Earnings call transcript: Energy Transfer Q1 2025 beats EPS forecast but misses revenue

Energy Transfer (ET), a prominent $54.7 billion market cap player in the Oil, Gas & Consumable Fuels industry, reported its first-quarter earnings for 2025, revealing a mixed performance against market expectations. The company surpassed earnings per share (EPS) forecasts, reporting $0.37 compared to the anticipated $0.36. However, it fell short on revenue, generating $21.02 billion against a forecast of $22.42 billion. Despite the revenue miss, the stock rose 1.64% in after-hours trading, closing at $16.07. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation.

Key Takeaways

• EPS beat expectations at $0.37 versus the $0.36 forecast.
• Revenue fell short, coming in at $21.02 billion against a $22.42 billion forecast.
• Stock price increased by 1.64% in after-hours trading.
• Adjusted EBITDA increased to $4.1 billion from $3.9 billion year-over-year.
• Strong growth in the Midstream segment, up from $696 million to $925 million.

Company Performance

Energy Transfer demonstrated a robust performance in the first quarter of 2025, with a notable increase in Adjusted EBITDA to $4.1 billion, up from $3.9 billion in the same period last year. The company’s Midstream segment showed significant growth, while its Crude Oil segment experienced a decline. This performance aligns with broader industry trends, where midstream infrastructure continues to play a critical role amidst fluctuating commodity prices. InvestingPro data reveals the company maintains an attractive 8.09% dividend yield and has raised its dividend for three consecutive years, making it particularly appealing to income-focused investors.

Financial Highlights

• Revenue: $21.02 billion, below the $22.42 billion forecast.
• Earnings per share: $0.37, surpassing the $0.36 forecast.
• Adjusted EBITDA: $4.1 billion, up from $3.9 billion in Q1 2024.
• Distributable Cash Flow: $2.3 billion.
• Organic Growth Capital Spend: $955 million.

Earnings vs. Forecast

Energy Transfer’s EPS of $0.37 exceeded the forecast by approximately 2.78%, marking a positive surprise for investors. However, the revenue shortfall of approximately 6.23% compared to expectations reflects potential challenges in market conditions or execution. This mixed result contrasts with the company’s historical trend of meeting or exceeding revenue forecasts.

Market Reaction

Despite the revenue miss, Energy Transfer’s stock rose by 1.64% in after-hours trading. This positive movement suggests investor confidence in the company’s operational strengths and future prospects. The stock trades at a P/E ratio of 12.38, which InvestingPro indicates is low relative to near-term earnings growth. Analyst targets range from $20 to $26, suggesting significant upside potential, with a strong consensus recommendation of 1.47 (where 1 is a Strong Buy). The stock remains within its 52-week range, indicating stability amidst sector volatility.

Outlook & Guidance

Energy Transfer has projected its 2025 Adjusted EBITDA to be between $16.1 billion and $16.5 billion. The company also plans significant capital expenditures, with $5 billion earmarked for organic growth projects in 2025. The focus remains on enhancing its infrastructure to meet growing demands in power generation and data center gas supply. With an overall Financial Health Score of "GOOD" from InvestingPro, which analyzes multiple financial metrics, the company appears well-positioned to execute its growth strategy. Subscribers can access 8 additional ProTips and a comprehensive Pro Research Report for deeper insights into ET’s financial health and growth prospects.

Executive Commentary

"We are the most diversified, unparalleled midstream pipeline company in the United States," stated Mackie McCree, highlighting Energy Transfer’s strategic positioning. Additionally, McCree expressed confidence in the company’s capacity sales, particularly in the Hugh Brinson Pipeline project, which is fully sold out for phase one.

Risks and Challenges

• Potential gas supply slowdown in certain production basins.
• Fluctuations in international demand for ethane, propane, and butane.
• Economic pressures that may impact capital expenditure plans.
• Market softening, which could defer planned projects.

Q&A

During the earnings call, analysts probed into the progress of the Lake Charles LNG project and potential production slowdowns. The management provided insights into their flexible capital expenditure plans, which could adapt to changing market conditions. The focus on data center and power generation opportunities was also emphasized, reflecting strategic alignment with emerging energy trends.

Full transcript - Energy Transfer Equity LP (ET) Q1 2025:

Conference Operator: Please note, today’s event is being recorded. I would now like to turn the conference over to Tom Long.

Please go ahead.

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Thank you, operator. Good afternoon, everyone, and welcome to the Energy Transfer first quarter twenty twenty five earnings call. Also joined today by Mackie McCree and other members of the senior management team who are here to help answer your questions after our prepared remarks. Hopefully, you saw the press release we issued earlier this afternoon. As a reminder, our earnings release contains a thorough MD and A that goes through the segment results in detail, and we encourage everyone to look at the release, as well as the slides posted to our website to gain a full understanding of the quarter and our growth opportunities.

As a reminder, we will be making forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements are based upon our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our Form 10 Q for the quarter ended 03/31/2025, which we expect to file this Thursday, May 8. I’ll also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non GAAP financial measures. You’ll find a reconciliation of our non GAAP measures on our website. So let’s start with our financial results today.

For the first quarter of twenty twenty five, we generated adjusted EBITDA of $4,100,000,000 compared to $3,900,000,000 for the first quarter of twenty twenty four. We saw strong volumes through our midstream gathering, crude gathering, natural gas interstate and NGL pipelines, as well as through our NGL fractionators. In addition, we saw strong NGL exports during the quarter. DCF attributable to the partners of Energy Transfer as adjusted was $2,300,000,000 And for the first three months of twenty twenty five, we spent approximately $955,000,000 on organic growth capital, primarily in the interstate, midstream and NGL and refined product segments, excluding Sun and USA Compression CapEx. Now turning to our results by segment for the first quarter.

Let’s start with NGL and refined products. Adjusted EBITDA was $978,000,000 compared to $989,000,000 for the first quarter of twenty twenty four. This was primarily due to higher throughput across the NGL export terminals and across our Permian And Mariner East pipeline operations, which were offset by higher operating expenses and lower blending margins compared to the first quarter of twenty twenty four. For Midstream, adjusted EBITDA was $925,000,000 compared to $696,000,000 for the first quarter of twenty twenty four. The increase was primarily due to higher legacy volumes in the Permian Basin, which were up 8%, as well as the addition of the WTG assets in July of twenty twenty four.

In addition, results for the first quarter of twenty twenty five were favorably impacted by the nonrecurring recognition of $160,000,000 associated with winter storm Uri in 2021. This represents the remainder of the midstream segment margin from winter storm Uri that had not already been recognized. Still outstanding in the intrastate segment is approximately $285,000,000 excluding interest that is currently in litigation, the vast majority of which is due from CPS. For the crude oil segment, adjusted EBITDA was $742,000,000 compared to $848,000,000 for the first quarter of twenty twenty four. During the quarter, we saw growth across our crude gathering systems, as well as contributions related to the recently formed Permian joint venture with Sun.

These were offset by lower transportation revenues, primarily on the Bakken pipeline, higher expenses, as well as lower gains due to the timing of the recognition of optimization gains in Q1 of twenty twenty five as compared to Q1 of twenty twenty four. Lower optimization gains were primarily due to lower hedge gains realized during the quarter, a write down to hedged inventory at the end of the quarter and the timing of the recognition of gains on certain physical crude sales. We expect approximately $30,000,000 of losses related to the hedge inventory that were realized in the first quarter of twenty twenty five to reverse during the second quarter of twenty twenty five. In our interstate natural gas segment, adjusted EBITDA was $512,000,000 compared to $483,000,000 for the first quarter of twenty twenty four. During the quarter, we achieved record volumes driven by higher throughput on Panhandle, Gulf Run and Trunkline.

The growth on Trunkline was related to our backhaul project to support growing Gulf Coast natural gas demand. We also had increased rates on several of our pipelines in the first quarter. For the intrastate natural gas segment, adjusted EBITDA was $344,000,000 compared to $438,000,000 in the first quarter of last year. During the quarter, we saw increased gains related to storage optimization opportunities, which were more than offset by reduced pipeline optimization as a result of lower volatility in natural gas prices compared to the first quarter of twenty twenty four. Now let’s take a look at the organic growth capital guidance.

We continue to expect approximately 5,000,000,000 on organic growth capital projects in 2025. Our projects are expected to achieve mid teen returns with most of them also providing incremental downstream benefits. In addition, the majority of these projects are expected online in 2025 or 2026, including our Flexport NGL export expansion, several Permian processing plant expansions and our Hugh Brinson pipeline project. As such, we continue to expect the majority of the earnings growth from these projects to significantly ramp up in 2026 and 2027. Taking a closer look at some of our largest growth projects that are currently underway.

During the first quarter, we commenced construction on Phase one of the Hugh Brinson pipeline, which we expect to be in service in the fourth quarter of twenty twenty six. We have secured the majority of the pipeline steel, which is currently being rolled in U. S. Pipe mills. And as a result, do not expect any material impacts to cost of the project tariff announcements.

Phase one is completely sold out and we’re currently in negotiations that are well in excess of Phase two capacity. At our Nederland terminal, construction of our Flexport expansion project is nearing completion. We expect to begin ethane service later this month and propane service in July. And we continue to expect to begin ethylene export service in the fourth quarter of this year. Looking at our Permian processing expansions, the Red Lake 4 processing plant is now expected to be in service by the end of the second quarter of twenty twenty five.

The Badger processing plant remains on schedule to be in service in mid-twenty twenty five. And the Mustang Draw Plant is now expected to be in service in the second quarter of twenty twenty six. Now let’s look at Lake Charles LNG. We are making substantial progress towards commercialization of the project. In April, Lake Charles LNG and Mid Ocean Energy signed a heads of agreement, which provides a non binding framework for the joint development of the LNG project.

Pursuant to the HOA, Mid Ocean would commit to fund 30% of the construction cost and be entitled to 30% of the LNG production. MidOcean is an LNG company formed and managed by EIG, Global Energy Partners. In April, Lake Charles LNG signed a binding SPA with a Japanese utility company for up to one MTPA, with the agreement subject to the approval of the board of this company, which is expected to be received by the May. Also in April, we signed an HOA with a German energy company for one MTPA. Lake Charles LNG is in discussions for the remaining uncommitted LNG offtake volume and is targeting FID by year end.

Now for a brief update around our power generation opportunities. The level of activity from demand pull customers has remained strong, and we’re in advanced discussions with several other facilities in close proximity to our footprint to supply, store and transport natural gas from gas fired power plants, data centers and industrial and onshore manufacturing. On our last earnings call, we were excited to announce that we have entered into a long term agreement with Cloudburst Data Centers to provide natural gas to their flagship AI focused data center development in Central Texas. We would expect these type of projects to require very low capital and to generate revenue relatively quickly. There is a lot of competition around these projects, but our team has done an excellent job of identifying the most likely opportunities, and we will continue to provide updates as we move forward.

Lastly, construction of eight ten megawatt natural gas fired electric generation facilities continues. The first facility was placed into service in the first quarter and we expect the next one to be in service by the end of the second quarter, with the remainder expected to be in service throughout 2025 and 2026. And now turning to our guidance, we continue to expect our 2025 adjusted EBITDA to be between $16,100,000,000 and $16,500,000,000 We benefit from an integrated business model that is well diversified by products and geography. Our cash flows are highly fee based with limited commodity price exposure. And financially, our balance sheet is in the strongest position in our history.

We also have a high percentage of take or pay contracts, helping to reduce impacts from market volatility. We are executing on a solid backlog of well contracted growth projects with strong counterparties, which are expected to generate strong returns, enhance our integrated value chain and promote strong growth. We will start to see contributions from some of these projects this year with additional benefits really ramping up next year as we quickly convert CapEx into cash flow. Given Energy Transfer’s extensive natural infrastructure, we are excited to see the growing demand in and around our franchise to support power plant, data center and LNG growth. With our diverse integrated asset base and strong financial position, we believe we are well positioned to manage volatility while we continue to grow.

Before we close, we’d like to take a moment to mention Sunoco’s recently announced plans to acquire Parkland Corporation. We are excited for Sun as they work to bring these assets into the family of partnerships. This combination is expected to create the largest independent fuel distributor in The Americas. This concludes our prepared remarks. Operator, please open the line up for our first question.

Conference Operator: Thank you, sir. Our first question today comes from Theresa Chen at Barclays. Please go ahead.

Theresa Chen, Analyst, Barclays: Good afternoon. I’d like to first ask on the Lake Charles progress. Looking to your year end target FID, can you talk about additional steps from here either from a commercialization financing or permitting a regulatory perspective? And more broadly, how do you think U. S.

LNG is situated given increasing competitive dynamics domestically as well as increasing demand abroad with the EU Commission proposing to phase out imports of all Russian gas and LNG.

Mackie McCree, Senior Executive, Energy Transfer: Hello, Theresa, this is Mackie. We continue to gain momentum and be excited about getting to FID. We’ve worked many, many years on this project. We’ve got teams over as we speak. In fact, even on this call moments ago, we got a text where we signed up another million tons from a large international energy company.

So we’re very excited. However, we still got work to do. We now pass 10,400,000 tons. We’re targeting about 15,000,000 tons. As Tom just said on his opening statements, we have a big partner in this now.

We’re looking for other partners. The end of the day, we want about 75% to 80% equity and or infrastructure partners. Still have that box to check. We’re finalizing our EPC cost over these next couple of months and everything’s looking good. Like I said, we’ve got a lot of work to do but we’re very excited about where we’re at and we’re also very excited about the new administration that will not hold up.

In fact, we’ll promote these types of projects not only benefit our country, our partnership but also our friends around the world that need so desperately need LNG. So we’re excited about it. A lot of work

Executive, Energy Transfer: to do and certainly hope we reach FID by the end

Mackie McCree, Senior Executive, Energy Transfer: of the year. As far as the second question you had, kind of hard to address that. We feel pretty good where our prices are. We know there’s a lot of competition out there. Some are already at FID, some aren’t.

We’re successful in continuing to price our capacity in a manner that works for our returns. So we kind of don’t worry and think much about what others are doing. We focus on what we’ve got and we’re excited and are hopeful to get there by the end of the year.

Theresa Chen, Analyst, Barclays: Thank you. And with one of your portfolio companies getting a C Corp currency soon potentially, how does that parlay into the potential for energy transfer to also have a C Corp presence? What are your thoughts on that topic at this point?

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Hey, Theresa, this is Tom. We’ve always had that on options list, if you will. We continue to evaluate it and see what makes sense from an energy transfer standpoint. Obviously, very excited to see Sun be able to first execute on one and we’ll evaluate that carefully. But as we sit here right now, it’s really not any more plans than probably we had before this transaction as far as Energy Transfer goes.

So, it’s an option and we’re going to continue to look at it and we’ll stay tuned.

Executive, Energy Transfer: You.

Conference Operator: Thank you. And our next question today comes from Jeremy Tonet with JPMorgan. Please go ahead.

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Hi, good afternoon.

Mackie McCree, Senior Executive, Energy Transfer: Hey, Jeremy.

Jeremy Tonet, Analyst, JPMorgan: Hey, I was just curious, given the volatility we have seen in commodity prices and we’re starting to see some rigs being dropped even in the Permian. Just wondering, I guess, with your latest producer customer conversations, what your outlook is for production if that has changed meaningfully or how do you expect it to impact the energy transfer?

Mackie McCree, Senior Executive, Energy Transfer: Okay. This is Mackie again. Typically, I’ll make a brief statement at the end. Sometimes I’ll make a brief statement real quick. I think it’s important for this question and also for other questions that might come up.

We were talking a couple of weeks ago and a lot of us have been in this business for thirty five, forty years, some like Tom longer than that. But anyway, we’ve seen a lot of cycles. It’s a very cyclical business and we’ve seen gas at 1.5 we’ve seen gas at $8 or $9 we’ve seen oil at less than $10 we’ve seen oil at $120 We’ve had quarters where we panicked about what the spread is between Waha and Katy because we were a natural gas pipeline company. And fortunately, where we are today with Kelsey’s leadership and guidance is we’re the most diversified kind of unparalleled midstream pipeline company in The United States. And just quickly a few comments on that.

In addition to kind of our segments, we’ve got our USA Compression run by Clint who’s doing a great job of not only maintaining what they have, but look for growth over the coming years. We got Joe Kim and his team with Sunoco has done an incredible job with the assets they purchased. Now they’ve just made a huge announcement that we see a lot of upside for them. Of course, that also provides additional distributions which don’t hurt our feelings at all. And then you look at our segment, you look at our crude segment run by Adam and his team and we move about 20% of the barrels out of West Texas, about 30% of the barrels that are produced in The United States go through our pipes, over 50% in the Bakken.

We’re the largest deliverers of barrels to the refineries around Port Arthur and then of course Bayou Bridge to the Lake Charles in St. James and then on and so forth up the Mid Continent. Then you jump over to the NGLs and the massive pipelines we’ve built with Mariner and we are the company to go to with any ethane propane growth out in Northeast through our Marcus Hook terminal. And then of course our incredible expansion at Nederland that we’re also completing our next 250,000 in our NGL world where we move a lot of barrels over a million barrels a day go into that. Very excited about that and of course midstream, we’ve got a big presence in the Permian and a lot of other places.

And then you look at what’s going on in the pipeline business, our intrastate, our interstate and how well we’ve built all those out from all the major basins delivering to all the major markets whether it’s LNG or whether it’s power plants or the utilities or cities or whatever. We just have positioned ourselves in such a good way to where if one segment slows down or whatever the other picks it back up. So all that saying, going to your question, yes, are seeing a slowdown a little bit over the last few weeks. We actually have been in conversations Tom and I have with some of the majors. They really haven’t indicated at these kind of mid to upper $50 a barrel pricing that they’re necessarily going to slow down.

But we have seen even the last day, yesterday and today there’s been some statements on slowdown. We’re well positioned to manage that. This is what happens in this industry. It will slow down and then it’ll come back as a barn burner. We certainly anticipate that happening with oil but even tenfold on gas.

Any kind of slowdown on gas, if you look over the next three or four years, five to seven Bcf of growth in the LNG market, who knows where the AI data center and power plants are going to go on a high side or even a medium side on that. I mean, it’s just a wonderful outlook for our pipeline business both intra and interstate. So yes, if there’s areas where drilling has slowed down, will slow down some parts of that. But as a whole, we think some of these other areas of our well balanced partnership will kind of even things out and we just stay very positive and bullish on the future, especially around NGLs and natural gas transportation.

Jeremy Tonet, Analyst, JPMorgan: Got you. Makes sense. Yeah, no, certainly important to have a diversified platform there. Seems like a slowdown in oil could help the gas supply demand dynamics and could help you out there as well. Maybe just building on gas a bit more, guess, the opportunity set as you see it to service growing power demand in data centers even.

Thinking particularly to the West Of Texas, just wondering how you see, I guess, the opportunity set to feed more power in Texas or data centers and also further west in Arizona as well?

Mackie McCree, Senior Executive, Energy Transfer: Yeah, I tell you, this is one of those areas where we feel like we’re sitting on a gold mine. As I just mentioned, we built a lot of assets, bought a lot of pipeline assets, moving molecules from production basis to markets. We wake up here in the last six to twelve months and find ourselves in an incredible position. Adam and his team are he’s got a really good team he’s put together to chase deals all over Texas. There’s 150 approximate data centers that we’re looking at just in Texas alone.

We would love to elaborate and talk about some significant progress we make. We do believe in the next four to six weeks, we’ll be able to make some significant announcements. But what’s really cool about our assets and we’ve said this before is that if we were going to go out and develop and we’re kind of doing this to a certain degree to help some of the hyperscalers and try to place some of these data centers, we’d place them almost right on top of our pipes. In fact, like we said last time, Cloudburst location, our pipeline actually runs through that acreage. But we’re so well positioned from a electrical transmission standpoint.

A lot of the major electric lines running through Texas parallel are very close to our pipelines. A lot of the low latency fiber optics runs in the same quarter as our pipeline. So we’re very optimistic. We’d love to elaborate. Yes, even outside of Texas, we see Arizona as a very significant growth area for data centers, really growth area for natural gas demand in addition to data centers.

Elsewhere in other states, couple of other states, we expect to make some significant announcements over the next four to eight weeks. So a little premature, but very excited about where that’s going to take us and couldn’t feel better about our situation on where our pipeline sit, our ability to move large volumes through these large diameter systems in the storage we have to back up that. We just couldn’t be more excited about these opportunities we’re chasing. Got it. We’ll be listening in

Jeremy Tonet, Analyst, JPMorgan: the coming weeks to that announcement. Thank you.

Conference Operator: Thank you. And our next question today comes from Jean Ann Salisbury with Bank of America. Please go ahead.

Jean Ann Salisbury, Analyst, Bank of America: Hi. Thank you for the update on the timing of the ethane and propane in service for the Nederland Flexport expansion that starts in the next few months. Can you speak to how you’re viewing the speed of the ramp for that project and if you expect it to mainly be shipping propane or ethane in the medium term?

Mackie McCree, Senior Executive, Energy Transfer: Yeah, this is Mackie again. Believe we’re coming on the end of this month, early next month with ethane. Regardless of what everybody’s hearing about all the negativity around what’s going on in China and other areas, we’re not having a problem finding a home for our products, ethane or LPG. In fact, we did a deal this morning for another ethane spot cargo to China. So with those tariffs apparently being lifted around ethane and possibly LPG, we feel very good about it.

July or August, we’ll be ramping up the propane portion of that and then by the end of this year, ethylene. All of that we expect to on a spot basis and or some of it’s turned up to be stay very full for the second half of this year. And then we’re on this new Flexport expansion, we’re over 90 sold out under three to five year agreement starting January first of twenty six. So we’re very excited about that. It needs to come online for the international demand around the world and we’re excited to finally draw that hundreds of millions of dollars were spent.

We’re excited about the revenue that we’re about to bring in the door.

Jean Ann Salisbury, Analyst, Bank of America: Great, that’s super helpful. Thank you. And then you kind of touched on this, but my follow-up was just real time what you’re seeing in the LPG export market. Is there basically enough rerouting, I guess, going on to avoid the China tariff on U. S.

LPG? How do you think that plays out in the next few months?

Mackie McCree, Senior Executive, Energy Transfer: Yeah, with all these questions, a lot of uncertainty about what’s going on in the industry, we have very little concern even talking to our team today. As I just said, there’s a lot of international demand, not just China, all over the world for ethane, propane and butane. We really don’t expect to see any major challenges, if any challenges at all selling out our terminal every month,

Tom Long, Executive (likely CEO or CFO), Energy Transfer: the rest of this year.

Jean Ann Salisbury, Analyst, Bank of America: Great. I’ll leave it there. Thank you.

Conference Operator: Thank you. And our next question today comes from Spiro Dounis with Citi. Please go ahead.

Spiro Dounis, Analyst, Citi: Thanks, afternoon team. Maybe just to go to you, Brinson. Tom, you pointed out that negotiations now are well in excess of that Phase two capacity. So multi part question here. One, what does that mean for the timing of Phase two?

Is there an ability to accelerate that now? And does this actually create some bottlenecks, maybe even downstream a few Brinson where that could precipitate more expansions? And then lastly, what kind of customers are you dealing with here? Is this largely data center driven demand?

Mackie McCree, Senior Executive, Energy Transfer: Yeah, this is Mac against Barewell. I tell you, it’s funny, we’ve been trying to get a 42 inches across Texas FID for I don’t even know four or five years and we finally got that done and it couldn’t have been better timing especially part of your last question was related to data centers. However, getting that to FID had nothing to do with data centers. Not one data center supported that project to get off the ground. As we’ve said, we have sold out now phase one.

We are in negotiations with, I wouldn’t say twice as much but significantly more volume requests than we have capacity available to take it from 1.5 Bcf to 2.2 Bcf. But as I was just alluding to what an incredible time to announce a new 42 inches 2.2 Bcf pipeline out of the most prolific basin in The United States that connects to multiple forty two and thirty six inches pipes of ours that feeds markets throughout the state of Texas. And then also of course accesses Carthage and Tex Oak to feed the Southeast LNG everything else. So we’re very excited about that. And then as far as data centers, we call it kind of the gold rush.

It’s something where not only is it are we working with customers that will end up probably utilizing some of the remainder capacity we have available. We also have customers that want diversification of receipt points, meaning they may want some from Waha, some from Katy, some from Cartage. We’re able to accommodate that with this massive system we’re built. So we’re in such a good situation. Very excited about as I keep saying, we can’t express our excitement enough.

And one kind of exclamation point on this, tying in all these, it’s not just data centers. That’s one thing that we probably need to elaborate on. We’re negotiating with as many power plants unassociated with data centers that we think are more likely to happen just because the need, especially here in Texas to meet the growing demand from population, etcetera. So kind of the exclamation point is there’s not a lot of capital to this. As I mentioned earlier, a lot of these areas where these data centers are proposed are right on top of us.

So we’re talking about moving 250,000, three hundred, four hundred thousand, five hundred thousand in different directions with some good healthy margins and yet we’re laying a mile to five miles of pipe. So I said exciting enough times I’ll say it again, we’re thrilled with this new opportunity for our pipeline assets and very excited where that’s going to take revenues for those assets in the future.

Spiro Dounis, Analyst, Citi: Good. No, it’s great to hear, Mackie. Second question, maybe this one for you as well and kind of want to go back to Jeremy’s original question, ask it a different way and hopefully not make you repeat yourself. Your point is well taken. I think over longer term periods, you’ve proven to be pretty durable and resilient through these cycles.

I guess, we narrow the focus a little bit, obviously a lot of projects coming online this year, 5,000,000,000 of CapEx in the hopper here. And I think last time we caught up, you did suggest you’d be sort of at the higher end of your sort of 3% to 5% growth rate this year and maybe next year. And so I guess I’m curious, given everything we’ve seen, I realize a lot of uncertainty still crude in the 50s. Does it still feel like that $5,000,000,000 of CapEx is got enough hardwired growth inside of it to still drive 5% growth or maybe just some of that come off a bit?

Mackie McCree, Senior Executive, Energy Transfer: That’s a good question and certainly we’re always looking at everything, every impact we might have on our system. With some of the statements that have come out even recently, one thing we were joking about before this call is every time we bring on a plant, we just brought on Lenora one here not too long ago within days, certainly within weeks it’s full. And so when we bring on Lenora two here in the next thirty, forty five days, we don’t know how full it’s going to be. Our expectations are it’s going to fill up pretty fast. But we do have the luxury of kind of watching what happens over the next quarter, maybe quarter and a half, two quarters.

And if we really do see a slowdown, we will have the ability to defer some of these costs. We could delay Mustang draw, certainly not talk about, think about that or anything right now on that. But it’s certainly a tool and something that we can look at as well as other projects that we have. If we see a huge downturn and it’s extended for some period of time, we will be able to push some of that $5,000,000,000 into ’26. But way premature to any kind of that type of, I wouldn’t say panic, but any of that type of moves where we remain bullish.

Yes, we see some softening. Yes, we see some potential challenges over the next quarter or two. But gosh, the year, two years through ten years, we’re extremely bullish on our industry and on the need for all the products that we transport. We’ll just see how the next quarter plays out before we make some of those decisions.

Spiro Dounis, Analyst, Citi: Got it. It’s great color, Mackie. Appreciate it. Thanks everyone.

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Thank you.

Conference Operator: Thank you. And our next question today comes from Keith Stanley at Wolfe Research. Please go ahead.

Keith Stanley, Analyst, Wolfe Research: Hi. Good afternoon. Two follow ups on that. So on the CapEx conversation, Tom, is there a figure that you have just roughly, if we’re talking $5,000,000,000 of growth CapEx this year, what would that look like based on just sanctioned projects right now for 2026? Does that number come down a lot?

Or how are you looking at that and flexibility for ’26 spend?

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Yeah, that’s thank you, Keith. That’s actually a very good question. We of course, we generally don’t give our guidance for the current year until the end of the year. But when you really look out and you probably look at a lot of these projects that we’re talking about coming on right now, we don’t have that same size number currently filled up, but we do have a as always a big backlog of projects to look at. So don’t really have an answer for you on how to guide, but you know, I probably take it to less than half, of that is probably where I would would take it with you, Keith.

So let’s let’s see how the year continues to develop. But, as we sit here right now, that’s it’s that’s probably a good a good marker without it being guidance though.

Keith Stanley, Analyst, Wolfe Research: Okay, so less than half of 5,000,000,000 is sanctioned today and obviously that can change over time.

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Yep, that’s correct. Okay,

Keith Stanley, Analyst, Wolfe Research: that’s very helpful. The second follow-up, I just wanted to check on the contracting position just across NGL exports. And so I think, Mackie, you said you expect to fully sell out on a spot basis all of your available export capacity. But you also said Flexport is 90% contracted for three to five years. Is there just looking holistically at your NGL export portfolio, is there a percentage of capacity that you would point to as being under fixed fee contracts going forward, including Flexport?

Mackie McCree, Senior Executive, Energy Transfer: Yeah, Keith. Our spot prices, they’re fixed when we negotiate in each month and then our term prices, they are fixed. So all the whether it’s a three year or four year or five year term, it’s a fixed fee for us to load ethane, propane or butane onto these ships. Does that answer your question?

Keith Stanley, Analyst, Wolfe Research: I guess I was trying to get at what percentage did the mix, so what percentage is term contracts versus month to month?

Mackie McCree, Senior Executive, Energy Transfer: So the flex port project that we’re bringing on ethane and propane and then ethylene throughout the remainder of this year, fully contracted fixed price on average three to five years for the flex board capacity that we’re putting in service this year.

Keith Stanley, Analyst, Wolfe Research: Got it. Thank you. Thank you.

Conference Operator: And our next question today comes from Michael Boone with Wells Fargo. Please go ahead.

Michael Boone, Analyst, Wells Fargo: Thanks. Good afternoon, everyone.

Conference Operator: I had a follow-up question on Hubernsen.

Michael Boone, Analyst, Wells Fargo: It sounds like you have more demand than your Phase two expansion. So I guess the question is, could you expand it further with compression? Or do you have another option? Would you somehow need to add another pipeline? And the other question related to that is, does this give you more pricing power and the ability to charge higher rates or could you see a higher return on a project like that?

Mackie McCree, Senior Executive, Energy Transfer: Well, let me just say our prices are always fair and competitive. We may have some markets on the phone, but no, anything like that. Of course, we can always loop pipe. We can always add compression. We actually now are looking at making Hugh Brinson fully bidirectional.

That’s at a relatively inexpensive price to make that work. But I guess to kind of round out the answer, we feel really good about the value of the capacity that we have yet to sell on Hugh Brinson and the amount of revenues that’s going to create for our partnership both from a west to east route as well as from an east to west route across Texas. So as I mentioned, we’re very well positioned and we think we’re going to do very well on adding significant value with all these, not only data centers, but with all the power plant opportunities that we have not only in Texas, but in a number of other states.

Michael Boone, Analyst, Wells Fargo: Got it. Thanks. That’s all I had today.

Conference Operator: Thank you. And our next question comes from Manav Gupta with UBS. Please go ahead.

Executive, Energy Transfer: Good afternoon. I wanted to ask you, it’s been about six months since you have had a new president and a new government. Have things actually changed on the ground? Are you seeing more supportive permitting process? And in general, are you seeing more support for oil and gas industry from the new administration?

Mackie McCree, Senior Executive, Energy Transfer: Yeah. Absolutely. We didn’t expect to be this big of an impact on things yet. But long term, we think the decisions that this administration will be very good for our country and very good for our industry and very good for our partnership. In regards to permitting, it goes without saying that the pause around LNG, whatever pause there was left has been lifted.

The Energy Dominance Council under the Department of Interior is doing everything they can to learn about projects and to help projects get to the finish line where they make sense. As far as any extensions, for example, around our LNG project with FERC extensions or DOE extensions, we feel very good about getting those. A general overall statement is things are much more positive. We think it will become much easier to build infrastructure with a lot more certainty for ourselves and for our customers and for the country. So as we talked about for the last four years, are very excited about this new administration and where it’s going to take this country and how our partnership will benefit from it.

Executive, Energy Transfer: Perfect. My quick and easy follow-up here is your guidance still remains for 2025, ’16 point ’1 to sixteen point five. And those of us who really like EP hope it’s sixteen point five. Help us understand despite some of the small slowdowns that we are seeing, what could still get you closer to 16.5 versus the midpoint of the guidance? Thank you.

Tom Long, Executive (likely CEO or CFO), Energy Transfer0: Yeah. This Dylan here. So when we think about that guidance range, one thing I do want to point out is for a start here. We put out this range of $400,000,000 and that’s on the midpoint of $16,300,000,000 So if you think about that, from the midpoint to the high and the low end, we’re only going less than one and a quarter percent each way. So that’s a pretty tight range.

There’s a lot of drivers in there. We feel really good about this plan when we put it out and we still feel really good about it right now. It’s the usual things, commodity price movements, spreads, those make up about 10% of our business there. And then there’s a little bit of volume exposure as well within primarily the midstream segment. That’s fairly muted as well.

But those are really the drivers that can move us within that 2.5% range top to bottom end.

Executive, Energy Transfer: Thank you so much.

Conference Operator: Thank you. And our next question today comes from John McKay with Goldman Sachs. Please go ahead.

Tom Long, Executive (likely CEO or CFO), Energy Transfer1: Hey, guys. Thanks for the time. I wanted to talk about WTG for a second. It’s been about, I guess, three quarters since you guys closed on that. Just anything you can kind of update us on in terms of how that asset’s going right now, your ability to kind of ramp it up and start to retake share in the Midland and then anything that’s coming out of it on the NGL side that’s given you some confidence on the contracting piece on the TNF side?

Thanks.

Mackie McCree, Senior Executive, Energy Transfer: This is Mac. I’ll start and Dylan may want to follow-up. But what a great acquisition, tremendous amount of reserve and contracts dedicated to those assets. We have discovered as we’ve kind of started operating on some issues that have come up that we continue to address. But long term we’re excited about the growth both from a cryogenic, from a gathering standpoint but also from a downstream.

We mentioned Hugh Brinson. Hugh Brinson will be at the tailgate of the majority of the WTG cryos. That’d be a great outlet when there’s issues. We are having issues from time to time with the existing pipeline. So that’ll help in a big way.

But as well as the NGLs, some of the NGLs already dedicated. We do see growth in NGLs coming from these facilities in the future for our NGL pipeline and fracking business. But all in all, we’re very pleased about that asset and working hard to bring it up to the full standards of energy transfers. Other assets, it’s going to be a great contributor to our partnership for many years to come.

Tom Long, Executive (likely CEO or CFO), Energy Transfer0: Maggie, said that, Greg. I think when we look back versus our acquisition plan, as many of you recall, we have a lot of maintenance capital in for the first two years as we recognize there was going be some work to do and we’re definitely spending that capital. But on the plus side, the volumes are ahead of the plan that we had an acquisition. And so I think we’re really pleased. The producers behind this system are great partners and we’re seeing the financial benefits of that on the revenue side.

All in all, financially this is going turn out to be

Tom Long, Executive (likely CEO or CFO), Energy Transfer: a great acquisition for us.

Tom Long, Executive (likely CEO or CFO), Energy Transfer1: I appreciate that. Thank you. And second, want to be quick. Going back to Manav’s question on the guidance, not to belabor the point. But since the range is so tight, just want to ask the $160,000,000 benefit in midstream this quarter, was that kind of expected inside the guide?

And then how are you guys treating the remainder storm proceeds that you haven’t recognized yet relative to that guidance range? Thanks.

Tom Long, Executive (likely CEO or CFO), Energy Transfer0: Yeah, would say that wasn’t explicitly as part of the guide. Now, when we look at the guide, the one thing that somewhat offsets that is the first quarter in our guide. We’ve assumed internally some volatility in there that we capture in the intrastate segment. I’ll say this first quarter, we did not have the volatility that we’ve seen in past years and so we were short on that mark there. So this is a little bit of an offset there versus some stretch that we’ve put into the business in the first quarter.

So you kind of consider that a wash as we go forward here.

Tom Long, Executive (likely CEO or CFO), Energy Transfer1: I appreciate that. Thanks for the time.

Conference Operator: Thank you. And our next question comes from Gabe Moreen Please go ahead.

Tom Long, Executive (likely CEO or CFO), Energy Transfer2: Hey, good afternoon. I just had one follow-up on Lake Charles. Given, I guess, all the activity to try to get gas to the Gulf Coast for LNG exports and also the Mid Ocean agreement saying that they’ll use energy transfer pipes to get gas to their portion of the facility. Can you calibrate kind of the upstream opportunities on the pipe side now that you’re getting close to FID, whether it’s getting gas from the Haynesville across the border from Texas? Just kind of your latest thoughts on how big that opportunity could be?

Mackie McCree, Senior Executive, Energy Transfer: You bet. This is Mackie again. It’s a huge opportunity. Yes, we do intend for all the molecules that come into Lake Charles will somehow move through our pipelines. We have the ability to move quite a bit of gas to that area today.

We will be needing to expand where exactly that expansion will come to and what size and timing and all that. We’re still working through that depending on what the customer’s desires are. But probably unlike any other LNG, we will have the ability to source from the Permian Basin, from Carthage, from Oklahoma, from Perryville, from North Louisiana, from East Texas, from Katy. So with our extensive pipeline intra interstate network, we’re having the ability to provide our customers and ourselves with access to the cheapest sources of supply wherever those may be from all those points we just talked about. So we’re still fine tuning and finalizing what additional upstream pipelines will be necessary and those will be also to FID by the end of this year as well in conjunction with the Lake Charles.

Tom Long, Executive (likely CEO or CFO), Energy Transfer2: Thanks, Mackie.

Conference Operator: Thank you. This concludes our question and answer session. I’d like to turn the conference back over to Tom Long for closing remarks.

Tom Long, Executive (likely CEO or CFO), Energy Transfer: Well, thank you and thank you to all of you for joining us. We’re always very, very appreciative of your support and we look forward to any follow-up questions you might have.

Conference Operator: Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.

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