Energy Transfer Reports Strong First Quarter 2022 Results and Increases 2022 Guidance

DALLAS–(BUSINESS WIRE)–Energy Transfer LP (NYSE:ET) (“Energy Transfer” or the “Partnership”) today reported financial results for the quarter ended March 31, 2022.

Energy Transfer reported net income attributable to partners for the three months ended March 31, 2022 of $1.27 billion. For the three months ended March 31, 2022, net income per limited partner unit (basic) was $0.38 per unit.

Adjusted EBITDA for the three months ended March 31, 2022 was $3.34 billion compared to $5.04 billion for the three months ended March 31, 2021. First quarter 2021 results were favorably impacted by earnings from the historic Winter Storm Uri. Excluding this contribution, Adjusted EBITDA would have increased over the prior period.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended March 31, 2022 was $2.08 billion compared to $3.91 billion for the three months ended March 31, 2021. The decrease from the prior period was primarily driven by the favorable impact on the first quarter 2021 Adjusted EBITDA from Winter Storm Uri discussed above.

For the first 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

• During the first quarter 2022:
  • Energy Transfer started construction on the new 200 MMcf per day Grey Wolf high-recovery cryogenic processing plant in response to increased customer demand for growing natural gas volumes in the Permian Basin.
  • Construction began on the Gulf Run Pipeline project. The 42-inch pipeline with 1.65 Bcf per day of capacity is expected to be completed by year-end and will provide natural gas transportation between the prolific Haynesville Shale Basin and the U.S. Gulf Coast.
  • Construction of the final phase of the Mariner East project was completed, bringing Energy Transfer’s total NGL capacity on the Mariner East pipeline system to more than 365,000 barrels per day, including ethane.
  • Energy Transfer completed capacity expansions on its Cushing South crude oil pipeline that provides transportation service from the Partnership’s Cushing Terminal to its Nederland Terminal, as well as on its Permian Bridge Project, which connects the Partnership’s gathering and processing assets in the Delaware and Midland Basins.
• In April 2022, Energy Transfer placed the Ted Collins Link into service providing additional connectivity for its Houston Terminal to the U.S. Gulf Coast pipeline network and the Houston Ship Channel. Energy Transfer completed its inaugural shipment of oil from its Houston Terminal for export utilizing this system in April.

Strategic

• In March 2022, the Partnership announced a definitive agreement to sell its 51% interest in Energy Transfer Canada. The sale is expected to result in cash proceeds to Energy Transfer of approximately $272 million (based on the March 31, 2022 exchange rate), subject to certain purchase price adjustments, and to reduce the Partnership’s consolidated debt by approximately $450 million. The transaction is expected to close by the third quarter of 2022.
• To date in 2022, the Partnership has entered into four long-term LNG Sale and Purchase Agreements (“SPAs”). Under these SPAs, Energy Transfer LNG Export, LLC is expected to supply a total of 4.7 million tonnes of LNG per annum over 20 years, plus another 0.4 million tonnes per annum over 18 years, with first deliveries expected to commence as early as 2026. The execution of these SPAs represents a significant step in moving the Lake Charles LNG export project towards a positive final investment decision.
• The Partnership continues to pursue a natural gas pipeline project from the Permian Basin to address the growing need for additional natural gas takeaway from the region. The project would include the construction of a new intrastate pipeline paralleling existing right of way from the Midland Basin to interconnnect with Energy Transfer’s extensive pipeline network south of Dallas/Ft. Worth, Texas. From that point, Energy Transfer’s vast pipeline systems provide significant flexibility to deliver natural gas to premier markets along the Texas Gulf Coast including Katy, Beaumont, and the Houston Ship Channel, as well as to Carthage, with potential deliveries to most major U.S. trading hubs and markets.
• During the first quarter 2022, Energy Transfer continued integration of the recently acquired Enable Midstream Partners (the “Enable Acquisition”) business with the majority of back office integration now complete. This early step, along with further improved efficiencies, is expected to generate run-rate cost savings of more than $100 million per year.

Financial

• In April 2022, Energy Transfer announced a more than 30% increase in its quarterly distribution on common units compared to the first quarter of 2021. For the quarter ended March 31, 2022, Energy Transfer will pay a quarterly distribution of $0.20 per common unit ($0.80 annualized). 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.
• In April 2022, the Partnership amended its revolving credit facility to extend the maturity to April 2027, with two optional one-year extensions. As of March 31, 2022, the Partnership’s revolving credit facility had $2.02 billion of available capacity, and the leverage ratio, as defined by the credit agreement, was 3.55x.
• For the three months ended March 31, 2022, the Partnership invested approximately $388 million on growth capital expenditures.
• Given Energy Transfer’s strong performance in the first quarter, as well as continued increasing demand, the Partnership expects Adjusted EBITDA for the full year 2022 to be between $12.2 billion and $12.6 billion (previously $11.8 billion to $12.2 billion). The Partnership also expects its 2022 growth capital expenditures to be between $1.8 billion and $2.1 billion (previously $1.6 billion to $1.9 billion).

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 25% of the Partnership’s consolidated Adjusted EBITDA for the three months ended March 31, 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, May 4, 2022 to discuss its first 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 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)
	March 31, 2022				December 31, 2021
ASSETS
Current assets (1)	$	15,699			$	10,537
Property, plant and equipment, net		80,035				81,607
Investments in unconsolidated affiliates		2,921				2,947
Lease right-of-use assets, net		830				838
Other non-current assets, net		1,566				1,645
Intangible assets, net		5,608				5,856
Goodwill		2,533				2,533
Total assets	$	109,192			$	105,963
LIABILITIES AND EQUITY
Current liabilities (1) (2)	$	13,719			$	10,835
Long-term debt, less current maturities		48,826				49,022
Non-current derivative liabilities		139				193
Non-current operating lease liabilities		809				814
Deferred income taxes		3,540				3,648
Other non-current liabilities		1,337				1,323
Commitments and contingencies
Redeemable noncontrolling interests		493				783
Equity:
Limited Partners:
Preferred Unitholders		6,077				6,051
Common Unitholders		25,881				25,230
General Partner		(3	)			(4	)
Accumulated other comprehensive income		43				23
Total partners’ capital		31,998				31,300
Noncontrolling interests		8,331				8,045
Total equity		40,329				39,345
Total liabilities and equity	$	109,192			$	105,963

(1)	As of March 31, 2022, current assets include $1.68 billion of current assets held for sale and current liabilities include $1.03 billion of current liabilities held for sale, related to the Partnership’s pending sale of its interest in Energy Transfer Canada.
(2)	As of March 31, 2022, current liabilities include $652 million of current maturities of long-term debt. This total includes all of the $650 million of senior notes due in April 2022 from the Bakken Pipeline entities, for which our proportional ownership is 36.4%. These notes were repaid in April 2022.

ENERGY TRANSFER LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per unit data) (unaudited)
	Three Months Ended March 31,
	2022				2021
REVENUES	$	20,491			$	16,995
COSTS AND EXPENSES:
Cost of products sold		16,138				10,948
Operating expenses		949				820
Depreciation, depletion and amortization		1,028				954
Selling, general and administrative		230				201
Impairment losses		300				3
Total costs and expenses		18,645				12,926
OPERATING INCOME		1,846				4,069
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized		(559	)			(589	)
Equity in earnings of unconsolidated affiliates		56				55
Losses on extinguishments of debt		—				(7	)
Gains on interest rate derivatives		114				194
Other, net		21				(6	)
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)		1,478				3,716
Income tax expense (benefit)		(9	)			75
NET INCOME		1,487				3,641
Less: Net income attributable to noncontrolling interests		205				341
Less: Net income attributable to redeemable noncontrolling interests		13				12
NET INCOME ATTRIBUTABLE TO PARTNERS		1,269				3,288
General Partner’s interest in net income		1				3
Preferred Unitholders’ interest in net income		106				—
Limited Partners’ interest in net income	$	1,162			$	3,285
NET INCOME PER COMMON UNIT:
Basic	$	0.38			$	1.22
Diluted	$	0.37			$	1.21
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
Basic		3,083.5				2,702.8
Diluted		3,100.5				2,708.6

ENERGY TRANSFER LP AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (Dollars and units in millions) (unaudited)
	Three Months Ended March 31,
	2022				2021(a)
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow(b):
Net income	$	1,487			$	3,641
Interest expense, net of interest capitalized		559				589
Impairment losses		300				3
Income tax expense (benefit)		(9	)			75
Depreciation, depletion and amortization		1,028				954
Non-cash compensation expense		36				28
Gains on interest rate derivatives		(114	)			(194	)
Unrealized (gains) losses on commodity risk management activities		45				(46	)
Losses on extinguishments of debt		—				7
Inventory valuation adjustments (Sunoco LP)		(120	)			(100	)
Equity in earnings of unconsolidated affiliates		(56	)			(55	)
Adjusted EBITDA related to unconsolidated affiliates		125				123
Other, net		59				15
Adjusted EBITDA (consolidated)		3,340				5,040
Adjusted EBITDA related to unconsolidated affiliates		(125	)			(123	)
Distributable cash flow from unconsolidated affiliates		86				76
Interest expense, net of interest capitalized		(559	)			(589	)
Preferred unitholders’ distributions		(118	)			(96	)
Current income tax (expense) benefit		41				(9	)
Transaction-related income taxes(c)		(42	)			—
Maintenance capital expenditures		(118	)			(76	)
Other, net		5				19
Distributable Cash Flow (consolidated)		2,510				4,242
Distributable Cash Flow attributable to Sunoco LP (100%)		(142	)			(108	)
Distributions from Sunoco LP		41				41
Distributable Cash Flow attributable to USAC (100%)		(50	)			(53	)
Distributions from USAC		24				24
Distributable Cash Flow attributable to noncontrolling interests in other non-wholly-owned consolidated subsidiaries		(317	)			(251	)
Distributable Cash Flow attributable to the partners of Energy Transfer		2,066				3,895
Transaction-related adjustments		12				19
Distributable Cash Flow attributable to the partners of Energy Transfer, as adjusted	$	2,078			$	3,914
Distributions to partners:
Limited Partners	$	617			$	412
General Partner		1				—
Total distributions to be paid to partners	$	618			$	412
Common Units outstanding – end of period		3,084.7				2,703.5
Distribution coverage ratio	3.36x				9.50x

(a)	Winter Storm Uri, which occurred in February 2021, resulted in one-time impacts to the Partnership’s consolidated net income, Adjusted EBITDA and Distributable Cash Flow. Please see additional discussion of these impacts, as well as the potential impacts to future periods, included in the “Summary Analysis of Quarterly Results by Segment” below.
(b)	Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio are non-GAAP financial measures used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of Energy Transfer’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities or other GAAP measures.
	There are material limitations to using measures such as Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio, including the difficulty associated with using any such measure as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as operating income, net income and cash flow from operating activities.
	Definition of Adjusted EBITDA
	We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at last-in, first-out (“LIFO”). These amounts are unrealized valuation adjustments applied to Sunoco LP’s fuel volumes remaining in inventory at the end of the period.
	Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.
	Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.
	Definition of Distributable Cash Flow
	We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.
	Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.
	On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of Energy Transfer’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:
	For subsidiaries with publicly traded equity interests, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners includes distributions to be received by the parent company with respect to the periods presented. For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest.
	For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related adjustments and non-recurring expenses that are included in net income are excluded.
	Definition of Distribution Coverage Ratio
	Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of Energy Transfer in respect of such period.
(c)	For the three months ended March 31, 2022, the amount reflected for transaction-related income taxes was related to an amended return from a previous transaction.

ENERGY TRANSFER LP AND SUBSIDIARIES SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT (Tabular dollar amounts in millions) (unaudited)
	Three Months Ended March 31,
	2022			2021
Segment Adjusted EBITDA:
Intrastate transportation and storage	$	444		$	2,813
Interstate transportation and storage		453			453
Midstream		807			288
NGL and refined products transportation and services		700			647
Crude oil transportation and services		593			510
Investment in Sunoco LP		191			157
Investment in USAC		98			100
All other		54			72
Total Segment Adjusted EBITDA	$	3,340		$	5,040

The following analysis of segment operating results includes a measure of segment margin. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA.

Contacts

Energy Transfer

Investor Relations:
Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795

or

Media Relations:
Vicki Granado, 214-840-5820

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