Energy Transfer Q1 2026 Earnings Call - Massive Guidance Raise Driven by Record Volumes and Geopolitical Tailwinds

Operator: Good morning, and welcome to the Energy Transfer first quarter 2026 earnings call. I would now like to turn the conference call over to Mr. Tom Long, Co-Chief Executive Officer. Thank you, and over to you.

Gabe Moreen, Analyst, Mizuho2: Thank you, operator. Good morning, everyone, and welcome to the Energy Transfer first quarter 2026 earnings call. I’m also joined today by Mackie McCrea, Dylan Bramhall, and other members of the senior management team who are here to help answer your questions after our prepared remarks. Hopefully, you saw the press release we issued earlier this morning. As a reminder, our earnings release contains an update to guidance and a thorough MD&A that goes through the segment results in detail. We encourage everyone to take a look at the press release, as well as the slides posted to our website to gain a full understanding of the quarter and our growth opportunities. As a reminder, we will be making forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.

These statements are based upon our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our Form 10-Q for the quarter ending March 31, 2026, which we expect to file later this week. I’ll also refer to adjusted EBITDA and distributed cash flow, or DCF, both of which are non-GAAP financial measures. You’ll find a reconciliation of our non-GAAP measures on our website. Let’s start today by going over our financial results for the first quarter of 2026. We generated adjusted EBITDA of approximately $4.9 billion compared to approximately $4.1 billion for the first quarter of last year. DCF attributable to the partners of Energy Transfer, as adjusted, was approximately $2.7 billion compared to approximately $2.3 billion for the first quarter of 2025.

These results were supported by strong operations, including record midstream gathering volumes, NGL fractionation volumes, NGL export volumes, and crude oil transportation volumes for the quarter. For the 1st quarter of 2026, we spent approximately $1.5 billion on organic growth capital, primarily in the intrastate NGL and refined products, midstream, and interstate segments, excluding Sun and USA Compression CapEx. Turning to our 2026 guidance. As a result of our strong 1st quarter performance across our segments as well as revised expectations for the rest of 2026, we now expect our 2026 adjusted EBITDA to range between approximately $18.2 billion and $18.6 billion compared to the previous range of between approximately $7.45 billion and $17.85 billion.

This includes a beat of approximately $500 million and the capture of our full year optimization target in the first quarter, as well as the expectations for continued outperformance for the balance of the year. Turning to organic growth capital guidance. We now expect 2026 organic growth capital guidance to be between approximately $5.5 billion and $5.9 billion compared to our previous guidance of approximately $5 billion-$5.5 billion, excluding Sunoco and USAC.

This increase is primarily a result of the addition of several new growth projects, including the construction of the new Springerville Lateral off our existing Transwestern Pipeline, the construction of pipelines and meter stations to provide natural gas to various power plants and data center sites in Oklahoma and Arkansas, accelerated timing on longer-term projects like Desert Southwest and FGT capital spin, and gathering system and compression build-out in the midstream segment, primarily in the Permian Basin associated with recent contract and acreage dedication extensions. I will provide additional details about these projects later in the call. Beyond these projects, we continue to have a significant backlog of opportunities that are expected to support future growth. Turning to our results by segment for the first quarter, we’ll start with NGL and refined products.

Adjusted EBITDA was approximately $1.2 billion compared to approximately $978 million for the first quarter of 2025. We saw higher throughput across our Gulf Coast pipeline operations and record performance at our Mont Belvieu fractionators. In addition, new chilling capacity placed into service last year contributed to a $50 million increase in earnings, as well as record export volumes from our Nederland terminal in the first quarter. This more than made up for fog delays experienced in the fourth quarter of 2025. During the first quarter of 2026, we realized higher gains of $65 million due to the timing of the settlement of NGL and refined product inventory hedges, which offset losses realized in the fourth quarter of 2025.

Results for the quarter also included an increase of approximately $50 million from higher premiums from the sale of propane and butane for both export and domestic supply, as well as approximately $25 million increase due to inventory write-down losses realized in the first quarter of last year. For Midstream, adjusted EBITDA was approximately $887 million compared to approximately $925 million for the first quarter of 2025. Base business earnings increased primarily due to growth in the Permian Basin, where we saw volumes up 8% related to new and upgraded processing plants brought online since the first quarter of last year. In addition, we saw a $25 million decrease due to lower NGL natural gas prices compared to last year.

As a reminder, the first quarter of last year included the recognition of revenue of $160 million from Winter Storm Uri. For the crude oil segment, adjusted EBITDA was approximately $869 million compared to approximately $742 million for the first quarter of 2025. During the quarter, we saw continued growth across several of our crude oil pipeline and gathering systems. Results also included a $60 million increase related to favorable impacts to our crude oil inventory value as a result of rising crude oil prices. We expect these gains to be mostly offset with hedge losses during the second quarter of this year. We recognized $43 million of revenue that had previously been reserved related to the recontracting and extension of a legacy shipper contract during the recently completed successful DAPL open season.

We had lower expenses due to a $43 million adjustment to an accrual for a litigation-related contingency. In our interstate natural gas segment, adjusted EBITDA was approximately $519 million compared to approximately $512 million for the first quarter of 2025. This increase was primarily due to higher contracted volumes at higher rates on several of our pipelines, including Panhandle Eastern, Trunkline, Florida Gas, and Transwestern. For our intrastate natural gas segment, adjusted EBITDA was approximately $437 million compared to approximately $344 million in the first quarter of 2025. This was primarily due to an increase of approximately $100 million from Winter Storm Fern. The results for the first quarter show how incredibly well-positioned our assets are across the country.

Combining our extensive pipeline network, our storage facilities, and our terminals with our exceptionally experienced optimization and operating teams, we were able to capitalize on quickly changing dynamics and market volatility. For a closer look at some of our major projects, I’ll start with the natural gas side of our business, where we continue to see significant demand for our services. We’re making good progress on our Desert Southwest Pipeline project. In March 2026, Transwestern Pipeline initiated the FERC pre-filing process for the project as previously scheduled. We expect to file the formal certificate application with FERC in the fourth quarter of this year. In April, as a continuation of our comprehensive stakeholder engagement program, we hosted 15 open houses in communities along the entire proposed pipeline route throughout Texas, New Mexico, and Arizona.

Our teams continue to actively engage with elected officials, county leadership, landowners, and associated communities along the route to communicate project information and updates. We have engaged with over 500 stakeholders to date. Our discussions have continued to be very positive as existing and potential stakeholders learn more about the expected economic benefits and realize the critical need for a dependable supply of natural gas to help with the transition from coal-fired generation to natural gas-fired generation, and to help address significant power needs in the coming years, driven by population and demand growth in Arizona and New Mexico markets. We expect this pipeline to be in service, providing a reliable energy source by the fourth quarter of 2029.

On the existing Transwestern Pipeline, we recently approved the construction of the new Springerville Lateral, an approximately 120-mile, 30-inch pipeline that will have a capacity of approximately 625 million cubic feet per day and extends south to new natural gas-powered generation that is expected to replace 2 coal-fired plants. This project is backed by 20-year agreements and is expected to be in service in the fourth quarter of 2029. Total growth capital for this project is expected to be approximately $600 million. New construction of our Hugh Brinson Pipeline is going well. We continue to expect Phase 1 to be in service in the fourth quarter of this year upon the full build-out of the 400-mile pipeline and associated compression required to move 1.5 Bcf per day of gas to customers’ contractual delivery points.

However, if we stay on our current schedule, we will have the ability to begin flowing some gas early in the third quarter, which is prior to placing Phase 1 into service. We continue to expect Phase 2, which includes additional compression, to be in service in the first quarter of 2027. The pipe is fully contracted from west to east, and we also have a growing amount of backhaul volumes committed that are expected to add significant upside. Turning to Florida Gas Transmission, or FGT. In February, we completed open seasons for two new projects that are supported by 15-25-year long-term agreements with anchor shippers, the Phase IX project, which is designed to expand firm natural gas transportation capacity to multiple new and existing meter stations located across FGT’s market area.

This project will consist of the construction of approximately 90 miles of pipeline looping, as well as new and upgraded compression, with an anticipated capacity of approximately 525 million cubic feet per day. We recently locked in pipe for delivery at the end of 2027, and compression for delivery in the first quarter of 2028, and we continue to expect the project to be available for service in the fourth quarter of 2028. The South Florida project is designed to enhance the reliability of critical infrastructure and increase overall deliveries in South Florida.

The project has a condition precedent, but once we reach FID, it will consist of the construction of an approximately 40-mile extension with a capacity of approximately 230 million cubic feet per day, along with compression and a new meter station, and is expected to be available for service in the first quarter of 2030. Energy Transfer’s share of the cost for these two projects is expected to be approximately $565 million and approximately $110 million respectively, depending upon final shipper volume elections. We continue to make progress on a new storage cavern at our Bethel Natural Gas Storage Facility, which is expected to double our working gas storage capacity at the facility to over 12 BCF. In February, our intrastate power team added connections to serve three new power plant loads in the state of Oklahoma.

We have since added a fourth connection for a total of approximately 300 million cubic feet per day of new gas supply. The first of these connections is in service, with two more expected in service in the third quarter of this year. The remaining connection is expected to be in service in the fourth quarter of 2028. These connections are supported by long-term contracts with investment-grade counterparties. In addition, we have entered advanced negotiations to serve another 400 million cubic feet per day of new power plant demand in Oklahoma. Since our last earnings call, Energy Transfer has entered into agreements to provide long-term firm natural gas transportation services through our Texas intrastate system to support the Nexus Hubbard campus located in Central Texas, where Nexus is constructing a behind-the-meter AI hyperscale campus powered by on-site natural gas generation.

Initial volumes are expected to be approximately 150 million cubic feet per day, with certain rights by the transporter to increase its capacity upon election. Costs associated with this project are expected to be fully reimbursed, and it is expected to be in service by the end of this year. In addition, we recently entered into a LOI to provide approximately 150 million cubic feet per day of firm natural gas transportation service through our EGT pipeline to support a new data center site in Arkansas. The facility is expected to be in service in mid-2027. Energy Transfer also previously entered into a 20-year binding agreement with Entergy Louisiana to provide at least 250,000 MMBtus per day of firm transportation service to fuel their facilities in Richland Parish, Louisiana.

To facilitate flow of this gas, we plan to construct an 18-mile lateral off of our Tiger Pipeline, for which our customer recently exercised their option to upsize the pipeline lateral to 36 inches. They continue to have an option to increase their commitment to up to 1 BCF per day. In addition to these projects, we have multiple ongoing discussions with power plants to provide significant volumes and associated transportation revenues across 15 states which have a high likelihood of reaching FID. Looking at our Permian processing expansions. The 275 MMcf per day Mustang Draw I processing plant is currently being commissioned and is expected to be in full service next month. We expect volumes to ramp up quickly.

We continue to expect our 275 MMcf per day Mustang Draw II plant to be in service in the fourth quarter of this year. In our NGL segment, we placed the Gateway NGL Pipeline debottlenecking project into service in the first quarter of this year, providing increased deliveries of Delaware Basin liquids to Energy Transfer’s NGL fractionation complex in Mont Belvieu. Construction is also underway on a new 3 million barrel ethane storage cavern at Energy Transfer’s NGL fractionation complex at Mont Belvieu. The cavern, which is expected to be in service in the second half of 2027, will help support our ninth fractionator at Mont Belvieu that is expected to be in service in the fourth quarter of this year, as well as future ethane export expansions.

At Nederland, we recently extended the vast majority of our ethane export agreements into 2041, adding 10 years to the current contracts. We are hopeful to be in the position for incremental Nederland ethane expansion in the coming months. In our crude oil segment, we continue to work with Enbridge on a project to provide capacity for approximately 250,000 barrels per day of light Canadian crude oil through our Dakota Access Pipeline. The open season is underway. We still expect to take FID of this project by mid-2026.

We have approved an expansion of the Bayou Bridge crude oil pipeline, which is expected to increase the capacity to up to approximately 600,000 barrels per day, depending on destination and product mix. This expansion is underpinned by a 10-year term extension and volume increase from a demand pull customer and is expected to be in service in Q1 of 2027. I think as all of you can see, we had a lot of great things happen in the first quarter and many more exciting things on the way, which contributed to our increased EBITDA guidance for 2026. Our guidance each year is based upon expectations for the base business with minimal optimization included. In five of the last eight years, we have seen large spreads, optimization, and other opportunities that have provided significant upside to our base business.

These kinds of benefits, while one time in nature, highlight the unique ability of our business to consistently capture significant upside during market volatility. While additional upside is expected to be dependent upon the duration and impact of current market disruptions and resulting commodity prices, our assets remain incredibly well-positioned to continue maximizing on these opportunities. As a result, we are optimistic that some of the benefits we saw in the first quarter will carry over throughout the rest of the year, putting us in a position to achieve or exceed the high end of our guidance range. Additionally, we continue to expect the ramp-up of growth projects, including our Flexport NGL export project, new Permian processing plants, Hugh Brinson, and others, which we expect will contribute to continued growth in 2026.

In particular, once our Hugh Brinson Pipeline is in service, it will be extremely well-positioned to become a major U.S. header system that ties together our network of large diameter pipelines, providing significant future upside. Our large slate of growth projects is contracted under long-term commitments and expected to generate mid-teen returns and considerable earnings growth over the next decade or more. Completing these projects safely on time and on budget remains one of our top priorities for 2026. We also continue to see new growth opportunities across all aspects of our business, demonstrated by the announcement of several new projects this quarter, and we remain extremely well-positioned to help meet the substantial growth and demand for energy resources over many years to come.

We also remain very focused on capital discipline, targeting a long-term annual distribution growth rate of 3%-5% and maintaining our leverage target of 4 to 4.5 times EBITDA. In summary, because of the breadth of our assets, we have an unparalleled ability to transport large amounts of energy from all of the major supply basins to markets throughout the U.S., including major trading hubs, power plants, data centers, city gates, industrial complexes, and other downstream markets, including international markets through our export terminals. This concludes our prepared remarks. Operator, please open the line up for our first question.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star and then 1 on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. At this time, we will pause momentarily to assemble a roster. We have the first question on the line of Michael Blum from Wells Fargo. Please go ahead.

Michael Blum, Analyst, Wells Fargo: Thanks. Good morning, everyone. Wanted to just start kind of high level, in light of the Middle East conflict that’s ongoing. Are you seeing any change in U.S. producer activity or messaging? I guess in a similar vein, would you expect to see any permanent shifts in where global buyers will be sourcing their hydrocarbons, perhaps leaning more heavily on the U.S.? Are you seeing any of that in your discussions yet?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Good morning, Michael. This is Mackie. Excuse me. As I look around the room, as you’re asking that question, there’s like five people that want to answer that question because we’re so excited about where we sit and where our assets sit. Certainly, what’s been going on in the world, there’s a very clear redirection to the U.S. for all products, LNG, NGLs, oil, et cetera. It really has emphasized the value of what this country offers and more importantly, what our partnership offers to deliver all these products around the world. If you talk about individual basins, it’s all different. I think the major tenor throughout is optimism, not a rush to put a bunch of rigs in.

Gabe Moreen, Analyst, Mizuho2: Even as of yesterday, one of our bigger customers out in the Midland Basin, Diamondback, they announced they’re going to upsize and bring in more rigs. I think we’re going to see it’s kind of slow-moving, not a lot of talk, but I think it’s very evident that we’re going to see more and more rigs moving in as more countries and companies turn to the U.S. for supply, regardless of how long that war may last. An example is in North Louisiana, Haynesville, excuse me, we’re projecting about 800,000 Mcf of growth into our processing, treating, and downstream assets in North Louisiana by August or September. Clearly, the producers in North Louisiana are drilling and are going to bring on DUCs as we proceed deeper into this year, and we think that’s going to continue for many years to come.

We love where our assets are. We’re very excited about the future of growth, of drilling. Not real clear how quickly all the companies and all the basins are gonna pick up, but the bottom line is there’s gonna be increased drilling.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: increasing bringing on new wells from DUCs throughout the country, and we’re very excited about where we sit.

Michael Blum, Analyst, Wells Fargo: Thanks for that, Matthew. Appreciate it. Maybe just to ask specifically on the LPG exports. First of all, can you just remind us what % of your capacity is contracted versus open? Are you seeing any increase in demand for contracted capacity? Do you think potentially you could see length of contracts or just rates kind of trend higher over time? Thanks.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Gosh, kind of yes to all the above. As I mentioned earlier, whether we’re meeting with companies or looking at building assets over here and/or buying products over here, everybody’s turning to the U.S. We’re extremely well-positioned there. Good or bad, our strategy as a company is looking long term. Whether it’s LPG or natural gas, whatever it is, we’re looking to extend out into the 2030s and 2040s as much as our business possible. Our team did a great job at good, healthy rates of extending our LPG business well into 2030s. Regretfully, we don’t have a bunch of spot, but we have 4 or 5 ships where we could be printing a lot more money. Fortunately, we do have spots available at the Flexport project too, that we just completed, that we’re starting to fully ramp up.

We do have at least one or two slots a month that we can benefit from these higher spreads. To answer the final part of your question, we do think this will bring about longer terms and stronger margins as time goes on, as everybody leans on the U.S. for supply.

Michael Blum, Analyst, Wells Fargo: Thank you.

Operator: Thank you. We have the next question from the line of Gabe Moreen from Mizuho. Please go ahead.

Gabe Moreen, Analyst, Mizuho: Hey, good morning, team. Just wanted to ask about guidance. It sounds like on the one hand in the slides, you didn’t really shift your allocation between spread and commodity-based margins through the year, and you’re using the forward curves. On the other hand, I think you noted in your remarks you’re hopeful to exceed guidance or the upper end of the guidance here if things persist. Can you just maybe talk about some of the moving pieces? I know it’s pretty considerable, and maybe sort of the assumptions on commodity versus forward curve and what you’re really baking in for the rest of the year here with this guidance, Tom.

Dylan Bramhall, Senior Management/Financial Officer, Energy Transfer: Sure, Gabe. Let me walk you through some additional thoughts around on the full-year guide. I think it’ll help clear some of this up. We had an incredible first quarter. Tom just walked through the fact that we beat our internal plan by $500 million, plus achieved our full-year target for optimization earnings. Out of the $500, I wanna point out that, you know, about $300 million of that would probably be considered one time, as we describe it. As Tom pointed out, we call it one time, but we see this almost every year at Energy Transfer with our assets and people. How much of that really you call one time is up to the individual, I guess.

The rest of it’s really a result of the tailwinds to the business. You know, as you see, we raised guidance by $750 million at the midpoint. This is really based on line of sight to the continued outperformance across the majority of the segments. It’s everything. It’s volumes, it’s rates, it’s spreads. That’s why you didn’t see us update that pie chart there. It’s really permeating everything we do here. A lot of this, you know, as a result of the conflict in the Middle East, making it clear, as Mackie McCrea pointed out, the need for these reliable U.S. energy supplies. That’s increasing the demand and the volumes and rates.

You know, while we in Energy Transfer, we pray for a resolution to this conflict, we feel that it’s very likely that the supply and product flows will need an extended amount of time to return to some form of normalcy on the back end of this. It’s likely they’ll never go back to exactly how it was pre-conflict. We saw this with the Ukraine conflict, and today’s issues just drive home even more the need to the reliability of the energy from the U.S. here. As we look through the balance of the year, from the commodity price standpoint, that midpoint of the guidance range, I think you could say is based on a conservative price deck going forward.

If prices remain in anywhere near where they are right now, that will push us to that high end of the guiding range and potential to exceed that. I think that should help clear up how we’re thinking about the balance of the year here.

Gabe Moreen, Analyst, Mizuho: Thanks, Dylan. Maybe if I can just follow up with a question on Desert Southwest and the Springerville Lateral. I’m just curious whether the volume heading to that lateral was contemplated in the original 2.3 BCF on Desert Southwest or whether there’s potentially any upsizing to the base project. Also as far as potential for further laterals along those lines. I know you’ve talked about the potential to upside the pipe. Lastly on that, anything changed in terms of the regulatory approval or timelines given the lateral associated with the project now?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Yeah, this is Mackie again. Kind of separate topics. Talking about the Springerville Lateral, that’s tied as Tom mentioned, to the retirement of some coal plants, replacing it with natural gas-fired generation. We believe that the majority of that gas will come from either the San Juan Basin and/or from the Permian Basin. Are there other lateral opportunities off that? Sure. There’s always gonna be stuff we’re looking at. Separate that from your question on Desert Southwest. Absolutely. All along, through New Mexico and especially in Arizona, there are numerous opportunities to lay laterals to different power plant opportunities and different customers. Our team is constantly chasing that.

There’s a lot of volume, a lot of demand that we’re chasing. We have zero concerns about selling the remaining portion of that gas through our largest pipeline that’s ever been built in the U.S. once we complete it. Once again, like all of our assets, we’re gonna do the best we can to add value on assets that are already in the ground. The Springerville customers can ultimately source through gas from anywhere on the TW system, but the vast majority of it will come from Permian Basin or San Juan.

Dylan Bramhall, Senior Management/Financial Officer, Energy Transfer: Thanks, Mackie.

Operator: Thank you. We have the next question from the line of Theresa Chen from Barclays. Please go ahead.

Gabe Moreen, Analyst, Mizuho1: Good morning. Going back to the macro side of things, assuming an uptick in U.S. production materializes and accelerates from here, can you talk about the operating leverage across your system to the extent where ET can handle incremental volumes without deploying additional CapEx? More broadly, where do you see the critical bottlenecks likely to arise, either for the industry or across your assets in particular? How does that translate to additional opportunities for Energy Transfer?

Dylan Bramhall, Senior Management/Financial Officer, Energy Transfer: Yeah. Theresa, as far as the operational leverage, let me kick off, and I’ll turn it over to Mackie to give some additional detail here. When you look at our systems, particularly in midstream, we’ve got a lot of capacity available or idle capacity we can bring back online quickly across across the MidCon. We’ve got a lot of capacity in the Eagle Ford. We’ve got a lot of capacity in our gathering systems in the Haynesville and in the Northeast. We’ve got, you know, some pipeline capacity throughout various pipeline systems. We’ve got capacity to move NGLs out of the Permian Basin, out of the Eagle Ford.

I think those would be the first places I’d point where we have capacity either available or quickly available that we could bring online with little to no capital and be able to move significantly higher volumes. That’s probably what based on the operational leverage. Mackie, I don’t know if you want to comment any more on bottlenecks in the system or-

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Yes. Thanks, Dylan. Yeah. As far as bottlenecks, it makes me think about, for example, our NGL segment. As we, as Tom read and as we released this morning in our press release, is that we had record levels from the wellhead, so to speak. From an NGL perspective, we had record transportation revenues and volumes. We had record fractionation volumes. We had record terminal volumes. We had record export volumes. When you talk bottlenecks, we kind of try to stay ahead of it. Right now, as everybody knows, we completed FlexPort Two. We are slowly ramping that up and benefiting from whether ethylene or ethane or propane are the best priced margins. We’re able to benefit from that, we’re trying to stay ahead of it.

As Tom mentioned earlier, we are way down the road and very optimistic on another announcement of a major ethane expansion. The way to avoid bottlenecks is to stay ahead of it, and that’s what we’re trying to do, is stay ahead of the production as it comes on. We’re building crudes as quickly as we can to fit the needs of our customers, downstream transport pipeline capacity, as well as frack, and in this case, export capability. Outside of that, you know, could you say there’s a bottleneck in the Permian Basin today? Absolutely. By the end of this year, first part of next year, that bottleneck’s gonna open up, and there’s gonna be enormous opportunities for producer to drill away as much as they want to drill because there’ll be plenty of capacity for, you know, number of years to come.

Really bottleneck-wise, don’t really see anything anywhere else. We try to stay ahead of where the production and where our customers are growing and connecting that with the markets downstream and, you know, very excited about our ability to kind of stay ahead of that and create more value for our partnership.

Gabe Moreen, Analyst, Mizuho1: Great. Thank you. For the gas transmission projects, related to delivering gas supply for data centers or power generation in general, some of these expansions seem relatively capital light, so maybe not coming with a huge uplift in EBITDA from the project itself. What proportion of them would you say have synergistic upstream opportunities where Energy Transfer brings the gas supply and/or these projects can pave the way for expansion upstream of the current projects?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: This is Mackie again. If you think about Hugh Brinson, it’s coming online, we’re gonna start ramping it up next quarter, we will have a full phase 1 in service by the end of the year. That gives us the ability to do a lot of things, as we’ve said in our statements before and we’ve said today, to swing volumes where volumes are needed, where the markets are the greatest demand. If you look at that system and what Hugh Brinson does for our entire intrastate pipeline network in Texas, we already have deals.

We’re working on additional transactions, where to your point, not a lot of capital, but we’re gonna be able to flow more and more backhaul volumes out of the Maypearl area, south of Dallas-Fort Worth, out of East Texas, even from Katy, where we’re very close to signing a large transportation deal to a data center, and the source supply is going to be Katy. We have such a fungible system that has the ability, especially with our massive storage capabilities in the Houston, North Texas area and growing and expanding those. We have enormous capacity to really grow our volumes in a lot of cases without adding much capital.

As we’ve said before, we look at our assets, especially our pipeline assets across the country, and we couldn’t be more pleased and really more fortunate to be located in such great areas where data centers are built right on top of us, and we’re able to benefit not only from normal flows, like in Texas, west to east, but now we’re gonna be able to benefit in multiple directions. Sourcing the best place to supply for our customers to the market demand areas they’re asking us to deliver gas to.

John Mackay, Analyst, Goldman Sachs: Thank you so much.

Operator: Thank you. We have the next question in line of Jeremy Tonet from JPMorgan. Please go ahead.

Jeremy Tonet, Analyst, JPMorgan: Hi, good morning.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Morning. Morning.

Jeremy Tonet, Analyst, JPMorgan: Just wanted to continue with the bottlenecks theme, if I could. You know, thinking about the Permian and thinking about the processing side specifically. Just wondering if you could share any thoughts on how you think the cadence of future processing plants might unfold. We saw some competitors announce some new plants this quarter. Just wondering any, you know, color you could provide there and how you see that developing.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Okay, this is Mackie again. Brian and Alex and our G&P team have done such a great job. We hear about announcements from all our competitors and their plants, and we just kind of pay attention to what we do. What we don’t do is get ahead of ourselves. We’re not gonna go out and build a bunch of cryos that aren’t fully sold out and fully committed to. That’s why maybe we haven’t announced as many as some of our competitors or especially in the future. We’re very excited about the 550,000 Mcf that we’ll have on by the third quarter. One of those coming on here next month. We will always take a look at when is the next one due to come on.

I’d be surprised if certainly not late third quarter to by the end of this year that our G&P doesn’t come to us say we need to add another one, very likely in the Delaware. It’s a little ahead of the game right now. Our focus right now is to bring these cryos on that we’re constructing today, and then we expect those to ramp up fairly quickly. We’ll do everything we can, and we’ll stay ahead of the volume commitments that we have. Very excited, like I keep saying, where our assets are, how well located our pipelines are to gather gas and bring them to the cryos, and then ultimately deliver it into our downstream assets, both NGL and residue pipelines.

Jeremy Tonet, Analyst, JPMorgan: Got it. That’s helpful. Thanks. Then just switching to the Haynesville, if I could. The 800 you talk about coming this year, quite a large quantity there. Just wondering if you could talk a bit more, I guess, on, you know, timing cadence of how that looks like. Is this really LNG pull or just any more color on how you see this unfolding over the course of the year?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Yeah. I can’t really speak to the ultimate market for all that. Just bottom line is the producers that have drilled are drilling and have DUCs indicated to us that they’re about to start really ramping up, bringing on gas. As was said earlier, we expect to bring on net about 500,000 a day. A lot of that’s treated, so we’ll be treating it, processing it, and that will, the vast majority, I think all of it actually, is going into our downstream pipes. Where the ultimate market is, sure, a lot of that will probably find its way to LNG markets, but most of those are third-party customers taking that transport, and we don’t know the ultimate market.

Jeremy Tonet, Analyst, JPMorgan: Got it. If I could sneak in one last quick one, just as far as exports are concerned with crude oil refined products, wondering opportunities you see there in light of global macro volatility.

Gabe Moreen, Analyst, Mizuho3: Yeah. Hey, this is Adam. You know, we’ve definitely seen a ramp up across our docks on all products. I think, you know, with the conflict that we talked about earlier, there’s a clear demand for incremental U.S. energy and with the record export numbers that we’ve seen over the last couple weeks be published, like, we at ET are benefiting from our share of that for sure. We expect that while this continues, there’s definitely increased activity across the docks, both from a crude, LPG, and refined products perspective.

As Dylan alluded to earlier, even if we get back to some sense of normalcy, it will never go back, we believe, to kind of where we have been before, and that increased demand will stay at levels elevated to before the conflict.

Jeremy Tonet, Analyst, JPMorgan: Got it. Helpful. I’ll leave it there. Thanks.

Operator: Thank you. We have the next question in line of Jean Ann Salisbury from Bank of America. Please go ahead.

Jean Ann Salisbury, Analyst, Bank of America: Can you comment on whether the ethane export contract extensions were at a similar rate to your existing rates or if they were stepped down? You’ve kind of referenced this potential future expansion at Nederland for ethane. Can you just comment on whether that’s partially due to the current Iran conflict bringing forward interest or if that had been kind of percolating?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: This is Mackie again. Yeah. One thing I guess we won’t get into for competitive reasons is where our rates are. Certainly, certain segments of our business rates have gotten tighter, more competitive, and some actually have gotten wider. We are very excited that we’ve expanded the vast majority of our ethane contracts into 2041. As you mentioned, as we’ve mentioned, we also are very excited about some very, you know, far down the road negotiations that we believe are very close to coming to fruition on not only additional ethane, but certainly significant ethane expansion, but also additional propane. What our commercial teams do, they extract as much value as they can that the market will provide. We’re very excited about the rates that we did roll over for 10 years.

We also have really good rates of return. We’ll have good rates of return on the next projects that we announce.

Jean Ann Salisbury, Analyst, Bank of America: That makes sense. Thank you. You decided at the beginning of this year not to move forward with Lake Charles, but I think you were open to kind of potential partners. Have the recent events in Iran driven any new interest from potential partners?

Gabe Moreen, Analyst, Mizuho2: Listen, this is Tom Long. I think the short answer to that is no. There has been some light interest, some inbounds. Overall, there has not been anything of any meaningful discussions on any type partners on that. We are still open, very much open to looking at ideas for Lake Charles, especially with us providing all the upstream benefits that of the connectivity to our pipes and everything else. We are open for that, but I wouldn’t guide you to anything, any meaningful discussions.

Jean Ann Salisbury, Analyst, Bank of America: Very clear. I’ll leave it there. Thank you.

Operator: Thank you. We have the next question in line of Keith Stanley from Wolfe Research. Please go ahead.

Keith Stanley, Analyst, Wolfe Research: Hi, good morning. I wanted to follow up on what you’re looking at for the next potential ethane export project. Could this be something similar size to what you did with the Satellite JV, timeline and what customers you’re targeting on that, if it’s Chinese customers or others?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: This is Mackey again, and Adam may want to follow up on any of this. Once again, won’t, of course, get into specifics on companies or countries, but it is fair to say we are chasing ethane markets all over the world. Certainly there are some still in China, of course, but there’s also others in other countries that are building crackers that we are pursuing and feel confident we will that will be a part of our next expansion. You know, I’ll put it this way. There’s probably between 500,000 to 750,000 barrels of ethane interest around the world on new crackers.

Wherever the, you know, the best margins are, the best volumes are, and the best customers for our business, those are the companies we’re chasing.

Keith Stanley, Analyst, Wolfe Research: Okay. It sounds like it could be as big as Satellite type sizing based on that demand, I would think.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Yes, or larger.

Keith Stanley, Analyst, Wolfe Research: Got it. Thanks for that. Second question. You know, it’s good to see the company have two straight quarters of gas pipeline projects that are meaningful with Springerville. As you look forward, are there any interstate gas pipes in particular that you’d highlight as seeing potentially meaningful growth opportunities or demand increases? Just what stands out on the interstate side in your system for sizable investments?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: It’s Mackey again. As we’ve announced, and that was discussed already, we’re very excited about FGT and those expansions. It seems like that’s never ending with the volume growth in the Southeast. Who knows? I wouldn’t be surprised if by the end of this year we’ll be looking at expanding that pipeline again. When you say that, you go, "Where’s all the gas coming from?" There’s definitely a need to move more gas from west to east. Everybody knows, we had an open season for our South Mississippi Project, and we’re not to FID by any means on that, however, we’ve made a lot of headway. That pipeline connect kind of the Perryville area to several pipelines, but predominantly to FGT.

That would be a good supply source for that. That’s a very viable project that we hope to get to FID over the coming months. If you look throughout the country, you know, there’s opportunities, but right now we’re focusing on bringing online the pipelines that we’re building, Hugh Brinson and DSW, and fully filling up all of our other pipeline assets, which we’ve been able to do throughout the country. That’s kind of where our vision is right now on the interstate pipeline expansion opportunities.

Keith Stanley, Analyst, Wolfe Research: Thank you.

Operator: Thank you. We have the next question in line of John Mackay from Goldman Sachs. Please go ahead.

John Mackay, Analyst, Goldman Sachs: Hi. Thank you so much for the time. I first wanted to focus on just the NGL business. I mean, you noted, you know, record volumes across the system, but how are you thinking about your NGL pipeline recontracting, particularly in the context of, you know, deeper or gasier benches in the Permian?

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: We, you know, very competitive. A lot of NGL pipelines have been announced. As we always say, we don’t really worry about what others announce. We worry about ourselves. With us bringing on more cryos and also chasing NGL liquids from third-party cryos, our team has been very aggressive. We are very optimistic over the coming year of replacing volumes that may be coming off over the next year or two. We also are adding a little bit of capacity. We’ve got 90,000 a day that we’ll have ramped up by next year, and we are highly confident over the next year or so that we will, similar to our other NGL businesses, frac, export, et cetera, that we will have the vast majority of that locked in at least into the 2030s, you know, early 2030s.

There are a lot of barrels, a lot of plants being built, and we’re very optimistic about keeping our NGL pipeline full.

John Mackay, Analyst, Goldman Sachs: Got it. Appreciate the comments.

Dylan Bramhall, Senior Management/Financial Officer, Energy Transfer: Jacki.

Oh, sure.

Just to piggyback on Mackie’s comments too. The one thing you have to remember with our franchise as well is all of these plants that we’re building are going to have significant NGL supplies. We have the luxury of generating a lot of our own growth on these pipelines, and that really allows us to be able to have a great line of sight into keeping our pipelines full and keeping them full at reasonable rates.

John Mackay, Analyst, Goldman Sachs: Got it, understood. Just wanted to touch again on the Bayou Bridge expansion project. I mean, what is driving the customer demand there? I mean, is part of that driven by exports specifically? You know, if so, you know, is there an ability for additional expansion opportunities for crude, you know, to move that more out east from here?

Gabe Moreen, Analyst, Mizuho3: Yeah. Hey, this is Adam. Bayou Bridge is really just driven by increased baseload customer demand. That pipe has, you know, continued over the last several years to operate at or near capacity, and we’ve seen strong results from it, and we’re able to go out and enter into recontracting with one of our original shippers on that to deliver to their refinery. We were able to not only extend the terms out, but to increase the volume and underpin expansion. We’ve also seen more demand further east into the St. James market. All those things are really leading to the increased demand on Bayou Bridge. Really not so much related to anything from exports there.

John Mackay, Analyst, Goldman Sachs: Great. Thank you so much.

Operator: Thank you. We have the next question in line of Julien Dumoulin-Smith from Jefferies. Please go ahead.

Gabe Moreen, Analyst, Mizuho0: Hi, good morning, everyone. This is Ram Askan for Julien. Wondering if the disruption that you’ve seen in the international LPG markets in the wake of what’s happening in Iran, has that maybe caused you to revisit projects such as a Panamanian LPG pipeline? Wondering how that factors into what you guys could potentially do on the LPG side.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: This is Mackie again. Yeah, you know, same thing, same common statement we all keep making. We are incredibly well-positioned to deliver products, ethane, propane, butane for the international market. There’s no question that’s gonna continue to grow for many years to come. Estimations are for the next 15-20 years, those product demand will grow by 3%-5%. We’re very well situated. You know, the Panama Canal project, if it comes to fruition, we think it’s a game changer. We hope we’re part of that project. We believe we will be. It will be the go-to place for much of the world. Instead of worrying about all the dynamics, getting through all the, you know, canals and all the straits and all the issues dealing with getting products to the markets.

Many of these companies and countries will just cross the Pacific, load up and go back. No waiting time, no nothing. We have more than enough product ourselves alone, plus with the rest of this country, to keep that project, once it comes online, fully loaded. We hope that gets to the end zone. We think it will. We think it will be a huge benefit to our country, a huge benefit to Panama, and more importantly, a huge benefit to the world.

Gabe Moreen, Analyst, Mizuho0: Great. Appreciate it, Mackie. You know, maybe sticking with the LPG theme, seems like we’re seeing a lot of positive data points around in basin demand to the Northeast. Wondering how that could set up your franchise, your NGL and export franchise in the Northeast for expansions and what potential tailwind you could experience there if you do start to see some more gas growth in the Marcellus Utica. Thanks.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: You know, we keep saying this, how well-positioned we are, but my goodness, there’s nobody even close to as well-positioned as we are with the 3 pipelines that we have to move products from west to east in the Northeast. Our continued ability to expand, excuse me, expand our capabilities. For example, we’re adding 20,000 a day of ethane, not huge, but it’s definitely an expansion. We have the capability of adding a lot more capacity at Marcus Hook, and our teams are focused right now on the contracts that end over the next 4 or 5 years of extending those out. We’re excited about how those are going. That’s gonna continue to be a very, a great asset and revenue generation segment of our business. We have a great team to maximize on that.

Yeah, I don’t know what the question is. We’ve talked about this before this call. We’ve seen the Northeast, Marcellus, Utica kind of hang around 33, 34, 35 BCF forever. It has the potential to grow significantly. You got to make sure you have enough pipeline infrastructure, MVP, Rover help that a lot. We don’t know where ultimately that will go, but we know we’re very well-positioned to maintain the business we have today and to grow it as needed as that basin expands.

Gabe Moreen, Analyst, Mizuho0: Really helpful color. Thanks for the time, everyone.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: Yeah.

Thank you. We have the next question in line of Manav Gupta from UBS. Please go ahead.

Manav Gupta, Analyst, UBS: Thank you. Congrats on a good quarter. Just wanted to ask you about the 2 FGT projects. The prospects over there, any gating items before you can move to FID, and the kind of benefits that those 2 projects offer? The second follow-up question is, on the call you talked about getting more Canadian light sweet crude into the U.S., to an open season that’s going on. Can you talk a little bit more about that also? Thank you so much.

Mackie McCrea, Co-Chief Executive Officer/Senior Management, Energy Transfer: You bet. This is Mackie. I’m gonna start first, and Adam will finish with the second. I believe you said FGT. Yeah, that project has no contingency. We’re already out there ordering compressors, ordering pipe. We will be completing that over the next several years, and we’re very excited about that. As far as us Florida project south Florida project, we’re bound to move forward. The customers do have some options that we’re waiting them to exercise that options, there’s about a 90-plus % chance they will, and that will reach full FID. There are 30, 60 days left for them to make some elections that we’ve got to wait for them to make before we ultimately bring that project to full FID.

Gabe Moreen, Analyst, Mizuho3: Hey, this is Adam. On the second part of your question as it relates to the Canadian light on DAPL, yeah, we continue to be really excited about that project and reaching FID later this year. We Enbridge has launched the open season, and we’re in that process right now. Kind of continued theme on this call of the world needing more North American energy surety of supply. Even before the Iran conflict, Canadian volumes were expected to see significant growth between now and the end of the decade. What we know is that MLO 2 is the right project at the right time, and the only project that’s out there in the market that can provide the needed egress for that growth.

That was growth before the war started, which, you know, subsequently, we expect there to be more. We’re really excited about MLO 2 and look forward to having more to talk about that later this year.

Manav Gupta, Analyst, UBS: Thank you so much, and completely agree on MLO 2. Thank you so much.

Operator: Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference over back to Mr. Tom Long for any closing remarks.

Gabe Moreen, Analyst, Mizuho2: Yeah. Listen, thank you. We really appreciate all of you joining. As you can see, we’ve got a lot of great projects to talk about. We’ve got a great outlook, not just the quarter we just reported here, but for a long time to come. As you continue to look at these projects and how they’re supported by good long-term contracts with a good mix of not just supply side, but on the demand side, with a lot of the discussion today around contracts that go out more than 20 years, you can see why we remain so optimistic and so excited about what we’re doing. Thank all of you for joining us today, and we definitely look forward to any follow-up questions you have and having discussions with you.

Operator: Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.