ENERGY TRANSFER LP AND SUBSIDIARIES FORM 10-K

Energy Transfer’s Stable Performance and Growth Outlook

Energy Transfer, a major energy infrastructure company, has reported solid financial results for the year ended December 31, 2024. The company’s primary business activities include natural gas and liquids transportation, storage, and processing services across the United States.

Overview of Financial Performance

Energy Transfer’s consolidated Adjusted EBITDA, a key measure of profitability, increased by $1.79 billion or 13% in 2024 compared to the prior year. This growth was driven by favorable results across multiple business segments, including midstream, crude oil transportation, and the company’s investment in Sunoco LP.

Net income also increased significantly, rising by $1.27 billion or 24% year-over-year. This was primarily due to a $586 million gain on the sale of Sunoco LP’s West Texas assets, as well as the absence of a $627 million non-operating litigation-related loss that was recorded in the prior year.

The company’s cash flows from operating activities were strong, totaling $11.51 billion in 2024. This allowed Energy Transfer to fund its capital expenditures, make distributions to partners, and reduce debt, while maintaining ample liquidity.

Segment Performance Highlights

Intrastate Transportation and Storage This segment’s Adjusted EBITDA increased by $247 million, or 22%, driven by higher natural gas sales and optimization activities, partially offset by lower storage optimization.

Interstate Transportation and Storage Segment Adjusted EBITDA decreased by $181 million, or 9%, due to lower transportation volumes, higher operating expenses, and decreased earnings from unconsolidated affiliates.

Midstream Adjusted EBITDA for this segment grew by $385 million, or 15%, primarily due to contributions from recently acquired assets and higher volumes in the Permian region, partially offset by lower natural gas prices.

NGL and Refined Products Transportation and Services This segment’s Adjusted EBITDA increased by $285 million, or 7%, reflecting higher transportation volumes, terminal services, and fractionation throughput, as well as improved marketing results.

Crude Oil Transportation and Services Segment Adjusted EBITDA rose by $496 million, or 19%, driven by contributions from recently acquired assets and the ET-S Permian joint venture, as well as higher transportation volumes on existing assets.

Investment in Sunoco LP Adjusted EBITDA for this segment increased by $493 million, or 51%, mainly due to the acquisitions of NuStar and Zenith European terminals, as well as the formation of the ET-S Permian joint venture.

Investment in USAC Segment Adjusted EBITDA grew by $72 million, or 14%, reflecting higher demand for compression services and improved pricing.

Strengths and Weaknesses

Strengths

• Diversified asset base spanning natural gas, NGL, and crude oil infrastructure
• Stable cash flows from fee-based transportation and storage services
• Successful integration of strategic acquisitions, such as WTG Midstream and NuStar
• Strong liquidity position with ample availability under credit facilities
• Prudent capital allocation, including disciplined growth spending

Weaknesses

• Exposure to commodity price volatility, particularly in the midstream and crude oil segments
• Regulatory uncertainty around cost-of-service rate structures for interstate pipelines
• Potential for increased operating expenses and maintenance capital expenditures

Outlook and Future Prospects

Energy Transfer’s outlook remains positive, as the company expects continued growth supported by increased production, higher utilization of existing assets, and strong domestic and international demand for its products and services.

The company anticipates that new data centers, power plants, and LNG export facilities will drive increased natural gas and NGL volumes. Additionally, global petrochemical and NGL feedstock demand is expected to support higher NGL production and exports.

While current and projected commodity prices may impact activity levels in the upstream and midstream sectors, Energy Transfer believes it is well-positioned to manage through market cycles due to its stable, fee-based business model.

The company also expects a more constructive regulatory environment under the new presidential administration, which it believes will be favorable for project development and operations.

Energy Transfer plans to maintain a prudent approach to capital allocation, with a healthy but disciplined capital expenditure program in 2025 and beyond. The company has ample liquidity and access to debt capital markets to fund its growth initiatives and acquisitions as opportunities arise.

In addition to its core energy infrastructure business, Energy Transfer is also pursuing alternative energy projects aimed at reducing its environmental footprint, demonstrating the company’s commitment to sustainability and adapting to evolving market dynamics.

Conclusion

Overall, Energy Transfer has delivered strong financial results in 2024, showcasing the stability and growth potential of its diversified asset base. The company’s focus on operational excellence, strategic acquisitions, and prudent capital management positions it well to navigate market challenges and capitalize on emerging opportunities in the energy sector. While regulatory and commodity price risks remain, Energy Transfer’s outlook appears favorable as it continues to execute on its strategic priorities.