UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 28, 2015
Date of Report (Date of earliest event reported)
Date of Report (Date of earliest event reported)
ENERGY TRANSFER EQUITY, L.P.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-32740 | 30-0108820 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3738 Oak Lawn Avenue Dallas, TX 75219 |
(Address of principal executive offices) |
(214) 981-0700 (Registrant’s telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On September 28, 2015, Energy Transfer Equity, L.P. (“ETE”), Energy Transfer Corp LP (“ETC”), ETE Corp GP, LLC (“ETC GP”), LE GP, LLC (“LE”), Energy Transfer Equity GP, LLC (“ETE GP”) and The Williams Companies, Inc. (“Williams” or “WMB”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which WMB will be merged with and into ETC, a newly formed partnership that will be treated as a corporation for federal income tax purposes (the “Merger”), with ETC surviving the Merger, and all of the outstanding common stock of WMB will be exchanged in the Merger for cash, mixed or stock consideration, and all of the assets and liabilities of WMB will be contributed to ETE in exchange for ETE Class E common units, all subject to the satisfaction or waiver of the conditions in the Merger Agreement and related transaction documents.
On September 28, 2015, ETE and WMB issued a joint press release in connection with entry into the Merger Agreement. In addition, ETE will hold a conference call and simultaneous presentation to investors on September 28, 2015, at 8 a.m. Central Time (9 a.m. Eastern Time) to discuss the announcement of the execution of the Merger Agreement. Information regarding the conference call is included in the press release, filed as an exhibit to this report. Interested investors can access the conference call webcast via the Investor Relations page of the Company’s website at www.energytransfer.com. The press release is attached hereto as Exhibit 99.1, the investor presentation is attached hereto as Exhibit 99.2 and each are incorporated herein in their entirety by reference.
Item 8.01 Other Events.
To the extent required, the information included in Item 7.01 of this Form 8-K is incorporated into this Item 8.01 by reference.
Forward-looking Statements
This communication may contain forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the merger of ETE and Williams, the expected future performance of the combined company (including expected results of operations and financial guidance), and the combined company's future financial condition, operating results, strategy and plans. Forward-looking statements may be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," "opportunity," "designed," "create," "predict," "project," "seek," "ongoing," "increases" or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results to differ materially from those described in the forward-looking statements. These assumptions, risks and uncertainties include, but are not limited to, assumptions, risks and uncertainties discussed in the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for each of ETE, Energy Transfer Partners L.P. (“ETP”), Sunoco Logistics Partners L.P. (“SXL”), Sunoco LP (“SUN”), WMB and WPZ filed with the U.S. Securities and Exchange Commission (the "SEC") and assumptions, risks and uncertainties relating to the proposed transaction, as detailed from time to time in ETE’s, ETP’s, SXL’s, SUN’s, WMB’s and WPZ’s filings with the SEC, which factors are incorporated herein by reference. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in other reports or documents that ETE, ETP, SXL, SUN, WMB and WPZ file from time to time with the SEC include, but are not limited to: (1) the ultimate outcome of any business combination transaction between ETE and ETC and Williams; (2) the ultimate outcome and results of integrating the operations of ETE and Williams, the ultimate outcome of ETE’s operating strategy applied to Williams and the ultimate ability to realize cost savings and synergies; (3) the effects of the business combination transaction of ETE, ETC and Williams, including the combined company's future financial condition, operating results, strategy and plans; (4) the ability to obtain required regulatory approvals and meet other closing conditions to the transaction, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Williams stockholder approval, on a timely basis or at all; (5) the reaction of the companies’ stockholders, customers, employees and counterparties to the proposed transaction; (6) diversion of management time on transaction-related issues; (7) unpredictable economic conditions in the United States and other markets, including fluctuations in the market price of ETE common units and ETC common shares; (8) the ability to obtain the intended tax treatment in connection with the issuance of ETC common shares to Williams stockholders; and (9) the ability to maintain ETP’s, SXL’s, SUN’s, Williams’ and WPZ’s current credit ratings. All forward-looking statements attributable to us or any
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person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Neither ETE nor WMB undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this communication or to reflect actual outcomes.
Additional Information
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. This communication relates to the entry by ETE and Williams into definitive agreements for a combination of the two companies. In furtherance of this proposal and subject to future developments, ETE, ETC and Williams may file one or more registration statements, proxy statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, prospectus or other document ETE, ETC or Williams may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ETE AND WILLIAMS ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION TRANSACTION. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders of Williams. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by ETE, ETC and Williams through the web site maintained by the SEC at http://www.sec.gov. Copies of the documents filed by ETE and ETC with the SEC will be available free of charge on ETE’s website at www.energytransfer.com or by contacting Investor Relations at 214-981-0700 and copies of the documents filed by Williams with the SEC will be available on Williams' website at investor.williams.com.
ETE and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding the directors and officers of ETE’s general partner is contained in ETE’s Annual Report on Form 10-K filed with the SEC on March 2, 2015 (as it may be amended from time to time). Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus and other relevant documents filed with the SEC if and when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from ETE using the sources indicated above.
Williams and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding the directors and officers of Williams is contained in Williams’ Annual Report on Form 10-K filed with the SEC on February 25, 2015 (as it may be amended from time to time). Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus and other relevant documents filed with the SEC if and when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Williams using the sources indicated above.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit | Description | |
99.1 | Press Release, dated September 28, 2015, jointly issued by Energy Transfer Equity, L.P. and The Williams Companies, Inc. | |
99.2 | Investor Presentation issued by Energy Transfer Equity, L.P., dated September 28, 2015 | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ENERGY TRANSFER EQUITY, L.P.
By: LE GP, LLC,
its general partner
its general partner
/s/ John W. McReynolds
John W. McReynolds
President
John W. McReynolds
President
Date: September 28, 2015
EXHIBIT INDEX
Exhibit | Description | |
99.1 | Press Release, dated September 28, 2015, jointly issued by Energy Transfer Equity, L.P. and The Williams Companies, Inc. | |
99.2 | Investor Presentation issued by Energy Transfer Equity, L.P., dated September 28, 2015 | |
ENERGY TRANSFER EQUITY TO COMBINE WITH WILLIAMS
Anticipated commercial synergies exceed $2 billion of incremental EBITDA by 2020
Up to $400 million of additional cost savings expected from the implementation of ETE’s shared service model
Williams’ stockholders can elect to receive shares issued by new ETE C- corp and/or cash, subject to proration if either is oversubscribed
Transaction is immediately accretive to cash flow and distributions for both ETE and WMB
Williams Partners L.P. (WPZ) to retain its name and remain headquartered in Tulsa
DALLAS, TEXAS AND TULSA, OKLAHOMA — September 28, 2015 — Energy Transfer Equity, L.P. (NYSE: ETE) (“ETE”) and The Williams Companies, Inc. (NYSE: WMB) (“Williams” or “WMB”) today announced a business combination transaction valued at approximately $37.7 billion, including the assumption of debt and other liabilities. This announcement follows the termination of the previously agreed merger agreement between WMB and Williams Partners L.P. (“WPZ”). The business combination between ETE and WMB was approved by the Boards of Directors of both entities. The combination will create the third largest energy franchise in North America and one of the five largest global energy companies. The combination will also benefit customers by enabling further investments in capital projects and efficiencies that would not be achievable absent the transaction.
Under the terms of the transaction, Energy Transfer Corp LP (“ETC”), an affiliate of ETE, will acquire Williams at an implied current price of $43.50 per Williams share. Williams’ stockholders will have the right to elect to receive as merger consideration either ETC common shares, which would be publicly traded on the NYSE under the symbol “ETC”, and / or cash. Elections to receive ETC common shares and cash will be subject to proration. Cash elections will be prorated to the extent they exceed $6.05 billion in the aggregate and stock elections will be prorated to the extent the full $6.05 billion cash pool is not utilized. Williams stockholders electing to receive stock consideration will receive a fixed exchange ratio of 1.8716 ETC common shares for each share of WMB common stock, before giving effect to proration. If all Williams’ stockholders elect to receive all cash or all stock, then each share of Williams common stock would receive $8.00 in cash and 1.5274 ETC common shares. In addition, WMB stockholders will be entitled to a special one-time dividend of $0.10 per WMB share to be paid immediately prior to the closing of the transaction. The special one-time dividend is in addition to the regularly scheduled WMB dividends to be paid before closing.
ETC will be treated as a corporation for U.S. federal income tax purposes, and holders of ETC common shares will therefore receive an IRS Form 1099, rather than a Schedule K-1, for federal income tax reporting. As part of this transaction, in exchange for the contribution by ETC to ETE of all of the assets and liabilities of WMB, ETE will issue to ETC a number of ETE Class E common units equal to the number of ETC common shares to be issued in the transaction. The Class E common units will be entitled to receive the same quarterly cash distribution per unit as the quarterly cash distribution per ETE common unit. As ETE has agreed to provide all administrative services to ETC and to indemnify ETC for all liabilities incurred by ETC, ETC is expected to distribute 100% of the after-tax cash distributions it receives from ETE to holders of ETC common shares on a quarterly basis as a cash dividend. ETC will benefit from a dividend equalization agreement through calendar 2018 with ETE that ensures that ETC shareholders will receive the identical cash dividend as an ETE unit holder.
To address any uncertainty as to how the newly listed ETC common shares, as a new security, will trade relative to ETE common units, ETE has agreed that, as part of the merger consideration, each ETC share will have attached to it one contingent consideration right (“CCR”). In the event the ETC common shares trade at a discount to the ETE common units on a daily volume-weighted average basis over the 23-month period
following the 20th trading day after the closing of the transaction, ETC will make a one-time payment in an amount equal to such volume-weighted price differential (the “Shortfall Amount”). Any Shortfall Amount will be settled in ETC common shares (at the then current value) or cash at ETE’s election, and ETE will issue a proportionate amount of Class E common units to ETC. If ETC common shares trade at a premium to ETE common units over the same 23-month period, the CCR will expire with no value and a portion of the ETE Class E common units held by ETC will be cancelled based on the volume weighted average price differential, thereby reducing ETC’s ownership interest in ETE. There is also an automatic termination provision of the CCR if ETC trades above ETE on a daily VWAP basis for 20 consecutive trading days and there is no Shortfall Amount outstanding at the end of that 20 trading day period.
The transaction is expected to be tax-free to Williams’ stockholders, except with respect to any cash received. The parties believe that all stakeholders will benefit from the cash flow diversification associated with ownership in three large investment grade MLPs (Energy Transfer Partners, L.P. (“ETP”), Sunoco Logistics Partners L.P. (“SXL”) and WPZ). As a result, the combination creates a truly unique and diversified collection of compatible businesses that will drive greater near- and long-term value.
Kelcy Warren, ETE’s Chairman, said: “I am excited that we have now agreed to the terms of this merger with Williams. I believe that the combination of Williams and ETE will create substantial value for both companies’ stakeholders that would not be realized otherwise.”
Frank T. MacInnis, Chairman of the Williams Board of Directors, said: “After a comprehensive evaluation of strategic alternatives, including extensive discussions with numerous parties, the Williams Board of Directors concluded that a merger with Energy Transfer Equity is in the best interests of Williams’ stockholders and all of our other stakeholders. The merger provides Williams stockholders with compelling value today as well as the opportunity to benefit from enhanced growth projects.”
Alan Armstrong, President and Chief Executive Officer of Williams, said: “Williams’ intense focus on connecting the best natural gas supplies to the best natural gas markets will be a significant complement to the ETE family of diverse energy infrastructure. As a combined company, we will have enhanced prospects for growth, be better able to connect our customers to more diverse markets, and have more stability in an environment of low commodity prices. Importantly, Williams Partners will retain its current name and remain a publicly traded partnership headquartered in Tulsa, Oklahoma.”
During the course of its diligence process over the last ten weeks, the Energy Transfer family has identified significant commercial synergies. These synergies run across a broad spectrum, ranging from new revenue opportunities, improved operational efficiencies and performance, new capital opportunities and prioritization of existing capital projects. ETE expects that the anticipated EBITDA from these commercial synergies will exceed $2 billion per year by 2020 (or more than 20% of the estimated current pro forma EBITDA for the combined company) and will require overall incremental capital investment of more than $5 billion to achieve.
As part of the merger, WPZ will retain its current name and remain a publicly traded partnership headquartered with a meaningful ongoing presence in Tulsa, Oklahoma. Also as a result of this announcement, WMB and WPZ are withdrawing their financial guidance. ETE expects no impact from this transaction on the credit ratings of ETP, SXL, Sunoco L.P. (“SUN”) or WPZ.
ETE and Williams believe there are numerous meaningful benefits from a proposed combination:
ETE Stakeholders
• | At closing, the transaction will be immediately accretive to distributable cash flow and distributions per unit for ETE and is expected to be credit positive to ETE’s credit ratings; |
• | ETE’s distribution growth rate is expected to remain at its current level; |
• | as a result of diligence, the size of both the expected cost savings and the anticipated commercial synergies exceeds ETE’s previous expectations and will help ensure that the duration of ETE’s distribution growth rate will be longer as a result of the transaction; |
• | the introduction of cash into the transaction consideration has reduced the ETC share issuance by over 260 million shares (or approximately 18.5% of the overall ETC share issuance); |
• | the number of possible opportunities to migrate assets within the Energy Transfer family and find additional commercial opportunities, not currently quantified, within the expanded asset base will |
increase significantly, thereby creating more value for ETP, SXL, WPZ and SUN, which in turn will result in increased cash flow growth for ETE;
• | the ability of ETE to broaden its overall shareholder base through the ETC structure; and |
• | the creation of ETC will result in increased liquidity for ETE unitholders because of the option for ETE unitholders to exchange ETE common units for ETC common shares. |
WMB Stakeholders
• | A compelling transaction that provides Williams’ stockholders with: |
◦ | an attractive premium to the implied trading price of WMB assuming WMB traded in line with either the Alerian index or its midstream peers since the date of ETE’s initial offer; |
◦ | a pro forma level of dividend per ETC common shares received that will exceed the 2016 dividend per WMB share that Williams had forecast on a pro forma basis for the Williams/WPZ merger; |
◦ | ETC dividend growth superior to that of Williams on a pro forma basis for the proposed Williams/WPZ merger; |
• | the option to elect cash in the transaction will allow Williams’ stockholders to monetize, on a taxable basis, all or some of their investment in WMB, subject only to the aggregate $6.05 billion pool of cash consideration being fully utilized; |
• | the exchange of WMB shares for ETC common shares is expected to be tax free to WMB stockholders, except with respect to cash received; |
• | for each outstanding ETC common share, ETC will receive from ETE the same cash distribution per quarter as ETE distributes with respect to each ETE common unit; |
• | ETC will benefit from a dividend equalization agreement through calendar 2018 that ensures that ETC shareholders will receive the identical cash dividend as an ETE unitholder; |
• | the CCR is intended to address any trading price differences between ETC and ETE during the two-year period following closing; |
• | ETE will become co-obligor of Williams’ existing debt and Williams’ credit facility will be terminated at closing; and |
• | ETC common shares are expected to have tremendous liquidity, a strong growth profile and the potential for inclusion in the S&P 500 index (similar to WMB’s current inclusion in that index). |
WPZ Stakeholders
• | There is no expected impact to WPZ’s credit ratings as a result of the ETE/Williams combination; |
• | WPZ unitholders will have greater distributable cash flow from material cost savings and synergies of up to $400 million per annum with WPZ joining the Energy Transfer shared service model; |
• | the combination will create new commercial opportunities for WPZ, including the potential to acquire assets from the overall Energy Transfer group, that will improve WPZ’s business outlook, cash flow growth and overall financial profile; |
• | WPZ unitholders will benefit from having a general partner, ETE, that, based on the unique intrinsic financial and strategic optionality in the Energy Transfer family, will be in a position to help WPZ fully realize its long-term growth potential; and |
• | WPZ will receive a $428 million break-up fee for the termination of its merger agreement with WMB payable to all outstanding limited partnership units of WPZ including WMB’s approximate 60 percent ownership. |
Regulatory Process and Transaction Timing
The closing of the transaction is subject to customary conditions, including the receipt of approval of the merger from Williams’ stockholders and all required regulatory approvals, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR”). ETE and Williams anticipate that the
transaction will be completed in the first half of 2016. There is no requirement for an ETE unitholder vote, providing additional deal certainty to Williams’ stockholders. The parties intend to commence the integration planning process immediately following receipt of HSR clearance to ensure that the implementation of the shared service model between Energy Transfer and WMB/WPZ is fully effective and functioning at completion of the merger.
Investor Conference Call
Energy Transfer will hold a conference call to discuss the transaction today at 8 a.m. Central Time (9 a.m. Eastern Time).
The dial-in number for the call is 1-866-700-5192 in the United States, or +1-617-213-8833 outside the United States, passcode 64571414. A live webcast of the call may be accessed on the Investor Relations page of Energy Transfer's website at www.energytransfer.com. The call will be available for replay for seven days by dialing 1-888-286-8010 (from outside the U.S., +1-617-801-6888) passcode 55056274. A replay of the broadcast will also be available on Energy Transfer’s website for 30 days.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master limited partnership which owns the general partner and 100% of the incentive distribution rights (IDRs) of Energy Transfer Partners, L.P. (NYSE:ETP) and Sunoco, LP (NYSE:SUN), approximately 2.6 million ETP common units, approximately 81.0 million ETP Class H Units, which track 90% of the underlying economics of the general partner interest and IDRs of Sunoco Logistics Partners L.P. (NYSE:SXL), and 100 ETP Class I Units. On a consolidated basis, ETE’s family of companies owns and operates approximately 71,000 miles of natural gas, natural gas liquids, refined products, and crude oil pipelines.
Williams (NYSE:WMB) is a premier provider of large-scale infrastructure connecting North American natural gas and natural gas products to growing demand for cleaner fuel and feedstocks. Headquartered in Tulsa, Okla., Williams owns approximately 60 percent of Williams Partners L.P. (NYSE:WPZ), including all of the 2 percent general-partner interest. Williams Partners is an industry-leading, large-cap master limited partnership with operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins. With major positions in top U.S. supply basins and also in Canada, Williams Partners owns and operates more than 33,000 miles of pipelines system wide – including the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas.
Forward-looking Statements
This communication may contain forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the merger of ETE and Williams, the expected future performance of the combined company (including expected results of operations and financial guidance), and the combined company's future financial condition, operating results, strategy and plans. Forward-looking statements may be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," "opportunity," "designed," "create," "predict," "project," "seek," "ongoing," "increases" or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results to differ materially from those described in the forward-looking statements. These assumptions, risks and uncertainties include, but are not limited to, assumptions, risks and uncertainties discussed in the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for each of ETE, ETP, SXL, SUN, WMB and WPZ filed with the U.S. Securities and Exchange Commission (the "SEC") and assumptions, risks and uncertainties relating to the proposed transaction, as detailed from time to time in ETE’s, ETP’s, SXL’s, SUN’s, WMB’s and WPZ’s filings with the SEC, which factors are incorporated herein by reference. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in other reports or documents that ETE, ETP, SXL, SUN, WMB and WPZ file from time to time with the SEC include, but are not limited to: (1) the ultimate outcome of any business combination transaction between ETE and ETC and Williams; (2) the ultimate outcome and results of integrating the operations of ETE and Williams, the ultimate outcome of ETE’s operating strategy applied to Williams and the ultimate ability to realize cost
savings and synergies; (3) the effects of the business combination transaction of ETE, ETC and Williams, including the combined company's future financial condition, operating results, strategy and plans; (4) the ability to obtain required regulatory approvals and meet other closing conditions to the transaction, including approval under HSR and Williams stockholder approval, on a timely basis or at all; (5) the reaction of the companies’ stockholders, customers, employees and counterparties to the proposed transaction; (6) diversion of management time on transaction-related issues; (7) unpredictable economic conditions in the United States and other markets, including fluctuations in the market price of ETE common units and ETC common shares; (8) the ability to obtain the intended tax treatment in connection with the issuance of ETC common shares to Williams stockholders; and (9) the ability to maintain Williams’, WPZ’s, ETP’s, SXL’s and SUN’s current credit ratings. All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Neither ETE nor WMB undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this communication or to reflect actual outcomes.
Additional Information
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. This communication relates to the entry by ETE and Williams into definitive agreements for a combination of the two companies. In furtherance of this proposal and subject to future developments, ETE, ETC and Williams may file one or more registration statements, proxy statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, prospectus or other document ETE, ETC or Williams may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ETE AND WILLIAMS ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION TRANSACTION. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders of Williams. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by ETE, ETC and Williams through the web site maintained by the SEC at http://www.sec.gov. Copies of the documents filed by ETE and ETC with the SEC will be available free of charge on ETE’s website at www.energytransfer.com or by contacting Investor Relations at 214-981-0700 and copies of the documents filed by Williams with the SEC will be available on Williams’ website at investor.williams.com.
ETE and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding the directors and officers of ETE’s general partner is contained in ETE’s Annual Report on Form 10-K filed with the SEC on March 2, 2015 (as it may be amended from time to time). Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus and other relevant documents filed with the SEC if and when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from ETE using the sources indicated above.
Williams and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding the directors and officers of Williams is contained in Williams’ Annual Report on Form 10-K filed with the SEC on February 25, 2015 (as it may be amended from time to time). Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus and other relevant documents filed with the SEC if and when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Williams using the sources indicated above.
Energy Transfer Contacts
Investor Relations:
Brent Ratliff
214-981-0795 (office)
Lyndsay Hannah
214-840-5477 (office)
Or
Media Relations:
Granado Communications Group
Vicki Granado
214-599-8785 (office)
214-498-9272 (cell)
Brunswick Group
Steve Lipin
(212) 333-3810 (office)
Mark Palmer
(214) 254-3790 (office)
Williams Contacts
Investor Relations:
John Porter
(918) 573-0797 (office)
Brett Krieg
(918) 573-4614
Or
Media Relations:
Lance Latham
(918) 573-9675
Joele Frank, Wilkinson Brimmer Katcher
Dan Katcher / Andrew Siegel / Dan Moore
212-355-4449
ENERGY TRANSFER EQUITY, L.P. TO ACQUIRE WILLIAMS Investor Presentation September 28, 2015
LEGAL DISCLAIMER 2 Additional Information and Where to Find It SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND THE REGISTRATION STATEMENT REGARDING THE TRANSACTION (THE "TRANSACTION”) INVOLVING THE BUSINESS COMBINATION OF ENERGY TRANSFER EQUITY, L.P. (“ETE”) AND THE WILLIAMS COMPANIES, INC. (“WMB" AND/OR “WILLIAMS”) CAREFULLY WHEN IT BECOMES AVAILABLE. These documents (when they become available), and any other documents filed by ETE, Energy Transfer Corp LP (“ETC”) or Williams with the U.S. Securities and Exchange Commission (“SEC”), may be obtained free of charge at the SEC’s website, at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus by phone, e-mail or written request by contacting the investor relations department of ETE or Williams at the following: Energy Transfer Equity, L.P. 3738 Oak Lawn Ave. Dallas, TX 75219 Attention: Investor Relations Phone: 214-981-0700 The Williams Companies, Inc. One Williams Center Tulsa, OK 74172 Attention: Investor Relations Phone: 800-600-3782 Participants in the Solicitation ETE, ETC, Williams and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed merger. Information regarding the directors and executive officers of ETE is contained in ETE’s Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 2, 2015. Information regarding the directors and executive officers of Williams is contained in Williams’ Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 25, 2015. Additional information regarding the interests of participants in the solicitation of proxies in connection with the proposed merger will be included in the proxy statement/prospectus. Cautionary Statement Regarding Forward-Looking Statements This communication may contain forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the merger of ETE and Williams, the expected future performance of the combined company (including expected results of operations and financial guidance), and the combined company's future financial condition, operating results, strategy and plans. Forward-looking statements may be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," "opportunity," "designed," "create," "predict," "project," "seek," "ongoing," "increases" or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results to differ materially from those described in the forward-looking statements. These assumptions, risks and uncertainties include, but are not limited to, assumptions, risks and uncertainties discussed in the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for each of ETE, ETP, SXL, SUN, WMB and WPZ filed with the U.S. Securities and Exchange Commission (the "SEC") and assumptions, risks and uncertainties relating to the proposed transaction, as detailed from time to time in ETE’s, ETP’s, SXL’s, SUN’s, WMB’s and WPZ’s filings with the SEC, which factors are incorporated herein by reference. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in other reports or documents that ETE, ETP, SXL, SUN, WMB and WPZ file from time to time with the SEC include, but are not limited to: (1) the ultimate outcome of any business combination transaction between ETE and ETC and Williams; (2) the ultimate outcome and results of integrating the operations of ETE and Williams, the ultimate outcome of ETE’s operating strategy applied to Williams and the ultimate ability to realize cost savings and synergies; (3) the effects of the business combination transaction of ETE, ETC and Williams, including the combined company's future financial condition, operating results, strategy and plans; (4) the ability to obtain required regulatory approvals and meet other closing conditions to the transaction, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Williams stockholder approval, on a timely basis or at all; (5) the reaction of the companies’ stockholders, customers, employees and counterparties to the proposed transaction; (6) diversion of management time on transaction- related issues; (7) unpredictable economic conditions in the United States and other markets, including fluctuations in the market price of ETE common units and ETC common shares; (8) the ability to obtain the intended tax treatment in connection with the issuance of ETC common shares to Williams stockholders; and (9) the ability to maintain Williams’, WPZ’s, ETP’s, SXL’s and SUN’s current credit ratings. All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Neither ETE nor WMB undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this communication or to reflect actual outcomes.
OVERVIEW OF ETE / WMB MERGER TERMS • Energy Transfer Equity, L.P. (“ETE”) has executed a definitive agreement to combine with Williams (“WMB”) in a transaction valued at approximately $38 billion as of September 25, 2015, including approximately $4.6 billion of assumed WMB debt – Implied offer price of $43.50 per WMB share as of September 25, 2015 – Prior to execution, WMB and Williams Partners, L.P. (“WPZ”) agreed to terminate their merger agreement • ETE will form a partnership that will be treated as a corporation for tax purposes to be called Energy Transfer Corp LP (“ETC”) that will merge with WMB and survive the merger • WMB stockholders can elect to receive as merger consideration either ETC shares, ETC shares and cash, or cash – Elections to receive ETC shares will receive a fixed exchange ratio of 1.8716x ETC shares per WMB share – If all WMB stockholders elect to receive all cash or all ETC shares, then each WMB share would receive $8.00 in cash and 1.5274 ETC shares • Elections to receive ETC shares or cash are both subject to proration such that a cash pool of $6.05 billion will be fully allocated • WMB stockholders will also be entitled to a special dividend of $0.10 per WMB share declared immediately prior to closing – The special one-time dividend is in addition to the regularly scheduled WMB dividends to be distributed before closing 3
OVERVIEW OF ETE / WMB MERGER TERMS (CONT’D) • In addition, each ETC common share received by WMB stockholders in the merger will have attached to it one contingent consideration right (“CCR”) – The WMB Board wanted protection that the newly created ETC common shares would trade at least at parity to ETE common units – In response to that concern, ETE agreed that each WMB stockholder will receive 1 CCR per ETC share – The CCRs provide an “adjustment mechanism” for trading parity between ETC shares and ETE units through the potential to provide additional or reduced consideration to ETC shareholders should ETC shares trade, on average over the two year measurement period, at a premium or discount to the ETE units – ETC shareholders will receive a payment in respect of the CCR if the ETC common shares trade at a discount to ETE common units over the agreed measurement period – Any payment owed under the CCR can be made in ETC common shares (at the then-current value) or cash, at ETE’s election • ETC will benefit from a dividend equalization agreement through calendar 2018 with ETE that ensures that ETC shareholders will receive the identical cash dividend as ETE unitholders • WPZ will remain a separate, publicly traded MLP based in Tulsa, Oklahoma • The transaction is expected to be credit positive to ETE; no expected ratings impact on of any of the underlying MLPs • Transaction expected to close in first half of 2016, subject to WMB stockholder vote and receipt of regulatory approvals – No ETE unitholder vote is required The combined ETE / WMB will create the third largest energy franchise in North America and one of the five largest global energy companies 4
COMBINATION CREATES A UNIQUE COLLECTION OF COMPATIBLE BUSINESSES THAT WILL DRIVE NEAR- AND LONG-TERM VALUE Largest Energy Infrastructure Group ETE Unitholders – Creates the largest energy infrastructure company by combining two of the largest diversified MLPs, the second largest crude and logistics MLP, a fast-growing retail fuel MLP and an attractive LNG export opportunity – Significant commercial / revenue synergies derived from Energy Transfer’s integrated business model which provides end-to-end solutions for its customers – Combined business platform creates better service offerings and efficiencies for customers, driving increased producer activity – Dramatically enhances credit profile through greater scale, cash flow diversity and synergy potential S ig n ific a n t V a lue C re atio n t o A ll C o n stit u en c ie s WMB Stockholders WPZ Unitholders – Transaction is immediately accretive to distributions by ETE – ETE’s distribution growth rate is expected to remain at its current level and for a longer period given the level of cost savings and commercial synergies – Addition of cash to the transaction consideration reduces ETC shares being issued by 260mm shares (or ~18.5% of the overall ETC share issuance) from ETE’s original offer – Increases the strategic and financial optionality for the Energy Transfer group, which creates potential for higher long-term growth for ETE – Broadens spectrum of institutional investors through the C-Corp entity structure – Accretive to WPZ distributions based on cost savings from implementing the Energy Transfer shared services model – New commercial opportunities, including the potential to pursue opportunities with and acquire assets from the overall Energy Transfer group – No adverse tax consequences – No expected impact to credit ratings – WPZ receives the benefit of $428mm break-up fee for the termination of its merger with WMB 5 – Increased scale and scope of operations and asset diversity – critical in a dynamic midstream space and in a challenging commodity price environment – Dividend accretion and significantly higher dividend growth rate than Williams standalone – Intended to qualify as a tax-free exchange to WMB stockholders (except with respect to cash received) – ETC shares expected to have considerable liquidity and a broader shareholder base – A dividend equalization agreement ensures distributions on ETC common shares equal to those on ETE common units through 2018
ILLUSTRATIVE TRANSACTION – Energy Transfer Corp GP LLC and Energy Transfer Corp LP (“ETC”) are formed; ETC elects to be taxed as a corporation for federal tax purposes – ETC issues shares and cash to WMB stockholders in exchange for all outstanding shares of WMB – WMB merges into ETC with ETC being the surviving entity – ETE issues ETE Class E units to ETC in an amount equal to the number of shares issued in the transaction – In exchange for the Class E units, ETC contributes WMB’s assets to ETE and ETE becomes a co-obligor of WMB’s outstanding debt – Class E units represent limited partnership interests of ETE and will be entitled to receive the same quarterly cash distribution per unit as the quarterly cash distribution per ETE common unit – ETE will provide all administrative services to ETC and otherwise indemnify ETC for all liabilities incurred by ETC – ETC will benefit from a dividend equalization agreement through 2018 with ETE that ensures ETC shareholders receive the identical cash dividend per ETC share as the cash distribution per ETE common unit – WMB’s revolving credit facility will be terminated at closing – Post closing, it is expected that ETE unitholders will have the option to exchange ETE units for ETC shares during selected exchange periods each year 1 2 3 Energy Transfer Corp LP (taxed as a C-Corp) (NYSE: ETC) Energy Transfer Equity, L.P. (NYSE: ETE) Merger WMB Assets and Liabilities + Dividend Equalization Agreement + Administrative Services Agreement Public LP Unitholders 2 Energy Transfer Corp GP LLC Public Shareholders 1 3 ETE Class E Units / ETC Shares LE GP Williams Companies, Inc. (NYSE: WMB) 6 Transaction Sources and Uses 4 4 Note: Market data as of 9/25/2015. Sources ($mm) ETC Shares $26,823 New Transaction Debt 6,045 Assume WMB Debt 4,193 ETE Revolver Draw 634 Total Sources $37,695 Uses ($mm) Purchase of WMB Equity $32,868 Assume WMB Debt 4,193 Terminate WMB Revolver 434 Transaction Expenses 200 Total Uses $37,695
CONSIDERATION OVERVIEW AND CCR MECHANICS 7 CCR Mechanics ETE Ownership Legacy WMB Ownership (1) If all WMB stockholders elect cash or, alternatively, all stock, each WMB share would be exchanged for $8.00 in cash and 1.5274 ETC shares. (2) Excluding the first 30 days following the announcement of the transaction. Consideration Overview • WMB stockholders can elect to receive ETC common shares, cash or a mix of both in the merger, with cash and stock elections to be prorated such that the full cash pool of $6.05 billion is paid out as consideration in the merger (1) • CCR creates a “true up” mechanism if ETC and ETE trade differently over the first 2 years post closing of the merger (“Measurement Period”)(2) • In the event ETC trades at a discount (a “Shortfall Amount”), ETE can settle the CCR through a cash payment equal to the Shortfall Amount or through the issuance of additional ETC shares equal in value to the Shortfall Amount (based on the then current trading price of the ETC shares) – Along with the settlement of any Shortfall Amount, ETE will also issue to ETC a proportionate number of Class E units • In the event that ETC shares trade at a premium to ETE units (an “Excess Amount”) during the Measurement Period, ETE will be entitled to cancel a number of Class E units equal to the Excess Amount (based on the then current price of the ETC shares) • Automatic early cancellation of the CCR (without penalty) if the daily VWAP of ETC trades above ETE for 20 consecutive trading days during the Measurement Period and at the end of such 20-day period there is no Shortfall Amount outstanding Projected Pro Forma ETE Economic Ownership 47.6% 52.4%
PRO FORMA ENERGY TRANSFER ORGANIZATIONAL STRUCTURE ENERGY TRANSFER LNG SUNOCO LOGISTICS PARTNERS L.P. (NYSE: SXL) Baa2 / BBB / BBB ~1% LP Interest 100% GP / IDRs 90% GP / IDRs (Class H Units) 27% LP Interest SUNOCO LP (NYSE: SUN) Ba2 / BB / BB ENERGY TRANSFER EQUITY, L.P. (NYSE: ETE) ENERGY TRANSFER PARTNERS, L.P. (NYSE: ETP) Baa3 / BBB- / BBB- 100% GP / IDRs (2) Legend: Publicly Traded MLP Operating Business Pro Forma 58.8% LP Interest 100% GP / IDRs 10% GP / IDRs ~60% LP Interest Lake Charles LNG (Regas) Lake Charles LNG Export Co 60% Interest WILLIAMS PARTNERS, L.P. (NYSE: WPZ) Baa2 / BBB / BBB ENERGY TRANSFER CORP LP (NYSE: ETC) 100% Interest (1) (1) Owner and operator of LNG facility in Lake Charles, LA and expected nucleus of new stand-alone MLP. (2) Reflects ETE/ETP- SUN LP GP/IDR Exchange 40% Interest 8
ETC PREMIUM VALUE OPPORTUNITY ETC Advantages 9 Vast C-Corp Market Compared to MLPs(1) US Equity Market Cap ~ $20T MLPs ~ $~500B • MLP C-Corp structure well received by the market • 60% of pro forma float at ETC • 1099 rather than K-1 for tax purposes • Provides access to broader range of high quality institutional investors including pension funds, endowments, and foreign investors • Liquidity of C-Corps allows investors to build meaningful positions • Eligible for broader index inclusion (S&P 500, S&P Energy) • Strategic currency for use in future acquisitions Source: Bloomberg, Alerian, S&P, Dealogic, FactSet. (1) US Equity Market Cap based on Wilshire 5000 Total Market Index as of 9/25/2015. Blue Chip Investors Likely to be Focused on ETC
$379 $332 $269 $193 $149 $139 $138 $135 $124 $113 $108 $81 $79 $73 XOM PTR RDS CVX ETE PF BP TOT PBR SNP SLB KMI COP ENB EPD BALANCE SHEET SCALE, MANAGING COST OF CAPITAL, AND OPTIONALITY WILL DETERMINE LONG-TERM WINNERS Equity Value Enterprise Value Enterprise Value vs. Top Energy Companies(1) Midstream Major Oilfield Services E&P Pro Forma ETE Family to Include Three of the Largest Investment Grade MLPs by Enterprise Value(1) Credit Rating Baa1 BBB+ BBB+ Baa3 BBB- BBB- Baa2 BBB BBB Baa2 BBB+ Baa3 BBB Baa2 BBB BBB Baa2 BBB Baa1 BBB+ Baa3 BBB BBB Baa3 BBB- BBB- ($ in billions) ($ in billions) (2) $73 $68 $52 $29 $23 $23 $21 $17 $16 $12 EPD ETP WPZ PAA EEP SEP OKS MMP SXL WES Source: FactSet. Market data as of 9/25/2015 (1) Enterprise Value calculated as Market Value of Equity + Preferred Equity + Consolidated Net Debt + NCI. Includes GP Value for MLPs, where applicable. GP value calculated as LP Equity Value / (1 - %GP Cash Flow) x %GP Cash Flow. (2) Pro forma for RDS and BG acquisition. Enterprise value calculated as sum of standalone enterprise values. (3) Pro forma for CAM acquisition. Enterprise value calculated as sum of standalone enterprise values. 10 (3)
MERGER CREATES ONE OF THE LARGEST ENERGY FRANCHISES IN THE U.S.... Largest transporter of natural gas in the U.S. 3rd largest NGL business in the U.S. Largest G&P MLP and NGL Producer in the U.S. 3rd largest MLP transporter of crude oil in the U.S. Natural Gas NGLs Crude Oil 2nd largest planned LNG Export facility in the U.S. Leading non-refining gasoline distributor in the U.S. Transport volumes representing approximately 35% of U.S. natural gas production Over 11 Bcfd processed and 498 Mbpd of NGL produced Fractionating 12% of NGL volumes in Mont Belvieu with plans to more than double capacity Transport more than 15% of crude oil in the U.S. Represents 15% of current approved U.S. LNG exports Supply ~5% of U.S. retail gasoline sales 11
(50%) 0% 50% 100% 150% 200% 250% Jan-13 May-13 Oct-13 Mar-14 Jul-14 Dec-14 May-15 Sep-15 ETE ETP SXL SUN WPZ Alerian Index …WITH A DIVERSIFIED PORTFOLIO OF COMPLEMENTARY BUSINESSES AND FINANCIAL SCALE ACROSS THE GROUP Enterprise Value of ~$150 billion and over $10 billion of Pro Forma Consolidated EBITDA Peer outperformance across entire ETE family Source: Factset. Market data as of 9/25/2015. (1) ETE peers: WGP, ENLC, PAGP, SE, TRGP, KMI and OKE; ETP and WPZ peers: EPD, PAA, EEP, SEP and OKS; SXL peers: MMP, BPL, TLLP, NS, GLP, PAA, RRMS, BKEP, and TLP; SUN peers: CAPL and GLP. (2) EBITDA as reported, includes consolidated subsidiaries. (3) $307mm 2014 FYE EBITDA + $161mm annual EBITDA from Susser Holdings dropdown transaction on 7/31/15 Indexed unit price performance since January 1, 2013 12 Price Perf. Price Perf. Total Return Total Return (9%) 126% 11% 56% 18% 48% 10% 23% 15% (11%) 21% 5% ETE Family Peer Group (1) (4%) ETE SUN SXL ETP AMZ WPZ (11%) 30% 5% Market Cap $21.2 billion $7.0 billion $2.5 billion NA $21.5 billion Distribution / unit (LQA) $4.14 $1.75 $2.77 NA $3.40 LQA EBITDA $6.0 billion (2) $1.3 billion $0.5 billion (3) $0.2 billion $4.2 billion Credit Ratings Baa3 / BBB- Baa3 / BBB Ba2 / BB NA Baa2 / BBB Key Operating Assets • ~62,500 miles of natural gas and NGL pipelines • Over 65 processing plants, treating plants and fractionators • 59 million barrels of underground liquids storage • ~5,800 miles of crude oil pipelines • ~2,400 miles of product pipelines • 39 active refined products marketing terminals • Interests in 12 product and crude oil pipelines and terminal JV’s • ~6,700 sites and 6 terminals in attractive markets • Presence in 30 states • More than 4.3 billion gallons of annual motor fuel sales • 3 LNG storage tanks • Regasification & discharge peak capacity Max rate: 2.1Bcf/d Run rate: 1.8Bcf/d • Take-or-pay contract with BG through 2030 • 33,000 miles of natural gas and NGL pipelines • NGL production of 128 Mbpd • ~11 Bcf/d of natural gas transported Partners 104% 34% 11% 0% (18%) 13%
ETP Assets SXL Assets Lone Star Express Pipeline Development Projects Lake Charles LNG Rover Pipeline Dakota Access Pipeline ` Company Operated Dealer / Distributor Operated Combined Sunoco Retail Platform SUN Terminals Marcus Hook Nederland Eagle Point Crude Conversion Pipeline UNIQUE AND COMPLEMENTARY GEOGRAPHIC FOOTPRINT TO HELP DRIVE INCREASED ENERGY PRODUCTION… Source: Company disclosures, DI Desktop and EIA Drilling Productivity Report; August 2015 Crude Production (Mbpd) Natural Gas Production (MMcf/d) Bakken Niobrara Permian , , , , , , , , , , , , , , , '03 '15 '03 '15 '03 '15 '03 '15 , , , , , , , , '03 '15 '03 '15 Marcellus '03 '15 '03 '15 16,372 Eagle Ford Haynesville '03 '15 '03 '15 '03 '15 '03 '15 9 1,155 9 1,468 114 399 2,571 4,478 897 2,038 5,279 6,342 0 74 1 1 58 84 6,718 0 1,482 0 6,864 WPZ Pipelines WPZ Gas Processing Plants WPZ LPG Fractionators (1) Includes unconsolidated affiliates volumes Revolution Project 13 Bayou Bridge Pipeline Asset Summary Energy Transfer Williams Pro Forma Pipeline (miles) 71,000 33,000 104,000 Gathering & Processing Throughput (MMBtu/d) 9,400,000 ~10,000,000 ~19,400,000 NGL Production (Mbpd) 370 128 498 Natural Gas Transported (MMBtu/d) 21,280,000(1) 11,348,000 32,628,000
…CREATES A COMPELLING INTERSTATE NATURAL GAS PIPELINE COMBINATION THAT PROVIDES BENEFITS FOR PRODUCERS AND END USE CUSTOMERS… 14 Fayetteville Express Tiger Trunkline Florida Gas Transmission Sea Robin Transwestern Rover Panhandle Eastern Midcontinent Express Northwest Pipeline Transco Gulfstream Constitution Appalachian Connector Sabal Trail (1) Atlantic Sunrise (1) Sabal Trail represented unexercised purchase interest of 17%.
…AND A FULLY INTEGRATED LIQUIDS PLATFORM ACROSS NORTH AMERICA NGL Pipelines Crude Projects NGL Projects Refined Products Crude Products Growth Projects LPG Pipelines Crude Products Energy Transfer Sunoco Logistics Williams Chemical Plant LPG Fractionator Facility LNG Facilities Fractionator 15 Hutchison Rail Terminal The ability to integrate a producer liquids end-to-end solution will better serve customers and alleviate bottlenecks currently faced by producers
2011 2012 2013 2014 2015E Status Quo 2015E Pro Forma $180 $180 $268 $119 $54 $54 $441 $534 $574 $641 $1,297 $1,297$48 $48 $48 $9911 $13 $14 $36 $35 $103 $266 $266 $22 $22 $195 $196 $196 $1,191 $927 $1,834 $3,952 LP | ETP GP + IDRs | ETP LP | RGP GP + IDRs | RGP Class H | SXL GP + IDRs | SUN Lake Charles LNG LP | WPZ GP + IDRs | WPZ ETE WILL CONTINUE TO BENEFIT FROM STRONG CASH FLOW GROWTH ($ in millions) (2) AA(3) BBB BBB- BB 2015E Status Quo ETP SXL SUN LC LNG WPZ (2) 34% 7% 0% 5% 54% 74% 14% 1% 11% 2015E Status Quo Distributions Received From Underlying Operating Partnerships(1) Cash Flow Contribution to ETE 34% 60% 1% 5% 16 2015E Pro Forma 2015E Pro Forma 74% 14% 1% 11% Note: Assumes effective WMB transaction close date of 1/1/2015 for illustrative purposes. (1) Figures exclude ETE SG&A. 2012 and 2013 ETP GP + IDRs include dividends from Holdco. Class H includes ~50% (~90% after SXL / Bakken transfer) of SXL GP and IDR cash flows, excluding the impact of IDR subsidies and subsidy offsets. Excludes WMB NGL / Petchem cash flow and impact of IDR subsidy to ETP. (2) WPZ projections are derived from Williams’ and Energy Transfer Management forecast. Excludes the effects of synergies. (3) Assumes AA rating for unencumbered LC LNG cash flows (current Shell rating) By Source By Source Rating
Fixed 82% Floating 18% MERGER ACCELERATES ETE TOWARDS INVESTMENT GRADE RATINGS Pro Forma Interest Rate Exposure (2) Pro Forma Maturity Profile ($ millions) Total Debt = $16,629 million Pro Forma Capital Structure (1) Assumes WMB revolver paydown and termination. Includes estimated transaction costs. (2) Term Loans subject to 75bps LIBOR floor. Transaction notes assumed to be fixed rate upon permanent financing. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 - 2044 $230 $634 $2,190 $1,187 $1,150 $1,000 $32 $19 $371 $850 $1,250 $1,688 $864 $2,222 $1,206 $371 $0.3 $850 $2,400 $2,688 Existing ETE Revolver ETE Revolver Draw ETE Term Loan ETE Senior Notes Assumed WMB Debt Excludes new transaction debt (1) (1) 17 Actual Transaction Pro Forma ($ in millions) 6/30/2015 Adju tments 6/30/2015 Cash and Cash Equivalents $1 $0 $1 Debt: ETE Senior Secured Revolving Credit Facility due Dec. 2018 $230 $634 $864 T rm Loan due Dec. 2019 2,19 0 2,190 i r Notes due Oct. 2020 1 87 1 87 Jan 4 , 5 , 5 TE Senio t u e 2027 000 00 Assumed WMB Senior Not s 4,193 4,193 New Transaction Debt 6 045 6 45 ETE t l Debt $5,757 $1 ,629
ORGANIC DEVELOPMENT AND ACQUISITIONS HAVE DRIVEN AND WILL CONTINUE TO DRIVE STRONG CASH FLOW GROWTH Growth Drivers • Bakken Crude Pipeline Project / Bayou Bridge Pipeline • ET Rover Pipeline Project • Natural Gas Exports to Mexico • Lone Star Expansions and NGL Export Opportunity • Eagle Ford & Permian Basin Expansion Projects • Revolution • Utica Ohio River Joint Venture Growth Drivers • Allegheny Access • Permian Express Franchise • Granite Wash Extension • Eaglebine Express • Longview & Louisiana Extension • “Mariner” Franchise • Delaware Basin Extension • Bakken Crude Pipeline Project CURRENT ENERGY TRANSFER BOARD-APPROVED GROWTH PROJECTS OF APPROXIMATELY $23 BILLION; WMB / WPZ PURSUING OVER $30 BILLION OF GROWTH PROJECTS Growth Drivers • Atlantic Sunrise • Constitution Pipeline • Rockaway Lateral • Additional Gulfstars • Kodiak • Gulf Trace • Appalachian Connector • Gunflint • Geismar II • Propylene Dehydrogenation Project (PDH-1&2) (1) Includes $18.0 billion of LP market value and net debt associated with Regency Energy Partners acquisition. (2) Includes $16.0 billion of LP market value and net debt associated with Access Midstream acquisition. $1.20 ETP SXL Completed ~$41 billion(1) in organic projects and acquisitions since 2011 Completed ~$5 billion in organic projects and acquisitions since 2010 WPZ Completed ~$25 billion(2) in organic projects and acquisitions since 2013 18
ACQUISITION FURTHER ENHANCES OUR KEY STRENGTHS WMB/WPZ is a major complement to Energy Transfer's existing business and will benefit from its integrated business model Interstate Natural Gas T&S Franchise Strengths Intrastate Natural Gas T&S Midstream Liquids Transportation & Services Lone Star NGL LNG Regas and Export Wholesale and Retail Fuel Distribution and Marketing • Access to multiple shale plays, storage facilities and end-markets • Approximately 90% of revenue from reservation fee contracts • Well-positioned to capitalize on changing marketplace dynamics • Marcellus natural gas takeaway to the Midwest, Gulf Coast, and Canada • Backhaul to LNG exports and new petrochemical demand on Gulf Coast • Expansions of Transco into NY, PA, NJ, and VA through Constitution, Atlantic Sunrise, Appalachian Connector, and other projects underway E T P / S X L / W P Z Opportunities • Development of the emerging Waha Hub • Natural gas exports to Mexico • Additional demand from LNG and petrochemical development • Gathering and processing build out in Texas and Marcellus • Synergies with ETP downstream assets (NGLs) • More than $5 billion of growth projects planned in the next five years • Integration of Williams Northeast midstream assets into ETE family • Increased volumes from transporting and fractionating ETP Midcontinent volumes • Increased fractionation volumes as NGL agreements expire • Bakken crude takeaway to Gulf Coast refineries • Permian crude, condensate and NGL takeaway • Ethane and Propane exports out of Marcus Hook • Transportation of incremental liquids volumes from Williams footprint • Wholesale fuel distribution / retail consolidation • Entry of Sunoco brand into Texas and neighboring states • LNG Export facility nearing construction phase • ETP pipelines are the only means to deliver gas to Lake Charles LNG S U N LN G • Well-positioned to capture additional revenues from anticipated changes in natural gas supply and demand in next 5 years • Largest intrastate natural gas pipeline and storage system on the Gulf Coast • Fastest growing midstream franchise in the Eagle Ford and Permian • Best in class asset base in Marcellus / Utica basins • Bakken Crude Oil pipeline supported by long-term fee-based contracts; expandable to 570,000 bpd • Mariner East provides significant Appalachian liquids takeaway capacity connecting NGL volumes to export opportunities at Marcus Hook • Overland Pass, Texas Belle, Promesa and Bayou NGL Pipelines add further franchise strength • Liquefaction transforms Lake Charles LNG into bi-directional facility capable of exporting and importing LNG • Finalized terms with BG on a minimum 25-year tolling contract • Diversified sales channels, long-term fee-based contracts and significant real estate holdings represent wide revenue mix • Vast drop down inventory expected to significantly expand SUN’s scale and provide further geographic diversity • A world-class integrated platform processing, transporting, fractionating, storing and exporting NGLs • Fastest growing NGLs business in Mont Belvieu • Integrated with Energy Transfer's midstream business Petchem • Geismar II, Alberta PDH plant, Alberta Syncrude Offgas project • World class Petchem franchise in Gulf Coast and Canada • Key assets: Geismar olefins facility, Canadian olefins 19
WELL OVER $2 BILLION OF POTENTIAL EBITDA FROM COMMERCIAL SYNERGIES West / Rockies • Northwest Pipeline / Transwestern Pipeline service optimization • WPZ / ETP Rockies liquids plants synergies Appalachia / Northeast • Integration of WPZ liquids footprint into SXL’s Mariner East / Marcus Hook franchise; PDH development • Expanded processing, gathering, and fractionation / storage • Rover synergies, capacity optimization • WPZ compression synergies Gulf Coast • Incremental liquids barrels funneled into ETP’s Lone Star Texas / MidCon • G&P operational efficiencies in the Eagle Ford, Permian, and Midcontinent • Eagle Ford processing operational efficiencies Annual Commercial Synergies of >$2 billion of EBITDA by 2020 Capital Efficiencies • New capital opportunities and prioritization of existing projects ETP Assets SXL Assets Williams Assets 20
SUBSTANTIAL OPPORTUNITY TO REALIZE SHARED SERVICE COST SAVINGS Shared Service Implementation Is Similar to Our Highly Successful Approach With Sunoco, Inc. Compliance & Governmental Affairs Corporate Services & Real Estate ITRisk Management TreasuryAccounting & Finance InsuranceTaxSOXInternal AuditHR Value Creation Low execution risk Run-rate cost synergies expected to be achieved by 2017 ~$300 to 400 million expected annual cost synergies 21
BETTER POSITIONED TO CREATE VALUE WITH ONE OF NORTH AMERICA’S LARGEST PRODUCERS 22 Source: Wall Street Research, Investor Presentations, Hart Energy Rextag (1) Based on Wall Street Research (2) Williams combined with ETP, SXL, and SUN 2016E EBITDA. Excluding synergies. Chesapeake Production Profile (1) Rockies Mid-Con Eagle Ford Haynesville Barnett Utica Marcellus Natural Gas Crude Oil 74% 16% 10% 2016E Total = 1,468 Bcfe Energy Transfer Franchise Expertise NGL Combined Footprint Expands Service Offering to Chesapeake and Increases Flexibility Chesapeake Production Areas Energy Transfer Pipelines Sunoco Logistics Pipelines Williams Pipelines Legend Significant Improvement in Coverage for Chesapeake to Create Win-Win Outcomes for Energy Transfer and Chesapeake
KEY TAKEAWAYS • The merger creates numerous benefits: – Enhances overall cash flow diversification by commodity exposure, geographic areas and customer base – Increases long-term cash flow growth – Improves pro forma credit profile – ETC is strategic currency for use in future acquisitions • ETE / ETC will derive its cash flow strength from: – Three of the largest investment grade diversified MLPs (ETP, SXL and WPZ) as well as a fast growing retail fuel MLP (SUN) – Increasing incentive distributions resulting from significant growth projects that have been announced by ETP, SXL and WPZ – Direct participation in a substantial LNG export opportunity with fixed fees for 25 years from high credit quality customer • WMB benefits from the size and strength of a broader, more diversified platform: – Tax deferred exchange using a C-Corp structure – Attractive premium with significant upside through ownership of ETC common shares – Higher dividends per share and dividend growth than WMB on a stand alone basis ETE / ETC will be stronger and better positioned with even greater strategic and financial optionality Consolidated group has better potential for growth in a volatile commodity price environment Largest energy infrastructure group 23
24 ILLUSTRATIVE TRANSACTION TIMELINE September 2015 • Prepare proxy / registration statement • Begin regulatory approval process File proxy statement / S-4 registration statement First half of 2016: Merger Close • File for Regulatory (HSR) Approval Expected timing from announcement to closing Subject to SEC review & regulatory approval Integration plan will result in one functional organization at closing WMB Stockholder Vote