Energy Transfer LP (NYSE:ET) (“Energy Transfer” or the
“Partnership”) today reported financial results for the quarter
ended September 30, 2022.
Energy Transfer reported net income attributable to partners for
the three months ended September 30, 2022 of $1.01 billion, a $371
million increase from the same period last year. For the three
months ended September 30, 2022, net income per limited partner
unit (basic and diluted) was $0.29 per unit.
Adjusted EBITDA for the three months ended September 30, 2022
was $3.09 billion compared to $2.58 billion for the three months
ended September 30, 2021. In the third quarter 2022, the
Partnership experienced a $126 million charge in the crude oil
transportation and services segment related to a legal matter. In
addition, Energy Transfer’s third quarter 2022 results were
impacted by an approximately $130 million negative adjustment
related to hedged inventory in the NGL and refined products
transportation and services segment. These two items impacted third
quarter 2022 Adjusted EBITDA by approximately $260 million in the
aggregate.
Distributable Cash Flow attributable to partners, as adjusted,
for the three months ended September 30, 2022 was $1.58 billion
compared to $1.31 billion for the three months ended September 30,
2021.
The improved results were primarily due to higher volumes across
all of our core segments and the impacts of the recent acquisition
of Enable Midstream.
Key accomplishments and recent developments:
Operational
- Energy Transfer’s nation-wide system, with diverse products and
services, is well-positioned throughout various markets. During the
third quarter of 2022, each of Energy Transfer’s five core segments
realized higher volumes compared with the same period in 2021.
- Intrastate natural gas transportation volumes were up 28% and
set a new Partnership record.
- Interstate natural gas transportation volumes were up 43%.
- Midstream gathered volumes were up 47% and set a new
Partnership record.
- NGL transportation volumes were up 5%.
- NGL fractionation volumes were up 6% and set a new Partnership
record.
- Crude oil transportation and terminal volumes were up 10% and
14%, respectively.
- Energy Transfer’s Nederland terminal and related facilities
serve as critical resources with access to the U.S. Strategic
Petroleum Reserve (“SPR”). Higher SPR volumes and increased
activity in the region drove transportation and terminal volumes at
the Nederland and Houston terminals to new records during the third
quarter.
- Mainline construction on the Gulf Run Pipeline was recently
finished and the project remains on schedule to be completed by
year-end
Strategic
- Over 90 percent of Energy Transfer’s growth capital spending is
comprised of projects that are already on-line or expected to be
on-line and contributing cash flow at very attractive returns
before the end of 2023. The project backlog includes Gulf Run
Pipeline in Louisiana, Grey Wolf and Bear processing plants in the
Permian Basin, Fractionator VIII in Mont Belvieu and LPG facilities
projects at Energy Transfer’s Nederland Terminal.
- In September 2022, Energy Transfer completed the acquisition of
Woodford Express, LLC, which owns a Mid-Continent gas gathering and
processing system, for approximately $485 million. The system,
which is located in the heart of the SCOOP play, has 450 MMcf per
day of cryogenic gas processing and treating capacity and over 200
miles of gathering and transportation lines, which are connected to
Energy Transfer’s pipeline network. The system is supported by
dedicated acreage with long-term, predominantly fixed-fee contracts
with active, proven producers.
- In August 2022, Energy Transfer announced a 20-year LNG Sale
and Purchase Agreement (“SPA”) with Shell NA LNG LLC. To date in
2022, the Partnership has entered into six long-term LNG SPAs.
Under these SPAs, Energy Transfer LNG Export, LLC is expected to
supply a total of 7.9 million tonnes of LNG per annum, with terms
ranging from 18 to 25 years.
- In August 2022, the Partnership completed the previously
announced sale of its 51% interest in Energy Transfer Canada for
cash proceeds to Energy Transfer of approximately $302 million. The
sale reduced Energy Transfer’s consolidated debt by approximately
$850 million, which includes the use of proceeds to pay down Energy
Transfer’s revolving credit facility and the deconsolidation of
Energy Transfer Canada’s debt.
Financial
- Energy Transfer’s base business continues to execute well with
performance ahead of expectations, driven by continued strong
demand across Energy Transfer’s network. As a result, the
Partnership now expects Adjusted EBITDA for the full year 2022 to
be between $12.8 billion and $13.0 billion (previously $12.6
billion to $12.8 billion). The Partnership continues to expect its
2022 growth capital expenditures to be between $1.8 billion and
$2.1 billion.
- In October 2022, Energy Transfer announced a quarterly cash
distribution of $0.265 per common unit ($1.06 annualized) for the
quarter ended September 30, 2022. This distribution represents a
more than 70% increase over the third quarter of 2021. Future
increases to the distribution level will continue to be evaluated
quarterly with the ultimate goal of returning distributions to the
previous level of $0.305 per common unit per quarter ($1.22
annualized) while balancing the Partnership’s leverage target,
growth opportunities and unit buybacks.
- As of September 30, 2022, the Partnership’s revolving credit
facility had $2.32 billion of available capacity.
- For the three months ended September 30, 2022, the Partnership
invested approximately $500 million on growth capital
expenditures.
Energy Transfer benefits from a portfolio of assets with
exceptional product and geographic diversity. The Partnership’s
multiple segments generate high-quality, balanced earnings with no
single segment contributing more than 30% of the Partnership’s
consolidated Adjusted EBITDA for the three or nine months ended
September 30, 2022. The vast majority of the Partnership’s segment
margins are fee-based and therefore have limited commodity price
sensitivity.
Conference Call information:
The Partnership has scheduled a conference call for 3:30 p.m.
Central Time/4:30 p.m. Eastern Time on Tuesday, November 1, 2022 to
discuss its third quarter 2022 results and provide an update on the
Partnership. The conference call will be broadcast live via an
internet webcast, which can be accessed through www.energytransfer.com and will also be available
for replay on the Partnership’s website for a limited time.
Energy Transfer LP (NYSE: ET) owns and operates one of
the largest and most diversified portfolios of energy assets in the
United States, with a strategic footprint in all of the major U.S.
production basins. Energy Transfer is a publicly traded limited
partnership with core operations that include complementary natural
gas midstream, intrastate and interstate transportation and storage
assets; crude oil, natural gas liquids (“NGL”) and refined product
transportation and terminalling assets; and NGL fractionation.
Energy Transfer also owns Lake Charles LNG Company, as well as the
general partner interests, the incentive distribution rights and
28.5 million common units of Sunoco LP (NYSE: SUN), and the general
partner interests and 46.1 million common units of USA Compression
Partners, LP (NYSE: USAC). For more information, visit the Energy
Transfer LP website at www.energytransfer.com.
Sunoco LP (NYSE: SUN) is a master limited partnership
with core operations that include the distribution of motor fuel to
approximately 10,000 convenience stores, independent dealers,
commercial customers and distributors located in more than 40 U.S.
states and territories, as well as refined product transportation
and terminalling assets. SUN’s general partner is owned by Energy
Transfer LP (NYSE: ET). For more information, visit the Sunoco LP
website at www.sunocolp.com.
USA Compression Partners, LP (NYSE: USAC) is a
growth-oriented Delaware limited partnership that is one of the
nation’s largest independent providers of natural gas compression
services in terms of total compression fleet horsepower. USAC
partners with a broad customer base composed of producers,
processors, gatherers and transporters of natural gas and crude
oil. USAC focuses on providing compression services to
infrastructure applications primarily in high-volume gathering
systems, processing facilities and transportation applications. For
more information, visit the USAC website at www.usacompression.com.
Forward-Looking Statements
This news release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
management’s control. An extensive list of factors that can affect
future results, including future distribution levels and leverage
ratio, are discussed in the Partnership’s Annual Report on Form
10-K and other documents filed from time to time with the
Securities and Exchange Commission. In addition to the risks and
uncertainties previously disclosed, the Partnership has also been,
or may in the future be, impacted by new or heightened risks
related to the COVID-19 pandemic, and we cannot predict the length
and ultimate impact of those risks. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
The information contained in this press release is available on
our website at www.energytransfer.com.
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
September 30,
2022
December 31,
2021
ASSETS
Current assets
$
12,159
$
10,537
Property, plant and equipment, net
80,261
81,607
Investments in unconsolidated
affiliates
2,869
2,947
Lease right-of-use assets, net
815
838
Other non-current assets, net
1,573
1,645
Intangible assets, net
5,505
5,856
Goodwill
2,553
2,533
Total assets
$
105,735
$
105,963
LIABILITIES AND EQUITY
Current liabilities
$
11,243
$
10,835
Long-term debt, less current
maturities
47,413
49,022
Non-current derivative liabilities
33
193
Non-current operating lease
liabilities
794
814
Deferred income taxes
3,661
3,648
Other non-current liabilities
1,530
1,323
Commitments and contingencies
Redeemable noncontrolling interests
493
783
Equity:
Limited Partners:
Preferred Unitholders
6,077
6,051
Common Unitholders
26,725
25,230
General Partner
(3
)
(4
)
Accumulated other comprehensive income
32
23
Total partners’ capital
32,831
31,300
Noncontrolling interests
7,737
8,045
Total equity
40,568
39,345
Total liabilities and equity
$
105,735
$
105,963
ENERGY
TRANSFER LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per unit
data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
REVENUES
$
22,939
$
16,664
$
69,375
$
48,760
COSTS AND EXPENSES:
Cost of products sold
18,516
13,188
56,169
35,641
Operating expenses
973
898
2,982
2,585
Depreciation, depletion and
amortization
1,030
943
3,104
2,837
Selling, general and administrative
361
198
802
583
Impairment losses and other
86
—
386
11
Total costs and expenses
20,966
15,227
63,443
41,657
OPERATING INCOME
1,973
1,437
5,932
7,103
OTHER INCOME (EXPENSE):
Interest expense, net of interest
capitalized
(577
)
(558
)
(1,714
)
(1,713
)
Equity in earnings of unconsolidated
affiliates
68
71
186
191
Losses on extinguishments of debt
—
—
—
(8
)
Gains on interest rate derivatives
60
1
303
72
Other, net
(120
)
33
(117
)
45
INCOME BEFORE INCOME TAX EXPENSE
1,404
984
4,590
5,690
Income tax expense
82
77
159
234
NET INCOME
1,322
907
4,431
5,456
Less: Net income attributable to
noncontrolling interests
304
260
793
870
Less: Net income attributable to
redeemable noncontrolling interests
12
12
37
37
NET INCOME ATTRIBUTABLE TO PARTNERS
1,006
635
3,601
4,549
General Partner’s interest in net
income
1
1
3
5
Preferred Unitholders’ interest in net
income
106
99
317
185
Limited Partners’ interest in net
income
$
899
$
535
$
3,281
$
4,359
NET INCOME PER COMMON UNIT:
Basic
$
0.29
$
0.20
$
1.06
$
1.61
Diluted
$
0.29
$
0.20
$
1.06
$
1.60
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic
3,087.6
2,705.2
3,085.6
2,704.0
Diluted
3,108.6
2,720.6
3,106.4
2,718.4
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Dollars and units in
millions)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021(a)
Reconciliation of net income to
Adjusted EBITDA and Distributable Cash Flow(b):
Net income
$
1,322
$
907
$
4,431
$
5,456
Interest expense, net of interest
capitalized
577
558
1,714
1,713
Impairment losses and other
86
—
386
11
Income tax expense
82
77
159
234
Depreciation, depletion and
amortization
1,030
943
3,104
2,837
Non-cash compensation expense
27
26
88
81
Gains on interest rate derivatives
(60
)
(1
)
(303
)
(72
)
Unrealized (gains) losses on commodity
risk management activities
(76
)
19
(130
)
(74
)
Losses on extinguishments of debt
—
—
—
8
Inventory valuation adjustments (Sunoco
LP)
40
(9
)
(81
)
(168
)
Equity in earnings of unconsolidated
affiliates
(68
)
(71
)
(186
)
(191
)
Adjusted EBITDA related to unconsolidated
affiliates
147
141
409
400
Other, net
(19
)
(11
)
65
—
Adjusted EBITDA (consolidated)
3,088
2,579
9,656
10,235
Adjusted EBITDA related to unconsolidated
affiliates
(147
)
(141
)
(409
)
(400
)
Distributable cash flow from
unconsolidated affiliates
102
103
270
268
Interest expense, net of interest
capitalized
(577
)
(558
)
(1,714
)
(1,713
)
Preferred unitholders’ distributions
(118
)
(110
)
(353
)
(305
)
Current income tax expense
(31
)
(10
)
(1
)
(34
)
Transaction-related income taxes(c)
—
—
(42
)
—
Maintenance capital expenditures
(247
)
(155
)
(527
)
(371
)
Other, net
5
14
17
50
Distributable Cash Flow (consolidated)
2,075
1,722
6,897
7,730
Distributable Cash Flow attributable to
Sunoco LP (100%)
(195
)
(146
)
(496
)
(399
)
Distributions from Sunoco LP
41
41
124
124
Distributable Cash Flow attributable to
USAC (100%)
(55
)
(52
)
(161
)
(157
)
Distributions from USAC
25
25
73
73
Distributable Cash Flow attributable to
noncontrolling interests in other non-wholly-owned consolidated
subsidiaries
(315
)
(284
)
(926
)
(786
)
Distributable Cash Flow attributable to
the partners of Energy Transfer
1,576
1,306
5,511
6,585
Transaction-related adjustments
5
6
26
34
Distributable Cash Flow attributable to
the partners of Energy Transfer, as adjusted
$
1,581
$
1,312
$
5,537
$
6,619
Distributions to partners:
Limited Partners
$
818
$
413
$
2,145
$
1,238
General Partner
1
1
2
2
Total distributions to be paid to
partners
$
819
$
414
$
2,147
$
1,240
Common Units outstanding – end of
period
3,088.0
2,705.8
3,088.0
2,705.8
Distribution coverage ratio
1.93x
3.17x
2.58x
5.34x
(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 nine months ended
September 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
September 30,
2022
2021
Segment Adjusted EBITDA:
Intrastate transportation and storage
$
301
$
172
Interstate transportation and storage
409
334
Midstream
868
556
NGL and refined products transportation
and services
634
706
Crude oil transportation and services
461
496
Investment in Sunoco LP
276
198
Investment in USAC
109
99
All other
30
18
Total Segment Adjusted EBITDA
$
3,088
$
2,579
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.
In addition, for certain segments, the sections below include
information on the components of segment margin by sales type,
which components are included in order to provide additional
disaggregated information to facilitate the analysis of segment
margin and Segment Adjusted EBITDA. For example, these components
include transportation margin, storage margin and other margin.
These components of segment margin are calculated consistent with
the calculation of segment margin; therefore, these components also
exclude charges for depreciation, depletion and amortization.
Intrastate Transportation and
Storage
Three Months Ended
September 30,
2022
2021
Natural gas transported (BBtu/d)
14,878
11,601
Withdrawals from storage natural gas
inventory (BBtu)
—
2,350
Revenues
$
2,383
$
1,217
Cost of products sold
1,994
978
Segment margin
389
239
Unrealized (gains) losses on commodity
risk management activities
12
(1
)
Operating expenses, excluding non-cash
compensation expense
(93
)
(64
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(12
)
(8
)
Adjusted EBITDA related to unconsolidated
affiliates
5
6
Segment Adjusted EBITDA
$
301
$
172
Transported volumes increased primarily due to the acquisition
of the Enable Oklahoma Intrastate Transmission system, as well as
increased production in the Haynesville.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our intrastate transportation and storage segment
increased due to the net impacts of the following:
- an increase of $100 million in realized natural gas sales and
other primarily due to higher optimization;
- an increase of $40 million in transportation fees primarily due
to fees from the Enable Oklahoma Intrastate Transmission System;
and
- an increase of $29 million in retained fuel revenues related to
higher natural gas prices; partially offset by
- an increase of $29 million in operating expenses primarily due
to a $17 million increase in cost of fuel consumption, a $7 million
increase from additional expenses from the Enable assets and a $4
million increase in utilities expenses;
- a decrease of $8 million in storage margin primarily due to
lower storage optimization; and
- an increase of $4 million in selling, general and
administrative expenses primarily due to the addition of
Enable.
Interstate Transportation and
Storage
Three Months Ended
September 30,
2022
2021
Natural gas transported (BBtu/d)
14,157
9,917
Natural gas sold (BBtu/d)
28
16
Revenues
$
549
$
418
Cost of products sold
3
—
Segment margin
546
418
Operating expenses, excluding non-cash
compensation, amortization and accretion expenses
(219
)
(152
)
Selling, general and administrative
expenses, excluding non-cash compensation, amortization and
accretion expenses
(37
)
(21
)
Adjusted EBITDA related to unconsolidated
affiliates
106
91
Other
13
(2
)
Segment Adjusted EBITDA
$
409
$
334
Transported volumes increased primarily due to the impact of the
Enable Acquisition, higher utilization on our Tiger system due to
increased production in the Haynesville Shale and higher volumes on
our Trunkline system due to increased demand.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our interstate transportation and storage segment
increased due to the net impacts of the following:
- an increase of $128 million in segment margin primarily due to
a $137 million increase as a result of higher volumes from the
Enable Acquisition and increased production in the Haynesville
Shale and Permian Basin and a $2 million increase due to higher
volumes and higher rates from operational gas sales. These
increases were partially offset by a $5 million decrease due to a
shipper bankruptcy on our Rover system and a $6 million decrease on
our Panhandle system resulting from developments in an ongoing rate
case;
- an increase of $15 million in Adjusted EBITDA related to
unconsolidated affiliates primarily due to an increase of $12
million resulting from the Enable Acquisition and a $3 million
increase from our Midcontinent Express Pipeline joint venture as a
result of higher revenue due to capacity sold at higher rates;
and
- an increase of $15 million in other primarily due to the
realization in the current period of certain amounts related to a
shipper bankruptcy that occurred in a prior period; partially
offset by
- an increase of $67 million in operating expenses primarily due
to a $71 million increase from the impact of the Enable Acquisition
and a $3 million increase in maintenance related expenses,
partially offset by a $7 million decrease from shipper imbalances;
and
- an increase of $16 million in selling, general and
administrative expenses primarily due to the impact of the Enable
Acquisition.
Midstream
Three Months Ended
September 30,
2022
2021
Gathered volumes (BBtu/d)
19,107
12,991
NGLs produced (MBbls/d)
814
667
Equity NGLs (MBbls/d)
43
37
Revenues
$
4,871
$
2,919
Cost of products sold
3,678
2,153
Segment margin
1,193
766
Operating expenses, excluding non-cash
compensation expense
(275
)
(191
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(55
)
(28
)
Adjusted EBITDA related to unconsolidated
affiliates
5
8
Other
—
1
Segment Adjusted EBITDA
$
868
$
556
Gathered volumes and NGL production increased compared to the
same period last year primarily due to increases in all
regions.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our midstream segment increased due to the net
impacts of the following:
- an increase of $33 million in non-fee-based margin due to
favorable natural gas prices of $25 million and NGL prices of $8
million;
- an increase of $124 million in non-fee-based margin due to the
Enable Acquisition in December 2021; and
- an increase of $271 million in fee-based margin due to the
Enable Acquisition in December 2021, as well as increased
production in the Permian and South Texas regions; partially offset
by
- an increase of $84 million in operating expenses due to $64
million in incremental operating expenses related to the Enable
assets acquired in December 2021 and an $18 million increase in
maintenance project costs and materials in the South Texas and
Permian regions; and
- an increase of $27 million in selling, general and
administrative expenses primarily due to a $10 million increase
from the impact of the Enable Acquisition and a $13 million
increase in insurance and legal fees.
NGL and Refined Products Transportation
and Services
Three Months Ended
September 30,
2022
2021
NGL transportation volumes (MBbls/d)
1,892
1,803
Refined products transportation volumes
(MBbls/d)
543
526
NGL and refined products terminal volumes
(MBbls/d)
1,287
1,237
NGL fractionation volumes (MBbls/d)
940
884
Revenues
$
6,075
$
5,262
Cost of products sold
5,044
4,347
Segment margin
1,031
915
Unrealized gains on commodity risk
management activities
(126
)
(2
)
Operating expenses, excluding non-cash
compensation expense
(265
)
(207
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(33
)
(27
)
Adjusted EBITDA related to unconsolidated
affiliates
27
26
Other
—
1
Segment Adjusted EBITDA
$
634
$
706
NGL transportation volumes increased primarily due to higher
volumes from the Permian and Eagle Ford regions and higher volumes
on our export pipelines into our Nederland Terminal.
Refined products transportation volumes increased due to
recovery from COVID-19 related demand reduction in the prior
period.
NGL and refined products terminal volumes increased primarily
due to higher volumes on our export pipelines and refined product
demand recovery.
Average fractionated volumes at our Mont Belvieu, Texas
fractionation facility increased due to increased production to our
system, primarily from the Permian and Eagle Ford regions.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our NGL and refined products transportation and
services segment decreased due to the net impacts of the
following:
- an increase of $45 million in fractionators and refinery
services margin primarily due to a $48 million increase from higher
volumes and higher rates driven by contractual rate escalations
tied to broader economic inflationary measures. This increase was
partially offset by a decrease from our refinery services business
due to a less favorable pricing environment;
- an increase of $39 million in transportation margin primarily
due to a $62 million increase resulting from higher y-grade
throughput and higher rates driven by contractual rate escalations
tied to broader economic inflationary measures on our Texas
pipeline system, and a $5 million increase from higher throughput
on our Mariner East pipeline system. These increases were partially
offset by a $10 million decrease from lower throughput on our
Mariner West pipeline due to the timing of customer facility
maintenance and a $16 million decrease from intrasegment charges
which are fully offset within our marketing and fractionators
margin;
- an increase of $13 million in terminal services margin
primarily due to a $9 million increase from higher rates on export
volumes loaded at our Nederland Terminal and a $3 million increase
from higher throughput at our Marcus Hook Terminal; and
- an increase of $9 million in storage margin primarily due to a
$4 million increase from the timing of third-party deficiency
payments, a $2 million increase in component product storage fees
and a $2 million increase from the timing of cavern withdrawals;
offset by
- a decrease of $114 million in marketing margin primarily due to
losses of approximately $128 million from the optimization of NGL
component products primarily due to the timing of the recognition
of gains on hedged inventory. Associated hedge positions recorded
unrealized gains of $125 million during the third quarter of 2022.
These decreases were partially offset by an $11 million increase
from intrasegment charges which are fully offset within our
transportation margin;
- an increase of $58 million in operating expenses primarily due
to a $43 million increase in gas and power utility costs, a $6
million increase in ad valorem taxes, a $5 million increase in
physical product losses and a $3 million increase in maintenance
project costs; and
- an increase of $6 million in selling, general and
administrative expenses primarily due to a $2 million increase in
overhead expenses allocated to the segment, a $1 million increase
in employee related costs and a $1 million increase in insurance
costs.
Crude Oil Transportation and
Services
Three Months Ended
September 30,
2022
2021
Crude transportation volumes (MBbls/d)
4,575
4,173
Crude terminal volumes (MBbls/d)
3,080
2,703
Revenues
$
6,416
$
4,578
Cost of products sold
5,627
3,918
Segment margin
789
660
Unrealized losses on commodity risk
management activities
2
14
Operating expenses, excluding non-cash
compensation expense
(176
)
(142
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(155
)
(44
)
Adjusted EBITDA related to unconsolidated
affiliates
1
7
Other
—
1
Segment Adjusted EBITDA
$
461
$
496
Crude transportation volumes were higher on our Texas pipeline
system and Bakken Pipeline, driven by continuing crude oil
production growth in these regions as a result of higher crude
prices and refinery demand. Additionally, volumes benefited from
assets acquired in 2021 as well as new assets placed into service,
primarily Cushing South and Ted Collins Link. Volumes on Bayou
Bridge were also higher, primarily due to increased crude supply
from recent Strategic Petroleum Reserve sales. Crude Terminal
volumes were higher due to Strategic Petroleum Reserve sale volumes
increasing throughput and export activity at our Gulf Coast
terminals.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our crude oil transportation and services segment
decreased due to the net impacts of the following:
- an increase of $117 million in segment margin (excluding
unrealized gains and losses on commodity risk management
activities) primarily due to a $36 million increase due to higher
volumes on our Bakken Pipeline, a $28 million increase related to
assets acquired in 2021, a $45 million increase in throughput at
our Gulf Coast terminals due to Strategic Petroleum Reserve
volumes, stronger refinery utilization and higher export demand, a
$6 million increase on our Bayou Bridge pipeline due to higher
volumes and a $5 million increase on our Texas pipeline system due
to higher volumes; offset by
- an increase of $34 million in operating expenses primarily due
to higher volume-driven expenses, higher project expenses and
expenses related to assets acquired in 2021;
- an increase of $111 million in selling, general and
administrative expenses primarily due to a charge related to a
legal matter; and
- a decrease of $6 million in Adjusted EBITDA related to
unconsolidated affiliates due to the consolidation of certain
operations that were previously reflected as unconsolidated
affiliates.
Investment in Sunoco LP
Three Months Ended
September 30,
2022
2021
Revenues
$
6,594
$
4,779
Cost of products sold
6,261
4,472
Segment margin
333
307
Unrealized losses on commodity risk
management activities
23
2
Operating expenses, excluding non-cash
compensation expense
(98
)
(85
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(29
)
(23
)
Adjusted EBITDA related to unconsolidated
affiliates
2
3
Inventory valuation adjustments
40
(9
)
Other
5
3
Segment Adjusted EBITDA
$
276
$
198
The Investment in Sunoco LP segment reflects the consolidated
results of Sunoco LP.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our investment in Sunoco LP segment increased due
to the net impacts of the following:
- an increase in the gross profit on motor fuel sales of $75
million primarily due to a 23.6% increase in gross profit per
gallon sold and a 0.8% increase in gallons sold; and
- an increase in non-motor fuel gross profit of $22 million
primarily due to the recent acquisition of refined product
terminals, as well as increased credit card transactions and
merchandise gross profit; partially offset by
- an increase in operating expenses and selling, general and
administrative expenses of $19 million primarily due to the recent
acquisitions of refined product terminals and a transmix processing
and terminal facility, higher employee costs, insurance costs and
credit card processing fees.
Investment in USAC
Three Months Ended
September 30,
2022
2021
Revenues
$
179
$
159
Cost of products sold
28
19
Segment margin
151
140
Operating expenses, excluding non-cash
compensation expense
(31
)
(31
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(11
)
(10
)
Segment Adjusted EBITDA
$
109
$
99
The Investment in USAC segment reflects the consolidated results
of USAC.
Segment Adjusted EBITDA. For the three months ended September
30, 2022 compared to the same period last year, Segment Adjusted
EBITDA related to our investment in USAC segment increased
primarily due to an increase of $11 million in segment margin
primarily due to an increase in contract operations revenue as a
result of select price increases on USAC’s existing fleet under
contract and higher revenue generating horsepower.
All Other
Three Months Ended
September 30,
2022
2021
Revenues
$
1,084
$
696
Cost of products sold
1,052
652
Segment margin
32
44
Unrealized losses on commodity risk
management activities
13
6
Operating expenses, excluding non-cash
compensation expense
(17
)
(29
)
Selling, general and administrative
expenses, excluding non-cash compensation expense
(11
)
(13
)
Adjusted EBITDA related to unconsolidated
affiliates
2
2
Other and eliminations
11
8
Segment Adjusted EBITDA
$
30
$
18
For the three months ended September 30, 2022 compared to the
same period last year, Segment Adjusted EBITDA related to our all
other segment increased primarily due to the net impacts of the
following:
- an increase of $18 million due to a favorable environment for
physical gas trading and storage activities;
- an increase of $12 million due to a favorable environment for
our power trading activities; and
- an increase of $6 million due to higher coal royalties at our
natural resources business; partially offset by
- a decrease of $17 million due to the sale of Energy Transfer
Canada.
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON LIQUIDITY
(In millions)
(unaudited)
The following table summarizes the status
of our revolving credit facility. We also have consolidated
subsidiaries with revolving credit facilities which are not
included in this table.
Facility Size
Funds Available at
September 30, 2022
Maturity Date
Five-Year Revolving Credit Facility
$
5,000
$
2,317
April 11, 2027
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED
AFFILIATES
(In millions)
(unaudited)
The table below provides information on an
aggregated basis for our unconsolidated affiliates, which are
accounted for as equity method investments in the Partnership’s
financial statements for the periods presented.
Three Months Ended
September 30,
2022
2021
Equity in earnings (losses) of
unconsolidated affiliates:
Citrus
$
36
$
44
MEP
(1
)
(5
)
White Cliffs
—
(1
)
Explorer
8
9
Other
25
24
Total equity in earnings of unconsolidated
affiliates
$
68
$
71
Adjusted EBITDA related to
unconsolidated affiliates:
Citrus
$
86
$
87
MEP
8
4
White Cliffs
5
4
Explorer
12
12
Other
36
34
Total Adjusted EBITDA related to
unconsolidated affiliates
$
147
$
141
Distributions received from
unconsolidated affiliates:
Citrus
$
52
$
106
MEP
4
1
White Cliffs
5
5
Explorer
6
6
Other
27
20
Total distributions received from
unconsolidated affiliates
$
94
$
138
ENERGY
TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT
VENTURE SUBSIDIARIES
(In millions)
(unaudited)
The table below provides information on an
aggregated basis for our non-wholly-owned joint venture
subsidiaries, which are reflected on a consolidated basis in our
financial statements. The table below excludes Sunoco LP and USAC,
which are non-wholly-owned subsidiaries that are publicly
traded.
Three Months Ended
September 30,
2022
2021
Adjusted EBITDA of non-wholly-owned
subsidiaries (100%) (a)
$
622
$
599
Our proportionate share of Adjusted EBITDA
of non-wholly-owned subsidiaries (b)
297
299
Distributable Cash Flow of
non-wholly-owned subsidiaries (100%) (c)
$
593
$
556
Our proportionate share of Distributable
Cash Flow of non-wholly-owned subsidiaries (d)
278
272
Below is our ownership percentage of certain
non-wholly-owned subsidiaries:
Non-wholly-owned subsidiary:
Energy Transfer Percentage
Ownership (e)
Bakken Pipeline
36.4%
Bayou Bridge
60.0%
Maurepas
51.0%
Ohio River System
75.0%
Permian Express Partners
87.7%
Red Bluff Express
70.0%
Rover
32.6%
Others
various
(a)
Adjusted EBITDA of
non-wholly-owned subsidiaries reflects the total Adjusted EBITDA of
our non-wholly-owned subsidiaries on an aggregated basis. This is
the amount included in our consolidated non-GAAP measure of
Adjusted EBITDA.
(b)
Our proportionate share of
Adjusted EBITDA of non-wholly-owned subsidiaries reflects the
amount of Adjusted EBITDA of such subsidiaries (on an aggregated
basis) that is attributable to our ownership interest.
(c)
Distributable Cash Flow of
non-wholly-owned subsidiaries reflects the total Distributable Cash
Flow of our non-wholly-owned subsidiaries on an aggregated
basis.
(d)
Our proportionate share of
Distributable Cash Flow of non-wholly-owned subsidiaries reflects
the amount of Distributable Cash Flow of such subsidiaries (on an
aggregated basis) that is attributable to our ownership interest.
This is the amount included in our consolidated non-GAAP measure of
Distributable Cash Flow attributable to the partners of Energy
Transfer.
(e)
Our ownership reflects the total
economic interest held by us and our subsidiaries. In some cases,
this percentage comprises ownership interests held in (or by)
multiple entities. In addition to the ownership reflected in the
table above, the Partnership also owned a 51% interest in Energy
Transfer Canada until August 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221101006138/en/
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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