Energy Transfer(ET) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated adjusted EBITDA of $3.1 billion for Q3 2022, a 20% increase from $2.6 billion in Q3 2021 [5] - Distributable cash flow (DCF) attributable to partners was $1.6 billion for Q3 2022, up from $1.3 billion in Q3 2021 [7] - Excess cash flow after distributions was approximately $760 million, with incurred excess DCF of about $265 million after distributions of $819 million [8] - A quarterly cash distribution of $0.265 per common unit was announced, representing a more than 70% increase over Q3 2021 [9] Business Segment Data and Key Metrics Changes - NGL and refined products segment adjusted EBITDA was $634 million, down from $706 million in the same period last year, primarily due to a $130 million negative impact from hedged inventory timing [10] - Midstream segment adjusted EBITDA increased to $868 million from $556 million year-over-year, driven by increased throughput and favorable pricing [15] - Crude oil segment adjusted EBITDA was $461 million, down from $496 million, impacted by a $126 million legal charge; absent this charge, adjusted EBITDA would have been $587 million [17] - Intrastate segment adjusted EBITDA rose to $409 million from $334 million, benefiting from increased rates and higher production in the Haynesville Shale [20] Market Data and Key Metrics Changes - NGL transportation volumes increased to 1.9 million barrels per day from 1.8 million barrels per day year-over-year [12] - Crude oil transportation volumes reached a record 4.6 million barrels per day, up from 4.2 million barrels per day [19] - Gathered gas volumes were a record 19.1 million MMBtu per day compared to 13 million MMBtu per day for the same period last year [16] Company Strategy and Development Direction - The company aims to return distributions to a previous level of $0.305 per quarter while balancing leverage targets and growth opportunities [9] - Ongoing growth projects include the Lake Charles LNG project, which has executed six LNG offtake agreements and is targeting FID by the end of Q1 2023 [26] - The company is evaluating additional processing plants in the Delaware Basin due to significant demand [30] - Strategic growth projects are being pursued to enhance the existing asset base and generate attractive returns [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future of the industry, citing strong domestic and international demand for crude oil, natural gas, and NGLs [39] - The company expects to reach its leverage target range of 4 to 4.5 times by the end of 2022, which will improve financial flexibility [40] - Adjusted EBITDA guidance for 2022 was raised to between $12.8 billion and $13 billion, reflecting strong performance and continued demand [38] Other Important Information - The company completed the sale of its 51% interest in Energy Transfer Canada for approximately $300 million, reducing consolidated debt by about $850 million [22] - The acquisition of Woodford Express LLC for approximately $485 million added significant gas processing capacity [23] Q&A Session Summary Question: Update on the LNG project with Lake Charles - Management acknowledged increased EPC costs and expressed confidence in their strong position due to a robust balance sheet and natural gas pipeline network [44] Question: Takeaway outlook in the Permian - Management highlighted the availability of capacity and the potential for wider spreads in the future, emphasizing the importance of the Warrior project [46] Question: Thoughts on ethane prices and exports - Management noted sufficient contracts to expand ethane export capabilities, with ongoing evaluations based on market conditions [49] Question: Clarification on updated guidance - Management confirmed that the updated guidance includes the legal settlement and the timing impact from NGLs, with expectations of reversals in Q4 [58] Question: CapEx outlook for next year - Management indicated that it is too early to provide specific guidance for 2023 CapEx, with a focus on ongoing projects [65] Question: Addressing debt maturities - Management plans to pay down debt using free cash flow and has options available through their credit facility [88] Question: Potential cracker investment - Management is cautious about making investments in the current petchem environment but is actively pursuing necessary permits and commitments [84]