Energy Transfer(ET) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2025, the company generated adjusted EBITDA of $3.9 billion, an increase from $3.8 billion in Q2 2024, indicating a growth in operational performance [5] - The ECF attributable to partners was approximately $2 billion, with $2 billion spent on organic growth capital in the first half of 2025 [5] - The company expects to be at or slightly below the lower end of its guidance range of $16.1 billion to $16.5 billion for 2025 due to weakness in the Bakken and slower recovery in dry gas areas [19][20] Segment Performance Changes - NGL and refined products segment adjusted EBITDA decreased to $1 billion from $1.1 billion in 2024, impacted by lower optimization gains and blending margins [6] - Midstream segment adjusted EBITDA increased to $768 million from $693 million, driven by a 10% increase in legacy volumes in the Permian Basin [6] - Crude oil segment adjusted EBITDA decreased to $732 million from $800 million, affected by lower transportation revenues on the Bakken pipeline [7] - Interstate natural gas segment adjusted EBITDA rose to $470 million from $392 million, attributed to higher contracted volumes [8] - Intrastate natural gas segment adjusted EBITDA decreased to $284 million from $328 million, due to reduced pipeline optimization [8] Market Data and Key Metrics Changes - The company reported strong volumes in midstream gathering, crude transportation, and NGL export volumes, indicating robust market demand [5] - The Permian Basin processing volumes reached a record of nearly 5 Bcf per day, reflecting increased operational capacity [14] Company Strategy and Industry Competition - The company plans to spend approximately $5 billion on organic growth capital projects in 2025, focusing on NGL transportation and pipeline expansions [9] - New projects like the Desert Southwest Pipeline and Hugh Branson pipeline are expected to enhance the company's position in the natural gas market [10][12] - The company aims to leverage its extensive pipeline network and storage capabilities to meet growing energy demands, positioning itself as a leader in the industry [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing significant growth in energy resource demand driven by natural gas and NGLs [20] - The company is confident in its ability to meet future demand with its extensive pipeline network and strategic projects [21] - Management acknowledged challenges in the Bakken and dry gas areas but remains bullish about long-term growth prospects [19][60] Other Important Information - The company has a significant backlog of contracted growth projects expected to generate strong returns and enhance its integrated value chain [23] - The Lake Charles LNG project is progressing, with significant interest from potential customers and ongoing discussions for equity sell-down [17][18] Q&A Session Summary Question: Can you provide more detail on the commercialization efforts related to data centers? - Management highlighted the complexity and time required for data center projects, noting recent significant deals in Texas and ongoing negotiations for additional contracts [26][30][31] Question: Can you provide color on the expected build multiple for the Desert Southwest project? - Management expressed confidence in selling out the project and mentioned potential for expansion due to high demand [34][35] Question: What is the status of the Lake Charles EPC quote process? - Management confirmed that the EPC contract is progressing as expected and is aligned with their financial projections [40][42] Question: How does the company view construction cost risk sharing for the Desert Southwest project? - Management indicated a traditional structure where the midstream company bears the cost risk, with confidence in meeting estimated costs [44][55] Question: What percentage of the overall business could gas represent in the future? - Management refrained from providing an exact percentage but indicated that gas projects are expected to grow significantly as a portion of the overall business [103][104]