Local impact of Sunoco Logistics merger is still under wraps

The name Sunoco Logistics Partners LP disappeared from stock markets after Friday, but its local operations are unlikely to be immediately affected, according to the company’s financial disclosures.

The Newtown Square company, which is being absorbed by its parent company, Energy Transfer Partners (ETP), has more than 2,600 employees nationwide, including 600 in Pennsylvania. About 380 of those are based in the Philadelphia area, including about 100 at its corporate headquarters in Delaware County.

Sunoco Logistics' operations will continue to be run out of the Philadelphia area, according to the companies’ merger filings with the Securities and Exchange Commission.

Any corporate functions that may be merged with ETP’s headquarters in Dallas are “still being worked through by the integration team,” said Jeffrey Shields, the company’s spokesman.

ETP has said it expects to achieve synergies and cost savings of about $200 million a year by 2019.

Sunoco Logistics operates a pipeline and terminal network that transports petroleum products – crude oil, refined fuels, and natural-gas liquids (NGLs). ETP operates mostly natural-gas pipelines. The combined companies will operate a network of about 71,000 miles of pipelines.

Michael J. Hennigan, a longtime Sunoco executive and currently president and chief executive of Sunoco Logistics, will continue in a similar role along with his current management team, according to the SEC filings. Hennigan will be president of crude, NGLs and refined products.

Sunoco Logistics’ operations in Pennsylvania are increasingly focused on its Mariner East project to transport NGLs such as propane and ethane from shale fields to its Marcus Hook Industrial Complex on the Delaware River. Its pipelines are operated from its Montello Terminal in Sinking Spring, Berks County.

It also operates a large terminal in Nederland, Texas, that is supplied by an extensive network of crude-oil pipelines that fan out into the Texas oilfields. That Gulf of Mexico terminal also is  linked by pipeline to the parent company’s new Dakota Access Pipeline, which is tied into North Dakota shale-oil fields.

In the merger, Sunoco Logistics technically is the acquiring company (ETP announced the deal in November under a headline “Sunoco Logistics to Acquire Energy Transfer Partners.”) On Friday, Sunoco issued about 845 new partnership units to ETP unit-holders, and ETP units ceased to be traded on the New York Stock Exchange. 

But as a practical matter, ETP is absorbing the subsidiary it acquired in 2012. Sunoco Logistics will take on all the characteristics of the parent company – its name, its "ETP" ticker symbol, and its corporate leadership, headed by Kelcy Warren, ETP’s chief executive.

Without the transaction, ETP said it would need to consider cutting its quarterly distribution to reduce its leverage. The merger effectively accomplishes that task without calling it a dividend cut: The old ETP units yielded an 11.7 percent annual distribution. The Sunoco Logistics units, now known as ETP, yield 8.9 percent.