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ETP Has 'No Plans at All' to Sell Sunoco's Retail Business

DALLAS -- Energy Transfer Partners LP (ETP) has "no plans at all" to sell its recently acquired Sunoco Inc. retail business, ETP Chairman and CEO Kelcy Warren stressed during the company's 2012 fiscal fourth-quarter earnings call this morning.

"We like the retail business," Warren said. "It's extremely well run and provides excellent distributable cash flow to our shareholders." As CSNews Online previously reported, Warren made similar comments during ETP's 2012 fiscal third-quarter conference call on Nov. 8.

The chief executive did not discuss a sale or possible spinoff of the approximately 5,000 Sunoco convenience stores and gas stations during prepared remarks in the conference call. However, he addressed the topic when questioned by an analyst.

Several analysts have recommended that ETP, an oil pipeline master limited partnership (MLP), spin off or sell the Sunoco retail business it acquired on Oct. 5 because the company is not familiar with running a retail business.

Warren, though, reiterated today that the executives brought over from Sunoco in the $2.6-billion acquisition are doing an excellent job.

Sunoco's retail division had an excellent fourth quarter, according to Martin Salinas Jr., ETP's chief financial officer. "Sunoco retail had a very strong performance with $109 million in EBITDA [earnings before interest, taxes, depreciation and amortization]," he said during the call. "Margins were excellent in the fourth quarter due to lower gas prices."

Regarding net earnings, Sunoco lost $14 million during the fourth quarter, which was calculated from Oct. 5 -- the day the acquisition closed -- through Dec. 31. Salinas acknowledged that Sunoco retail margins will be "somewhat impacted" in its 2013 fiscal first quarter due to rising gas prices.

Companywide, ETP had distributable cash flow of $193 million for its 2012 fiscal fourth quarter, compared to $135 million in the same quarter in 2011. MLPs often reports earnings in distributable cash flow as opposed to net earnings.

To qualify for MLP status, a partnership must generate at least 90 percent of its income from what the Internal Revenue Service deems "qualifying" sources. For many MLPs, this include activities related to the production, processing or transportation of oil, natural gas and coal.

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