Energy Transfer(ET) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements for the six months ended June 30, 2025, show total revenues of $40.26 billion, a decrease from $42.36 billion in the prior year period. Net income attributable to partners was $2.49 billion, slightly down from $2.55 billion year-over-year. Total assets stood at $125.02 billion, with total liabilities at $79.17 billion. The statements reflect the ongoing operations, recent acquisitions, and financial position of the Partnership Consolidated Balance Sheets As of June 30, 2025, Energy Transfer's total assets were $125.02 billion, a slight decrease from $125.38 billion at year-end 2024. The change was primarily driven by a decrease in current assets, offset by an increase in net property, plant, and equipment. Total liabilities increased to $79.17 billion from $78.63 billion, mainly due to a rise in long-term debt Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $13,671 | $14,202 | | Property, Plant and Equipment, Net | $95,531 | $95,212 | | Total Assets | $125,022 | $125,380 | | Total Current Liabilities | $11,849 | $12,656 | | Long-term Debt, less current maturities | $60,749 | $59,752 | | Total Liabilities | $79,165 | $78,633 | | Total Equity | $45,534 | $46,017 | Consolidated Statements of Operations For the second quarter of 2025, revenues were $19.24 billion, down from $20.73 billion in Q2 2024, primarily due to lower refined product and crude sales. Net income attributable to partners was $1.16 billion, compared to $1.31 billion in the prior-year quarter. For the six-month period, revenues decreased to $40.26 billion from $42.36 billion, while net income attributable to partners slightly decreased to $2.49 billion from $2.55 billion Key Operating Results (in millions, except per unit data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $19,242 | $20,729 | $40,262 | $42,358 | | Operating Income | $2,309 | $2,298 | $4,800 | $4,678 | | Net Income | $1,458 | $1,992 | $3,178 | $3,684 | | Net Income Attributable to Partners | $1,163 | $1,314 | $2,486 | $2,554 | | Basic Net Income per Common Unit | $0.32 | $0.35 | $0.68 | $0.67 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $5.68 billion, a decrease from $6.04 billion in the prior year period. Net cash used in investing activities increased significantly to $2.90 billion from $1.15 billion, driven by higher capital expenditures. Net cash used in financing activities was $2.85 billion, primarily for distributions to partners and debt management Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $5,679 | $6,042 | | Net Cash Used in Investing Activities | $(2,899) | $(1,151) | | Net Cash Used in Financing Activities | $(2,850) | $(4,402) | | Decrease in Cash and Cash Equivalents | $(70) | $489 | Notes to Consolidated Financial Statements The notes provide detailed information on the Partnership's accounting policies and financial activities. Key highlights include significant acquisition activity by subsidiary Sunoco LP, details on debt obligations and recent refinancing activities, equity transactions including preferred unit redemptions and common unit distributions, and extensive disclosures on regulatory matters, legal contingencies, and environmental liabilities. The notes also disaggregate revenue and provide segment-level financial data - Sunoco LP, a consolidated subsidiary, announced a definitive agreement to acquire Parkland Corporation for approximately $9.1 billion and entered an agreement to acquire TanQuid GmbH & Co. KG for approximately €500 million[31][34] - The Partnership issued $3.0 billion in new senior notes in March 2025 to refinance existing debt and redeemed $2.0 billion of senior notes due in March and May 2025[50][51] - Quarterly cash distributions on common units increased sequentially, reaching $0.3300 per unit for the quarter ended June 30, 2025[65] - As of June 30, 2025, the Partnership had accrued approximately $305 million for contingent obligations deemed probable and reasonably estimable, with a potential range of additional losses up to $42 million for matters considered reasonably possible[86] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management's discussion provides an analysis of the financial results for the three and six months ended June 30, 2025. Consolidated Adjusted EBITDA increased to $3.87 billion for the quarter and $7.96 billion for the six-month period, driven by strong performance in the Midstream and Investment in Sunoco LP segments. The discussion details segment-level performance, recent acquisitions by Sunoco LP, regulatory updates, liquidity position, capital expenditure plans for 2025, and cash distribution policies Consolidated Adjusted EBITDA (in millions) | Period | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $3,866 | $3,760 | $106 | | Six Months Ended June 30 | $7,964 | $7,640 | $324 | - The increase in Adjusted EBITDA was primarily driven by higher segment margin in the Midstream segment and the Investment in Sunoco LP segment[204] - The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, permanently reinstates 100% bonus depreciation, which is expected to defer a significant portion of U.S. federal income taxes for the Partnership's corporate subsidiaries in future periods[185] Recent Developments Key recent developments include significant acquisition activities by subsidiary Sunoco LP, which agreed to acquire Parkland Corporation for ~$9.1 billion and TanQuid for ~€500 million. Energy Transfer also announced an increased quarterly cash distribution of $0.33 per common unit. Additionally, the report notes the enactment of the One Big Beautiful Bill Act (OBBBA), which reinstates 100% bonus depreciation and is expected to defer future federal income tax payments - Sunoco LP announced a definitive agreement to acquire Parkland Corporation in a cash and equity transaction valued at approximately $9.1 billion, expected to close in Q4 2025[178] - Sunoco LP also agreed to acquire TanQuid GmbH & Co. KG, which operates fuel terminals in Germany and Poland, for approximately €500 million, including assumed debt[181] - Energy Transfer announced a quarterly distribution of $0.33 per common unit ($1.32 annualized) for the quarter ended June 30, 2025[184] Results of Operations For Q2 2025, consolidated Adjusted EBITDA increased by $106 million YoY to $3.87 billion. The Midstream segment's Adjusted EBITDA grew by $75 million due to acquired assets and higher Permian volumes. The Investment in Sunoco LP segment saw a $134 million increase, largely from the NuStar acquisition. These gains were partially offset by decreases in the Intrastate, NGL & Refined Products, and Crude Oil segments. For the six-month period, Adjusted EBITDA rose $324 million to $7.96 billion, with the Midstream and Sunoco LP segments again being the primary drivers of growth Segment Adjusted EBITDA - Q2 2025 vs Q2 2024 (in millions) | Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Intrastate transportation and storage | $284 | $328 | $(44) | | Interstate transportation and storage | $470 | $392 | $78 | | Midstream | $768 | $693 | $75 | | NGL and refined products transportation | $1,033 | $1,070 | $(37) | | Crude oil transportation and services | $732 | $801 | $(69) | | Investment in Sunoco LP | $454 | $320 | $134 | | Investment in USAC | $149 | $144 | $5 | | Total Adjusted EBITDA | $3,866 | $3,760 | $106 | - The Midstream segment's performance was boosted by recently acquired assets and higher volumes in the Permian region, which increased segment margin by $176 million YoY[227] - The Investment in Sunoco LP segment benefited from the NuStar acquisition (acquired May 2024), contributing to a $12 million increase in segment margin and a $48 million increase in Adjusted EBITDA from unconsolidated affiliates (ET-S Permian)[235] Liquidity and Capital Resources The Partnership maintains a strong liquidity position, funding capital expenditures and distributions primarily with cash from operations. For 2025, total planned capital expenditures are approximately $6.1 billion, with $5.0 billion allocated to growth projects and $1.1 billion for maintenance. As of June 30, 2025, the Partnership had $2.51 billion available for future borrowings under its $5.0 billion Five-Year Credit Facility. Total consolidated debt stood at $60.76 billion 2025 Expected Capital Expenditures (in millions) | Category | Growth | Maintenance | Total | | :--- | :--- | :--- | :--- | | Intrastate transportation and storage | $1,400 | $85 | $1,485 | | Interstate transportation and storage | $170 | $205 | $375 | | Midstream | $1,525 | $375 | $1,900 | | NGL and refined products | $1,375 | $150 | $1,525 | | Crude oil transportation and services | $295 | $180 | $475 | | All other | $235 | $105 | $340 | | Total | $5,000 | $1,100 | $6,100 | - As of June 30, 2025, the Partnership's Five-Year Credit Facility had $2.47 billion of outstanding borrowings and $2.51 billion available for future borrowings[265] - Total consolidated debt was $60.76 billion as of June 30, 2025, up from $59.76 billion at year-end 2024[258] Cash Distributions Energy Transfer follows a policy of distributing all available cash quarterly. For the quarter ended June 30, 2025, the distribution on common units was set at $0.3300 per unit. The report also details distributions for various series of preferred units. Consolidated subsidiaries Sunoco LP and USAC also continued their regular quarterly distributions to their respective unitholders Energy Transfer Common Unit Distributions Declared in 2025 | Quarter Ended | Rate per Unit | | :--- | :--- | | December 31, 2024 | $0.3250 | | March 31, 2025 | $0.3275 | | June 30, 2025 | $0.3300 | Quantitative and Qualitative Disclosures About Market Risk The Partnership is exposed to market risks from commodity price volatility and interest rate changes. Commodity price risk is managed using various derivative instruments. A hypothetical 10% change in commodity prices would have a varied impact on the fair value of its derivative portfolio. For interest rate risk, the company had $4.05 billion of floating-rate debt outstanding as of June 30, 2025, where a 100-basis-point change would alter annual interest expense by approximately $40 million. There have been no material changes to market risk exposures since year-end 2024 - The company manages commodity price volatility through exchange-traded and OTC financial instruments, including futures, swaps, and options[281] - As of June 30, 2025, the Partnership had $4.05 billion of floating-rate debt. A 100-basis-point change in interest rates would result in an estimated $40 million annual change in interest expense[283] Controls and Procedures Management, including the Co-Chief Executive Officers and Chief Financial Officer, evaluated the Partnership's disclosure controls and procedures and concluded they were effective as of June 30, 2025. There were no material changes in the company's internal control over financial reporting during the second quarter of 2025 - Based on an evaluation, the Co-Principal Executive Officers and Principal Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[286] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[287] PART II – OTHER INFORMATION Legal Proceedings The Partnership is involved in various legal and environmental proceedings. Notable updates include an investigation by the Pennsylvania Attorney General's Office into a refined products release from an SPLP pipeline in January 2025. Additionally, a lawsuit by the State of New Mexico regarding PCB contamination is proceeding to trial, with the state seeking damages of $50-$60 million from Transwestern. A consent decree related to a 2014 crude oil release in Ohio was terminated after payments of approximately $3 million were made - A January 2025 refined products release from the Twin-Oaks to Newark Pipeline in Pennsylvania is under investigation by the Pennsylvania Attorney General's Office, Environmental Crimes Unit. Potential charges and penalties are unknown[292] - In a lawsuit concerning PCB contamination, the State of New Mexico is seeking damages of $50 million to $60 million from subsidiary Transwestern, with a trial tentatively set for October 2025[293] - A consent decree related to a 2014 crude oil release in Ohio was terminated in May 2025 after SPLP and Mid Valley made total payments of approximately $3 million for civil penalties and natural resource damages[294] Risk Factors There have been no material changes to the risk factors previously disclosed in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2024, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 - No material changes have been identified from the risk factors described in the 2024 Form 10-K and the Q1 2025 Form 10-Q[298] Exhibits This section lists the exhibits filed or furnished as part of the quarterly report, including corporate governance documents, certifications by executive officers as required by the Sarbanes-Oxley Act, and interactive data files