Related Party Transactions

9 Months Ended

Sep. 30, 2011

RELATED PARTY TRANSACTIONS:

Regency became a related party on May 26, 2010 in connection with ETE’s acquisition of Regency’s general partner. We provide Regency with certain natural gas sales and transportation services and compression equipment, and Regency provides us with certain contract compression services. For the nine months ended September 30, 2011, we recorded revenue of $25.9 million, cost of products sold of $26.4 million and operating expenses of $2.3 million related to transactions with Regency. For the period from May 26, 2010 to September 30, 2010, we recorded revenues of $0.9 million, costs of products sold of $1.4 million and operating expenses of $0.4 million related to transactions with Regency. For the three months ended September 30, 2011, we recorded revenue of $6.9 million, cost of products sold of $7.2 million and operating expenses of $0.4 million related to transactions with Regency. For the three months ended September 30, 2010, we recorded revenues of $0.9 million, costs of products sold of $0.7 million and operating expenses of $0.2 million related to transactions with Regency.

On September 1, 2011, Regency exercised its option to acquire our remaining 0.1% interest in MEP for approximately $1.2 million in cash.

We received $12.7 million and $3.7 million in management fees from ETE for the provision of various general and administrative services for ETE’s benefit for the nine months ended September 30, 2011 and 2010, respectively. For the three months ended September 30, 2011 and 2010 we received $4.4 million and $2.6 million, respectively in management fees from ETE for the provision of various general and administrative services for ETE’s benefit. The management fees for the three and nine months ended September 30, 2011 reflect the provision of various general and administrative services for Regency. For the three and nine months ended September 30, 2011 we recorded from Regency $1.7 million and $4.9 million, respectively, for reimbursement of various general and administrative expenses incurred by us.

Enterprise is considered to be a related party to us due to Enterprise’s holdings of outstanding common units of ETE. We and Enterprise transport natural gas on each other’s pipelines, share operating expenses on jointly-owned pipelines and ETC OLP sells natural gas to Enterprise. Our propane operations routinely buy and sell product with Enterprise. Our propane operations purchase a portion of our propane requirements from Enterprise pursuant to an agreement that expires in 2015 and includes an option to extend the agreement for an additional year. The following table presents sales to and purchases from Enterprise:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Natural Gas Operations:
Sales	$	164,339	$	126,992	$	462,359	$	402,238
Purchases	3,938		396		21,898		13,928
Propane Operations:
Sales	395		262		10,613		11,228
Purchases	86,673		58,642		328,830		276,821

As of September 30, 2011 and December 31, 2010, Titan had forward mark-to-market derivatives for 52.7 million and 1.7 million gallons of propane at a fair value liability of $2.0 million and a fair value asset of $0.2 million, respectively, with Enterprise. In addition, as of December 31, 2010, Titan had forward derivatives accounted for as cash flow hedges of 32.5 million gallons of propane at a fair value asset of $6.6 million with Enterprise. Our propane operations discontinued cash flow hedge accounting during the three months ended September 30, 2011; therefore, all of their forward derivatives are currently accounted for using mark-to-market accounting.

The following table summarizes the related party balances on our consolidated balance sheets:



	September 30, 2011			December 31, 2010
Accounts receivable from related parties:
Enterprise:
Natural Gas Operations	$	53,016		$	36,736
Propane Operations	222			2,327
Other	23,659			14,803
Total accounts receivable from related parties	$	76,897		$	53,866
Accounts payable to related parties:
Enterprise:
Natural Gas Operations	$	2,465		$	2,687
Propane Operations	19,632			22,985
Other	4,276			1,505
Total accounts payable to related parties	$	26,373		$	27,177
Net imbalance (payable to) receivable from Enterprise	$	(89	)	$	1,360

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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+ Details