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Energy Transfer Reports Strong Second Quarter 2022 Results and Increases 2022 Full Year Outlook

·12-min read

DALLAS, August 03, 2022--(BUSINESS WIRE)--Energy Transfer LP (NYSE:ET) ("Energy Transfer" or the "Partnership") today reported financial results for the quarter ended June 30, 2022.

Energy Transfer reported net income attributable to partners for the three months ended June 30, 2022 of $1.33 billion, a $700 million increase from the same period last year. For the three months ended June 30, 2022, net income per limited partner unit (basic) was $0.40 per unit.

Adjusted EBITDA for the three months ended June 30, 2022 was $3.23 billion compared to $2.62 billion for the three months ended June 30, 2021.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended June 30, 2022 was $1.88 billion compared to $1.39 billion for the three months ended June 30, 2021.

For the second quarter 2022, Energy Transfer had higher transportation volumes across all of its segments and a full quarter contribution from the Enable Midstream assets that were acquired in December 2021.

Key accomplishments and recent developments:

Operational

  • As a result of increasing demand for fractionation capacity, Energy Transfer recently resumed construction of its eighth fractionator at its Mont Belvieu, Texas facility. Frac VIII, which was more than half funded when construction was paused in 2020, is now expected to be in service in the third quarter of 2023 and will bring the Partnership’s total fractionation capacity at Mont Belvieu to over 1.1 million barrels per day.

  • During the second quarter of 2022, Energy Transfer achieved record processing volumes in the Permian Basin. In support of this increased activity, the Partnership is currently constructing two new cryogenic processing plants:

    • The Grey Wolf and Bear plants will each have a design capacity of 200 MMcf per day and are expected to be in service by year-end 2022 and in the second quarter of 2023, respectively.

  • During the second quarter of 2022, Energy Transfer also reported record NGL transportation and fractionation volumes.

  • Energy Transfer recently completed a non-binding open season on its Gulf Run Pipeline Project. Customer discussions are ongoing, which will likely necessitate facilities beyond the initial design of 1.65 Bcf/d. The 42-inch pipeline is expected to be completed by year-end 2022 and will provide natural gas transmission between the prolific Haynesville Shale and the U.S. Gulf Coast.

  • Energy Transfer’s Houston Terminal increased export crude oil volumes in the second quarter as a result of improved supply access via the new Ted Collins Link. This pipeline connection increases access to oil volumes from Energy Transfer’s Nederland Terminal and is expected to support future export volume growth.

Strategic

  • In August 2022, Energy Transfer entered into an agreement to acquire Woodford Express, LLC, a Mid-Continent gas gathering and processing system, for approximately $485 million. The system, which is located in the heart of the SCOOP play, has 450 MMcf per day of cryogenic gas processing and treating capacity and over 200 miles of gathering and transportation lines, which are connected to Energy Transfer’s pipeline network. The system is supported by dedicated acreage with long-term, predominantly fixed-fee contracts with active, proven producers. The transaction is expected to close by the end of the third quarter, subject to regulatory review and other customary closing conditions, and to be immediately accretive to Distributable Cash Flow.

  • To date in 2022, the Partnership has entered into five long-term LNG Sale and Purchase Agreements ("SPAs"). Under these SPAs, Energy Transfer LNG Export, LLC is expected to supply a total of 5.8 million tonnes of LNG per annum, with first deliveries expected to commence as early as 2026 under SPA terms ranging from 18 to 25 years.

  • Energy Transfer’s Nederland terminal and related facilities serve as critical resources with access to the nation’s Strategic Petroleum Reserve ("SPR"). As a result of increased activity in the region along with higher SPR volumes, the terminal set records for throughput during the second quarter.

Financial

  • Given Energy Transfer’s strong performance in the second quarter of 2022, as well as continued increasing demand, the Partnership now expects Adjusted EBITDA for the full year 2022 to be between $12.6 billion and $12.8 billion (previously $12.2 billion to $12.6 billion). The Partnership continues to expect its 2022 growth capital expenditures to be between $1.8 billion and $2.1 billion.

  • In July 2022, Energy Transfer announced a quarterly cash distribution of $0.23 per common unit ($0.92 annualized) for the quarter ended June 30, 2022. This distribution represents a more than 50% increase over the second quarter of 2021. Future increases to the distribution level will continue to be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per common unit per quarter ($1.22 annualized) while balancing the Partnership’s leverage target, growth opportunities and unit buybacks.

  • As of June 30, 2022, the Partnership’s revolving credit facility had $2.44 billion of available capacity.

  • For the three months ended June 30, 2022, the Partnership invested approximately $437 million on growth capital expenditures.

Energy Transfer benefits from a portfolio of assets with exceptional product and geographic diversity. The Partnership’s multiple segments generate high-quality, balanced earnings with no single segment contributing more than 30% of the Partnership’s consolidated Adjusted EBITDA for the three or six months ended June 30, 2022. The vast majority of the Partnership’s segment margins are fee-based and therefore have limited commodity price sensitivity.

Conference Call information:

The Partnership has scheduled a conference call for 3:30 p.m. Central Time/4:30 p.m. Eastern Time on Wednesday, August 3, 2022 to discuss its second quarter 2022 results and provide an update on the Partnership. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.

Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in North America, with a strategic footprint in all of the major U.S. production basins. Energy Transfer is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids ("NGL") and refined product transportation and terminalling assets; and NGL fractionation. Energy Transfer also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco LP (NYSE: SUN), and the general partner interests and 46.1 million common units of USA Compression Partners, LP (NYSE: USAC). For more information, visit the Energy Transfer LP website at www.energytransfer.com.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories, as well as refined product transportation and terminalling assets. SUN’s general partner is owned by Energy Transfer LP (NYSE: ET). For more information, visit the Sunoco LP website at www.sunocolp.com.

USA Compression Partners, LP (NYSE: USAC) is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. USAC partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USAC focuses on providing compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. For more information, visit the USAC website at www.usacompression.com.

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results, including future distribution levels and leverage ratio, are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. In addition to the risks and uncertainties previously disclosed, the Partnership has also been, or may in the future be, impacted by new or heightened risks related to the COVID-19 pandemic, and we cannot predict the length and ultimate impact of those risks. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.energytransfer.com.

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(unaudited)

June 30, 2022

December 31, 2021

ASSETS

Current assets (1)

$

15,434

$

10,537

Property, plant and equipment, net

79,868

81,607

Investments in unconsolidated affiliates

2,924

2,947

Lease right-of-use assets, net

822

838

Other non-current assets, net

1,561

1,645

Intangible assets, net

5,607

5,856

Goodwill

2,553

2,533

Total assets

$

108,769

$

105,963

LIABILITIES AND EQUITY

Current liabilities (1)

$

13,475

$

10,835

Long-term debt, less current maturities

48,104

49,022

Non-current derivative liabilities

144

193

Non-current operating lease liabilities

801

814

Deferred income taxes

3,611

3,648

Other non-current liabilities

1,376

1,323

Commitments and contingencies

Redeemable noncontrolling interests

493

783

Equity:

Limited Partners:

Preferred Unitholders

6,051

6,051

Common Unitholders

26,507

25,230

General Partner

(3

)

(4

)

Accumulated other comprehensive income

29

23

Total partners’ capital

32,584

31,300

Noncontrolling interests

8,181

8,045

Total equity

40,765

39,345

Total liabilities and equity

$

108,769

$

105,963

(1)

As of June 30, 2022, current assets include $1.71 billion of assets held for sale and current liabilities include $1.09 billion of liabilities held for sale, related to the Partnership’s pending sale of its interest in Energy Transfer Canada.

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

(unaudited)

Three Months Ended

June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

REVENUES

$

25,945

$

15,101

$

46,436

$

32,096

COSTS AND EXPENSES:

Cost of products sold

21,515

11,505

37,653

22,453

Operating expenses

1,060

867

2,009

1,687

Depreciation, depletion and amortization

1,046

940

2,074

1,894

Selling, general and administrative

211

184

441

385

Impairment losses

8

300

11

Total costs and expenses

23,832

13,504

42,477

26,430

OPERATING INCOME

2,113

1,597

3,959

5,666

OTHER INCOME (EXPENSE):

Interest expense, net of interest capitalized

(578

)

(566

)

(1,137

)

(1,155

)

Equity in earnings of unconsolidated affiliates

62

65

118

120

Losses on extinguishments of debt

(1

)

(8

)

Gains (losses) on interest rate derivatives

129

(123

)

243

71

Other, net

(18

)

18

3

12

INCOME BEFORE INCOME TAX EXPENSE

1,708

990

3,186

4,706

Income tax expense

86

82

77

157

NET INCOME

1,622

908

3,109

4,549

Less: Net income attributable to noncontrolling interests

284

269

489

610

Less: Net income attributable to redeemable noncontrolling interests

12

13

25

25

NET INCOME ATTRIBUTABLE TO PARTNERS

1,326

626

2,595

3,914

General Partner’s interest in net income

1

1

2

4

Preferred Unitholders’ interest in net income

105

86

211

86

Limited Partners’ interest in net income

$

1,220

$

539

$

2,382

$

3,824

NET INCOME PER COMMON UNIT:

Basic

$

0.40

$

0.20

$

0.77

$

1.41

Diluted

$

0.39

$

0.20

$

0.77

$

1.41

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:

Basic

3,085.9

2,704.0

3,084.7

2,703.4

Diluted

3,105.7

2,717.8

3,104.2

2,715.5

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars and units in millions)

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021(a)

Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow(b):

Net income

$

1,622

$

908

$

3,109

$

4,549

Interest expense, net of interest capitalized

578

566

1,137

1,155

Impairment losses

8

300

11

Income tax expense

86

82

77

157

Depreciation, depletion and amortization

1,046

940

2,074

1,894

Non-cash compensation expense

25

27

61

55

(Gains) losses on interest rate derivatives

(129

)

123

(243

)

(71

)

Unrealized gains on commodity risk management activities

(99

)

(47

)

(54

)

(93

)

Losses on extinguishments of debt

1

8

Inventory valuation adjustments (Sunoco LP)

(1

)

(59

)

(121

)

(159

)

Equity in earnings of unconsolidated affiliates

(62

)

(65

)

(118

)

(120

)

Adjusted EBITDA related to unconsolidated affiliates

137

136

262

259

Other, net

25

(4

)

84

11

Adjusted EBITDA (consolidated)

3,228

2,616

6,568

7,656

Adjusted EBITDA related to unconsolidated affiliates

(137

)

(136

)

(262

)

(259

)

Distributable cash flow from unconsolidated affiliates

82

89

168

165

Interest expense, net of interest capitalized

(578

)

(566

)

(1,137

)

(1,155

)

Preferred unitholders’ distributions

(117

)

(99

)

(235

)

(195

)

Current income tax (expense) benefit

(11

)

(15

)

30

(24

)

Transaction-related income taxes(c)

(42

)

Maintenance capital expenditures

(162

)

(140

)

(280

)

(216

)

Other, net

7

17

12

36

Distributable Cash Flow (consolidated)

2,312

1,766

4,822

6,008

Distributable Cash Flow attributable to Sunoco LP (100%)

(159

)

(145

)

(301

)

(253

)

Distributions from Sunoco LP

42

42

83

83

Distributable Cash Flow attributable to USAC (100%)

(56

)

(52

)

(106

)

(105

)

Distributions from USAC

24

24

48

48

Distributable Cash Flow attributable to noncontrolling interests in other non-wholly-owned consolidated subsidiaries

(294

)

(251

)

(611

)

(502

)

Distributable Cash Flow attributable to the partners of Energy Transfer

1,869

1,384

3,935

5,279

Transaction-related adjustments

9

9

21

28

Distributable Cash Flow attributable to the partners of Energy Transfer, as adjusted

$

1,878

$

1,393

$

3,956

$

5,307

Distributions to partners:

Limited Partners

$

710

...