Ladies and gentlemen and welcome to the Energy Transfer Partners conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator instructions) I would now like to turn the conference over to your host, Martin Salinas, Chief Financial Officer of Energy Transfer Partners. Please proceed, sir.

Good afternoon, everyone. As you know, we issued our results yesterday after the market close and as we’ve done in the past I’ll give a high-level overview of our results for the quarter and for the year ended December 31st, 2009. I’ll also update you on where we stand with some of our projects in addition to discussing our financing activities. We’ll then go into Q&A. During the call I will make forward-looking statement within the meaning of Section 21E of the SEC Act of 1934 based on our belief as well as certain assumptions and information available to us. Kelcy, Mackie, John McReynolds, Bill Powers, and other members of our senior management team are here to answer your questions. I’ll start with ETP’s results. Our consolidated EBITDA was $477.1 million for the quarter of 2009, roughly $139.3 million higher than the fourth quarter of 2008. And EBITDA for the year ended December 2009 was just a little over $1.5 billion, an increase of $104 million over 2008. I’ll go into a little more detail about what specifically impacted us during the fourth quarter when discussing the individual segments. Distributable cash for the fourth quarter was $238.4 million and $962.1 million for the year. We paid $957 million in distributions to our partners during the year ended December 31st of 2009. I do want to point out also as relates to our distributable cash flow that we did have a one-time $11.1 million charge due to the settlement of interest rate swaps that were entered into back in the late 2008. And we also didn’t include a $15 million cash distribution from MEP that we received in January that relates to the fourth quarter results. With respect to distributions, we paid our quarterly distribution of $89.375 per common unit at…

(Operator instructions) Your first question comes from the line of Ross Payne with Wells Fargo. Please proceed.

How are you doing guys?

Hey, Ross.

First question on maintenance CapEx, did I hear 110 to 120 and I am just kind of looking at 2000 – I know 2009 was down, but 2008 I know it was around 140, I was just curious what’s moving down.

Yes, Ross, on a couple of those we had some integrity projects that needs to get done between the two periods ’08-’09. Those have gone away as also we continue to evaluate just from a cash perspective some of the wants versus needs. It’s really allowed us to focus on again what the needs are from a maintenance CapEx perspective. That’s why you are seeing that fluctuation between the years.

Okay. And also on the propane, you mentioned 45.6 million in derivative gains, what – could you just explain that a little bit?

Yes, that was a timing – if you go back and look at fourth quarter of 2008 given the price movement on the commodity side, we had a loss of about $45.6 million in the fourth quarter of 2008. That’s just getting reversed in the first quarter of 2009 as those volumes or those gallons were delivered.

Okay. And also on your reconciliation of distributable cash flow you have a section here for inventory hedging at lower cost to market, 27.3, if you can explain that a little bit. Thanks.

The 27.3 million, yes, you go back and look a lot of this is just timing on – from an accounting perspective of when we log in those derivatives and really more the spread of gas that gets injected into Bammel and then it gets withdrawn during the winter months. Due to the recognition or our accounting rules recognition, you are seeing some of that timing occur. That $27 million really reflects some of those – the lower cost to market charges that we took back in late ’08 and early ’09, and as we withdrawn the inventory we’re kind of I guess seeing that reversal come through. So, that’s what that $27 million is.

Okay. Is that non-cash I guess or==?

Well, it’s really cash, but it’s not flowing through – it was non-cash when we made the write-downs back in late ’08, early ’09.

Okay. Okay, just to get to a cash EBITDA number, I guess I won't play with that number too much, but I guess I’ll take out the unrealized gains on interest rate derivatives, commodities, et cetera.

Yes.

Okay. Because you gave me up into the kind of the 360 – I am sorry – or somewhere in the 392 range.

Yes. That was back in – I believe that’s correct.

Okay. All right. That’s just from me. Thanks guys.

Okay.

Your next question comes from the line of Darren Horowitz with Raymond James. Please proceed.

Hey, good afternoon guys. Martin, just a couple of quick questions for you on the Interstate side of the business, appreciate your color on Barnett volumes but can you give us an update on any more of your open transport capacity that you’ve hedged, any further initiatives to kind of lock in fuel retention margins and kind of how you think volumes progress with the current basis spreads, not only this quarter, but into the second quarter as well?

This is Mackie, I’ll answer that. As we stated in our last call, we have slowly started seeing growth, and as Martin mentioned earlier, we’ve seen the volumes grow both at the Bossier and the Barnett Shale. So we’re kind of balancing that growth and that capacity that allows producers to have the right to versus hedging any open capacity that we have, but it is something that we do continue to look at. If we see the opportunity to hedge at spread that we think are favorable we certainly will do that. In the mean time, we're just pleased to see the growth that we didn’t see last year coming out of those areas.

Sure. Mackie, what does it take for you guys to lock in more fee based contracts for open storage at Bammel?

(inaudible) on these kind of calls for competitive reasons don’t give out that information. It’s negotiated based on a number of factors, are there transportation synergies embedded in there, what are the terms, what are the flexibilities, so the demand charges per storage vary fairly widely on the service that’s being requested.

Okay. And just one final question on the Midstream side of the business. Can you give us a little bit more insight into the contract mix this year for your midstream business, particularly around your hedges, so we can get our arms around just how much of a benefit you might have if processing fundamentals improve further?

Okay. Well, from the – oh on the Midstream – from a processing perspective–

Right.

If you look at up North Texas, our Godley facility is kind of been fluctuating up and we think volumes it’s slowly increasing there as we have on the rest of our system. We’ve got about 10% to 15% of that as keepo [ph]. Our volume is down. Our southeast Texas system by and large are just maintaining a – keeping up with the clients. So we are seeing some just steady flows there. And then that’s pretty much it.

Yes, Darren, I mean – this is Martin – there is a really from a contract mix as Mackie indicated there, there hadn’t been too much of a shift in what we are seeing last year or so. We have a flexibility at both Godley and La Grange to bypass. We’ve not historically hedged a whole lot of that business. One, it’s difficult to hedge out more than three to four months. Secondly, it’s just not a big part of our business. And it’s kind of benefited us. If you look at really over the last three to four months and seeing the improved processing margins, again, it’s just, we can hedge operationally the downside and giving us the opportunity to capture better margins on the upside.

Sure. I appreciate the color. Thanks guys.

Yes, you bet, thanks, Darren.

The next question comes from the line of Derrick Baliski [ph] with RBC Capital. Please proceed.

Hey guys.

Hi Derrick.

Hi. Just out of curiosity I was wondering you know it seems like the SG&A dropped off in the third quarter and stayed low again in the fourth. Is this kind of a new run rate that we are seeing here in the low 30s?

We haven’t the guidance 2010. What I will tell you there is a couple of things is we’ve – as we stated before, continue to look at our expenses. One thing is as we are seeing in another industry. Looking at competition that had launched this. So those are things that we are focusing on. And the other thing is we had a run rate of a FERC [ph] expense that we no longer are seeing. So, going forward, I think as you see us increasing a little bit of the size just given some of the discussions we’ve had around development, probably it’s slightly higher. I wouldn’t necessarily use this as a run rate going forward, but probably any guidance I would give you would be to probably a trend just a little bit.

But not all the way back up to the mid 50s level we were seeing in kind of early ’09?

No, no.

Okay, thanks.

The next question comes from the line of Michael Blum with Wells Fargo. Please proceed.

Hey, good afternoon everybody.

Hey, Michael.

Couple of questions. Can you talk about the – what the volume contribution was in the fourth quarter from Texas independents? I guess I am trying to figure out did you get a full quarter contribution or is there going to be a ramp associated with that?

Well, Michael, the way we operate our systems, it’s hard to answer that question and the reason for that is our shippers have the flexibility to move points, so, for example, any given day, we may have 500 or 600 or 700,000 going to Carthage that the next day or the next month must be past another point say Katy or southeast Texas. The way we operate our system is to of course run as little compression as possible to provide the services that we are required to provide. So there maybe some days when we are running tips [ph] at 800 or 900, which is 80% to 90% of the capacity and there maybe some days when we are running at 50% of capacity because it makes more sense to fully load up another path from a compression efficiency standpoint. And so to answer that question as far as relating that to an – the earlier answer is that as we see growth at the Barnett Shale and the Bossier, that gas will be sourced, some of which day to day through tips [ph]. And so they fill apart our entire system.

Okay, that’s helpful. The second question I had was on the incremental capacity you are signing up on Tiger. Obviously you had – you had a pretty good rate of return on the initial capacity. Will you have similar returns on this; will they be higher, lower, the same?

They will be – we are very pleased with those return. They won't be lower.

Okay, fair enough. And then can you just – are you willing to disclose what you paid for the recent gathering assets you bought in the Haynesville and what type of multiple we should be thinking about there?

Hey, Tom Mason, can we do that?

Well, you can if you want to, I am not – it’s a kind of few, but with – sure.

Sure. Let’s do it. Back to you.

Okay. Yes, we paid $150 million for those assets. They complement a large acre position that we already had dedicated to us. We couldn’t be more excited about that. And the synergies that – that system fits in with what we already had owned in the Haynesville provides them a significant upside for us in our Haynesville gathering opportunities.

And, Michael, this is Kelcy, we love acquisitions like this because if you just look at the multiples, EBITDA that they were making, it’s a good deal for us, but if you look at the path that we will no longer be required to lay to other gas that we were going to gather, it really gets to be a great deal. So we are very pleased.

Okay, understand. Then thanks for providing that. My last question is just on the Marcellus, you made an announcement with an investment there. Is this – anything, any color you want to add to that and then is this kind of your first step in there and is there more to come?

Yes, we have – I don’t think we’ve made a press release or anything but we have consummated a deal. We already actually in the process of laying some top [ph] lines and we are being a little bit quiet about that, several reasons, one, the producer has asked for that, and also there is a lot of competitive acreage that we are going after, but we are pretty excited after a year and a half of trying hard – of starting the foundation up there and really excited about the future up there.

And yes, I would say that’s just the first step of hopefully many that we are going to take in Marcellus.

Okay, thank you very much.

Thanks, Michael.

Thanks, Michael.

Your next question comes from the line of Helen Ryoo with Barclays Capital. Please proceed, ma’am.

Yes, thank you, good afternoon. Couple of questions, first, when you think about your CapEx commitments beyond 2010, would you say it’s around – I guess the only thing left is the remaining Tiger spend, which, I guess depending on how the Open Season goes, would add another 300, so, is it fair to say it could come out to around 500 plus I guess what you end up saying – spending on in the Tristates gathering system and also the water JV acquisition you made?

Yes, Helen, this is Martin, we’ve always provided 2010 guidance, we’ve not provided 2011 as we’ve done and will continue to do, we’ll update that as we see projects unfold, as we see commitments to move forward with projects. So to give you a number today it’s only be as good as what we have today. And as we talked about, there is a number of activities that we are pursuing. There is a number of things that we have just embarked on. It could mean a higher number, as to how high, that’s something that we’ll continue to evaluate as we get the commitments from the shippers or customers to move forward with that.

Okay, and then you gave 2010 guidance, you said about 1.2 to 1.3 that’s on the natural gas asset. I guess – does that include some spending on the Tristates–?

Yes it does.

Okay. Could you say how much?

Between 20 million and 30 million is what we’ve estimated for Tristates.

Okay, okay, and then I guess just a little bit more on Tristates, who are the main producers behind that system? Is it Chesapeake?

Chesapeake is one of them.

Okay. And then I guess the plan is to bring the Tristate volume into Tiger, is that that the synergy you are talking about?

Yes, Tiger will be a major interconnect for that system, yes.

Okay. And I guess 2010 cash flow from Tristates would be pretty minimal, is that correct?

We’ve not provided that and I think as both Mackie and Kelcy mentioned, this is an acquisition. We are on a – it’s a good deal based on what we think we can get out of the assets and building up the relationships would be a better. But in terms of providing the cash flow guidance for 2010, we are not going to give that.

Okay. And then just finally, what are you seeing, I guess you’ve stepped on the acquisition front, what are you seeing in the market, the M&A environment?

We are more aggressive now than I think we’ve ever been in our history and we are optimistic as well. We are chasing small deals and we are chasing very large deals as well and I will tell you, Helen I am seeing a little bit of a break in the wall here, we might have some success in 2010, we are certainly trying.

Okay, great, thank you very much.

Thank you.

Your next question comes from the line of Ted Durbin with Goldman Sachs. Please proceed, sir.

Yes, thanks. Just coming back to the Intrastate, I think you had said you were running around 74 % utilization, has that bumped up, down, kind of what’s your outlook for that going forward?

Yes, Ted, there are some days that we do exceed that level, but I think what we are seeing and with the number of wells that are shutting the Fort Basin that we have been told will be coming on line over the next quarter – several quarters, we expect that to grow. So we have every expectations of approaching 90% plus by the end of the year on a consistent basis.

Okay, great. And coming back to storage to Bammel, I think you said you did $95 million of margin in the quarter and $130 million in the year. Can you – was the quarter just extraordinarily as strong, how do we think about run rate for that going forward?

Yes, Ted, this is Martin, part of the at $95 million can you go back to the (inaudible) $52 million of that was annualized gains that due to timing of – on a full year basis when you look at the $130 million pretty consistent to what we saw in 2008. As we look at the balance of (inaudible) I mentioned we got about 25 Bcf tied up under fee based arrangements. The remaining capacity is as I think Mackie indicated, we continue to shop that up fixing others contracts. When we don’t have that, it sounds like the system or the reservoirs remains empty, we’ll utilize it under our account and look at capturing attractive spreads as it presents itself during the counter bid.

Okay, great, and then just considering all of the financing that you’ve done recently, how are you feeling about needs in 2010 sort of the debt end an equity fund?

Ask that again?

Yes, in terms of your financing needs for 2010, or the remainder of the year, given all the financing you’ve already done?

No, still very good where we are today given the last time we operate, that we did back in January, almost $2 billion of revolving credit facility capacity. Feel good about funding the projects that we have today. The Tiger expansion is really set for a late 2011. We’ll look at paying some dollars probably in late 2010. And then as Kelcy mentioned, the expenses dollar to dollar that takes place we’ll look financing them quarterly. Fortunately the capital markets have been freed up. We’ve seen a lot of activity even early as this year. So, we feel good about where we are and certainly as we continue to look to grow, we’ll balance that out with the appropriate amount of debt equity.

Okay great, thanks a lot guys.

Thank you.

Your next question comes from the line of Yves Siegel with Credit Suisse. Please proceed.

Good afternoon everybody.

Hi, Yves.

Good. Could you talk about the thought process behind the water JV?

You bet. This is Mackie, Yves. As we had tried to grow up in the Marcellus, we are king of getting our feeling ourselves what we roll out is really what’s evident in all the shales, but especially in the Marcellus, because of the difficulty in disposing off water underground up there, that there has to be a water solution in order to develop the reserves up there and we’ve been working with producers over the last year to kind of come to a solution and by forming this joint venture with Heckmann, we really now have an answer and we couldn’t be more excited. Our focus is of course on gathering and treating and transporting natural gas, but the water complements it, number one. And number two, it’s an absolute necessity, and we are meeting with governors as part of this partnership in West Virginia and some legislative folks in the Pennsylvania and there and also in Washington, everybody is of course excited to hear that somebody is paying attention in dealing with the water concerns because they have to be dealt with to develop that play.

And as you know, typically in the outfield [ph] water is trucked away from the well-side and it’s hauled to a disposal well. That’s your typical way that you deals with water. And then there is a purchase of freshwater for your bracing [ph]. That’s not really very available in the Marcellus at all. There is a lack of quality disposal reservoirs, therefore creating much longer transportation hauls therefore deteriorating the roads. And then of course the fresh water is limited as well. So we think this is a – to me this is as natural as building an aiming [ph] plant or building a top line, it’s all part of addressing the producer’s wants and needs in that area.

So, when you answered Mike’s question early on in the call in terms of what you are doing in the Marcellus, were you speaking to the water JV or were you actually had some infrastructure or opportunities around gathering and more conventional type of natural gas activities.

What we spoke about or I spoke about earlier was strictly natural gas gathering.

Okay. And then any sense on how much dollars the Marcellus might – and if you could may be bifurcate it between the water and the gathering, are you looking at it – you must be looking at two separate investments?

Yes, we really, as Martin said, no, we are not giving guidance on that, but there is so much opportunity up there, it’s wide band. But let me go back to your last question and then I will finish. The project that we have ongoing is gas. However, there are ten general water opportunities that we do anticipate will develop off of that, but the initial deal was strictly just gas. But we are working on a number of different opportunities up there and we are very excited about the potential of some of those coming together, and if they do then it could be a very nice contributor to our growth up there.

Okay. Well, if I could, is it mutually exclusive, in other words, you go to a producer, saying hey guys we have a water solution for you, but in order for you to do the water solution, we need you to let us gather your gas.

Yes. They are exclusive. However, we hope not, because as you know, buying right of way, clearing right of way, digging a ditch, those are all cost that you incur on laying the top line or a water line and to the extent that two separate serving pipes could be laid in the same ditch or the same right of way is obviously economies of scale that we hope to achieve. So, they certainly could be initially exclusive, but that we are hoping that they are done in cooperation with each other. They already have, I should say.

I promise I’ll move on, but – could the dollars that you invest in Marcellus be significant – be material in 2010, or do you think it’s in the play out over a longer timeframe?

I think a longer timeframe. I would like to think we will be announcing more projects soon. But I don’t think there will be meaningful dollars spend in 2010. Do you agree, Mackie?

Yes, we may begin spending, but we won't see the results from a revenue perspective until 2011, yes, of any material perspective.

Okay. And if I could just push a little bit, just shift gears, when you for the quarter on the Intrastate side, you had a nice pickup in gas sales. Any change in the dynamic there that you could talk about?

I am sorry, you said Intra?

Intra, yes, we had a nice pick up in natural gas sales.

Yes, as you know we hedged a large portion of our operational sales and then as the cold weather hit and process hit higher levels during the month, we (inaudible) the market and make sales at those times, oh no, we are very pleased with those, the retention revenue sales.

Okay, great, and two more quick ones. As you go forward, any target on what you want to hedge going forward, percentage wise or are you just going to be opportunistic or–?

As part of our 10-Q.

10-Q or a basis if you could head lock that in, yes.

Yes, way we address the hedge first the spread is that the way we hedge that by selling that space. And we are having success on adding some volumes with some shippers that already own capacity. As we mentioned, we see the volumes growing. So we see – towards the end of this year, going into the next year, less of a need to hedge the spreads. From the standpoint of hedging the retained fuel, as we’ve mentioned, we changed the way we think about, we changed our approach. And we are being much more cautious. And we – as we’ve said, we have hedged a large portion, thank goodness, of our fuel this year. And we have put on some no cost collars for 2011.

Good.

As you know, historically, we’ve done minimal hedging of our retained fuel and we will – we look forward to the day that we resume that policy. However, right now as you know from us speaking, we are pretty bearish here as a partnership as it relates to gas process for the next couple of years.

Okay. And then before I say good-bye, could you disclose what the cost of the gas that you guys have in storage is and could you also say if you are looking at any material incremental acquisitions in the Haynesville?

Yves, I’ll address the first one. I mean our cost I believe is $5.66 that’s in the ground now. But I can remind you that that’s a fair value due to the change in the carrier we did back in the first quarter – second quarter of 2009. We look at from an accounting perspective marking that inventory to go market basically every quarter. What we focus on is basically the injection price to the withdrawal price to capture that spread.

Got it.

Then incremental acquisitions in the Haynesville, yes we are. I would not say we are close than we think but we are looking at one thicker opportunity.

Okay, thanks guys.

Thank you.

Thank you.

Your next question comes from the line of John Edwards with Morgan Keegan & Company. Please proceed.

Yes, good afternoon everybody.

Hey John.

Hey, the – on the water joint venture on the pipe, does that – is that going to – because you are helping producers that I assume that will continue to qualify for MLP treatment.

You know, and I’ll let Tom mention – talk about this a little bit, we don’t know the answer to that as whether it will qualify purely as a service to our gathering business. However, we are not overly concerned because we can deal with it internally and not break it in the barriers that we have. Tom, you mind commenting on that please?

Yes, we are looking into that issue now and with our outside law firms who are very familiar with the qualify income issues and may be a gray area we may seek an IRS ruling on, but as Kelcy mentioned, we have the ability to – there is – for one thing there is a 10% exception for the amount of qualifying income you can have and still qualify as an MLP. And so we have a lot of run rate particularly in the first few years as this thing takes off and hopefully it grows into a problem. But we think that as the – as our MLP grows, even if this were not qualified, it would be well within the 10% limit. And then secondly there is always ways of structuring to put the – our portion of the JV’s income flow into a (inaudible). Federal income tax on that is the dividends from that C corp are treated as qualifying income. So that may be a kind of a high class problem if it grows very substantially.

Okay, great. And then are you going to provide any guidance for 2010 or–?

No, John, we are not.

Okay, all right, I didn’t think you would. Okay. And that’s all I have. All my other questions were asked already, thank you.

Thank you.

Great, thank, Tom

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

All right, just a couple of quick follow-ups. Kelcy, you know I know with a lot of these big new pipes even if they are intrastate, they are take or pay, so do we hear that volumes may be picking up in the Barnett, and what have you, is that benefiting your other systems, your older systems or how do we think about that?

No, that is the way to think about it, as Mackie had a question earlier about the Texas independent top line system. And clearly there is capacity available in that system. That was built at a period of time when the producers load – or I am sorry, their production curve that they were providing us and asking us to provide those services were at a higher level. And then as you are aware, many wells were drilled to hole leases and a backlog of inventory of those wells have not been completed and brought on line and we are beginning to see that. That’s why our volumes are coming up. So, I don’t see the need other than probably some very much small systems here and there, but I don’t see a big need for a much large takeaway capacity out of the Barnett Shale from us (inaudible).

Okay, thank you and Martin one other quick thing. In your Qs you kind of in the cash flow section you have a price risk management asset and liability number that’s fairly sizable. Is that where all this non-cash commodity and its referring derivatives is going through?

That does. That is a component of that, Ross. When we put on the derivatives it's where it falls on the balance sheet and then the other side is just the mark-to-market on the inventory. As I was answering Yves’ question, we also see some of that change in value per quarter to quarter show up on the balance sheet and inventory that change posted to the P&L.

Okay, great thanks. That’s it from me guys.

Thanks, Ross.

Thank you.

The next question comes from the line of Derrick Baliski [ph] with RBC Capital. Please proceed.

Hey guys, just a follow-up question on the midstream side of the NGL volumes came down a little bit in the fourth quarter. Is that something we should start to kind of see, are you seeing that as a trend here or can you just speak about that a little bit?

That – and so Derrick, you are looking there quarter over quarter or year to year?

Quarter over quarter, I mean year over year it’s obviously up quite a bit.

Are you looking at ’08-’09 or – I am not–

Yes, the NGL barrels.

I’d say in ’08 to ’09 increase–

Yes that’s what – it’s up year over year but it’s down quarter to quarter.

I see, quarter to quarter.

Sorry.

Yes, as I mentioned earlier the volumes behind Godley, for example, have been fluctuating up and down. For example, there we are recovering more liquids in this quarter on a day to day basis than we did last quarter but as the volumes have slowly started to grow in the Barnett Shale, some of that has been rich, and some of that has been lean, and so that had an impact on liquids, but we should see that continue to grow.

Okay. And just a follow-up to a comment that Kelcy made in that’s that you guys are bearish on natural gas prices for the next few years. Could you give a little more detail on that or just kind of where do you think it’s going and your outlook?

Yes, you know and I am not going to give you a lot of data that this has been prepared, although we review a lot of data prepared by third parties, but we do have the benefit of looking internally and looking at what we see as kind of the inventory of production that is going to be coming on and we just see that this is good news for us. we see a tremendous amount of production that’s going to be coming on, wells that were drilled, not completed that are going to be completed, producers expectedly pump the price producer style that this is the best use of their capital is to go sideways on some of these wells and bring them online. What they the well board has been drilled. So we just – we see a lot of data that you don’t see reported out there and we just think there is a lot of gas that’s going to be hitting the market in 2010 that people have not forecasted.

Okay, thank you.

Thank you.

I am showing no further questions in queue. I would like to turn the call back over to Chief Financial Officer of Energy Transfer Partners, Mr. Martin Salinas for closing remarks.

Thanks, Gerard. Wish you everybody’s time this afternoon and everybody have a great weekend, so no heaters up.

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