Energy Transfer LP Q2 FY2025 earnings call

Financial Results: Second quarter 2025 adjusted EBITDA was $3.9 billion vs $3.8 billion in 2024. DCF attributable to partners was ~$2 billion. First 6 months of 2025 organic growth capital spent ~$2 billion. Segment Results: NGL/refined products saw higher throughput but offset by lower gains; midstream up due to Permian Basin volumes; crude oil had growth but offset by lower transportation revenues; interstate natural gas up due to higher contracted volumes; intrastate natural gas down due to reduced optimization. Organic Growth Capital: Expect to spend ~$5 billion in 2025 on organic growth projects, expecting mid-teen returns. Specific Projects: Desert Southwest pipeline project to enhance reliability and provide natural gas to SW region; Hugh Brinson Pipeline Phase 1 and 2 developments; Lake Charles LNG progress with HOAs and SPAs; Permian processing expansions with new plants coming online; NGL looping project to expand NGL access.

For the second quarter of 2025, by segment:

• NGL and refined products: Adjusted EBITDA was $1 billion compared to $1.1 billion for the second quarter of 2024.
• Midstream: Adjusted EBITDA was $768 million compared to $693 million for the second quarter of 2024.
• Crude oil: Adjusted EBITDA was $732 million compared to $801 million for the second quarter of 2024.
• Interstate natural gas: Adjusted EBITDA was $470 million compared to $392 million for the second quarter of 2024.
• Intrastate natural gas: Adjusted EBITDA was $284 million compared to $328 million in the second quarter of 2024.

We now expect to be at or slightly below the lower end of the guidance range of $16.1 billion to $16.5 billion due to weakness in Bakken, slower dry gas recovery, and gas optimization issues. Expect to spend approximately $5 billion on organic growth capital in 2025, with mid-teen returns on majority of growth projects.

Weakness in the Bakken, slower recovery in dry gas areas than expected, lack of normal volatility in gas optimization business from spreads and storage margins, potential construction cost risks, and uncertainties related to tribal land and right-of-way issues for projects.

Q: On the gas to power front related to data centers, provide more detail on commercialization efforts, gating factors, and expected announcements?

A: Mackie McCrea stated they've signed deals with hyperscalers in Texas, with growth potential, but projects take time due to large scale.

Q: Pivot to Lake Charles, where are we with EPC quote process and firming against SPAs?

A: Mackie McCrea said EPC contract looks to come out as expected, fitting with contracted and remaining agreements.

Q: Thoughts on construction cost risk sharing and tribal land for Desert Southwest?

A: Mackie McCrea said they expect zero right of way across tribal lands, have contingency for unknowns, and feel confident in costs.

Q: Competitive advantage in winning Desert Southwest project?

A: Mackie McCrea said it's due to good team, assets, patient approach, and ability to tie supply sources.

Q: Mid-teens returns on Desert Southwest, 6x EBITDA multiple?

A: Mackie McCrea said it's a traditional deal, mid-teens returns expected, 6x EBITDA is a good consideration.

Q: Impact of ethane export saga on quarterly results and future plans?

A: Marshall S. McCrea said no impact on quarterly results, but may make it harder to contract with Chinese crackers.

Q: Cadence of growth CapEx beyond 2025?

A: Tom Long said they'll provide more guidance later, but projects like Desert Southwest, Lake Charles, etc., are driving growth.

Q: EBITDA contribution from AI power projects?

A: Mackie McCrea said it's early to quantify, but will be impactful.

Q: Percentage of overall business gas could be in EBITDA forward?

A: Dylan Bramhall said they can't give exact percentage yet, but gas projects are driving growth in segments.