Because ETE has plenty of transmission and distribution profit streams not dependent on gas gathering, because the bulk of iits affiliates’ gathering revenue isn’t going anywhere either, and lastly because a significant decrease in US energy output, which would be needed to meaningfully affect those revenues, would be followed in short order by a big upturn in energy prices, I believe. Williams even claims its renegotiated gathering terms will boost profits in the near-term, though I’m pretty skeptical about that: http://investor.williams.com/press-release/williams/williams-and-chesapeake-energy-execute-expansion-gas-gathering-services-and-a

I think you may be referencing this Barron’s blog http://www.barrons.com/articles/why-the-mlp-business-model-may-be-a-goner-1443476002 which in turn quoted this guy http://valuentumbrian.tumblr.com/post/130073604290/warning-the-mlp-business-model-may-not-survive , who I think has only popped up in the last year. More credible MLP bears (Kevin Kaiser, for one) made similar criticisms earlier. I think saying that MLPs rely on outside capital to finance their investments and then return that capital via distributions is like saying water is wet — that’s the model for any limited partnership, it’s why it exists: to bring in outside capital. Those that finance a lot of their investment out of retained profits, notably Entterprise Products, are certainly not getting any extra credit for it, now or previously. It’s true that during the shale boom the financing needs for all the midstream construction were so huge that a lot of equity got sold. And it’s true that some of that selling was motivated by the prospect of ever-larger incentive distribution rights to the general partners. I’ve covered these issues a lot over the last three years, and happy to provide the relevant links if you’d find them useful. Now the environment has changed, investment needs at least for the short term have been significantly reduced and the equity issuance spigot effectively shut for the moment. But that doesn’t mean we don’t need midstream processing; we do, and likely still in significantly higher volumes than presently. So as long as there are profits to be made backed by commitments we can trust, whether from consumers (utilities) or energy producers, someone’s going to finance that infrastructure. Rates are still as low as ever in recent past, and the prospect of a dramatic increase accompanied by global economic uplift seems as remote as ever. So lots of unrewarded savings sloshing around in a growth-starved world. I’m not worried that 300 million Americans will need less heat, light or fuel in the near future, or that even if they do the financing won’t be available to deliver it.

I don’t really see an impact one way or the other, since ETE will have the same incentives to sell assets into WPZ (increasing distributions but also debt and its own incentives) as WMB would have before its buyout bid. To the degree that ETE is larger and better managed than WMB, the change in sponsor is a very modest long-term positive, but WPZ (as with ETP) is best seen strictly as a yield vehicle. The GP will skim any and all of the long-term value it builds.

Sure. As with most other industries, earnings, whether as reported or GAAP, are not the valuation metric you’re looking for, because no one uses it. As with many other industries, cash flow is often more telling for MLPs, but the “distributable cash flow” most of them report can be misleading if management so wishes. One big disparity between reported earnings and cash flow is that the earnings subtract non-cash depreciation and amortization, while the latter does not. Depreciation imposes real long-term costs but these aren’t necessarily accurately reflected in depreciation accounting, where for example simply buying an asset can dramatically increase its annual depreciation non-cash cost based on the purchase price.
The best gauges of profitability and sustainability for MLPs remain cash flow, overall debt level, debt relative to cash flow and the trends in distribution growth and distribution coverage. If you’ve just joined us, welcome, and please check out our annual compendium of key metrics for all the MLPs and stocks we were recommending at the time: http://www.investingdaily.com/mlp-profits/articles/22423/in-rude-health/

Energy Transfer is as solid a general partner as you could hope for, and I expect WPZ to rally with the rest of the sector sometime next year. Over the longer term, though, expect the distributions to account for the bulk of your returns, with growth gains ultimately accruing at ETE/ETC thanks to the general partner’s incentive distribution rights. The yield is now huge, of course. One notable risk making it so is the potential liquidity crunch at key customer Chesapeake if commodity pricing doesn’t meaningfully improve over the next 18 months or so.