Ladies and gentlemen, thank you for standing by. Welcome to the Energy Transfer Earnings Conference Call. At this time all participants are in a listen-only mode later we will conduct the question and answer session. (Operator Instructions). And as a reminder this conference is being recorded. I would now like to turn the conference over to our host Martin Salinas. Please go ahead.

Thank you, Linda. Good morning everyone. Thank you for attending today's call. As we've done in the past I wish to make a few comments about Energy Transfer Partners and Energy Transfer Equities, results for the quarter and six months ended June 30, 2009. We will also update you on some of our larger pipeline projects which by the way are going extremely well at as well as our strong liquidity position as of June, 30. We will then go into Q&A at the end of my prepared remarks. I'm joined here by Kelcy, Mackie, John McReynolds and Bill Powers in addition to other members of our senior management team. As always, you can obtain a copy of ETP and ETE's quarterly report on Form 10-Q by visiting our website at www.energytransfer.com. During this call, we'll make a few forward-looking statements within the meaning of Section 21-E of the Securities and Exchange Act of 1934. Based on our belief as well as certain assumptions and information available to us. Although we believe these forward-looking statements to be reasonable, we can't give assurance that such information will prove correct. We encourage you to read about the risk factors that may result our result of operations and our annual report on Form 10-Q which is also found on our website. Okay, let’s talk some numbers. Beginning with the second quarter results, our consolidated EBITDA was $307.7 million for the second quarter of 2009, $15.7 million higher than the second quarter of 2008, despite the significant market headwind and its substantial difference, economic environment than a year ago. EBITDA was $748.5 million for the six months ended June 30 of 2009 an increase of 16 million for the first six months of 2008. Before I walkthrough our operating segments results, I would like…

(Operator Instructions). Our first question comes from the line of Stephen Maresca with Morgan Stanley. Please go ahead.

Good morning, guys.

Hi, Stephen.

Couple of quick housekeeping. Don't know if I missed this. What is your current liquidity, I guess at the quarter end and maybe if there is an update as it where it is right now?

No updates until right now, but as it relates to June 30th, its about $1.94 billion available under our prolonged capacity of $2 billion.

Okay. And then just whatever cash is on the balance sheet and then that that's how you guys are settle right now?

Well, I believe we had a about little over $100 million of cash that was June, 30.

Okay. My next question is maybe you can talk to the Midstream segment, obviously it's a little bit weak and maybe you can talk to what you're seeing going on and how you feel like you can protect yourself in a difficult environment as we move forward and maybe just touch upon that a little bit?

Yes Steven, this is Kelcy. You know what, in the Texas intrastate segment of the business there has been tremendous market pressure. As you know, I'll talk about the intrastate and the Midstream together, processing margins of course have suffered, they've comeback by the way as you probably followed and we feel good about that. But in the quarter that they were off, so much of our business is impacted through some of that margin but not a lot of it is speed basis well. But if you look at the intrastate business, the delta of value to move gas from 1000 spite together has been probably the largest impact to our company. We experienced for the past several years of helping margin, we've seen six single digit margins value between Waha and Carthage let say. And even Waha to Katy from time-to-time. So, that's probably been the largest impact and those thing don't last but they do occur and it will occur and it will cover and they will keep stocking like that. That's probably been the most impact able thing that we've seen.

Okay. I guess finally, Kelcy you haven't been too shy in terms of talking about looking at acquisition opportunities and looking for something in the potentially transformational. My guess maybe if you use right now what you're saying from sellers in the market in general.

Yeah, we its been a little puzzling to me. I thought we would see small investment situations that we've seen so far. We do a lot of work in trying to buy things. We will continue to do that. We -- as you can see we've got pretty conservative that you must go preparing yourself for this when we cease distribution increases. Obviously we've said that we will resume those increases in the last two distances future. But we position ourselves well. As you can see, we got about $2 billion available to us to do a deal and we're chasing a lot of deals. I think we're going to begin to see some more opportunities come our way, but we've got to be patient, we're not going to get overly addressed in these times, we don't things its necessary.

Okay. Thanks a lot for the color.

Thank you.

Of the line of Michael Blum with Wells Fargo. Please go ahead.

Hi, good morning.

Hey, Michael.

Couple of questions. One in the queue you talked about the decrease in margin from fuel retention and I thought some of that is offset by lower operating cost from the pipeline, so can you just talk about the dynamics of how that works?

Primarily on our Texas intrastate system, we do retain fuel and we tried to offer efficiently as possible its about saving fuel in the moving gas hydraulically appropriate and can and by retaining that fuel we of course benefit from our commodity prices, lower commodity prices we don't see the benefit quite as much but there really isn't and the impact on the operations of our system from a cost standpoint, there is more of a saving standpoint by not lending as much compression.

Okay. While you see on two parts of the income statement both on the revenue side and then it was in the operating cost. Fluctuations are more dictated by the gas price from that, $7 gas price its cost you more to consume, the $3 gas price. As we also mentioned that when we look at where additional savings can be have wind when electricity and fuel. So they're lot of as Mathew indicated we look to efficiently operate this much profitable cost side well its been able to get from a retention perspective whether due to right or a percentage on the margin side.

Okay. Second question is just on the Texas Independent, the tips (ph) project. Can you just remind us are those demand charges is that a biometric commitment in terms of the contract or is that just going to be a straight revenue depending on volume type of project?

I think in Texas consistent with the rest of our business, the vast majority of our capacity is sold under demand charges. We also offer shippers, a last kind of tier end both demand charges, it will be demand charges grow to the full capacity that just over the next 12 to 18 months.

Okay. And then my last question is just one, you just addressed this but I just want to make sure I have clearly, I guess in the past related to distribution growth, you'd sort of indicated that perhaps we'd start seeing increases in the second half of 2009, with this projects are in term online, given the change in your guidance is that still the plan or do you think it's going to be more likely 2010?

Fairly no, Michael and we'll continue to be very prudent with our cash management. We do see the benefit of these pipelines coming online and the dollars associated with that. And we'll take a close look at it. We're going to meet our goals of 1.1 times coverage ratio with these pipelines as the level of increases. As I stated in our prepared remarks, we're going to get there whether soon or later and we're still to evaluate that.

Okay, great. Thank you.

Thank you.

Next we will go to the line of John Edwards with Morgan Keegan. Please go ahead.

Yeah. Good morning, everybody.

Good morning, John.

I just wondering if you could give a little more color on the what's your yield that paid from moving gas intrastate and how basis differentials are, when you think that's going to recover?

John, the way our business works and we think we do a pretty good job, in fact we know we do a really good job this week. We charge for a service. And as Marty mentioned, so much of our businesses demand -- but we strive to do is not performed that service hydraulically. In other words, let say, a producer willing to move his gas from Barnett Shale to Fayetteville. If we do our jobs correctly it could be the gas gets delivered to Fayetteville not in fact have been source somewhere in East Texas and hopefully maybe in the Haynesville and so the Btus that we're delivering the Barnett shale may impact go to another location as in the near proximity 70 of the Barnett shale. By doing that, we drive benefits and fuel that we keep -- that we charge, but we didn't need to use, that's one thing. Now as commodity prices are fallen in course of that is fallen as well. Well also that creates capacity. So, therefore on the paper we may have sold out the full capacity of lion (ph). They operating at more efficiently, we created capacity but that is interruptible capacity -- that is capacity that you cannot count on, it varies day-to-day depending on how the producers nominate their gas or they ask for that service to be called (ph) and so its virtually impossible to hedge that. So, if there is a small part of our business to that is probably less than 40% but it is impacted. So what you'll see is our margins in that business, the delta in other words between parts of Texas that have been let say 25 to $0.35 in that range for the last several years on average have now fallen down into the single-digits. That's just reality. And you know, the business will always be this way. It's a way have been since up and doing at 30 years and it will continue to do that and it will recover to get us well but right now we are experiencing those reduce margins.

Fine. So and then what Kelcy when do you think that's going to recover?

Typically recovers when you see a recovering commodity prices. Obviously the producers willing to pay more for services that this is receiving $6 for gas versus $3 first for gas that's just with macroeconomics of it. But it also recovers seasonally. Right now we've got -- we had a really hot summer. John you've being at Texas, you know what I mean.

Yeah.

It's going to be over $100 in today. I think we've had over 30 days of 100 degree temperatures. Well that sounds like that would be really good for Texas intrastate, but it is really not. We make money especially the way our system is configured, where we move gas across the state, out of the state. We have that capability. So, we're experiencing the summer where gas wants to stay here. It's not kind of time displayed in the North East and that will change probably change of in another month or 45 days, I expect to see things cool off here. And gas will begin to try to walk to lead the state and of course that's what we tend to do a little better.

Okay. Great, thank you very much.

Thank you, John.

Thank you. We'll go over the line of John Tysseland with Citi.

Hi, guys, Good morning.

Good morning, John.

Just real quick question on I guess your gas store opportunities in and around on and off system. With the in the curve despite market have taken the near term, do you have -- do you see any opportunity to take advantage your short capacity over the course the next 6 to 8 months?

Sure, what we have done for the last three or four years has fully turned our towards best our larger facility in some more of a third party business, we also in the last couple years have for and receive the for 311 so, we can now offer intrastate service provides storage facilities in the Houston area but also the -- still leads and over to the Carthage and then some of our other pipeline. And intrastate markets going for these. So, yes we do see opportunities grown with our customer base because of when our storage combine with our pipeline network and all.

Can you remind me what the length operating some of those third party contracts are and have you seen any rollovers recently and are you seeing any kind of uplift in those rollovers?

Yes, primarily in those three regions (ph) from three seven years, we have rolled over some in several the one below rollover the last six months they have rollover at highly or slightly markets.

Is that -- how much is the -- that something that you're continued throughout next I guess six months and how much of your portfolio do you expect to roll in 2009 approximately?

Prior to answer but that's not exactly, where commodity -- but our goal is to reach the level of 70-75% of our storage capacity build under long-term fee based agreement. So, we'll do that prudently as possible over the next six to 12 months.

And then for the remaining 25 to 30% is that how do you view that year-over-year in terms of opportunities in the market today versus last year?

What we do is we utilize that in a number of ways. Let's look at the spread between spring and the late summer and in summer and fall into the winter. We also provide swing services on our ROE and daily basis, our plans throughout the state that is facilitated in our balance facility. So, provides a lot of opportunity from an operational standpoint as well as from a spread standpoint on a seasonal changes in gas prices.

All right. Thanks guys.

Thanks John.

From the line of Louis Shamie with Zimmer Lucas. Please go ahead.

Hi everyone. Just a little bit of a follow-up on John's question, regarding the gas that you haven't storage at Bammel. I think that was a 32 Bcf that you have a title to? Just an estimated how much margin you blocked in there and ended back and be realized Q4, Q1 upcoming?

We don't provide the guidance on that so our numbers. But we do things as we look at the demand in the winter -- you'll see some it go through in November-December, again depending on temperatures. We'll see that coming out and then I've been told that will come out first quarter of 2010.

Okay. And in terms of where the spreads have been kind of throughout this year as you can walk in them in I mean as it something like this the $2 an Mcf range or?

Yeah. I'll say that its between about 15 to but in what we've seen last couple of months and what's the, the winter prices have been published at, as Matt indicated earlier and given the flexibility that we have, we will continue to look at growth opportunities as the calendar presented so, with the very spend it around, we might have another 8% of opportunity to capture and with the merger on a daily basis.

That's great. And then the other question was on regarding the CapEx that you've been spending at the interest rate segment and kind of be the impact there, can you give kind of and some estimate of what the economic impact is that we can see in 2010 versus 2009 from all these projects ramping up?

When you look at our CapEx for 2009 and I'll take capital contribution for the joint ventures. And that's in both they're all growth CapEx. And you look at the timing of the projects as they come in service. And we had a number of projects coming in late '08 and early 2009, where you'll see a full benefit of that cash flow and EBITDA in 2010. We look at 2009 and we're about to not going to stated complete this project. MET will be in service. Already Trans 85 or agents terms Trans 85. You'll get the full benefit of that. So we'll continue to see it as we are optimistic that the end market will recover in 2010 and we'll see a factor of business that we -- customers to be in and I think we'll see that in 2010 and factor that in. And you're really looking at the larger project, Tiger SEP coming in service in late 2010 or early 2011. And then you're really looking at the larger project Tiger, FEP coming in servicing and late 2010 always 2011. And we'll see those benefits roll in and those perceptively FEP. Have you build that are in terms your model the cash flow that start coming in. In a very visible our fee base are not deductibles to volume or ...

Sure. And that what's going to be driving your distribution growth going forward?

Yes.

Okay, great. Thanks a lot.

Thanks

Next we will go to the line of Baird Rybowski with RBC Capital Markets. Please go ahead.

Hey guys. Just a couple of quick questions. Hi, how are you? Maintenance CapEx for the rest of 2009 and 2010, and the 2010 CapEx expectation?

We've not given guidance on 2010 CapEx other than what --- there's been committed between Tiger, FEP. From the maintenance, the remainder of '09 that stated, we expect to be at a $100 million on an annual basis. Then we said about 44 million unit days are calling another 50 to 60 of the remainder of the year. Just to meet our maintenance requirement. As we have been in a motto with an every dollar and we screwed that every project and they would like to want get the later handful. They might have that to meet our standard of pipeline operator are being done. There were good news at a time in 2010 as we look at how the year chased up.

And you kind of answered part of my next question which was going to be what is your appetite in the project in terms stretching on that a little bit. You guys, do you seem to have more access to capital markets some of your peers and does that kind of help the outlook so maybe taking on initial projects at this point or is there any appetite at this point?

There is a very strong appetite. We're going to remain very disciplined. We're seeing some projects that are been done these days before taking risks that we don't believe it's appropriate for our business. And we're going to remain just pulling that on that matter. However, I'll tell you, we're going to be extremely aggressive coming into 2010 from a growth project standpoint and also M&A standpoint.

Okay. The only thing I had the follow up with that, just kind of looking to Midstream business. Do you see the possibility of volumes being shutdown or declining significantly here for the rest of the year, I mean I know we are going in strong season for natural gas but there does appear to be some risk.

Yes there does. And it's a really good point and I personally don't see a lot risk of shutting especially in our world I think we'll some of the course in the region and some of the other areas that where the bases is so live and they've impacted more but I think really what we're seeing and overall this tends to suggest that we'll be recovering from this market, hopefully in not to distant future. Hopefully may be in 2010. But we're seeing a volume decline that the rig count from the shell have impacted the volume. It's just reality now. But fortunately for us we make majority of our income is made from -- we still we enjoy the commodity presence. And so we're seeing volume declines in some of those places and we're not experiencing much shutting and all and I don't expect.

Okay. Thank you.

Thank you.

Next we will go to the line of Ross Payne with Wells Fargo (ph). Please go ahead.

How are you doing, guys.

Hey, Ross.

I got a little bit late so I apologize some of these question been asked. Just want you to point just little bit on the basis differentials, second of all we didn't about volume some, any particular price or specific areas that have shown abnormal weaknesses and finally on that same note, what you're hearing about rigs moving to other shales side of the Barnett, just any comments on that would be helpful? Thanks.

Ross, First of all the basis, as we mentioned before, is this really contracted -- in fact -- in cost base that has greatly contracted. Many reasons for that, the primary reason is, it's very seasonal. We've had a very hot summer in Taxes. Gas tends to more stay here goes to power plant. And therefore, you just don't have the demand to move gas out of stake, and that you know we benefit from that demand, when we have a lot more gas in Texas from that demand that helps us. So, that's what thing. Also, its just commodity sense that you see basis contractual like this and you will to the end of time, as that -- this is a very cyclical business, as much as everybody would like to talk that away, I suggest that its not it is. But it will always be very cyclical, well running MLPs, managed their way through that, they managed coverage ratio, distributions various things and we're certainly -- we're proud the way we're offering our business. And then the Ross the other question was about weaknesses in pipes, you said?

I said any particular pipes that are having more weaknesses than others. Also we're we've heard certainly with the Barnett for other shales to secure acreage there. Is that what you're seeing as well any comment there?

As far as pipes, sure. Its not a great place to have your gas right now as Carthage. That's not the right place to be. It's funny Waha has been relatively strong which is not good for us. By the way we like to take gas away from Waha. So I would say generally you can kind of look at the seasonality of the weather that the North East has been so mild, we're just now seeing temperatures of any meaningful major -- so mild in the North East and very hot in the middle part of the country. As it relates to rig counts, we've seen dramatic rig counts reduction. I would say probably the average reduction of the big driller in the Barnett shale is probably 50% of where they were during the peak of 2008. That's substantial and so we've got a caught up now with the wells at debt to EBITDA. We comes soon at production. And we've seen those rigs move to places like the Haynesville and the Marcellus and areas like that. Unfortunately, we're not in the Marcellus. We will be a very substantial player in the Haynesville. As Marty discussed with Tiger. But yes we've seen rigs not only reduce from a total rig count of the nation but we've seen rigs move out of areas like the Barnett Shale and even the Bossier and move to places like the Haynesville.

Finally, some housekeeping items, what was the debt at Mid-Cont at the end of June and also are you guys holding on to inventory in Propane if so, how sizeable is that? And also you probably gave us earlier, what is the, the total growth CapEx written on. Thanks.

On your first question relating to mid MEP and 1.3 drawn on the credit facility at the MEP level that's pretty much maxed out that what you're seeing the fund remaining CapEx is equity contributions on the both sponsors. We looked given the pipeline and service, what we looked have a permanent structure MEP, given where the credit markets are today and we saw a cash do a deal. I think it was yesterday, a very attractive rates that we're optimistic in a good cap structure there in MEP. As it relates to your question on propane, not a lot of inventory in propane and it's not how do we business. We'll look at securing firm commitments from our customers and then back that up with propane hedges on the purchase side to log in the margin. We're now gearing up for a lot of that reentering into to the fall, in two months as of June that our propane (ph). On CapEx, we expect it's been growth wise about 250 to $300 million for the remainder of the year, pretty in line with what we goes to at the beginning of the year, same cost come inline. And most of that is fun, see a production on Tiger, as well as the completion of -- and this is starting at September 1st.

Very good, equity contribution, I assume that?

No, that didn't. Equity contribution 320 to 340 for MEP and it call as another 160, 180 per FEP.

All right. Okay that's all from me. Thanks.

Thanks a lot.

Our last question comes from the line of Steve Seagull (ph) with Credit Suisse. Please go ahead.

All right. Thanks. Good morning, everybody.

Good morning Steve.

FERC 30 day, stay on FERC any updates that you like to talk about there?

For the first time ever, I knew you'd asked the first question and I really won't answer but I can't. We're prohibited from talking about, I'll say however I can't say this so I think everything that we've said publicly before we stand behind today and but we by agreement with the first we cannot disclose how we stand in that process but I'd like to say we stand behind everything we've said applicable.

Okay, great. And then the second question is what when you think about prioritizing acquisitions. Could you discuss what those priorities are not too long ago I think Kelcy you said you like in Okalahoma. Any thoughts of priorities and what might be the most probable next place that you guys might expand into?

Yeah. In fact, even if you go back to several years ago, when you not first met and there is many key on this call before these statements that questions have been asked about what keeps you out of this campaigns and in your -- and we've stated publicly that we are concerned about basis contraction and we didn't want to be vulnerable to those basis contraction, we're seeing some of that today. As we stated that we also received lot of these position further east we've been successful on positioning ourselves to the west but we've not achieved that goals totally on moving to the east. In addition, we've stated that we want to be in all the major producing basis with the rigs and leave and go to another one, we're benefiting we're hedged as we have exposure to those areas. We feel like Oklahoma is a place that we need to be a better position. And we're continuing to work on that. We are continuing to work on our the presence in the Marcellus. And we're continuing to work on expanding our pipeline systems further east. Whether that's a South East or whether it's North East. We're pursuing both of those regions.

If I could just a quick a quick follow-up. You have the normal returns on the organic growth project that you did historically, especially intrastate Texas. What you're expectations -- what kind of returns you like to see going forward, or what achievable I guess you've like to see as hard as you can get what might be achievable?

Yeah. It will, of course, with our cost to capital. We shifted, I would say around first of the year to expectations of 20% and above, half internal rates return. And we have a -- we are now coming off of that. Question was asked earlier if we intend to be aggressive with growth CapEx as well as M&A and the answer is yes. Our expectations, because our cost to capital has improved, have reduced as relates to our expectations have internal rate of return.

Okay. Thank you guys.

Thank you.

So, everybody thank you for the questions and time. I look forward to results. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.