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    ET
    Earnings call· Dec 2024(Q4 FY24)

    Energy Transfer LP ET

    Feb 11, 2025 Source

    Executive summary

    Energy Transfer LP Q4 FY24 — Record Performance and Strategic Growth Investments

    Energy Transfer delivered record full-year 2024 financial results, driven by strong operational volumes across all key segments and NGL exports. The company is deploying significant organic growth capital, approximately $5 billion in 2025, to expand its Permian processing, NGL export, and intrastate natural gas infrastructure. Strategic positioning for rising natural gas demand from power plants and data centers, exemplified by the CloudBurst deal, underpins future growth, alongside continued NGL infrastructure development.

    Highlights

    6

    • Full-year 2024 Adjusted EBITDA reached a partnership record of $15.5 billion, up 13% over 2023.

    • Full-year 2024 Distributable Cash Flow (DCF) attributable to partners was a record $8.4 billion, up 10% over 2023.

    • Record volumes were moved across interstate, midstream, NGL, and crude segments for the full year 2024.

    • Record NGL exports were achieved out of Nederland and Marcus Hook terminals.

    • Q4 2024 Adjusted EBITDA increased to $3.9 billion, up from $3.6 billion in Q4 2023.

    • Approved construction of the Mustang Draw processing plant in the Midland Basin and secured a long-term agreement with CloudBurst data centers for up to 450,000 MMBtus/day.

    Concerns

    4

    • Midstream segment experienced decreased volumes in dry gas regions due to low natural gas pricing.

    • Crude Oil segment saw lower transportation revenue, primarily on the Bakken pipeline, and reduced earnings from marketing.

    • Interstate Natural Gas segment was impacted by lower interruptible utilization and reduced rates on Panhandle.

    • Increased operating expenses were noted in Midstream and Interstate Natural Gas segments due to recent acquisitions.

    Guidance & targets

    13
    CategoryTargetConfidence
    Adjusted EBITDA
    $16.1 billion - $16.5 billion
    high materiality
    High
    Organic Growth Capital Expenditure
    approximately $5 billion
    high materiality
    High
    Hugh Brinson Pipeline Phase 1 In-Service
    end of 2026
    medium materiality
    High
    Nederland Flexport Expansion In-Service (Ethane and Propane)
    mid-2025
    medium materiality
    High
    Nederland Flexport Expansion In-Service (Ethylene)
    fourth quarter of this year
    medium materiality
    High
    Frac IX In-Service
    fourth quarter of 2026
    medium materiality
    High
    Sabina 2 Pipeline Expansion
    approximately 70,000 barrels
    low materiality
    High
    Processing Plant Upgrades (West Texas)
    approximately 100 million cubic feet per day
    medium materiality
    High
    Badger Processing Plant In-Service
    mid-2025
    medium materiality
    High
    Mustang Draw Processing Plant In-Service
    first half of 2026
    medium materiality
    High
    Lake Charles LNG Project Final Investment Decision (FID)
    sometime probably in the fourth quarter of this year
    high materiality
    Medium
    ET's Own Power Generation Facilities In-Service
    remainder expected to be in service throughout 2025, and in 2026
    low materiality
    High
    Distribution Growth
    higher end of that range
    high materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    NGL and Refined Products
    Adjusted EBITDA of $1.1 billion, up from $1.04 billion in Q4 2023, driven by higher throughput, higher rates across Gulf Coast and Mariner East pipeline operations, strong NGL exports, and increased profits from optimization of hedged NGL inventory.
    		———$1.1 billion
    Midstream
    Adjusted EBITDA of $705 million, up from $674 million in Q4 2023, primarily due to higher volumes in the Permian Basin (9% increase in legacy throughput, plus Crestwood and WTG assets). Partially offset by decreased volumes in dry gas regions due to low natural gas pricing and increased operating expenses from acquisitions.
    Legacy Permian throughput: 9% increase
    		———$705 million
    Crude Oil
    Adjusted EBITDA of $760 million, down from $775 million in Q4 2023. Growth across crude gathering systems and contributions from Permian JV with SUN and Crestwood acquisition were offset by lower transportation revenue on Bakken pipeline and reduced earnings from marketing.
    		———$760 million
    Interstate Natural Gas
    Adjusted EBITDA of $493 million, down from $541 million in Q4 2023. Higher demand on Panhandle, Trunkline, Gulf Run, and FGT was offset by lower interruptible utilization, reduced rates on Panhandle, and increased operating expenses.
    		———$493 million
    Intrastate Natural Gas
    Adjusted EBITDA of $263 million, up from $242 million in Q4 2023, primarily due to increased gains related to pipeline and storage optimization opportunities.
    		———$263 million

    Operational metrics

    17
    Adjusted EBITDA
    $15.5 billionup 13% YoY
    FY24

    Full-year 2024 Adjusted EBITDA, at the high end of guidance range.

    Distributable Cash Flow (DCF) attributable to partners
    $8.4 billionup 10% YoY
    FY24

    Full-year 2024 DCF, as adjusted.

    Organic Growth Capital
    $3 billion
    FY24

    Excluding SUN and USA Compression CapEx. Primarily in NGL and refined products segments.

    Total Mont Belvieu Fractionation Capacity
    more than 1.3 million
    Post-Frac IX

    Expected after Frac IX comes into service in Q4 2026.

    Sabina 2 Pipeline Capacity
    40,000up from 25,000 bbl/day
    Q4 2024

    Initial phase of conversion from Mont Belvieu to Nederland completed in December 2024.

    Marcus Hook Refrigerated Ethane Storage Tank
    900,000
    Ongoing

    Construction continues on a new refrigerated ethane storage tank.

    Marcus Hook Incremental Ethane Chilling Capacity
    20,000
    Ongoing

    Addition of incremental ethane chilling capacity.

    Orla East and Grey Wolf Processing Plants Upgrades
    50 million
    FY24

    Upgrades completed in 2024.

    EOIT Pipeline Deal Volume
    90 million
    Q4 2024

    Deal executed in Q4 2024, expected online in 2026.

    CloudBurst Natural Gas Supply
    450,000
    Future

    Long-term agreement to supply firm natural gas to CloudBurst's AI-focused data center, subject to CloudBurst reaching FID.

    CloudBurst Power Generation Capacity
    1.2
    Future

    Power generation capacity supported by the natural gas supply to CloudBurst.

    Power Plants Potential Connections
    62
    Current

    Requests received for potential connections to power plants not currently served.

    Existing Power Plants Potential Connections
    15
    Current

    Requests received for potential connections to plants already served.

    Prospective Data Centers Requests
    over 70
    Current

    Requests received from prospective data centers.

    ET's Own Power Generation Facilities
    8
    Ongoing

    Constructing 8 10-megawatt natural gas-fired electric generation facilities for system reliability.

    Project Returns
    mid-teen to upper teen
    Ongoing

    Target rate of return for new growth projects.

    Natural Gas Demand Capture
    3 to 4
    18-24 months

    Expected capture of natural gas demand from power plants and data centers.

    Industry KPIs

    7
    MetricValueDetails
    Pipeline throughput storage—
    Realized price differential—
    Sanctioned expansion backlogapproximately $5 billionUSD
    Basin level production volume9% increase%
    FCF shareholder distributions—
    Take or pay contract structure—
    Distributable cash flow per unit share$8.4 billionUSD

    Orderbook & backlog

    2
    Lake Charles LNG Sale and Purchase Agreement2 million tons per annumDecember 2024

    20-year agreement with Chevron U.S.A., Inc.

    Hugh Brinson Pipeline Combined Costs (Phase 1 & 2)$2.7 billionQ4 FY24

    Expected combined costs for Phase 1 and Phase 2 of the pipeline project.

    Deals & partnerships

    6
    SUNPermian joint venture

    Recently formed Permian joint venture with SUN.

    CrestwoodAcquisition of assets

    Acquisition of Crestwood assets, contributing to midstream and crude oil segments.

    WTGAcquisition of assets

    Acquisition of WTG assets in July 2024, contributing to midstream segment.

    Chevron U.S.A., Inc.LNG sale and purchase agreement20-year

    Agreement to supply 2 million tons of LNG per annum related to the Lake Charles LNG project, announced in December.

    CloudBurst data centersLong-term agreement for natural gas supply

    Agreement to provide natural gas to their flagship AI-focused data center development in Central Texas, subject to CloudBurst reaching FID.

    NuStarInvestment in NuStar

    Investment in NuStar, contributing to 2025 guidance through Sunoco.

    Capital programs

    6
    Hugh Brinson Pipeline (Phase 1 & 2)underwayapproximately $2.7 billion
    Period spend: approximately $1.3 billion
    Start: Q4 FY24

    Benefit: 1.5 Bcf/day (Phase 1), 2.2 Bcf/day (Phase 2)

    Phase 1 FID in December, includes 400 miles of 42-inch pipeline and a 42-mile, 36-inch Midland Lateral. Phase 2 would add compression. $1.3 billion of the total is included in 2025 organic growth capital for intrastate natural gas segment.

    Nederland Flexport Expansionunderway
    Period spend: approximately $1.1 billion

    Benefit: Expanded NGL export capacity, ethylene export service

    Included in the $1.4 billion NGL and refined products segment spend for 2025. Remains on schedule.

    Frac IXunderway

    Benefit: 165,000 bbl/day fractionation capacity

    Construction underway at Mont Belvieu, will bring total fractionation capacity to over 1.3 million bbl/day.

    Marcus Hook Optimizationunderway

    Benefit: 900,000-barrel refrigerated ethane storage tank, 20,000 bbl/day incremental ethane chilling capacity

    Construction continues to provide ability to load DLCs faster.

    Permian Basin Processing Expansionsunderway
    Period spend: approximately $1.2 billion

    Benefit: 50 MMcf/d (Orla East/Grey Wolf upgrades), 100 MMcf/d (other upgrades), 200 MMcf/d (Badger), 275 MMcf/d (Mustang Draw)

    Includes upgrades to Orla East and Grey Wolf, two other processing plants, the Badger processing plant, and the Mustang Draw plant. $1.2 billion is included in 2025 organic growth capital for the midstream segment.

    ET's Own Power Generation Facilitiesunderwayapproximately $100 million
    Spent to date: First facility placed into service last week

    Benefit: 8 10-megawatt natural gas-fired electric generation facilities

    To make critical transportation systems more reliable in areas with electricity shortages. $100 million is included in 2025 organic growth capital for the 'all other' segment.

    Risks & headwinds

    6
    Low natural gas pricingQ4 2024

    Decreased volumes in dry gas regions

    Mitigation: Focus on Permian growth and market pull opportunities for natural gas.

    Increased operating expensesQ4 2024

    Increased operating expenses

    Mitigation: Integration of recent acquisitions (Crestwood, WTG assets).

    Lower transportation revenueQ4 2024

    Lower transportation revenue

    Mitigation: Primarily on the Bakken pipeline; offset by growth in crude gathering systems.

    Reduced earnings from marketingQ4 2024

    Reduced earnings

    Mitigation: Offset by growth in crude gathering systems and JV contributions.

    Lower interruptible utilization and reduced ratesQ4 2024

    Lower interruptible utilization, reduced rates

    Mitigation: On Panhandle pipeline; offset by higher demand on other interstate pipelines.

    Waha basis compressionFY25

    Waha basis compression

    Mitigation: Guidance for 2025 assumes less basis blow-out than 2024, providing potential upside if spreads widen.

    What to watch in Q1 FY25

    5

    CloudBurst Data Center FID and Ramp-up

    by end of next quarter
    CurrentLong-term agreement signed, subject to CloudBurst FID
    TargetCloudBurst reaches FID, initial ramp-up details

    Why it matters

    This is ET's first commercial data center deal and its progress will indicate the pace and scale of this new growth vector.

    We possibly could know a lot more by the end of the next quarter but we'll see💬 and we'll continue to work closely with them and other developers, but we're very excited about this first project.

    Q&A highlights

    6

    What are the expected returns on the new growth projects, and what is the strategic significance of the Hugh Brinson pipeline, particularly regarding data centers?

    Project returns are consistently in the mid-teen to upper-teen range. The Hugh Brinson pipeline is critical for Permian producers and market pull, especially for data centers and power plants, many of which are strategically located near Energy Transfer's existing pipeline infrastructure, making the company uniquely positioned.

    “We are always kind of targeting depending on the project, kind of that mid-teen to upper teen rate of return. A lot of that depends on how much synergistic benefits up and down, but that's kind of the range that we look at on these projects, kind of the mid- to upper teens.”

    asked by Theresa Chen · answered by Marshall McCrea

    2 min read5 chapters

    Detailed Narrative

    01

    Record Financial and Operational Performance in 2024

    Energy Transfer achieved record financial results in 2024, with Adjusted EBITDA reaching $15.5 billion, a 13% increase over 2023, and Distributable Cash Flow (DCF) of $8.4 billion, up 10% year-over-year. Operationally, the company moved record volumes across its interstate, midstream, NGL, and crude segments, and exported a record amount of NGLs from its Nederland and Marcus Hook terminals. These results highlight strong underlying business performance and effective asset utilization.

    02

    Significant Organic Growth Capital Deployment

    The company plans to invest approximately $5 billion in organic growth capital in 2025, primarily across its intrastate natural gas, NGL and refined products, and midstream segments. Key projects include the $1.4 billion Hugh Brinson Pipeline in the intrastate segment, $1.4 billion in NGL and refined products for Nederland Flexport expansion and Frac IX, and $1.6 billion in midstream for Permian Basin processing expansions. These investments are expected to yield mid-teen returns and drive significant earnings growth in 2026 and 2027.

    03

    Permian Basin Expansion and NGL Infrastructure

    Energy Transfer continues to expand its Permian Basin footprint with projects like the 200 MMcf/d Badger processing plant (mid-2025 in-service) and the newly approved 275 MMcf/d Mustang Draw plant (H1 2026 in-service). NGL infrastructure is also being enhanced with the Nederland Flexport expansion (ethane/propane mid-2025, ethylene Q4 2025), Frac IX (Q4 2026), and Sabina 2 pipeline expansion. These projects aim to meet growing Permian production and international NGL demand.

    04

    Strategic Focus on Data Centers and Power Generation

    The company is actively pursuing opportunities in natural gas supply for power plants and data centers, noting requests from 62 new power plants and over 70 prospective data centers. A significant long-term agreement was signed with CloudBurst data centers to supply up to 450,000 MMBtus/day for a 1.2 GW AI-focused data center in Central Texas. This initiative leverages Energy Transfer's extensive natural gas infrastructure to capitalize on anticipated demand growth, positioning it as a key player in the energy transition for these sectors.

    05

    Lake Charles LNG Project Progress

    Energy Transfer is making substantial progress towards the full commercialization of its Lake Charles LNG project. This includes a 20-year LNG sale and purchase agreement with Chevron U.S.A., Inc. for 2 million tons per annum. The company is in negotiations for over 20 million tons of LNG and is seeking an equity partner, with a Final Investment Decision (FID) targeted for Q4 2025. Management expressed optimism regarding the project's brownfield advantages and strategic location.

    AI-generated summary of the company’s earnings call. Not investment advice.