Energy Transfer Q2 FY26 earnings call ET

Energy Transfer reported robust Q2 FY26 financial results, with adjusted EBITDA reaching $5.1 billion, a significant increase from $3.9 billion in Q2 FY25. Distributable Cash Flow (DCF) attributable to partners, as adjusted, also grew to $2.6 billion from $2.0 billion year-over-year. This strong performance across all business segments led management to raise its full-year adjusted EBITDA guidance to a range of $18.8 billion to $19.1 billion, an increase of $0.5 billion at the midpoint from previous guidance. The company attributes this to record volumes and strong base business performance, with additional upside potential from market volatility^🌐.

The Hugh Brinson Pipeline Phase 1 is now in commercial service, with full 1.5 Bcf/day capacity expected by September 1, 2026, ahead of schedule and under budget. Phase 2 is slated for Q1 2027 completion. Progress continues on the Desert Southwest Pipeline project, with positive stakeholder engagement and permitting. The Springville Lateral, a 120-mile extension of the Transwestern Pipeline with 625 MMcf/day capacity, is expected in Q4 2029 to serve power generation. Additionally, connections to serve new power plant loads in Oklahoma are progressing, with 250 MMcf/day of new demand under negotiation.

The NGL and Refined Products segment saw adjusted EBITDA increase to $1.3 billion from $1.0 billion, driven by record exports from Nederland and Marcus Hook terminals, higher NGL throughput, and increased margins from product optimization. Crude Oil adjusted EBITDA grew to $834 million from $732 million, benefiting from pipeline growth, favorable market conditions, and strategic petroleum reserve activity. The company announced a 240,000 bbl/day ethane export expansion at Nederland, with 100% of capacity committed under long-term agreements, and completed upgrades to the Lone Star Express NGL pipeline, increasing Permian NGL takeaway capacity.

Energy Transfer is actively pursuing opportunities to serve increasing natural gas demand from data centers and power plants. The company entered an agreement with Crusoe to construct facilities for a 900-megawatt expansion at an AI factory campus in Abilene, Texas. Two Texas customers recently added a combined 100 MMcf/day to their contracts. Management expects this trend to continue, leveraging its extensive pipeline network and storage capabilities to provide reliable supply, particularly for behind-the-meter power generation, mitigating grid interconnection concerns.

Record volumes in the Permian Basin contributed to strong midstream performance, with the Mustang Draw I plant running near capacity and Mustang Draw II expected online in Q4. The early in-service of Hugh Brinson has significantly narrowed Waha basis differentials, unleashing pent-up production from DUCs and previously shut-in gas. The company successfully recontracted 300,000 bbl/day of Y-grade assets out of the Permian into the 2030s at market rates, with expectations for future contracting at higher rates. Mont Belvieu fractionators remained fully utilized, with Frac IX expected to ramp quickly upon late-year in-service.