Energy Transfer Q2 Earnings Call Highlights
Key Points
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- Energy Transfer delivered strong second-quarter results: Adjusted EBITDA rose to approximately $5.1 billion from $3.9 billion a year earlier, while distributable cash flow increased to about $2.6 billion. Record gathering, NGL, export and crude transportation volumes supported the gains.
- The company raised its 2026 outlook, increasing adjusted EBITDA guidance to $18.8 billion–$19.1 billion and forecasting $5.6 billion–$5.9 billion in organic growth capital expenditures. Management expects mid-teen returns from most growth projects and is targeting 3%–5% annual distribution growth.
- Major expansion projects are advancing: The Hugh Brinson Pipeline is ramping toward 1.5 billion cubic feet per day, while new Permian processing, power-generation connections and a 240,000-barrel-per-day ethane export expansion are expected to provide additional long-term growth.
Energy Transfer (NYSE:ET) reported second-quarter adjusted EBITDA of approximately $5.1 billion, up from about $3.9 billion a year earlier, supported by record gathering, NGL transportation and export, and crude oil transportation volumes. Distributable cash flow attributable to partners, as adjusted, rose to roughly $2.6 billion from $2.0 billion in the second quarter of 2025.
Co-CEO Thomas E. Long said the company raised its 2026 adjusted EBITDA guidance to a range of $18.8 billion to $19.1 billion, representing an increase of about $500 million at the midpoint from the prior outlook. Energy Transfer now expects 2026 organic growth capital expenditures of $5.6 billion to $5.9 billion, excluding SUN and USA Compression capital spending.
Long said the company spent approximately $2.6 billion on organic growth projects during the first half of 2026 across its intrastate, midstream, NGL and refined products, and interstate segments. He said most of its growth projects are supported by long-term contracts and are expected to generate mid-teen returns.
Segment results reflect volumes and market conditions
The NGL and refined products segment generated approximately $1.3 billion of adjusted EBITDA, compared with about $1.0 billion in the prior-year period. The increase included record exports from the Nederland and Marcus Hook terminals, record throughput on NGL pipelines and at Mont Belvieu fractionators, and higher NGL sales premiums and product optimization margins.
Long said segment results included a $212 million benefit from higher premiums on NGL sales for export and domestic supply, as well as increased optimization and blending margins. Results also included gains from NGL and refined-products inventory hedges, $27 million of which the company expects to be offset during the fourth quarter.
Midstream adjusted EBITDA increased to approximately $884 million from $768 million a year earlier, aided by record Permian Basin volumes. Permian volumes rose 5% as new processing capacity entered service and plant utilization improved. The segment also benefited by about $88 million from higher NGL prices.
Crude oil segment adjusted EBITDA rose to approximately $834 million from $732 million, driven by growth across pipelines, terminals and gathering systems. Favorable market conditions, including pipeline and export arbitrage, higher crude prices and Strategic Petroleum Reserve activity at Nederland, contributed approximately $106 million.
Intrastate natural gas adjusted EBITDA increased to approximately $377 million from $284 million, primarily due to wider basis differentials and early commissioning volumes on the Hugh Brinson Pipeline. Interstate natural gas adjusted EBITDA increased to approximately $481 million from $470 million, reflecting higher parking, storage and liquids revenue along with increased contracted volumes and utilization on Panhandle Eastern, Transwestern and Florida Gas Transmission.
Management sees further growth from project ramp-ups
Group CFO Dylan Bramhall said the company expects its base business to remain strong during the second half, with volumes growing across segments and several new projects contributing. He said the revised guidance does not assume a continuation of the market volatility, wider spreads and higher commodity prices seen during the first half.
“The more of this that continues to play out,” Bramhall said, “with some of this volatility, we can very easily achieve that high end of the guidance range.”
Energy Transfer said the Hugh Brinson Pipeline is in commercial service and is expected to be capable of flowing its full phase I capacity of 1.5 billion cubic feet per day by Sept. 1, subject to continuing commissioning progress. Shipper contracts are coming online in stages, with the majority of phase I contract volumes expected to be active by Jan. 1.
Phase II of Hugh Brinson, which includes downstream compression, remains targeted for the first quarter of 2027 and is expected to come in under budget. The company also completed a 14-mile lateral from the pipeline in Abilene, Texas, and entered an agreement with Crusoe to build facilities serving a previously announced 900-megawatt expansion at the AI Factory campus in Abilene.
Co-CEO Mackie McCrea said the pipeline’s startup has helped ease constraints at the Waha trading hub and could allow producers to bring on pent-up gas, oil and NGL volumes. He said Energy Transfer can transport Permian gas to markets including Phoenix, South Texas, Dallas-Fort Worth, East Texas, the Houston Ship Channel and Florida.
Natural gas, Permian and export projects advance
Energy Transfer said its Desert Southwest Pipeline project is progressing through stakeholder outreach and scoping activities in Texas, New Mexico and Arizona. McCrea said the company is ahead of its expectations on survey permissions and project development and continues to target service in the latter part of 2029.
The company’s Springerville Lateral, a roughly 120-mile extension of the Transwestern Pipeline, remains expected to enter service in the fourth quarter of 2029. The 30-inch line is designed for capacity of approximately 625 million cubic feet per day and is intended to serve power generation expected to replace two coal-fired plants.
In Oklahoma, Energy Transfer said one of four planned connections for new power plant loads entered service earlier this year, two more are ready for service, and the last is expected online in the fourth quarter of 2028. Together, the connections are expected to provide approximately 300 million cubic feet per day of demand growth. The company is also finalizing negotiations to serve about 250 million cubic feet per day of additional Oklahoma power plant demand.
On the Permian processing front, the Mustang Draw I plant entered service in June and is operating near capacity at the company’s Midland Basin processing complex. Mustang Draw II remains scheduled for service in the fourth quarter. Bramhall said the latter project is expected to provide a more meaningful contribution in 2027 because of its late-2026 startup.
Energy Transfer also announced a 240,000-barrel-per-day ethane export expansion at Nederland, along with 55,000 barrels per day of incremental LPG capacity. The project includes an expansion of the Mont Belvieu-to-Nederland pipeline system and two additional NGL docks. Service is expected to begin in stages in 2028, with the docks targeted for mid-2029.
The company said all ethane export capacity has been committed under long-term agreements extending into the 2040s, with 80% of volumes expected to serve Asian markets outside China. Growth capital for the project is expected to be slightly more than $1 billion.
Energy Transfer completed upgrades to its Lone Star Express pipeline during the quarter, adding more than 90,000 barrels per day of Permian NGL takeaway capacity. Its total deliverability into Mont Belvieu now exceeds 1.3 million barrels per day, while its Permian NGL takeaway pipelines are approximately 95% utilized. The company also signed long-term transportation and/or fractionation agreements covering about 300,000 barrels per day on its Y-grade assets into the 2030s.
Long said the company remains focused on project execution and capital discipline, targeting annual distribution growth of 3% to 5% and leverage of four to four-and-a-half times EBITDA.
About Energy Transfer (NYSE:ET)
Energy Transfer (NYSE: ET) is a Dallas-based midstream energy company that develops and operates infrastructure for the transportation, storage and processing of hydrocarbons. The company's operations focus on moving and storing natural gas, natural gas liquids (NGLs), crude oil and refined products through an integrated network of pipelines, terminals, storage facilities and processing plants. Energy Transfer provides core midstream services such as gathering, compression, fractionation, processing, and bulk transportation to support production and downstream supply chains.
Its asset base spans an extensive network across the United States, connecting producing regions, processing centers, petrochemical hubs and coastal and inland markets.
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