Energy Transfer Partners L.P. (ETP) – a natural gas and propane gas distributor – priced the public offering of 8.5 million common units at $44.72 per unit, with a 30-day over-allotment option for an additional 1.3 million units. The partnership plans to use the net proceeds from this offering to pay back the outstanding indebtedness under its revolving credit facility, to finance capital expenditures associated with pipeline construction projects, and for general partnership purposes. The offering is expected to close on January 11, 2010.
 
Energy Transfer recently reported weaker-than-expected third quarter results as low natural gas prices adversely affected profitability. The partnership reported a loss per unit of 10 cents, significantly below the Zacks Consensus Estimate of a profit of 35 cents. Energy Transfer’s low growth and seasonal propane business also remain major liabilities, in our view. Given these headwinds, we expect Energy Transfer units to be under pressure in the medium- to long-term and rate the partnership as Underperform.
 
Dallas-based Energy Transfer Partners L.P. is a master limited partnership owning and operating a diversified portfolio of energy assets. The partnership’s natural gas operations include miles of natural gas gathering and transportation pipelines, natural gas treating and processing assets located in Texas and Louisiana, and three natural gas storage facilities located in Texas.
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