ENERGY TRANSFER LP AND SUBSIDIARIES FORM 10-K

Overview of Energy Transfer’s Financial Performance

Energy Transfer derives cash flows from distributions related to its investment in subsidiaries like Sunoco LP and USAC. The company’s primary cash requirements are for distributions to partners, capital expenditures, expenses, and debt service. Energy Transfer aims to increase distributable cash flow to unitholders over time by growing its natural gas and liquids businesses through construction, expansion, and strategic acquisitions.

Energy Transfer’s reportable segments include intrastate transportation and storage, interstate transportation and storage, midstream, NGL and refined products transportation and services, crude oil transportation and services, investment in Sunoco LP, investment in USAC, and all other.

In 2024, Energy Transfer completed several key acquisitions and transactions:

WTG Midstream Acquisition

• Acquired 100% of WTG Midstream for $2.28 billion in cash and 50.8 million common units
• Added 6,000 miles of gas gathering pipelines, 8 gas processing plants, and 2 additional plants under construction in the Midland Basin

Sunoco LP Acquisitions

• Acquired all common units of NuStar for $2.85 billion in Sunoco LP common units, assumed $3.5 billion in debt, and assumed $800 million in preferred units
• Acquired liquid fuels terminals in Amsterdam and Bantry Bay for €170 million
• Acquired a terminal in Portland, Maine for $24 million

ET-S Permian Joint Venture

• Formed a 67.5%/32.5% joint venture with Sunoco LP combining crude oil and produced water gathering assets in the Permian Basin

Revenue and Profit Trends

For the year ended December 31, 2024, Energy Transfer reported:

• Net income of $6.57 billion, up 24% from 2023
• Adjusted EBITDA of $15.48 billion, up 13% from 2023

The increase in net income and Adjusted EBITDA was driven by favorable results across multiple segments:

• Midstream segment margin increased $659 million, primarily due to recently acquired assets and higher Permian volumes
• Crude oil transportation and services segment margin increased $667 million, primarily from recently acquired assets and the ET-S Permian joint venture
• Investment in Sunoco LP segment Adjusted EBITDA increased $493 million, primarily from the NuStar and Zenith European terminals acquisitions

These increases were partially offset by:

• A $181 million decrease in interstate transportation and storage segment Adjusted EBITDA, primarily due to lower rates, volumes, and operational gas sales
• A $12 million decrease in the all other segment Adjusted EBITDA, primarily from intersegment eliminations related to the ET-S Permian joint venture

Strengths and Weaknesses

Strengths:

• Diversified business model across natural gas, NGLs, and crude oil infrastructure
• Stable cash flows from fee-based transportation and storage assets
• Successful track record of strategic acquisitions and joint ventures to expand footprint
• Strong liquidity position with $2.21 billion available under credit facility

Weaknesses:

• Exposure to commodity price volatility, particularly in marketing and trading activities
• Regulatory uncertainty around FERC policies on income tax allowances for pipelines
• Potential for increased operating expenses and capital expenditures to comply with new environmental regulations

Outlook and Future Prospects

Looking ahead, Energy Transfer expects continued growth to be supported by:

• Increased demand from new data centers, power plants, and LNG exports driving higher production volumes
• Growing global demand for petrochemicals and NGL feedstocks supporting higher NGL volumes
• A more constructive regulatory environment under the new presidential administration

The company plans to maintain a prudent capital allocation approach, reducing growth capital spending in recent years while anticipating a healthy capex program in 2025 and beyond. Energy Transfer also continues to pursue alternative energy projects to reduce its environmental footprint.

Risks and uncertainties that could impact the business include:

• Commodity price volatility and its effect on upstream and midstream activity levels
• Regulatory changes, particularly around pipeline certification and air quality standards
• Ability of subsidiaries to generate sufficient cash flow for distributions
• Successful integration of acquired assets and projects under development

Overall, Energy Transfer appears to have a stable outlook, with a diversified asset base, strong liquidity, and opportunities for continued growth, though it faces some near-term headwinds and regulatory risks that will require careful management.