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Energy Transfer Reports Strong Third Quarter 2022 Results and Raises 2022 Outlook

DALLAS, November 01, 2022--(BUSINESS WIRE)--Energy Transfer LP (NYSE:ET) ("Energy Transfer" or the "Partnership") today reported financial results for the quarter ended September 30, 2022.

Energy Transfer reported net income attributable to partners for the three months ended September 30, 2022 of $1.01 billion, a $371 million increase from the same period last year. For the three months ended September 30, 2022, net income per limited partner unit (basic and diluted) was $0.29 per unit.

Adjusted EBITDA for the three months ended September 30, 2022 was $3.09 billion compared to $2.58 billion for the three months ended September 30, 2021. In the third quarter 2022, the Partnership experienced a $126 million charge in the crude oil transportation and services segment related to a legal matter. In addition, Energy Transfer’s third quarter 2022 results were impacted by an approximately $130 million negative adjustment related to hedged inventory in the NGL and refined products transportation and services segment. These two items impacted third quarter 2022 Adjusted EBITDA by approximately $260 million in the aggregate.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended September 30, 2022 was $1.58 billion compared to $1.31 billion for the three months ended September 30, 2021.

The improved results were primarily due to higher volumes across all of our core segments and the impacts of the recent acquisition of Enable Midstream.

Key accomplishments and recent developments:

Operational

  • Energy Transfer’s nation-wide system, with diverse products and services, is well-positioned throughout various markets. During the third quarter of 2022, each of Energy Transfer’s five core segments realized higher volumes compared with the same period in 2021.

    • Intrastate natural gas transportation volumes were up 28% and set a new Partnership record.

    • Interstate natural gas transportation volumes were up 43%.

    • Midstream gathered volumes were up 47% and set a new Partnership record.

    • NGL transportation volumes were up 5%.

    • NGL fractionation volumes were up 6% and set a new Partnership record.

    • Crude oil transportation and terminal volumes were up 10% and 14%, respectively.

  • Energy Transfer’s Nederland terminal and related facilities serve as critical resources with access to the U.S. Strategic Petroleum Reserve ("SPR"). Higher SPR volumes and increased activity in the region drove transportation and terminal volumes at the Nederland and Houston terminals to new records during the third quarter.

  • Mainline construction on the Gulf Run Pipeline was recently finished and the project remains on schedule to be completed by year-end

Strategic

  • Over 90 percent of Energy Transfer’s growth capital spending is comprised of projects that are already on-line or expected to be on-line and contributing cash flow at very attractive returns before the end of 2023. The project backlog includes Gulf Run Pipeline in Louisiana, Grey Wolf and Bear processing plants in the Permian Basin, Fractionator VIII in Mont Belvieu and LPG facilities projects at Energy Transfer’s Nederland Terminal.

  • In September 2022, Energy Transfer completed the acquisition of Woodford Express, LLC, which owns 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.

  • In August 2022, Energy Transfer announced a 20-year LNG Sale and Purchase Agreement ("SPA") with Shell NA LNG LLC. To date in 2022, the Partnership has entered into six long-term LNG SPAs. Under these SPAs, Energy Transfer LNG Export, LLC is expected to supply a total of 7.9 million tonnes of LNG per annum, with terms ranging from 18 to 25 years.

  • In August 2022, the Partnership completed the previously announced sale of its 51% interest in Energy Transfer Canada for cash proceeds to Energy Transfer of approximately $302 million. The sale reduced Energy Transfer’s consolidated debt by approximately $850 million, which includes the use of proceeds to pay down Energy Transfer’s revolving credit facility and the deconsolidation of Energy Transfer Canada’s debt.

Financial

  • Energy Transfer’s base business continues to execute well with performance ahead of expectations, driven by continued strong demand across Energy Transfer’s network. As a result, the Partnership now expects Adjusted EBITDA for the full year 2022 to be between $12.8 billion and $13.0 billion (previously $12.6 billion to $12.8 billion). The Partnership continues to expect its 2022 growth capital expenditures to be between $1.8 billion and $2.1 billion.

  • In October 2022, Energy Transfer announced a quarterly cash distribution of $0.265 per common unit ($1.06 annualized) for the quarter ended September 30, 2022. This distribution represents a more than 70% increase over the third 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 September 30, 2022, the Partnership’s revolving credit facility had $2.32 billion of available capacity.

  • For the three months ended September 30, 2022, the Partnership invested approximately $500 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 nine months ended September 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 Tuesday, November 1, 2022 to discuss its third 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 the United States, 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)

September 30,

2022

December 31,

2021

ASSETS

Current assets

$

12,159

$

10,537

Property, plant and equipment, net

80,261

81,607

Investments in unconsolidated affiliates

2,869

2,947

Lease right-of-use assets, net

815

838

Other non-current assets, net

1,573

1,645

Intangible assets, net

5,505

5,856

Goodwill

2,553

2,533

Total assets

$

105,735

$

105,963

LIABILITIES AND EQUITY

Current liabilities

$

11,243

$

10,835

Long-term debt, less current maturities

47,413

49,022

Non-current derivative liabilities

33

193

Non-current operating lease liabilities

794

814

Deferred income taxes

3,661

3,648

Other non-current liabilities

1,530

1,323

Commitments and contingencies

Redeemable noncontrolling interests

493

783

Equity:

Limited Partners:

Preferred Unitholders

6,077

6,051

Common Unitholders

26,725

25,230

General Partner

(3

)

(4

)

Accumulated other comprehensive income

32

23

Total partners’ capital

32,831

31,300

Noncontrolling interests

7,737

8,045

Total equity

40,568

39,345

Total liabilities and equity

$

105,735

$

105,963

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

2021

REVENUES

$

22,939

$

16,664

$

69,375

$

48,760

COSTS AND EXPENSES:

Cost of products sold

18,516

13,188

56,169

35,641

Operating expenses

973

898

2,982

2,585

Depreciation, depletion and amortization

1,030

943

3,104

2,837

Selling, general and administrative

361

198

802

583

Impairment losses and other

86

386

11

Total costs and expenses

20,966

15,227

63,443

41,657

OPERATING INCOME

1,973

1,437

5,932

7,103

OTHER INCOME (EXPENSE):

Interest expense, net of interest capitalized

(577

)

(558

)

(1,714

)

(1,713

)

Equity in earnings of unconsolidated affiliates

68

71

186

191

Losses on extinguishments of debt

(8

)

Gains on interest rate derivatives

60

1

303

72

Other, net

(120

)

33

(117

)

45

INCOME BEFORE INCOME TAX EXPENSE

1,404

984

4,590

5,690

Income tax expense

82

77

159

234

NET INCOME

1,322

907

4,431

5,456

Less: Net income attributable to noncontrolling interests

304

260

793

870

Less: Net income attributable to redeemable noncontrolling interests

12

12

37

37

NET INCOME ATTRIBUTABLE TO PARTNERS

1,006

635

3,601

4,549

General Partner’s interest in net income

1

1

3

5

Preferred Unitholders’ interest in net income

106

99

317

185

Limited Partners’ interest in net income

$

899

$

535

$

3,281

$

4,359

NET INCOME PER COMMON UNIT:

Basic

$

0.29

$

0.20

$

1.06

$

1.61

Diluted

$

0.29

$

0.20

$

1.06

$

1.60

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:

Basic

3,087.6

2,705.2

3,085.6

2,704.0

Diluted

3,108.6

2,720.6

3,106.4

2,718.4

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars and units in millions)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

2021(a)

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

Net income

$

1,322

$

907

$

4,431

$

5,456

Interest expense, net of interest capitalized

577

558

1,714

1,713

Impairment losses and other

86

386

11

Income tax expense

82

77

159

234

Depreciation, depletion and amortization

1,030

943

3,104

2,837

Non-cash compensation expense

27

26

88

81

Gains on interest rate derivatives

(60

)

(1

)

(303

)

(72

)

Unrealized (gains) losses on commodity risk management activities

(76

)

19

(130

)

(74

)

Losses on extinguishments of debt

8

Inventory valuation adjustments (Sunoco LP)

40

(9

)

(81

)

(168

)

Equity in earnings of unconsolidated affiliates

(68

)

(71

)

(186

)

(191

)

Adjusted EBITDA related to unconsolidated affiliates

147

141

409

400

Other, net

(19

)

(11

)

65

Adjusted EBITDA (consolidated)

3,088

2,579

9,656

10,235

Adjusted EBITDA related to unconsolidated affiliates

(147

)

(141

)

(409

)

(400

)

Distributable cash flow from unconsolidated affiliates

102

103

270

268

Interest expense, net of interest capitalized

(577

)

(558

)

(1,714

)

(1,713

)

Preferred unitholders’ distributions

(118

)

(110

)

(353

)

(305

)

Current income tax expense

(31

)

(10

)

(1

)

(34

)

Transaction-related income taxes(c)

(42

)

Maintenance capital expenditures

(247

)

(155

)

(527

)

(371

)

Other, net

5

14

17

50

Distributable Cash Flow (consolidated)

2,075

1,722

6,897

7,730

Distributable Cash Flow attributable to Sunoco LP (100%)

(195

)

(146

)

(496

)

(399

)

Distributions from Sunoco LP

41

41

124

124

Distributable Cash Flow attributable to USAC (100%)

(55

)

(52

)

(161

)

(157

)

Distributions from USAC

25

25

73

73

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

(315

)

(284

)

(926

)

(786

)

Distributable Cash Flow attributable to the partners of Energy Transfer

1,576

1,306

5,511

6,585

Transaction-related adjustments

5

6

26

34

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

$

1,581

$

1,312

$

5,537

$

6,619

Distributions to partners:

Limited Partners

$

818

$

...