Good day, ladies and gentlemen and welcome to the First Quarter 2011 Energy Transfer Partners, L.P. Earnings Conference Call. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr. Martin Salinas, Chief Financial Officer. Please proceed, sir.

Thank you and good morning everyone. Thanks for joining us today. Just based on the number of press releases that we’ve made over the last several weeks, including the one just this morning, we certainly have a lot to talk about, particularly, targets that we are pursuing and we expect will bring significant distributable cash flow growth to the partnership over the next several years and further increase our scale and diversification of revenue stream. And in addition to bringing you up to speed on our growth initiative, we’ll also make certain comments about ETP and ETE financial results for the first quarter of 2011. I’ll also encourage you to visit our website to access the earnings release we issued yesterday after the market close. And during this call, I’ll 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 that’s available to us. And as always, Kelcy, Mackie, John McReynolds and other members of our senior management team are here with me to answer your questions after our prepared remarks. Okay. Before going to our growth initiatives, I would like to discuss our Q1 results. Our adjusted first quarter EBITDA was $471 million, down about $42 million from the first quarter of last year. The decrease was primarily due to lower storage margin on an adjusted basis or a cash that is -- but not only lower storage growth realized our results, but also decrease results from a year ago given the current [market additions] that we saw during the first quarter, I’ll touch about on that in here a little bit. Also, adjusted EBITDA from our intrastate transportation and midstream segments declined slightly or affected by higher adjusted EBITDA from our intrastate…

(Operator Instructions) And our first question comes from Darren Horowitz with Raymond James. Please proceed.

Just a couple quick questions as it relates to the press release. The Lone Star press release that you guys put out, of the 100,000 barrels a day fractionation capacity at their new facility, how much capacity is ETT going to utilize under those 10-year contracts that you outlined?

As we said today, approximately 80%, but we anticipate that being 100% in the very near future.

Okay. And how much additionally storage capacity is Lone Star going to develop there?

In regards to this fractionator, we are re-activating one existing cavern and building two additional caverns.

Okay. And then, Mackie, last question for me, I am just trying to get a feel for how much capacity you think is going to be filled by y-grade coming from Jackson County down to Belvieu? I mean it seems like if you move forward with that 20-inch line, that's 340,000 barrels a day, you've got plenty capacity to accommodate a ramp from the Eagle Ford Oil from West Texas. So, any color there that you could give us will be appreciated?

Sure. We continue to see some pretty incredible curve coming from the producers in the Eagle Ford. So it’s hard to say where we end up barrels-wise, but we certainly have some high hopes for significantly more barrels in the future. In addition of that, there needs to be a line built from West Texas and we intend to play a big role on that and so, this is kind of the first leg in getting us to West Texas.

And our next question comes from Helen Ryoo with Barclays Capital. Please proceed.

On the fractionation project 350 to 375 does that include just the cost of the fractionation or does it also include related infrastructure?

It includes the latter; includes the store facilities we’re developing. It includes a significant amount of interconnectivity to all fracs, to all the pipelines and (inaudible) more markets.

Okay, great. And then, sorry please go ahead.

And just convey in addition to the fracs now.

Okay, got it. And then you talked about the NGL takeaway capacity out of Jackson that you could either build it by yourself or did you mean joint venture – and if you were to go with another option which is to go with a joint venture partner, would you be building with the joint venture partner or use an existing line?

Possibly either. We have third-party discussions both utilizing existing lines and partnering up on the NGL line.

Okay. And if you were to build this, how much do you think you need to spend in order to have that 340,000 barrels a day capacity?

We estimate $250 million and $300 million if we build the entire 130 miles 20-inch pipe.

Right. And this will be in the joint venture; so you would be splitting the cost with Regency if you were to do that?

As we sit here today, this is a ETP NGL line from Jackson…

Okay. Yes, okay. And then just moving over to the crude line, the JV with EPT, I think in the press release, you mentioned this line would account for 40% of the system and I am wondering if that means that the value of the asset you are contributing would account for 40% of the JV. In other words, you would be, may be contributing the remaining 10% in capital?

Yes. What we are doing is it’s not a 584 mile pipeline, and 240 miles of that of existing system that we’re converting to crude. And then we will share the capital required to build all the pipes that need to be build on each end 50/50 with enterprise.

Okay.

It is Kelcy, its worth noting that even though that pipeline is in fact owned by Energy Transfer, there are contractual rights that enterprise owns in the top-line in perpetuity that it really roll back to purchase – its kind of a jointly owned line.

Okay. The pipeline you are contributing is kind of jointly owned by enterprise?

No, Helen we own it.

Okay.

But enterprise does have contractual rights to abuse the line and so therefore it’s – I just want to be clear that this is truly a partnership where we are both involved in the contribution of this pie.

Okay, got it. And how much capital do you think you may have to contribute to make it a 50-50 joint venture?

On that one Helen, this is Martin, you know we’re still going through the discussions with producers and so ultimately how big is pipeline from a diameter perspective is yet to be determined. Also just kind of given the competitiveness of this pipeline, we’ve not given cost estimate. So at this time, we’ll probably pass on that, but certainly as we find our producers, you know get the required volume commitment to move forward with this which we’re very optimistic that we’ll get there; we’ll share more that information, but for now its given where we are in discussions and that’s something we probably won’t provide in depth.

Yeah Helen let me add, we are pretty excited about this. It's pretty easy for us to state that this will be substantially less cost than any of the competing projects that I have seen that have been announced for pushing to the Gulf Coast. The cost of the existing pipe and also you know just to – there is less environmental impact that is good to have in the State of Texas; it should be – this line should be built faster and substantially at less cost than any of the alternatives out there.

Okay, great. And then the last question would be, you know are these new projects are pretty must fee-based project; I would think that the frac, the crude oil pipeline and you know I am not sure about the processing, the REM processing plant whether that would be 100% fee-based or there would be some commodity components there?

The gathering, processing the NGL line and the frac are all significantly fee-based contracts; half percentage to [demand charge].

Okay. Even the REM plant?

Even the REM processing plant, yes.

Our next question comes from Bernie Colson with Oppenheimer. Please proceed.

Hi, given you got this new platform for growth and Louis Dreyfus assets and you know continue to conservation on the propane side; I was wondering if you could kind of outline what your strategy is for propane and whether that’s changed or you can be doing deals to try to keep that flat or what’s the strategy there?

Yes, propane has consistently been a good business for us and as you know and you can see from the numbers and from previous years, it’s very weather sensitive, it’s very economy sensitive. We've got very good management and we will continue to grow propane, but as you know you don't grow it in big chunks. At least that's the way we choose not to grow it. It’s typically small acquisitions and they don't amount to a lot of money compared to our other investments, but the business we will continue to grow and we believe that our propane business has grown as well as any other business in the country.

And our next question comes from Yves Siegel with Credit Suisse. Please proceed.

My questions are going to tend to be sort of high level. The first is congratulations on all these projects, but do you need to add some folks to be able to manage all these projects?

Absolutely, we've got Mackie to the point of breaking and which is good, you know if you are me, that's what you want to do. But absolutely we’ve been here and we need more expertise and we are in the job market now conducting interviews and we are going to beef up our team, yes we are.

So related to that Kelcy, what does the integration mean in terms of I guess Martin in your opening remarks you said that you are well on your way to integrating the Louis Dreyfus asset. What does that mean exactly?

Yes, for example, there are certain things that doesn’t matter if you are moving a barrel or if you are moving a cubic foot of gas, that can actually be integrated in certain amount of engineering, in certain amount of accounting, even measurement to a large degree, [runway] maintenance. Many, many things that can be integrated and effectively, cost effectively and intelligently and that’s what we are referring to. Martin, would you like to add anything?

Yes and Kelcy has hit the nail on the head. It has a lot more to do with just getting folks on board, getting both teams to work together. As you know, Regency's assets tie in on the originations on the West Texas pipeline and in the Permian. We tie into (inaudible) and of course what we are doing in Mont Belvieu. That’s the integration of being commercially minded from an ETP perspective and Regency perspective as well. But then also, I think there were some questions. We announced a project about who is coming from the employment perspective. That’s all behind us. We've got the team in place across all entities and ready to show some growth.

And when you think about all these projects, it seems like a lot of the capital is going to be spent next year. Do you have any sense of how big the number could be for 2012 in terms of growth CapEx?

Well, I think when you add up all the things that we've announced over the last few months, let’s say, I think as I mentioned in my remarks, on Lone Star, we see that being north of $1 billion, close to $1.5 billion. When you look at what we are doing on the ETP side, you are also talking probably north of 750, so we’re approaching probably $2 billion between 12 and may be some into 13 in terms of lot of risks we are pursuing today.

And of course if we’re successful with the Cushing project.

Right, and then if we are successful with the cushing project, then that’s added to it.

Okay and then just the last two. When you think the returns historically, you’ve really knocked the cover off ball on returns, how would you frame the returns on these projects going forward?

No difference.

You want to put a number on that?

Well, we’ve always shot for something getting off the ground in the six, seven multiple range for these type of assets, for these type of projects and then these are also going on a commitment level that we’re comfortable with and as we have historically proven and executed on, we drive that multiple down. So that says the same from a pricing perspective.

And the last question. When you look at the Lone Star assets and the whole array of assets that you have within Energy Transfer, does it make sense to perhaps to prune some assets, any disposition that you might want to think about? A few years ago, you sold some assets would you think about that again here?

Yes, this is Kelcy. As you know, it’s very difficult for an NLP to justify that or rationalize just way through it. However, we continue to look at that and we will, if there’s obvious tax cuts points us to that, that we’ve got to consider per unit holders, but yes, sure. We will continue to look that sure.

Our next question comes from Ross Payne with Wells Fargo. Please proceed. Ross you may need to un-mute your line. And our next question comes from John Edwards with Morgan Keegan Company. Please proceed.

Just on the fractionation facility that you just announced this morning and I just wanted your views on all these projects. So, I am just trying to understand a little better what kind of, how this works. Is this going to be fractionation on fee basis or are you going to be able to capture margins for your own account. I am not quite clear, how the arrangement is here?

As we been mentioned earlier the way we structure these agreements, if the put a frac its 100% fee based, demand charge, fracking [low grade] into different components. Yeah, in other words John. We are not going to be buying the [low grade] and then reselling the fractionated product. That's what you are asking. We are not going to get them, the merchant business of that.

Okay, great. Just switching over to Energy Transport Equity, can you just remind us the, what the interest rate on that debt. You did that refinancing lot long ago.

It was there were 7% -- 7.25% somewhere in that. Now that was a 1.85 billion senior note offering.

And our next question comes from Michael Blum with Wells Fargo. Please proceed.

Just have one question from me on natural gas storage. Can you talk about your thoughts process and keeping that gas underground rather than withdrawing and what your view is and what storage in the winter, winner spreads will do for the coming year. Since right now they don’t look much better than that what you could gotten today.

Yes I think Michael on there we hedged, and then you look at what it would cost you to withdraw at a cost. What would you realize if would have withdrawn and based on the our top months on the curvet and the market says or at least show that it makes more sense to hold on to that and get an extra nickel, a quarter, a dime whatever that maybe. That’s what we look at and because of what we saw from a commodity price perspective in the first quarter it was more advantageous to hold on to that inventory, keep it on the ground and then just profile it for a withdrawal in late ‘11 or early ‘12. Having said that we continue to look at it, the extent that we see weather patterns unfold, commodity prices change as we head into this summer with heat coming in, you make an opportunity to withdraw during the summer and we take advantage of that as it shows up. So a lot of flexibility in our storage facilities and we try and optimize that and again try and profile some that makes sense today but the market will change and so will we. And I think going forward our goal is to have much more that capacity under a fee based contract. Having said that with where gas prices are in our business and its the tough business today. Its pretty flat curve out there which means flat spread or spread aren’t as good as what they used to be but it will come back and we just don’t want to give that capacity away. We've got returns to make and right now we’ll do it on a short-term basis including get contracts that make sense for us.

Let me add one thing to that to. These volumes that we are talking about and others are talking about there's a significant amount of residue volume that will show up in and around the [ship] channel. We do believe that will impact spreads and storeds will become more and more valuable in the future as these volumes show up.

Okay. That’s helpful. So just one more point on this topic. So just to understand how it works; are you effectively rolling your hedges forward to the next winter now or are you just letting it expire and then you see kind of how it develops?

No you roll them, we don't think any [predictive] positions on that natural gas in the facility. So that will expire, the ones that we put in let's say for March of this year but as they expire and we don't withdraw then we put on let's say December through March hedges thereby locking in a margin. So we don't take [predictive] positions with respect to that gas.

And we have a follow-up question from Ross Payne with Wells Fargo. Please proceed.

Sorry guys. I jumped off just temporarily there. My question and someone also might have already asked it but Kelcy, just wanted you to kind of talk just generally speaking. OKS has announced, obviously 75,000 a day of frac. You guys on 100 and EPD just finished one and is talking about another but. Just the overall supply demand dynamics and you know, is this kind of put us into another capacity situation or is there just adequate demand that you guys see it over the next couple of years? Thanks.

Yeah, you bet, Ross, it's a very good question and I really appreciate it, and time we will overbuild and then we will be challenged for capacity, and we will overbuild again. That’s what our industry does and we are very, very good at it. We can't seem to learn our way through the process. We've done that in the natural gas pipeline business and you can see several of our peers are having discussions of converting natural gas line into crude or liquid service. And hence it becomes the overbuild capacity. I believe that we've got ways to go on fractionation capacity before we get overbuild. Yes, I do. I believe we've got a long way to go. But it will ultimately happen. To go back to Mackie's comments, that is why we are structuring our contracts in a fee-based manner and we are structuring them in a long-term tenure as well.

There are no further questions at this time. I will now turn the call over to Martin Salinas for closing remarks.

Great. Well, thanks everyone. As you know, we have exciting times over here. We look forward to a lot more growth that comes from the partnership. Thanks for you time this morning.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.