’re heavily waiting, gathering, and processing, any coverage ratio approaching (inaudible) is a foolish thing to do. So there are both sides of that. You will see us probably – long term, once we understand what our true cost of capital is, you’ll see us probably retreat back to a 1.1 to 1.15 coverage ratio. And Darren, the point is, these dollars will come back out to the unit holders. And we just need a little bit more clarity as to what the rules of the game are right now.

Darren Horowitz – Raymond James

All right. Thanks, Kelcy. I appreciate it.

Kelcy Warren

All right. Thank you.

Operator

Thanks. We’ll go to the line of Yves Segal [ph] with Royal Capital. Please go ahead.

Yves Segal – Royal Capital

Thank you. Good morning.

Martin Salinas

Good morning, Yves.

Yves Segal – Royal Capital

First question, could you describe what you think, in the areas that you operate, are you seeing any slowdown in drilling activity? And how do you think that’s going to impact the business near term going forward?

Kelcy Warren

Yves, we are seeing a slowdown in drilling activity. And what I’m about to say is a little bit odd. But if you hear me out, that’s a very good thing for us. The worst thing that could happen to a pipeliner is for you to have dramatic drilling in an area, and have kind of needle peak in a production area. I’ll use the Barnett Shale for example. We are seeing reduced rig count in the Barnett Shale, and that’s very, very positive. I would much rather see a 7 Bcf, 8 Bcf a day peak for the Barnett Shale that was sustained over three to five years than to see a 9 Bcf a day peak that will sustain over two years. And the obvious reason for that is that pipeliner will be required to building up capacity to address that peak. And then, in three years, there will be idle capacity competing in the market. And of course, we don’t – we don’t enjoy that.

So we feel it’s pretty positive. In the Bossier, we’re seeing reduced drilling there as well, rig count, that is. However, as you know, we’ve been capacity constrained there as well. We don’t think we’re going to see a lot of reduced drilling in the Fayetteville Shale. So much of that is just development drilling. And we think you’re going to see more reduced rig counts in areas that still have science to be proven, and less of a rig count reduction in areas that was a pure development play.

Yves Segal – Royal Capital

Okay. So when you think of the project that had just come on line, how do you see the volumes ramping up on those expansions?

Kelcy Warren

Well, first of all, every pipeline we have in construction now, I think, with the exception of possibly one. Therefore, the original 42-inch pipeline, the capacity is – has been so – the looping of that has been so – the southeast Bossier expansion, the 42-inch to Beaumont – is that pretty much full?

Martin Salinas

Eighty-five percent.

Kelcy Warren

Eighty-five percent. We can add compression. As you know, the most expensive capacity you sell is that that you use horsepower to accomplish. And so then, the Texas and the (inaudible) – how far are we on that?

Martin Salinas

Probably about 70%.

Kelcy Warren

We’re 70% on Texas independents. But if you look at the rig count at the Barnett Shale and in the Bossier, and in the Permian Basin, for example, because those pipelines do hydrolically address those areas as well. We feel very comfortable that we’ll be running at high percentage of capacity on all of our projects.

Yves Segal – Royal Capital

Okay. And if I could, the last question, given the current environment and the relationship to a – in the liquids market, Kelcy, what’s your appetite for more gathering and processing given the difficulties in the market today?

Kelcy Warren

Well, it’s strong. However, everything’s changed. It was not that long ago that gathering and processing assets would achieve a multiple EBITDA very similar to a long haul transmission pipe. That’s all changing. The way we’re processing our services now, that’s changing. So I think, we have a very substantial appetite for gathering and processing. But I think, the multiple of EBITDA that we would pay for such an asset or that we would build such as asset and charge fee to get our money back has changed dramatically over the last two, three months.

Yves Segal – Royal Capital

And that basically is the question, what’s that number? Can we negotiate right now?

Kelcy Warren

I tell you, you seriously understood – this is going to shock you. We’re not – we now have projects competing for dollars. We’re not running a dollar – this partnership doesn’t achieve less than seven multiple of EBITDA. It’s not occurring. Gathering and processing would probably be closer to five.

Yves Segal – Royal Capital

Thanks a lot, Kelcy.

Kelcy Warren

Thank you.

Operator

Thank you. And next we’ll go to the line John Edwards with Morgan Keegan. Please go ahead.

John Edwards – Morgan Keegan

Yes. Hi, everybody. Could you talk a little bit about the revolving credit facility? It’s got an accordion feature. And then, in your queue, it talks about subject to the approval of the administrative agent and securing commitments from lenders. What are the – what are the chances of you being able to accomplish that?

Martin Salinas

John, this is Martin. I mean it’s really a, I guess, an issue of price. I guess if we had to do it today, I’d give it little chance just given the fact that banks are starting to fall out, and I don’t see any happening in ’08, possibly ’09. We’ve had discussions with our banks related to that. It does require the lead agent’s approval or consent. And as it becomes almost a – our best efforts to get up to speed to $3 million, that would be priced at a current market price. And so, we’ve evaluated it. We looked at it. It is an option for us. But given today’s environment, it’s probably not the best option today’s price.

John Edwards – Morgan Keegan

What is the price today?

Martin Salinas

It changes daily.

John Edwards – Morgan Keegan

Well you range, what’s the range?

Martin Salinas

I heard anywhere from LIBOR plus 250 to LIBOR plus 500.

John Edwards – Morgan Keegan

LIBOR plus 500. Okay. I could see why you wouldn’t want to do that. And then, you – I mean, you really had an outstanding quarter. But when you announced that you are using the distribution growth or that – you affirmed EBITDA guidance for ’08. I conclude then that fourth quarter should be weaker.

Martin Salinas

Well, maybe if you look at closing out to the end of the year, as Kelcy just alluded to, we’ve been through a volatile two or three months. I wouldn’t call it – I wouldn’t say it’s weak, but I think you need to understand – Intrastate demand continue to be there. We have projects coming on line, the pipeline on line a little bit later in the quarter than what we anticipated. But we do expect to close the year strong.

John Edwards – Morgan Keegan

Okay. So you didn’t – but you’re not guiding – you’re not going to guidance ’08 a little higher?

Martin Salinas

No, not at this time.

John Edwards – Morgan Keegan

Okay. And what about 2009, any preview we can get prior to the analysts meeting or–?

Kelcy Warren

Yes. This is Kelcy. We’re holding firm with our guidance. I believe we gave a range. Isn’t that right, Martin?

Martin Salinas

$1.7 million and $1.8 million.

Kelcy Warren

Yes. That’s what you’re going to hear next week.

John Edwards – Morgan Keegan

Okay. All right.

Operator

And does that answer your question?

John Edwards – Morgan Keegan

Hang on. Yes, that’s it. I’m sorry. I was looking at my list. Yes, that does it for me for now. Thank you.

Operator

Thank you. (Operator instructions) We do have a question from the line of Andy Shapiro with Palley Asset Management. Please go ahead.

Andy Shapiro – Palley Asset Management

Good morning.

Kelcy Warren

Good morning.

Andy Shapiro – Palley Asset Management

Just to follow up on – given the question about your current revolver and the pricing it would take to increase the sides. Could you talk a little bit about what you’re seeing in the financing markets with respect to the joint ventures? Obviously, those transactions are subject to obtaining financing on satisfactory terms. I mean, what are you sort of seeing out there? And given sort of what you were quoting, LIBOR plus 250 to LIBOR plus 500. I mean, are you seeing things out there that would be the satisfactory terms for financing?

Kelcy Warren

Well, we are working on that, Andy. Currently, no. I mean, we just went through the – possibly the worst October ever. It’s at the base that that pricing on that I think is – I don’t think is right. We saw a good deal happen. We saw a good deal happen on a BBB company last week. The demand was there. The pricing was lower than, I think, anybody expected. And it’s a good thing. So I think we’re going to see that pricing come down. I’m confident that – well I guess, at the end of the day, we will get permanent satisfactory for both partnerships.

Andy Shapiro – Palley Asset Management

Are you assuming that you’re just going to have to pay more because you’re earlier comment about investment grade companies being able to get out in the marketplace. They have been, and there’s actually been strong demand. But obviously, they are pricing at much wider spreads versus where they’re sort of current bonds for trading. So I guess the question is, are you sort of taking in that you’re going to have to – you’re going to have to pay a higher interest rate.

Kelcy Warren

We are. And that was included in our conference when we closed our – or signed our agreements with them, so. We understand that. And they worked every angle to get there.

Andy Shapiro – Palley Asset Management

Okay. Sure. Thanks very much.

Kelcy Warren

Thanks, Andy.

Operator

Thank you. We’ll go to the line of Ron Londe with Wachovia. Please go ahead.

Ron Londe – Wachovia

Thanks. I’m just curious where the partnership stands from the standpoint of its participation using the BAMO [ph] storage facility. What percentage of the product capacity are you using and what are your experiences then and going forward?

Martin Salinas

Currently, we have about 15 Bcf to 18 Bcf of that – or that facility on a long term contract. But the remaining – the parts that that’s utilized from an optimization perspective. And we look at the spreads going forward. And if it provides a return that’s acceptable to us, we on our end – the contract of injecting gas, and then the forward contract to sell the gas.

Kelcy Warren

Yes, Ron. This is Kelcy. As you know, from previous conversations, our objective, actually, a year ago was that we were hoping to sell at least 85% of BAMO long term. And the market just hasn’t been good for that. So the percentage that we still have that we’re using as a partnership is higher than we would like. But we’re not going to be impatient and let that capacity go too cheaply either.

Ron Londe – Wachovia

Are the spreads better this year better than they were last year?

Kelcy Warren

No.

Ron Londe – Wachovia

Okay. Thanks.

Kelcy Warren

Thank you.

Operator

Thank you. And next, we’ll go to Barrett Blaschke with RBC Capital.

Barrett Blaschke – RBC Capital

Hey, guys. Given that the capital markets – it seems like it’s tighter for smaller than the all – that could be put into a worse position a lot quicker. What’s your appetite at this point for maybe some acquisitions or if just some distressed assets were to come your way?

Kelcy Warren

Extremely strong. This is going to sound almost – I don’t know, to take advantage of other people’s perils doesn’t sound to feel good, but it is business. We’re excited. We think this is going to be an incredible time for growth for certain MLPs that are capable. And we believe that consolidation will necessarily come our way. And we’re very excited to explore these opportunities. And we’re spending a lot of time right now looking at a lot of possibilities.

Ron Londe – Wachovia

Okay. Thank you.

Kelcy Warren

Thank you.

Operator

Thank you. We’ll go to William Adams from Venco [ph]. Please go ahead.

William Adams – Venco

(inaudible). Given the drop in the – the share drop in commodity prices, it probably took everybody off guard. How does that change the economics of doing this proposed joint venture with OGE? Should we be thinking on a lot more – thinking on more of a gathering process – business more riskier? Is that potentially – do you do a renegotiation? Or how do you view the – that joint venture given the new and primer (inaudible)?

Kelcy Warren

Bill, it’s currently impractical to the partnership. In our due diligence on the assets, we recognized that this was a possibility. I compliment OGE, however, they’ve done a really good job of minimizing the impact of commodity prices. That’s probably about as good as you could do. They have triggered the process where contracts can switch from – and that’ll be exposed to peepholes that goes to a fee based cost structure, and they have other – other provisions in the contract that minimize that. However, I would say, it has been impractical. And we will continue to look at that.

But in saying all that, there’s so much growth opportunity in Oklahoma. I don’t know if you paid attention to the basis differential that exists from Oklahoma, let’s say, the (inaudible) County. It is substantial. And we think the partnership still makes a lot of sense. And we think, by compiling our assets, we can – we can take advantage of some opportunities that we couldn’t do otherwise.

William Adams – Venco

Okay. Great. Thanks so much.

Kelcy Warren

Thank you.

Operator

Thank you. We’ll go to Yves Segal with Royal Capital.

Yves Segal – Royal Capital

Yes, Kelcy, Martin, any update on FERC?

Kelcy Warren

Yves, leave it to you to ask that question, buddy.

Yves Segal – Royal Capital

Well I thought it was – I thought it was interesting that’s no one’s asked the question.

Kelcy Warren

I’m joking. You know what, Jerry Langdon is sitting here next to me, and I’ll let him give you a quick update.

Yves Segal – Royal Capital

This is for Jerry, he really wants the chance to talk.

Jerry Langdon

Hi, Yves. We continue to – I haven’t said this in a while, but we – we know we have broken no laws and we are vigorously pursuing the actions at FERC. As you know, we have a December 10th trial dates – step for the – for the Oasis piece of that trial coming up. We think we’ve got an exceptionally strong case there. And we’re looking forward to pursuing that. We do think that there’s possibility that there’ll – that there’ll be some breaks between now and then. We’ve got a motion, for example, at the circuit to look at – develop an overview. And I think FERC is likely to take that under advisement between now and the 10th of December. But we’re pursuing it. And we feel very, very strongly about – strongly about where we are, and pushing forward.

Yves Segal – Royal Capital

Thank you.

Operator

Thank you. We’ll go to the line of John Edwards with Morgan Keegan. Please go ahead.

John Edwards – Morgan Keegan

Yes, just a couple of follow ups. The amount of available capital you have for DTE, I think you said it used $350 million. Is that including cash and credit availability from DTE or are there additional amounts?

Kelcy Warren

You’re inquiring DTE or–?

John Edwards – Morgan Keegan

Yes, yes.

Kelcy Warren

Yes. It is including cash.

John Edwards – Morgan Keegan

So that’s the total availability streak, would that be correct?

Kelcy Warren

That’s correct.

John Edwards – Morgan Keegan

Okay. And then, the other is, are you seeing any kind of stresses – because of the credit crunch on some of your customers? Is there any concern there as far as that goes?

Kelcy Warren

Well, we’ve had on a daily basis, John. When we look at it, those on the market side as well as on the transport. Short answer, no significant stress there. We’ll maintain strong relationships with them. And we look at their balance sheet and their results. And they have a very active credit department. We’ve had dialogues with them, so. When we start seeing any type of stress, we do – we do change our credit policy, and either ask for letters of credit, ask for freeze names, and et cetera. To date, we’re not experiencing significant (inaudible) as a result of our processing.

Martin Salinas

And John, I’d like to add, so much of our distributable cash flow comes from the producer community paying as of the poor service. Where people can really be exposed to credit is when you’re in the merchant role, when your selling has to – a party that can no longer pay. Because margin on that might be very thin, yet your exposure on that transaction is very, very large. Even though we do that, that is a – as percentage of our distributable cash flow is quite low.

John Edwards – Morgan Keegan

Okay. Great. Thank you.

Kelcy Warren

Thank you.

Operator

Thank you. And we have no further questions. Please continue.

Kelcy Warren

I guess before we do close – close the conference, I would like to make a correction at this day for ETE, for the rate – with the rate of $0.04. I apologize. It’s $0.48 per quarter, so. I just want to make sure that nobody expects that.

With that, I do thank everyone for the call. I look forward to seeing you at the analysts meeting on the 19th of November in Dallas. Thank you, everyone.

Operator

That does conclude our conference for today. Thank you for your participation, and for using AT&T executive teleconference. You may now disconnect.

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Source: Energy Transfer Partners L.P. Q3 2008 Earnings Call Transcript
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