On Tuesday, Energy Transfer (NYSE:ET) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Energy Transfer reported a strong financial performance with adjusted EBITDA of $4.9 billion for Q1 2026, a notable increase from $4.1 billion in the previous year.
The company raised its 2026 adjusted EBITDA guidance to a range of $18.2 billion to $18.6 billion, up from the previous range of $17.45 billion to $17.85 billion.
Significant operational highlights include record midstream gathering, NGL fractionation, NGL export, and crude oil transportation volumes.
Energy Transfer plans substantial capital investments with new growth projects, including the Springerville lateral pipeline and expanded natural gas services to power plants and data centers.
The company sees potential long-term growth opportunities, particularly in the Permian Basin and international LPG markets, driven by global demand shifts due to geopolitical conflicts.
Management expressed confidence in achieving or exceeding the high end of their guidance range, citing the strong performance and strategic positioning of their assets.
Full Transcript
Operator
Good morning and welcome to the Energy Transfer first quarter 2026 earnings call. All participant lines will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question we press STAR and then one on your touchstone phone. To withdraw your question you may press STAR and then two. Please note this event is being recorded. I would now like to turn the conference call over to Mr. Tom Long, Co Chief Executive Officer. Thank you and over to you.
Tom Long (Co Chief Executive Officer)
Thank you Operator & good morning everyone & welcome to the Energy Transfer first quarter 2026 earnings call. I’m also joined today by Mackey McCree, Dylan Bramhall & 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 morning. As a reminder, our earnings release contains an update to guidance & a thorough MDA that goes through the segment results in detail & we encourage everyone to take a look at the press release as well as the slides posted to our website to gain a full underst&ing of the quarter & 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 & information currently available to us, & are discussed in more detail in our Form 10Q for the quarter end March 31, 2026, which we expect to file later this week. I’ll also refer to adjusted EBITDA & 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. Let’s start today by going over our financial Results. For the first quarter of 2026. We generated adjusted EBITDA of approximately $4.9 billion compared to approximately $4.1 billion for the first quarter of last year. DCF attributable to the partners of Energy Transfer as adjusted was approximately $2.7 billion compared to approximately $2.3 billion for the first quarter of 2025. These results were supported by strong operations including record midstream gathering volumes, NGL fractionation volumes, NGL export volumes & crude oil transportation volumes. For the quarter & for the first quarter of 2026, we spent approximately $1.5 billion on organic growth capital primarily in the intrastate, NGL & refined products, midstream & interstate segments excluding sun & USA compression CAPEX turning to our 2026 guidance as a result of our strong first quarter performance across our segments as well as revised expectations for the rest of 2026, we now expect our 2026 adjusted EBITDA to range between approximately $18.2 billion & $18.6 billion compared to the previous range of between approximately $7.45 billion & $17.85 billion. This includes a beat of approximately $500 million & the capture of our full year optimization target in the first quarter as well as the expectations for continued outperformance for the balance of the year. Now turning to Organic Growth Capital Guidance, we now expect 2026 organic growth capital guidance to be between approximately $5.5 billion & $5.9 billion compared to our previous guidance of approximately 5 billion to $5.5 billion excluding sun & USAC. This increase is primarily a result of the addition of several new growth projects including the construction of the new Springerville lateral off our existing Transwestern pipeline, the construction of pipelines & meter stations to provide natural gas to various power plants & data center sites in Oklahoma & Arkansas. Accelerated timing on longer term projects like Desert Southwest & Florida Gas Transmission capital spend & gathering system & compression build out in the midstream segment primarily in the Permian Basin associated with recent contract acreage dedication extensions. I will provide additional details about these projects later in the call. Beyond these projects, we continue to have a significant backlog of opportunities that are expected to support future growth. Now turning to our results by segment for the first quarter & we’ll start with NGL & refined products. Adjusted EBITDA was approximately $1.2 billion compared to approximately $978 million for the first quarter of 2025. We saw higher throughput across our Gulf coast pipeline operations & record performance at our Mont Belvie fractionators. In addition, new chilling capacity placed into serversus last year contributed to a $50 million increase in earnings as well as record export volumes from our needle & terminal in the first quarter. This more than made up for fog delays experienced in the fourth quarter of 2025. During the first quarter of 2026 we realized higher gains of $65 million due to the timing of the settlement of NGL & refined product inventory hedges which offset losses realized in the fourth quarter of 2025. Results for the quarter also included an increase of approximately $50 million from higher premiums from the sale of propane & butane for both export & domestic supply, as well as approximately $25 million increase due to inventory write down losses realized in the first quarter of last year for midstream adjusted EBITDA was approximately $887 million compared to approximately $925 million for the first quarter of 2025. Base business earnings increased primarily due to growth in the Permian Basin where we saw volumes up 8% related to new & upgraded processing plants brought online since the first quarter of last year. In addition, we saw a $25 million decrease due to lower NGL natural gas prices compared to last year. As a reminder, the first quarter of last year included the recognition of revenue of $160 million from winter storm URI for the crude oil segment, adjusted EBITDA was approximately $869 million compared to approximately $742 million for the first quarter of 2025. During the quarter we saw continued growth across several of our crude oil pipeline & gathering systems. Results also included a $60 million increase related to favorable impacts to our crude oil inventory value as a result of rising crude oil prices. We expect these gains to be mostly offset with hedge losses & during the second quarter of this year. In addition, we recognized $43 million of revenue that had previously been reserved related to the recontracting & extension of a legacy shipper contract during the recently completed successful DAPL open season. And we had lower expenses due to a $43 million adjustment to an accrual for a litigation related contingency. In our interstate natural gas segment, adjusted EBITDA was approximately $519 million compared to approximately $512 million for the first quarter 2025. This increase was primarily due to higher contracted volumes at higher rates on several of our pipelines including Panh&le, Eastern Trunk Line, Florida Gas & Transwestern. And for our intrastate natural gas segment, adjusted EBITDA was approximately $437 million compared to approximately $344 million in the first quarter 2025. This was primarily due to an increase of approximately $100 million from winter storm burn. Results for the first quarter show how incredibly well positioned our assets are across the country. Combining our extensive pipeline network, our storage facilities & our terminals with our exceptionally experienced optimization & operating teams, we were able to capitalize on quickly changing dynamics & market volatility for a closer look at some of our major projects & I’ll start with the natural gas side of our business where we continue to see significant dem& for our serversuss. We are making good progress on our Desert Southwest pipeline project. In March 2026, Transwestern Pipeline initiated the FERC pre filing process for the project as previously scheduled & we expect to file the formal certificate application with FERC in the fourth quarter of this year. In April, as the continuation of our Comprehensive Stakeholder Engagement program, we hosted 15 open houses & communities along the entire proposed pipeline route throughout Texas, New Mexico & Arizona. Our teams continue to actively engage with elected officials, county leadership, l&owners & associated communities along the route to communicate project information & updates & we have engaged with over 500 stakeholders today. Our discussions have continued to be very positive as existing & potential stakeholders learn more about the expected economic benefits & realized the critical need for a dependable supply of natural gas to help with the transition from coal fog generation to natural gas power generation & to help address significant power needs in the coming years. Driven by population & dem& growth in Arizona & the Mexico markets, we expect this pipeline to be in serversus providing a reliable energy Source by the fourth quarter of 2029. On the existing Transwestern pipeline, we recently approved the construction of the new Springerville lateral, an approximately 120 mile 30 inch pipeline that will have a capacity of approximately 625 million cubic feet per day & extend south to new natural gas powered generation that is expected to replace two coal fired plants. This project is backed by 20 year agreements & is expected to be in serversus in the fourth quarter of 2029. Total growth capital for this project is expected to be approximately $600 million. New construction of our Hugh Brinson pipeline is going well. We continue to expect Phase 1 to be in serversus in the fourth quarter of this year upon the full build out of the 400 mile pipeline & associated compression required to move 1.5 bcf per day of gas to customers contractual delivery points. However, if we stay on our current schedule, we will have the ability to begin flowing some gas early in the third quarter which is prior to placing Phase one into serversus & we continue to expect Phase two which includes additional compression to be in Serversus in the first quarter of 2027. The pipe is fully contracted from west to east & we also have a growing amount of backhaul volumes committed that are expected to add significant upside turning to Florida gas transmission or Florida Gas Transmission. In February we completed open seasons for two new projects that are supported by 15 to 25 year long term agreements with anchor shippers. The phase nine project, which is designed to exp& perm natural gas transportation capacity to multiple new & existing meter stations located across Florida Gas Transmission’s market area. This project will consist of the construction of approximately 90 miles of pipeline looping as well as new & upgraded Compression with an anticipated capacity of approximately 525 million cubic feet per day. We recently locked in pipe for delivery at the end of 2027 & compression for delivery in the first quarter of 2028 & we continue to expect the project to be available for serversus in the fourth quarter of 2028. The South Florida project is designed to enhance the reliability of critical infrastructure & increase overall deliveries in South Florida. The project has a condition precedent, but Once we reach FID it will consist of the construction of an approximately 40 mile extension with a capacity of approximately 230 million cubic feet per day along with compression & a new meter station & is expected to be available for Serversus in the first quarter of 2030. Energy transfer share of the cost for these two projects is expected to be approximately $565 million & approximately $110 million respectively depending upon final shipper volume elections. We continue to make progress on a new storage cavern at our Bethel Natural Gas storage facility which is expected to double our working gas storage capacity at the facility to over 12 BCF. In February, our intrastate power team added connections to serve three new power plant loads in the state of Oklahoma. We have since added a port connection for a total of approximately 300 million cubic feet per day of new gas supply. The first of these connections is in serversus with two more expected in serversus in the third quarter of this year. The remaining connection is expected to be in Serversus in the fourth quarter of 2028. These connections are supported by long term contracts with investment grade counterparties. In addition, we have entered advanced negotiations to serve another 400 million cubic feet per day of new power plant dem& in Oklahoma & since our last earnings call, Energy Transfer has entered into agreements to provide long term firm natural gas transportation serversuss through our Texas intrastate system to support the Nexus Hubbard Campus located in Central Texas where Nexis is constructing a behind the meter AI hyperscale campus powered by on site natural gas generation. Initial volumes are expected to be approximately 150 million cubic feet per day with certain rights by the transporter to increase its capacity upon election. Costs associated with this project are expected to be fully reimbursed & it is expected to be in serversus by the end of this year. In addition, we recently entered into a LOI to provide approximately 150 million cubic feet per day of firm natural gas transportation serversus through our EGT pipeline to support a new data center site in Arkansas. The facility is expected to be in serversus in mid-2027. Energy Transfer also previously entered into a 20 year binding agreement with Entergy Louisiana to provide at least 250,000 MMBtus per day of firm transportation serversus to fuel their facilities in Richl& Parish, Louisiana. To facilitate flow of this gas, we plan to construct an 18 mile lateral off of our Tiger Pipeline for which our customer recently exercised their option to upsize the pipeline lateral to 36 inches & they continue to have an option to increase their commitment to up to 1bcf per day. In addition to these projects we have multiple ongoing discussions with power plants to provide significant volumes & associated transportation revenues across 15 states which have a high likelihood of reaching FID. Now looking at our Permian processing expansions, the 275 MMCF per day Mustang Draw 1 processing plant is currently being commissioned & is expected to be in full serversus next month & we expect volumes to ramp up quickly & we continue to expect our 275mmcfd Mustang Draw 2 plant to be in serversus in the fourth quarter this year. In our NGL segment, we placed the Gateway NGL pipeline debottlenecking project into serversus in the first quarter of this year providing increased deliveries of Delaware Basin liquids to Energy Transfer’s NGL fractionation complex in Mont Belvieu. Construction is also underway on a new 3 million barrel ethane storage cavern at Energy Transfer’s NGL fractionation complex at Mont Belvieu. The cavern, which is expected to be in serversus in the second half of 2027 will help support our ninth fractionator at Mont Belvieu that is expected to be in serversus in the fourth quarter of this year as well as future ethane export expansions at Nederl&. We’ve recently extended the vast majority of our ethane export agreements into 2041 adding 10 years to the current contracts. We are hopeful to be in the position for incremental Nederl& Ethane expansion in the coming months. In our crude oil segment, we continue to work with Enbridge on a project to provide capacity for approximately 250,000 barrels per day of light Canadian crude oil through our Dakota Access pipeline. The open season is underway & we still expect …
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