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

DALLAS–(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			$	413			$	1,327			$	825
General Partner		—				1				1				1
Total distributions to be paid to partners	$	710			$	414			$	1,328			$	826
Common Units outstanding – end of period		3,086.8				2,704.6				3,086.8				2,704.6
Distribution coverage ratio	2.65x				3.36x				2.98x				6.42x

(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.
(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 six months ended June 30, 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 June 30,
		2022			2021
Segment Adjusted EBITDA:
Intrastate transportation and storage	$	218		$	224
Interstate transportation and storage		397			331
Midstream		903			477
NGL and refined products transportation and services		763			736
Crude oil transportation and services		562			484
Investment in Sunoco LP		214			201
Investment in USAC		106			100
All other		65			63
Total Segment Adjusted EBITDA	$	3,228		$	2,616

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. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization. Among the GAAP measures reported by the Partnership, the most directly comparable measure to segment margin is Segment Adjusted EBITDA; a reconciliation of segment margin to Segment Adjusted EBITDA is included in the following tables for each segment where segment margin is presented.

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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