Provide an update on Desert Southwest (DSW) project execution, permitting, and potential for incremental demand (laterals, power, data centers).

DSW is progressing ahead of expectations on survey permission and construction, with steel and compression ordered. Management is very excited about DSW being a 'game changer' for the Southwest, with potential upside to Mexico. They are actively engaging with all stakeholders (government, indigenous groups, landowners). They anticipate significant new markets and growth in the Phoenix area and Arizona, with opportunities for laterals, power generation connections, and data center load. “As far as our expectations, we're probably a little ahead of our expectations on survey permission and on making progress on getting this pipeline built, everything is going exceptionally well.”

Are you surprised by the rapid narrowing of Waha basis, and do you believe there is still stranded gas in the Permian?

The rapid narrowing of Waha basis was not entirely unexpected given the new pipeline capacity (Hugh Brinson and another coming online), but it happened quicker than anticipated. There is significant pent-up volume, shut-in gas, and DUCs (drilled uncompleted wells) in the Permian. This new egress will unleash production, with oil, gas, and NGL volumes expected to grow exponentially. Management is very excited about bringing this capacity online for customers. “It probably has narrowed quicker than we thought, which goes to the second part of your question, there's a lot of pent-up volume, a lot of shutting gas, a lot of DUCs that bring online and producers have been holding back.”

Are upcoming gas pipeline announcements for power customers referring to larger backbone projects or more laterals for data center demand?

It's 'all of the above.' The company has numerous opportunities, including laterals (some less than 18-20 miles) and is working on at least one large intrastate and another interstate pipeline. They are optimistic about reaching FID on these and hope to discuss them further in November. “All of the above. We've got numerous opportunities, some of you all aware of, some you're not on laterals that are less than 18 or 20 miles, some just a few miles. And then yes, we are working on another at least one large intrastate pipeline, and we're also working on another interstate pipeline.”

Energy Transfer (ET) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 4, 2026

Source: earnings call transcript

Executive summary

Energy Transfer Q2 FY26 — Strong Performance Drives Raised Full-Year Guidance

Energy Transfer delivered a strong second quarter, exceeding expectations across all segments and leading to a significant raise in full-year adjusted EBITDA guidance. The company is capitalizing on robust demand for natural gas and NGLs, driven by power generation, Permian growth, and global export needs. Strategic project execution, exemplified by the early commercial service of the Hugh Brinson Pipeline, underpins confidence in sustained growth and capital discipline.

Highlights

Adjusted EBITDA increased to $5.1 billion in Q2 FY26, up from $3.9 billion in Q2 FY25.
DCF attributable to partners, as adjusted, rose to $2.6 billion, compared to $2.0 billion in Q2 FY25.
Full-year adjusted EBITDA guidance raised by $0.5 billion at the midpoint, now $18.8 billion to $19.1 billion.
Record midstream gathering, NGL transportation, NGL export, and crude oil transportation volumes achieved.
Hugh Brinson Pipeline Phase 1 is now in commercial service ahead of schedule, with full capacity expected by September 1, 2026.

Concerns

Crude inventory value benefit of approximately $60 million in Q1 FY26 was offset by hedge losses in Q2 FY26.
Green Chile project (Project Jupiter for Oracle) faces regulatory complexity and potential delays due to data center-focused protest activity.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Adjusted EBITDA	$18.8 billion to $19.1 billion high materiality	FY26	High
Full-year Organic Growth Capital Expenditures (excluding SUN and USAC)	$5.6 billion to $5.9 billion high materiality	FY26	High
Hugh Brinson Pipeline Phase 1 Full Capacity In-Service	September 1, 2026 medium materiality	Q3 · FY26	High
Hugh Brinson Pipeline Phase 2 In-Service	Q1 2027 medium materiality	Q1 · FY27	High
Springville Lateral In-Service	Q4 2029 medium materiality	Q4 · FY29	High
Mustang Draw II Plant In-Service	Late 2026 medium materiality	Q4 · FY26	High
NGL Export Expansion (Nederland Terminal) In-Service	Stages beginning 2028, docks mid-2029 high materiality	2028-2029	High
Frac IX In-Service	Late 2026 medium materiality	Q4 · FY26	High
Long-term Annual Distribution Growth Rate	3% to 5% high materiality	Long-term	High
Leverage Target	4 to 4.5x EBITDA high materiality	Long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
NGL and Refined Products Increase primarily due to record exports from Nederland and Marcus Hook terminals (driven by new chilling capacity at Nederland), record throughput across NGL pipelines, and higher throughput at Mont Belvieu fractionators. Also benefited from higher premiums from NGL sales and increased margins from product optimization and blending. Included gains from NGL and refined products inventory hedges, expected to be offset in Q4. Adjusted EBITDA: $1.3 billionAdjusted EBITDA (Q2 2025): $1.0 billionIncrease from NGL premiums and product optimization/blending: $212 million	—	—	—	$1.3 billion
Midstream Increase due to record volumes in the Permian Basin (up 5% from new processing and improved plant utilization) and an $88 million increase from higher NGL prices compared to last year. Adjusted EBITDA: $884 millionAdjusted EBITDA (Q2 2025): $768 millionPermian Basin volume increase: 5%Increase from higher NGL prices: $88 million	—	—	—	$884 million
Crude Oil Increase due to continued growth across crude pipelines, terminals, and gathering systems. Benefited from $106 million related to favorable market conditions, including pipeline and export arbitrage, higher crude oil prices, and strategic petroleum reserve activity at Nederland terminal. Q1 benefit of $60 million from crude inventory value was offset by Q2 hedge losses. Adjusted EBITDA: $834 millionAdjusted EBITDA (Q2 2025): $732 millionIncrease from favorable market conditions: $106 million	—	—	—	$834 million
Interstate Natural Gas Increase primarily due to increased parking, storage, and liquids revenue, as well as higher contracted volumes and utilization on pipelines including Panhandle Eastern, Transwestern, and Florida Gas Transmission. Adjusted EBITDA: $481 millionAdjusted EBITDA (Q2 2025): $470 million	—	—	—	$481 million
Intrastate Natural Gas Increase primarily due to a $113 million benefit from wider basis differentials and a $17 million benefit from early volumes during the commissioning of the Hugh Brinson Pipeline. Adjusted EBITDA: $377 millionAdjusted EBITDA (Q2 2025): $284 millionIncrease from wider basis differentials: $113 millionIncrease from early volumes (Hugh Brinson): $17 million	—	—	—	$377 million

ET operating KPIs by quarter

ET operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Jun 2026 Q2 FY26	Change vs prior quarter
Storage capacity	230 Bcf+ In addition to our extensive pipeline systems, we have over 230 Bcf of storage to support the market demands of our customers. Source: earnings call transcript	237 Bcf We have 237 Bcf of storage in 6 states in the United States. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Crusoe Agreement to construct facilities to provide natural gas to support a 900-megawatt expansion at an AI factory campus.

Facilities will support a 900-megawatt expansion at the AI factory campus in Abilene, Texas. Expect additional growth opportunities in the region.

Capital programs

Hugh Brinson Pipeline Phase 1 in commercial service

Benefit:1.5 Bcf per day

Now in commercial service, progressing toward full Phase 1 capacity ahead of schedule and under budget. Shipper contracts coming online in stages.

Hugh Brinson Pipeline Phase 2 underway

Benefit:Additional downstream compression

Expected to be in service in Q1 2027 and come in under budget. Commissioning likely in late January/early February 2027.

Hugh Brinson Pipeline Lateral (Abilene, Texas) ready for service

Completed another 14-mile lateral in Abilene, Texas, now ready for service.

Desert Southwest Pipeline Project underway

Making good progress, FERC completed scoping meetings. Active engagement with stakeholders. Steel and compression ordered. Expected to be on time in late 2029.

Springville Lateral underway

Benefit:625 million cubic feet per day

Approximately 120-mile extension of Transwestern Pipeline, 30-inch diameter. Will serve natural gas power generation replacing two coal-fired plants. Pipe and compression costs locked in.

Oklahoma Power Plant Connections underway

Start: Early 2026

Benefit:300 million cubic feet per day (total new demand)

First of four connections went into service earlier this year, next two ready for service, remaining expected in Q4 2028.

Mustang Draw I Plant in service

Placed into service in June, running near capacity for Midland Basin processing complex.

Mustang Draw II Plant under construction

Expected to be in service in Q4 2026, with limited impact to 2026 results but a big 2027 push.

Nederland Terminal Ethane Export Expansion under construction Slightly over $1 billion

Benefit:240,000 bbl/day ethane export, 55,000 bbl/day LPG capacity

Project includes expanding Mont Belvieu to Nederland pipeline system and two additional NGL ship docks. Growth capital was previously included in 2026 guidance. 100% of ethane capacity committed under long-term agreements.

Lone Star Express NGL Pipeline Upgrades completed

Benefit:90,000 bbl/day Permian NGL takeaway capacity

Completed in Q2, provides more than 90,000 bbl/day of Permian NGL takeaway capacity, leading to record wide-grade volumes.

Frac IX under construction

Expected to ramp up quickly upon anticipated in-service late this year, with limited 2026 impact.

Risks & headwinds

Market Volatility H2 2026 and beyond

Upside to forecast dependent on duration and impact of market disruptions.

Mitigation:Company's unique operating model and asset base are positioned to capture benefits from volatility.

Regulatory Complexity and Protest Activity for Data Centers (Green Chile Project) Ongoing

Potential for delays in project execution.

Mitigation:Working with FERC, BLM, and all stakeholders. Confident the pipeline will be put into service. Oracle has improved messaging on closed-loop systems and lower emissions (Bloom technology).

What to watch in Q3 FY26

Hugh Brinson Pipeline Phase 1 Full Capacity

September 1, 2026

Current In commercial service, ramping up

Target 1.5 Bcf/day

Why it matters

Verifying the full capacity of Hugh Brinson Phase 1 comes online as scheduled is critical for natural gas segment growth and overall volume expectations.

We anticipate that Hugh Brinson will be capable of flowing the full Phase I capacity by September 1, 2026, assuming pipeline commissioning activities continue to progress as scheduled.

Find out whether ET delivers this. Inve re-checks your case every morning.

Q&A highlights

Elaborate on drivers of Q2 volumetric outperformance, expectations for H2 2026 and 2027, and factors influencing the high end of guidance.

Q2 outperformance was broad-based, with strong beats across all segments, especially NGLs due to exports, sales, and blending margins. The base business is expected to remain strong, with volumes growing in H2 2026 as projects like Hugh Brinson, Mustang Draw I/II, and Frac IX come online. The majority of the impact from Hugh Brinson and Mustang Draw II will be seen in 2027. The current guidance assumes no significant commodity price volatility in H2; sustained volatility would push results towards the high end of the revised range.

“The more of this that continues to play out, I think, is setting us up to where with some of this volatility, we can very easily achieve that high end of the guidance range.”

asked by Theresa Chen · answered by Dylan Bramhall

2 min read 5 chapters

Detailed narrative

Strong Financial Performance and Guidance Update

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.

Natural Gas Infrastructure Expansion

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.

NGL and Crude Oil Segment Growth

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.

Data Center and Power Generation Demand

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.

Permian Basin Dynamics and Recontracting

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.