Good day, ladies and gentlemen and welcome to the First Quarter 2014 Energy Transfer Partners’ and Energy Transfer Equity Joint Earnings Conference Call. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the presentation. (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 Martin Salinas, ETP CFO. Please proceed.

Thank you, operator, and good morning, everyone. Welcome to Energy Transfer's first quarter 2014 earnings call. We thank you for joining us and appreciate your continued interest in Energy Transfer. As always, I’m 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. On today's call, we’ll be making a few remarks about some of our recent accomplishments as well as provide an update on our growth projects. I will also walk through ETP’s quarterly financial results before handing the call over back to Jamie to discuss ETE’s activities. We’ll then open up the call to take your questions. And just as a reminder, we’ll be making 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. So let’s start by saying how pleased we are to announce a third consecutive increase in our quarterly distribution rate and a significant increase in our coverage ratio to 1.36 times. This was certainly an excellent quarter for ETP of which I’ll delve into in more detail shortly but it definitely reflects what our diversified asset platform can do with just a little bit of volatility. And moving on to some of our other accomplishments and I’ll begin with the most recently announcement we made yesterday. As you saw in our press release, we have entered into agreements with CFE to provide transportation services for 930,000 MMBtus per day of natural gas transportation to Mexico under a 15-year fee based contract. These agreements support the installation of new 24 and 30 inch pipeline systems and provide transportation revenue for existing capacity in our extensive intra-state pipeline network. In another…

Thank you Martin. The first quarter first of 2014 was terrific quarter, and I’m very proud of the hard work of all of our teams across the family of partnerships who have come together and delivered these strong results, particularly at ETP, given the financial performance and the level of activity on the commercial side. I would also like to highlight the recent announcement of ETP’s plans to acquire Susser Holdings in a unit and cash transaction valued at $1.8 billion. The addition of Susser to the Sunoco network broadens Sunoco’s geographic footprint and creates a portfolio of strong brands that should generate sustained earnings growth over time. ETE is very excited at the prospect of being the ultimate long-term GP IDR owner of that business. On the Regency side, we couldn’t be more proud of their efforts having completed the previously announced acquisition of PVR Partners and Hoover Energy Partners in this last quarter, further diversifying their assets with a scale presence in some of the most prolific shale plays in North America. Right now the level of in house development opportunity for Regency is extremely impressive and sets it up for tremendous future growth. Finally, we continue to see strong results from SXL and are pleased with the continued growth across their exceptional platform. Switching over to LNG, development progress for liquefaction continues on track. Upcoming there is a pending launch of the invitation of tender process in EPC contract to the pre-qualified EPC consortium. Our expected timing for the IPO of ET LNG also remains on track for the early fall of 2014. As Martin mentioned, we filed an application with the FERC, seeking authorization for the proposed new liquefaction facilities and modifications to Trunkline LNG existing terminal to facilitate the storage and subsequent export of LNG.…

Ladies and gentlemen, we’re ready to open up the lines for your questions. (Operator Instructions) And your first question comes from the line of Abhi Rajendran with Credit Suisse. Please proceed.

Couple of quick questions, you mentioned some weather in nat gas driven help in the quarter especially in intra and interstate. I guess how should we think about some of the boost here and how it looks going forward in terms of gas supply demand balance for the rest of the summer and the rest of the year and then what it might mean for the earnings trajectory for these businesses?

Abhi, this is Mackie. What the winter showed us and showed our assets and the value of our assets is a lot. In addition to those markets in the Midwest who for some period of time have not interested extending long term transportation, we had those guys kind of in a panic. So they have stepped up over the last three or four months and subscribed to close to Max rates for three to five year agreement. So not only did we get a good boost on throughput in revenues in the first quarter because of cold weather and also kind of opened up a concern again for the Midwest with all the hydraulic change in the nation that they could be short of supply in the really cold winter. In addition to that, of course the hydraulic change in the country is adding significant benefit to all of our assets, not only our interstate but also our intrastate. So yes we did very well because the cold weather but also has shown and created a lot more value for our capacity as seen by the marketplace.

Okay, great. And then just kind of following along those lines, obviously big standout in the quarter was the coverage of 1.36 times, kind of given that there’s a backdrop in a bunch of your other growth projects. How should we think about this excess coverage level in terms of what it means for the cadence of the distribution out of ETP over the next couple of quarters and beyond?

Yes, Abhi, this is Martin. Obviously we’re excited that we’ve seen a nice increase in our distributable cash flow [indiscernible] to reward our unit holders given the patience that they’ve demonstrated over the last several years. Having said that, we continue to believe that a coverage ratio in and around 1.05 times makes sense for us long term. We have a number of projects that are coming online over the course of the remainder of the year and to next year. So I think it allows us the opportunity to continue to grow our distributions and maintain that coverage. As Mackie eluded, to we have very strong quarter if things kind of normalize going forward but we are going to capture more long term value as we see the yields coming back to play with our intra and interstate. So, long winded answer but we want to maintain that 1.05. Our goal is to get there and to the extent that we see that confidence in the cash flows continuing to be there, we’ll distribute that excess coverage back to our unit holders through distribution increases.

Great, and then one last one if I may. ETE completed $750 million in buybacks in the quarter. Looks like you’ll be finishing up fairly soon. Maybe, could you just -- maybe just talk a little bit about what comes next, what you could do with some of these repurchased units in terms of possibly putting it up into an Up-C structure or something like that? Any color there will be very helpful.

Abhi, it’s Jamie. Since we’ve done $750 million through April, we were on track. We were doing almost around $80 million to $100 million a week just based on our 10B 18 [ph] limit and I think therefore, once we get through blackout, we will get this thing completed. We’ve spent a lot of time. We have a lot of inbound from our investments on an Up-C structure. We’ve spent the better part of the last several months evaluating the tax component of that structure because that’s really the heart of the overall analysis. We think we’ve cracked the code on the tax side and I think look -- we need to sit down with Kelsy and then subject to Kelsy’s approval with the Board and sort of see what we want to do. I think an Up-C structure for ETP given all our [indiscernible] makes a whole lot of sense. And the fact that we’ve got a bunch -- even if it means that we have to recycle some of these units that we’ve bought back to create the IPO event for an Up-C structure, it’s something that I think we would consider because we believe in the long term future and flexibility that an Up-C would then give us as we think about sort of strategic opportunities going forward. So I think we’re pretty excited by it. I think we’ve got the tax answer and now we just need to pick entire [ph] things and then we’ll sort of report more as we continue our deliberation.

And your next question comes from the line of Gabe Moree with Bank of America/Merrill Lynch. Please proceed.

On the Trunkline project just wondering kind of where that stands, given the open season on the Bakken side and also just given all the announcements we’ve seen on pipeline reversals, I guess I’m wondering to what degree that’s under consideration at Trunkline and what is the crude oil conversion or and a pipeline reversal Trunkline would be mutually exclusive or you could give both of those?

This is Mackie, Gabe. First I’ll start with our Bakken open season. Unlike many of the projects that we’ve kicked off in the past, we really don’t have foundation shippers up there that are big enough to get the project off the ground. So you’re negotiating with multiple shippers, probably over dozen that we’re in pretty significant negotiations with. We are very confident, we have extended the open season and we’re confident and hopeful that in the near future we will have enough volumes committed to get the project off the ground, meaning we build a pipeline from the Bakken down to Patoka, connect the Trunkline and deliver fairly significant volumes into the new header, the SXLs header. In regards to the hydraulic flow, really, the country and especially our systems as I mentioned a moment ago, we’re very aggressively not only looking at reserving the flow and having by-directional flows to push the gas from north to south but we also are in negotiations. So the answer to your question, we hope to do both, we hope to complete the abandonment and conversion of Trunkline’s accrued service for 30 inch and we also intend to make the panhandle and Trunkline 36 inch pipelines bi-directional so that we can push significant volumes to the Gulf coast, which is of course the fastest growing market in the world.

Thanks Mackie. And then as far as I guess how much open exposure you all have to rising gas prices as retain fuel on the intrastate? Can you just remind us what your hedge position is there and how you guys are positioning for potentially higher or more volatile gas prices there?

This year we’ve hedged about half of that. Over time it’s getting a little bit less significant in our revenues. But we have hedged about half of that. The half that we didn’t hedge, we did see a benefit in the first quarter with higher gas prices compared to the first quarter of 2013. On most of our intrastate projects, of course we don’t have retained fuel, but we do continue to manage the intrastate pipeline that we do have retained fuel upgrade and our intrastate system, and looking ahead, just making a decision on is a good time to hedge or not and right now we think it makes sense to stay unhedged for about half of our capacity for the rest of this year as we look towards 2015.

And on that, this is Martin. I mean we probably do 20 Bcft to 25 Bcf on an annual basis of net retain fuel. So from a commodity price exposure perspective, a dollar move is going to $20 million and $25 million. So as Mackie alluded to, it’s became less of an impact to our overall business.

Great. And then last question from me is just on the retail margins at ETP, obviously a very strong quarter. Could you just talk about -- ethanol prices have come in a bit, but some of I guess optimization margin for lack of a better term, can you talk about more about what some of that was and whether you think that’s I guess sustainable going forward?

This is Bob. I guess I would start with unlike what Mackie described in terms of weather impact driving demand we saw was that weather reduced miles driven, that the additional factor in the first quarter for us was Easter this year falls into the second quarter versus the first quarter. That was more than offset by the margin increases you described, driven largely by the fact that we’re about $0.10 a gallon lower this year than last year and what we see is our margins are most affected by direction of price changes. We saw gentler slope on the wind this year. In terms of the balance of the factors you talked about, I would kind of describe it this way, that there were a number of things that happened particularly in the North East around the weather transportation and some both planned and unplanned downtime with refineries and we were -- our assets were well positioned to take advantage of that and we did.

And your next question comes from the line of John Kiani [ph] with Highlander [ph] Capital. Please proceed.

I have a question for Mackie, please. Obviously you discussed the strong performance of the intrastate business during the quarter. If we overlay the LNG exports that are going to be coming online from other projects and your own like Charles project in both Louisiana and Texas over the next several years, how do you think that will impact the intrastate business please, both the pipes and Bammel from a storage perspective as well?

John, it will impact it in a significant way. We’re already seeing that. All the markets along the Gulf Coast, not only LNG but also the new pet chems that are coming on, new business that we’re tied had into and after our announcement with the pipeline deliveries to Mexico, every conversation we have with shippers up in the northeast are asking us how far can they go. Can they get all the way down to the LNG facilities, can they get to Gulf Coast. We actually have some discussions with some fairly large volumes that would like to get into the Mexico project. So we see the growth along the Gulf Coast and the growth in Mexico not only from South Texas but also from West Texas adding significant benefit to what we’ve been seeing for some time is that we have idle capacity that we’ve been receiving zero revenue from for the most part that we’re about to start to see and are seeing significant use and revenue growth from. So we couldn’t be more excited about how our assets, both interstate and intrastate are situated to bring the gas from the largest basins to the fastest growing market area.

And your next question comes from the line of Ethan Bellamy with Baird. Please proceed.

Would we ever see you guys get into LPG or LNG shipping?

Actually owning the ships?

Yup.

Kelcy?

No, I don’t believe so, this is Kelcy. Even though that business is extremely intriguing it’s -- the brief look that we’ve given it or I’ve given it, it’s a very difficult business to be in if you’re not part of the club the club being actually linked with sales of LNG in the world market. So I do not believe so.

Thank you, Kelcy. And the complexity of the family continues to grow with the Susser deal and then with the liquefaction IPO later this year which seems to be an impediment for some of the investors to understand all the inner relationships, do you anticipate that we’re all going to see a move towards simplification?

It’s a great question and probably almost everybody in this town knows. That was a commitment of ours a couple of years ago and we’ve made great strides to simplify who we are but as we find ourselves today, the reality of MLP map, and I think most people on this call will understand what I mean -- the reality of MLP map suggest that you actually do not reduce complexity in some instances. There are people on this call I’ve noticed names on a list that don’t understand what I am talking about that -- they don’t believe we are complicated. They understand it quite well. I would hope over time people would be able to model us and see that because I don’t -- I can’t make a commitment that there will not be multiple MLPs underneath the family of MLPs or ETE. I can’t make the commitment that will happen. It’s actually better for ETE and the compatibility of these MLPs and the sharing of opportunity that can grow with family has been a wonderful business plan. It’s something that’s a little bit unique to us after Dam Duncan and we’re very pleased with that. I don’t see I’d like to tell you that we’re committed to simplifying organization under the rating agencies. We’d like to see that. We will try but not to the detriment of our unit holders in the family.

And your next question comes from the line of Helen Ryoo with Barclays. Please proceed.

On your Mexico project what kind of CapEx is required to build those new build of pipeline and what kind of return do you expect?

The total for the two projects is approximately $200 million of new CapEx for new pipe, but the important thing to note is that the volumes will be derived from other sources like Waha or Katy, other receipt points through our intrastate system. So we have significant revenue benefit, only spending a $200 million and it’s in line with our typical kind of intrastate deals on kind of five or six multiple.

Five or six including sort of the residual benefit from your overall intrastate volume?

Not including that.

Okay, not including that. And then I think midstream side of the CapEx also increased by 120, compared to your previous reporting. Is there any significant project on the midstream side that was added?

The only thing that changed as I mentioned earlier is that we increased the capacity, our rubber plant growing from 135,000 a day to 180,000. So that was a bulk of the increase there.

Okay, great. And then in the quarter you’ve made some good margins related to fuel and Bammel. Are you able to quantify the margin you made on Bammel or provide or gas that was withdrawn from the storage facility?

Yes, we came into the quarter with I think 37 Bcf, 38 Bcf of gas that we own that we hedged to sell out in the quarter. First time in five or six years, maybe more than that where we actually emptied the entire capacity of the cold weather and the strong natural gas prices. So a good bulk of the performance within our intrastate related to Bammel and the fact that we withdrew like I said, I want to say it was about 37 Bcf of gas in the quarter.

Okay, great. And there was an incremental distribution payable to H unit in the quarter? Is that something that’s repeating going forward or is this a one-time item?

What is that again?

There was an incremental distributions payable to Class H unit holder which amounted to $30 million in the quarter and this I guess helps the ETE side of the cash flow. But just wondering if that’s a one-time or recurring?

This is Jamie. It’s actually the reversal of the IDR subsidy. Remember when we did the SXL exchange, we had ended up with the GP IDR representing just 50% effectively the IDR cash flow from SXL. And we ended up with a reversal of the subsidy of a certain amount for a prescribed period. So that’s what that incremental effect, that’s the way that flows through right now.

Got it, it’s great. Thank you. And then just last one. You bought back 750 of ETE units, although your debt balance just went up by about 250 quarter-over-quarter. Would we be seeing the remaining about $500 million debt balance going up when you’re done in April -- sorry in the second quarter?

The debt balance I think actually went up by 350 not 250 if you look at the Page 8 of the press release. We did $365 million for the quarter that is bought and settled as of March 31. So if we bought on March 29, March 30, March 31, they close post quarter, they’re not reflected. So in 365 about 8 million units that we bought as of the first quarter and now we’re effectively 16 million units through the end of April. You will see though Helen, to your question. So the 350 to 365 and then you’ll see the incremental 400 million in our balance sheet, which right now sits just under 3.6 billion of debt at ETE.

And your next question comes from the line of Ross Payne with Wells Fargo. Please proceed.

I was wondering if you guys could give us some timing on when you think the Bakken project results will come through? And also on making Trunkline bi-directional if you can give us an idea when that might happen as well?

Ross this is Mackie again. As I mentioned, we are in negotiations with multiple shippers and they all kind of have their own desires and their own board issues and so we have had to extend it. The weather conversations have going and very likely could be extended again till the end of May. To answer your question, certainly by some time mid-June we’ll have certainty of whether or not we’re going to move that project forward. And in the event we do, we hope and we’re optimistic that we will, that will be a simultaneous build as we’re reversing and putting the Trunkline pipeline into crude service. All that goes well, we should be in crude service by the end of 2016, early ‘17.

And also just jumping back to Bammel for a second, were you able to quantify maybe what the one-time gain might have been by emptying out most of those volumes and storage?

Yeah, give me one second Ross. That’s had an impact about $40 million. I want to say something, that we’ve all said one time gain -- I mean that’s what support storage is supposed to do and don’t forget that but that’s we’re supposed to do and Ross I’ve referred to this as seasonal gain but I certainly wouldn’t if we return to a normal industry. It’s certainly a seasonal thing but certainly and not one time.

Yes, and to add to that Ross, as you know we’ve got about 40 to 45 Bcf of working gas capacity that we manage up until we will get an fee based contracts on that storage capacity. So we’ll inject gas when the market says we should and we will draw gas when we think the market should. We’ve done typically a storage and winter withdrawal to the extent that we have a hot summer, we could inject between now and then and then we’ll draw in the July-August-September time frame and reinject and then do again in the winter. So that’s what Kelcy mentioned. This is a seasonal business for us but it’s something that is recurring year over year.

Okay, that’s very helpful. I mean I guess maybe a way for me to ask the question is, was this a little bit more than the norm I guess in terms of withdrawal and maybe there is some part of this which was a little bit out of the norm but clearly most of the business is recurring but any kind of help there would be great.

Yes, I think what you can do -- looking -- going forward is look at the calendar strip and that’s what we do day to day. Where we can see an opportunity in gas calendar spreads we’re going to take advantage of them. So if we see a dip in the front lines, we’re going to look to inject gas. We see strip increase in the outer months. We’ll look to put on the forth though lock in that margin. So that’s something we will. Yes, I think this winter certainly we benefited by the colder weather and the higher gas prices and again what I eluded to, we saw little bit of volatility and we captured it. If that happens again in the summer or the winter I think you can count on us capturing that opportunity again.

And your next question comes from the line of Michael Bloom with Wells Fargo. Please proceed.

Back to the topic of simplification for one second, any updated thoughts in terms of the timing of potentially moving the SXL, the remaining 50% of the SXL IDRs up to ETE?

Michael, its Kelcy. As you know you and I have spoken about this. That’s something we would like to do. It would need to be an opportune time. It would be need to be a time when it was the correct thing to do for ETP and the correct thing to do for ETE. I don’t see that on the short term horizon however. I don’t see anything that would cause us to want to view that in the next quarter or so.

Okay. And then two kind of nitpicking questions if I may. One I noticed a footnote that you sold a marketing business in April and I’m just curious what that was in sort of in that other bucket? And then also in that bucket, just any outlooks you can provide on what you think the Philadelphia Energy Solutions could generate this year in terms of cash flow for you guys?

This is Macke, I’ll answer the first part of that question. So we’ve bought a small marketing company that had a lot of transportation business, storage business on pebble back in the fall and we did it for several reasons and it made a lot of sense at the time to do it. However as everybody knows we’re not a big trading company. We’re more of a fee based midstream company. So it really didn’t fit us well. However it did fit our assets well. The guys did a really good job maintaining and growing the business. But we’re approached by several companies with the high level of interest to purchase that business and we got a really attractive price for that and it make sense to divest ourselves of that asset.

Yeah, Michael, this is Martin. On PES really, how we’ve looked at that that since owning back to October 2012 is we’ve got a budget of zero every year for that investment in terms of cash coming to us and if we get it, we get it, it’s great. And if we don’t, it doesn’t hurt us. Where as part of the agreement PES covers our tax piece related to any earnings associated with that investment. So we pick up that in some quarters we will get it, some we don’t. I think you saw in the press release we had earnings but no cash distribution. So I think so those are modeling and put a zero in there and just becomes great if we get it.

Is there any potential to fully divest that business at some point?

What we’ve heard is Carlyle is looking to do something with the refinery to the extent that they want to buy us out as part of their plans. I think for the right price we certainly would be engaged to do so.

Ladies and gentlemen, that concludes the question-and-answer session. With that I would like to turn the call back to Mr. Martin Salinas.

Well, again thanks everybody for your time this morning and we’ll see you in few months. Thank you.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. And have a great day.