Acquisitions and Dispositions

2011

Lone Star. On May 2, 2011, the Partnership contributed $592.7 million in cash to Lone Star, in exchange for its 30% interest. Lone Star, a newly formed joint venture that is owned 70% by ETP and 30% by the Partnership, completed its acquisition of all of the membership interest in LDH, a wholly-owned subsidiary of Louis Dreyfus Highbridge Energy LLC, for $1.98 billion in cash. To fund a portion of this capital contribution, the Partnership issued 8,500,001 common units representing limited partnership interests with net proceeds of $203.9 million. The remaining portion of the Partnership’s capital contribution was funded by additional borrowings under its revolving credit facility.

Lone Star owns and operates an NGL storage, fractionation and transportation business. Lone Star’s storage assets are primarily located in Mont Belvieu, Texas and its West Texas Pipeline transports NGLs through an intrastate pipeline system that originates in the Permian Basin in west Texas, passes through the Barnett shale production area in north Texas and terminates at the Mont Belvieu storage and fractionation complex. Lone Star also owns and operates fractionation and processing assets located in Louisiana. Lone Star is managed by a two-person board of directors, with the Partnership and ETP each having the right to appoint one director, and is operated by ETP.

MEP. On September 1, 2011, the Partnership purchased an additional 0.1% interest in MEP from ETP for $1.2 million in cash, bringing its total interest in MEP to 50%. Because this transaction occurred between entities under common control, partners' capital was increased by $0.2 million, which represented a deemed contribution of the excess carrying amount of ETP's investment of $1.4 million over the purchase price.

Ranch JV. On December 2, 2011, Ranch JV was formed by the Partnership, APM and CM, each owning a 33.33% interest in the joint venture. Ranch JV, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

2010

HPC. On April 30, 2010, the Partnership purchased an additional 6.99% general partner interest in HPC from EFS Haynesville, bringing its total general partner interest in HPC to 49.99%. The purchase price of $92.1 million was funded by borrowings under the Partnership’s revolving credit facility. Because this transaction occurred between two entities under common control, partners’ capital was decreased by $17 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount of $75.1 million.

MEP. On May 26, 2010, the Partnership purchased a 49.9% interest in MEP from ETE. The Partnership issued 26,266,791 common units to ETE, valued at $584.4 million, and received a working capital adjustment of $4.6 million from ETE that was recorded as an adjustment to investment in unconsolidated affiliates. Because this transaction occurred between two entities under common control, partners’ capital was increased by $8.9 million, which represented a deemed contribution of the excess carrying amount of ETE’s investment of $588.7 million over the purchase price. MEP owns approximately 500 miles of natural gas pipelines that extend from the southeast corner of Oklahoma, across northeast Texas, northern Louisiana, central Mississippi and into Alabama.

Disposition of East Texas Assets. In July 2010, the Partnership sold its gathering and processing assets located in east Texas for $70.2 million in cash. The financial results of these assets have been reclassified to discontinued operations in accordance with applicable accounting standards. Revenues for these assets for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009 were $9.5 million, $24.2 million and $46.2 million, respectively.

Zephyr. On September 1, 2010, the Partnership completed the Zephyr acquisition for $193.3 million in cash that was funded by borrowings under the Partnership’s revolving credit facility. Zephyr owns and operates a fleet of equipment used in gas treating. The primary treatment services include carbon dioxide and hydrogen sulfide removal, dehydration, natural gas cooling and BTU management. The acquisition of Zephyr further increased the Partnership’s fee-based revenues. From September 1, 2010 through December 31, 2010, revenues and net income attributable to Zephyr’s operations of $13.7 million and $5.9 million, respectively are included in the Partnership’s results of operations. The total purchase price was allocated as follows:



	September 1, 2010
Cash and cash equivalents	$	1,983
Trade accounts receivable	6,580
Other current assets	128
Gas plants and buildings	80,859
Other property, plant and equipment	303
Intangible assets	119,379
Total assets acquired	$	209,232
Trade accounts payable	(8,364		)
Deferred revenues	(6,408		)
Other current liabilities	(1,164		)
Net assets acquired	$	193,296

2009

HPC. In March 2009, the Partnership completed a joint venture arrangement among Regency HIG, EFS Haynesville, and the Alinda Investors. The Partnership contributed RIG, which owns RIGS, with a fair value of $401.4 million, to HPC, in exchange for a 38% general partner interest in HPC. EFS Haynesville and Alinda Investors contributed $126.9 million and $528.3 million in cash, respectively, to HPC in return for a 12% general partner and a 50% general partner interest, respectively. The disposition and deconsolidation resulted in the recording of a $133.5 million gain (of which $52.8 million represents the remeasurement of the Partnership’s retained 38% general partner interest to its fair value), net of transaction costs of $5.5 million.

In September 2009, the Partnership purchased a 5% general partner interest in HPC from EFS Haynesville for $63 million, increasing the Partnership’s general partner ownership percentage from 38% to 43%. Because the transaction occurred between two entities under common control, the Partnership’s general partner interest was reduced by $10.2 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount.