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Energy Transfer Reports Third Quarter 2021 Results

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DALLAS, November 03, 2021--(BUSINESS WIRE)--Energy Transfer LP (NYSE:ET) ("ET" or the "Partnership") today reported financial results for the quarter ended September 30, 2021.

ET reported net income attributable to partners for the three months ended September 30, 2021 of $635 million, an increase of $1.29 billion compared to the same period the previous year. For the three months ended September 30, 2021, net income per limited partner unit (basic and diluted) was $0.20 per unit.

Adjusted EBITDA for the three months ended September 30, 2021 was $2.58 billion compared to $2.87 billion for the three months ended September 30, 2020. The third quarter of 2020 benefited from approximately $300 million of one-time items and gains from optimization activities that did not re-occur in the current period.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended September 30, 2021 was $1.31 billion compared to $1.69 billion for the three months ended September 30, 2020. The decrease was primarily driven by the decrease in Adjusted EBITDA discussed above.

Key accomplishments and current developments:

Operational

  • In the third quarter of 2021, ET reached a new record for NGL transportation and fractionation volumes, as well as for NGL and refined product terminal volumes.

  • ET recently completed its Permian Bridge project, which provides increased connectivity and efficiency between ET’s natural gas gathering and processing assets in the Delaware Basin and its assets in the Midland Basin.

  • ET has also commissioned the next phase of the Mariner East Pipeline Project (ME2X).

Strategic

  • In September 2021, ET’s patented Dual Drive Technologies natural gas compression system received a GPA Midstream Environmental Excellence Award for its impact on reducing CO2 emissions.

  • In September 2021, ET entered into its second major solar energy power purchase arrangement. The agreement is for 120 megawatts of electricity from the Eiffel Solar project in Northeast Texas.

  • During the third quarter, ET signed a memorandum of understanding with the Republic of Panama to study the feasibility of a proposed Trans-Panama Gateway LPG pipeline and is reviewing the potential creation of a new strategically located NGL hub in Panama.

  • ET and Enable Midstream Partners, LP continue to work toward obtaining Hart-Scott-Rodino Act clearance for their previously announced merger. ET continues to expect the transaction to close in the fourth quarter of 2021.

Financial

  • During the third quarter of 2021, the Partnership reduced outstanding debt by approximately $800 million, utilizing cash from operations. Year-to-date in 2021, ET has reduced its long-term debt by approximately $6.0 billion.

  • As of September 30, 2021, the Partnership’s $6.00 billion revolving credit facilities had an aggregate $5.37 billion of available capacity, and the leverage ratio, as defined by the credit agreement, was 3.15x.

  • For the three months ended September 30, 2021, the Partnership invested approximately $362 million on growth capital expenditures.

  • In October 2021, ET announced a quarterly distribution of $0.1525 per unit ($0.61 annualized) on ET common units for the quarter ended September 30, 2021.

  • For full year of 2021, ET expects its adjusted EBITDA to be $12.9 billion to $13.3 billion and its growth capital expenditures to be approximately $1.6 billion.

ET benefits from a portfolio of assets with exceptional product and geographic diversity. The Partnership’s multiple segments generate high-quality, balanced earnings with no single segment contributing more than 30% of the Partnership’s consolidated Adjusted EBITDA for the three months ended September 30, 2021. The vast majority of the Partnership’s segment margins are fee-based and therefore have limited commodity price sensitivity.

Conference Call information:

The Partnership has scheduled a conference call for 3:30 p.m. Central Time, Wednesday, November 3, 2021 to discuss its third quarter 2021 results and provide a partnership update. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.

Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins. ET is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids ("NGL") and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ET also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco LP (NYSE: SUN), and the general partner interests and 46.1 million common units of USA Compression Partners, LP (NYSE: USAC). For more information, visit the Energy Transfer LP website at www.energytransfer.com.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states, as well as refined product transportation and terminalling assets. SUN’s general partner is owned by Energy Transfer LP (NYSE: ET). For more information, visit the Sunoco LP website at www.sunocolp.com.

USA Compression Partners, LP (NYSE: USAC) is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. USAC partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USAC focuses on providing compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. For more information, visit the USAC website at www.usacompression.com.

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission, including the Partnership’s Quarterly Report on Form 10-Q to be filed for the current period. In addition to the risks and uncertainties previously disclosed, the Partnership has also been, or may in the future be, impacted by new or heightened risks related to the COVID-19 pandemic, and we cannot predict the length and ultimate impact of those risks. The Partnership has also been, and may in the future be, impacted by the winter storm in February 2021 and the resolution of related contingencies, including credit losses, disputed purchases and sales, litigation and/or potential legislative action. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.energytransfer.com.

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(unaudited)

September 30,
2021

December 31,
2020

ASSETS

Current assets

$

9,049

$

6,317

Property, plant and equipment, net

74,271

75,107

Investments in unconsolidated affiliates

2,958

3,060

Lease right-of-use assets, net

829

866

Other non-current assets, net

1,722

1,657

Intangible assets, net

5,474

5,746

Goodwill

2,395

2,391

Total assets

$

96,698

$

95,144

LIABILITIES AND EQUITY

Current liabilities (1)

$

9,834

$

5,923

Long-term debt, less current maturities

44,793

51,417

Non-current derivative liabilities

187

237

Non-current operating lease liabilities

799

837

Deferred income taxes

3,683

3,428

Other non-current liabilities

1,270

1,152

Commitments and contingencies

Redeemable noncontrolling interests

783

762

Equity:

Limited Partners:

Preferred Unitholders

5,671

Common Unitholders

21,726

18,531

General Partner

(5

)

(8

)

Accumulated other comprehensive income

19

6

Total partners’ capital

27,411

18,529

Noncontrolling interests

7,938

12,859

Total equity

35,349

31,388

Total liabilities and equity

$

96,698

$

95,144

(1)

As of September 30, 2021, current liabilities include $678 million of current maturities of long-term debt. This total includes all of the $650 million of senior notes due in April 2022 from the Bakken Pipeline entities, for which our proportionate ownership is 36.4%.

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

REVENUES

$

16,664

$

9,955

$

48,760

$

28,920

COSTS AND EXPENSES:

Cost of products sold

13,188

6,376

35,641

18,784

Operating expenses

898

773

2,585

2,422

Depreciation, depletion and amortization

943

912

2,837

2,715

Selling, general and administrative

198

176

583

555

Impairment losses

1,474

11

2,803

Total costs and expenses

15,227

9,711

41,657

27,279

OPERATING INCOME

1,437

244

7,103

1,641

OTHER INCOME (EXPENSE):

Interest expense, net of interest capitalized

(558

)

(569

)

(1,713

)

(1,750

)

Equity in earnings (losses) of unconsolidated affiliates

71

(32

)

191

46

Impairment of investment in an unconsolidated affiliate

(129

)

(129

)

Losses on extinguishments of debt

(8

)

(62

)

Gains (losses) on interest rate derivatives

1

55

72

(277

)

Other, net

33

71

45

6

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

984

(360

)

5,690

(525

)

Income tax expense

77

41

234

168

NET INCOME (LOSS)

907

(401

)

5,456

(693

)

Less: Net income attributable to noncontrolling interests

260

242

870

427

Less: Net income attributable to redeemable noncontrolling interests

12

12

37

37

NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS

635

(655

)

4,549

(1,157

)

General Partner’s interest in net income (loss)

1

5

(1

)

Preferred Unitholders’ interest in net income

99

185

Limited Partners’ interest in net income (loss)

$

535

$

(655

)

$

4,359

$

(1,156

)

NET INCOME (LOSS) PER LIMITED PARTNER UNIT:

Basic

$

0.20

$

(0.24

)

$

1.61

$

(0.43

)

Diluted

$

0.20

$

(0.24

)

$

1.60

$

(0.43

)

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:

Basic

2,705.2

2,696.6

2,704.0

2,694.4

Diluted

2,720.6

2,696.6

2,718.4

2,694.4

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars and units in millions)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021(a)

2020

Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow(b):

Net income (loss)

$

907

$

(401

)

$

5,456

$

(693

)

Interest expense, net of interest capitalized

558

569

1,713

1,750

Impairment losses

1,474

11

2,803

Income tax expense

77

41

234

168

Depreciation, depletion and amortization

943

912

2,837

2,715

Non-cash compensation expense

26

30

81

93

(Gains) losses on interest rate derivatives

(1

)

(55

)

(72

)

277

Unrealized (gains) losses on commodity risk management activities

19

30

(74

)

27

Losses on extinguishments of debt

8

62

Impairment of investment in an unconsolidated affiliate

129

129

Inventory valuation adjustments (Sunoco LP)

(9

)

(11

)

(168

)

126

Equity in (earnings) losses of unconsolidated affiliates

(71

)

32

(191

)

(46

)

Adjusted EBITDA related to unconsolidated affiliates

141

169

400

480

Other, net

(11

)

(53

)

48

Adjusted EBITDA (consolidated)

2,579

2,866

10,235

7,939

Adjusted EBITDA related to unconsolidated affiliates

(141

)

(169

)

(400

)

(480

)

Distributable cash flow from unconsolidated affiliates

103

128

268

353

Interest expense, net of interest capitalized

(558

)

(569

)

(1,713

)

(1,750

)

Preferred unitholders’ distributions

(110

)

(97

)

(305

)

(282

)

Current income tax expense

(10

)

(7

)

(34

)

(8

)

Maintenance capital expenditures

(155

)

(129

)

(371

)

(368

)

Other, net

14

17

50

57

Distributable Cash Flow (consolidated)

1,722

2,040

7,730

5,461

Distributable Cash Flow attributable to Sunoco LP (100%)

(146

)

(139

)

(399

)

(419

)

Distributions from Sunoco LP

41

41

124

123

Distributable Cash Flow attributable to USAC (100%)

(52

)

(57

)

(157

)

(170

)

Distributions from USAC

25

24

73

72

Distributable Cash Flow attributable to noncontrolling interests in other non-wholly-owned consolidated subsidiaries

(284

)

(234

)

(786

)

(733

)

Distributable Cash Flow attributable to the partners of ET

1,306

1,675

6,585

4,334

Transaction-related adjustments

6

16

34

46

Distributable Cash Flow attributable to the partners of ET, as adjusted

$

1,312

$

1,691

$

6,619

$

4,380

Distributions to partners:

Limited Partners

$

413

$

411

$

1,238

$

2,055

General Partner

1

1

2

3

Total distributions to be paid to partners

$

414

$

412

$

1,240

$

2,058

Common Units outstanding – end of period

2,705.8

2,698.0

2,705.8

2,698.0

Distribution coverage ratio

3.17x

4.10x

5.34x

2.13x

(a)

Winter Storm Uri, which occurred in February 2021, resulted in one-time impacts to the Partnership’s consolidated net income, Adjusted EBITDA and Distributable Cash Flow. Please see additional discussion of these impacts, as well as the potential impacts to future periods, included in the "Summary Analysis of Quarterly Results by Segment" below.

(b)

Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio are non-GAAP financial measures used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of ET’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities or other GAAP measures.

There are material limitations to using measures such as Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio, including the difficulty associated with using any such measure as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as operating income, net income and cash flow from operating activities.

Definition of Adjusted EBITDA

We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at last-in, first-out ("LIFO"). These amounts are unrealized valuation adjustments applied to Sunoco LP’s fuel volumes remaining in inventory at the end of the period.

Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.

Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.

Definition of Distributable Cash Flow

We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.

On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ET’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:

For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related adjustments and non-recurring expenses that are included in net income are excluded.

Definition of Distribution Coverage Ratio

Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of ET in respect of such period.

ENERGY TRANSFER LP AND SUBSIDIARIES

SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT

(Tabular dollar amounts in millions)

(unaudited)

Three Months Ended
September 30,

2021

2020

Segment Adjusted EBITDA:

Intrastate transportation and storage

$

172

$

203

Interstate transportation and storage

334

425

Midstream

556

530

NGL and refined products transportation and services

706

762

Crude oil transportation and services

496

631

Investment in Sunoco LP

198

189

Investment in USAC

99

104

All other

18

22

Total Segment Adjusted EBITDA

$

2,579

$

2,866

In the following analysis of segment operating results, a measure of segment margin is reported for segments with sales revenues. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization. Among the GAAP measures reported by the Partnership, the most directly comparable measure to segment margin is Segment Adjusted EBITDA; a reconciliation of segment margin to Segment Adjusted EBITDA is included in the following tables for each segment where segment margin is presented.

In addition, for certain segments, the sections below include information on the components of segment margin by sales type, which components are included in order to provide additional disaggregated information to facilitate the analysis of segment margin and Segment Adjusted EBITDA. For example, these components include transportation margin, storage margin and other margin. These components of segment margin are calculated consistent with the calculation of segment margin; therefore, these components also exclude charges for depreciation, depletion and amortization.

Intrastate Transportation and Storage

Three Months Ended
September 30,

2021

2020

Natural gas transported (BBtu/d)

12,335

12,185

Withdrawals from storage natural gas inventory (BBtu)

2,350

10,315

Revenues

$

1,217

$

654

Cost of products sold

978

434

Segment margin

239

220

Unrealized (gains) losses on commodity risk management activities

(1

)

23

Operating expenses, excluding non-cash compensation expense

(64

)

(42

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(8

)

(7

)

Adjusted EBITDA related to unconsolidated affiliates

6

7

Other

2

Segment Adjusted EBITDA

$

172

$

203

Transported volumes increased primarily due to production increases in the Permian.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation segment decreased due to the net effects of the following:

  • a decrease of $36 million in realized natural gas sales and other primarily due to lower optimization volumes with shifts to long-term third-party contracts from the Permian to the Gulf Coast and lower spreads; and

  • an increase of $22 million in operating expenses primarily due to increases of $9 million in cost of fuel consumption due to higher gas prices, $6 million in maintenance project costs, $3 million in employee related expenses, and $3 million in ad valorem taxes; partially offset by

  • an increase of $11 million in transportation fees due to increased firm transportation volumes from the Permian;

  • an increase of $17 million in retained fuel revenues primarily due to higher natural gas prices; and

  • an increase of $3 million in realized storage margin due to higher storage optimization.

Interstate Transportation and Storage

Three Months Ended
September 30,

2021

2020

Natural gas transported (BBtu/d)

9,917

10,387

Natural gas sold (BBtu/d)

16

15

Revenues

$

418

$

471

Operating expenses, excluding non-cash compensation, amortization and accretion expenses

(152

)

(147

)

Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses

(21

)

(20

)

Adjusted EBITDA related to unconsolidated affiliates

91

122

Other

(2

)

(1

)

Segment Adjusted EBITDA

$

334

$

425

Transported volumes decreased primarily due to foundation shipper contract expirations and a shipper bankruptcy on our Tiger system, as well as lower utilization resulting from unfavorable market conditions on our Trunkline system.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment decreased due to the net impacts of the following:

  • a decrease of $53 million in revenues primarily due to a $37 million decline resulting from shipper contract expirations on our Tiger system and an $18 million decline due to a shipper bankruptcy during 2020 also on our Tiger system. In addition, transportation revenues decreased by $16 million on our Panhandle and Trunkline systems due to lower demand. These decreases were partially offset by an increase of $13 million in transportation revenue from our Rover system as a result of more favorable market conditions;

  • an increase of $5 million in operating expenses primarily due to a $7 million increase from the revaluation of system gas, a $5 million increase in maintenance project costs, a $3 million increase in employee costs, and $2 million increase in ad valorem taxes; partially offset by a decrease in credit losses in the prior period;

  • an increase of $1 million in selling, general and administrative expenses primarily due to higher allocated overhead costs and employee costs; and

  • a decrease of $31 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to a $19 million decrease from our Fayetteville Express Pipeline joint venture as a result of the expiration of foundation shipper contracts, a $9 million decrease from our Citrus joint venture due to a contractual rate adjustment and a $3 million decrease from our Midcontinent Express Pipeline joint venture due to lower rates on short-term capacity.

Midstream

Three Months Ended
September 30,

2021

2020

Gathered volumes (BBtu/d)

12,991

12,904

NGLs produced (MBbls/d)

667

635

Equity NGLs (MBbls/d)

37

32

Revenues

$

2,919

$

1,377

Cost of products sold

2,153

668

Segment margin

766

709

Operating expenses, excluding non-cash compensation expense

(191

)

(169

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(28

)

(21

)

Adjusted EBITDA related to unconsolidated affiliates

8

9

Other

1

2

Segment Adjusted EBITDA

$

556

$

530

Gathered volumes and NGL production increased compared to the same period last year primarily due to volume increases in the Permian, Ark-La-Tex, and South Texas regions, partially offset by volume declines in the Northeast and Mid-Continent/Panhandle regions.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment increased due to the net impacts of the following:

  • an increase of $156 million in non-fee-based margin due to favorable NGL prices of $96 million and natural gas prices of $60 million; and

  • an increase of $8 million in non-fee-based margin due to increased throughput in the Permian region and the ramp-up of recently completed assets in the Northeast region; partially offset by

  • a decrease of $107 million in fee-based margin due to the recognition of $103 million related to the restructuring and assignment of certain gathering and processing contracts in the Ark-La-Tex region in the third quarter of 2020;

  • an increase of $22 million in operating expenses due to an increase of $15 million in employee costs and $6 million in outside services; and

  • an increase of $7 million in selling, general and administrative expenses due to higher allocated overhead costs.

NGL and Refined Products Transportation and Services

Three Months Ended
September 30,

2021

2020

NGL transportation volumes (MBbls/d)

1,803

1,493

Refined products transportation volumes (MBbls/d)

526

460

NGL and refined products terminal volumes (MBbls/d)

1,237

850

NGL fractionation volumes (MBbls/d)

884

877

Revenues

$

5,262

$

2,623

Cost of products sold

4,347

1,712

Segment margin

915

911

Unrealized (gains) losses on commodity risk management activities

(2

)

11

Operating expenses, excluding non-cash compensation expense

(207

)

(162

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(27

)

(20

)

Adjusted EBITDA related to unconsolidated affiliates

26

22

Other

1

Segment Adjusted EBITDA

$

706

$

762

NGL transportation volumes increased primarily due to the initiation of service on our propane and ethane export pipelines into our Nederland Terminal in the fourth quarter of 2020, higher volumes from the Eagle Ford region and higher volumes on our Mariner East and West pipeline systems.

Refined products transportation volumes increased due to recovery from COVID-19 related demand reduction in the prior period.

NGL and refined products terminal volumes increased primarily due to the previously mentioned start of new pipelines and refined product demand recovery.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment decreased due to the net impacts of the following:

  • a decrease of $58 million in marketing margin primarily due to a $36 million decrease in optimization gains and from the sale of NGL component products at our Mont Belvieu facility and a $19 million decrease in northeast blending and optimization primarily due to realized losses on financial instruments and increased costs related to renewable identification numbers ("RINs"), and a $6 million decrease due to optimization gains realized in 2020 as marketing prices increased. These decreases were partially offset by a $4 million increase in butane blending margin due to more favorable spreads and incremental gasoline blending in the third quarter of 2021;

  • an increase of $45 million in operating expenses primarily due to a $21 million increase in utilities cost, a $16 million increase in employee related costs, a $6 million increase in materials and other associated costs to run the assets and a $2 million increase in allocated corporate overhead costs;

  • an increase of $7 million in selling, general and administrative expenses primarily due to corporate cost reductions in 2020; and

  • a decrease of $7 million in fractionators and refinery services margin primarily due to a $10 million decrease resulting from a slightly lower average rate achieved due to the increased utilization of our ethane optimization strategy. This decrease was partially offset by a $5 million increase in blending activity at our fractionation facility; partially offset by

  • an increase of $36 million in terminal services margin primarily due to a $20 million increase in ethane export fees at our Nederland Terminal, an increase of $13 million in loading fees due to higher LPG export volumes at our Nederland Terminal and a $3 million increase at our refined product terminals due to higher throughput and timing of accounting adjustments;

  • an increase of $20 million in transportation margin primarily due to a $30 million increase due to higher export volumes feeding into our Nederland Terminal, a $6 million increase from higher throughput on our Mariner pipeline system, and a $6 million increase in refined products transportation due to recovery from COVID-19 related demand reduction in the prior period and other refined products demand increases. These increases were partially offset by a $23 million decrease resulting from a slightly lower average rate achieved due to the increased utilization of our ethane optimization strategy; and

  • an increase of $4 million in Adjusted EBITDA related to unconsolidated affiliates due to an increase primarily resulting from higher throughput on Explorer pipeline due to COVID-19 demand recovery.

Crude Oil Transportation and Services

Three Months Ended
September 30,

2021

2020

Crude transportation volumes (MBbls/d)

4,173

3,551

Crude terminals volumes (MBbls/d)

2,703

2,317

Revenues

$

4,578

$

2,850

Cost of products sold

3,918

2,096

Segment margin

660

754

Unrealized (gains) losses on commodity risk management activities

14

(1

)

Operating expenses, excluding non-cash compensation expense

(142

)

(112

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(44

)

(28

)

Adjusted EBITDA related to unconsolidated affiliates

7

9

Other

1

9

Segment Adjusted EBITDA

$

496

$

631

Crude transportation volumes were higher on our Texas pipeline system and Bakken pipeline, driven by a recovery in crude oil production in these regions as a result of higher crude oil prices as well as a recovery in refinery utilization. Volumes on our Bayou Bridge pipeline were also higher, driven by more favorable crude oil differentials for shippers. Volumes also benefited from a full quarter of operations from our Cushing South pipeline. Crude terminal volumes were higher due to increased customer throughput activity at our Gulf Coast terminals.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment decreased due to the net impacts of the following:

  • a decrease of $79 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $133 million decrease from our crude oil acquisition and marketing business due to storage trading gains realized in the prior period, unfavorable crude inventory valuation adjustments, and less favorable pricing conditions impacting our Bakken to Gulf Coast trading operations, a $6 million decrease in throughput at our crude terminals primarily driven by lower export demand, and a $3 million decrease from our Texas crude pipeline system due to lower average tariff rates realized; partially offset by a $65 million increase from improved performance on our Bayou Bridge and Bakken pipelines;

  • an increase of $30 million in operating expenses primarily due to higher volume-driven expenses and higher employee expenses;

  • an increase of $16 million in selling, general and administrative expenses primarily due to legal expenses and higher overhead allocations to the crude segment as a result of assets acquired; and

  • a decrease of $2 million in Adjusted EBITDA related to unconsolidated affiliates due to lower volumes on White Cliffs pipeline from lower crude oil production, partially offset by an increase in jet fuel sales by our joint ventures.

Investment in Sunoco LP

Three Months Ended
September 30,

2021

2020

Revenues

$

4,779

$

2,805

Cost of products sold

4,472

2,497

Segment margin

307

308

Unrealized (gains) losses on commodity risk management activities

2

(6

)

Operating expenses, excluding non-cash compensation expense

(85

)

(84

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(23

)

(24

)

Adjusted EBITDA related to unconsolidated affiliates

3

2

Inventory valuation adjustments

(9

)

(11

)

Other

3

4

Segment Adjusted EBITDA

$

198

$

189

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP segment increased due to the net impacts of the following:

  • an increase in the gross profit on motor fuel sales of $4 million primarily due to a 6.4% increase in gallons sold, partially offset by a 7.3% decrease in gross profit per gallon sold; and

  • an increase in non-motor fuel sales of $5 million primarily due to increased credit card transactions, merchandise gross profit and franchise fee income.

Investment in USAC

Three Months Ended
September 30,

2021

2020

Revenues

$

159

$

161

Cost of products sold

19

20

Segment margin

140

141

Operating expenses, excluding non-cash compensation expense

(31

)

(27

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(10

)

(10

)

Segment Adjusted EBITDA

$

99

$

104

The Investment in USAC segment reflects the consolidated results of USAC.

Segment Adjusted EBITDA. For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our investment in USAC segment decreased due to the following:

  • a decrease of $1 million in segment margin primarily due to slightly lower revenue generating horsepower; and

  • an increase of $4 million in operating expenses primarily due to an increase in property taxes and expenses related to our vehicle fleet.

All Other

Three Months Ended
September 30,

2021

2020

Revenues

$

696

$

367

Cost of products sold

652

318

Segment margin

44

49

Unrealized losses on commodity risk management activities

6

3

Operating expenses, excluding non-cash compensation expense

(29

)

(35

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(13

)

(23

)

Adjusted EBITDA related to unconsolidated affiliates

2

1

Other and eliminations

8

27

Segment Adjusted EBITDA

$

18

$

22

For the three months ended September 30, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment decreased primarily due to the net impacts of the following:

  • a decrease of $12 million due to the settlement of customer disputes related to prior period activity;

  • a decrease of $7 million due to the revaluation of natural gas inventory; and

  • a decrease of $2 million due to lower trading gains; partially offset by

  • an increase of $5 million due to higher compressor sales and lower operating expenses in our compressor business;

  • an increase of $2 million from Energy Transfer Canada due to the aggregate impact of multiples smaller changes; and

  • an increase of $2 million due to lower utility expense.

ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON LIQUIDITY
(In millions)
(unaudited)

The following table is a summary of our revolving credit facilities. We also have other consolidated subsidiaries with revolving credit facilities which are not included in this table.

Facility Size

Funds Available at
September 30, 2021

Maturity Date

Five-Year Revolving Credit Facility

$

5,000

$

4,370

December 1, 2024

364-Day Revolving Credit Facility

1,000

1,000

November 26, 2021

$

6,000

$

5,370

ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)

The table below provides information on an aggregated basis for our unconsolidated affiliates, which are accounted for as equity method investments in the Partnership’s financial statements for the periods presented.

Three Months Ended
September 30,

2021

2020

Equity in earnings (losses) of unconsolidated affiliates:

Citrus

$

44

$

50

FEP

(106

)

MEP

(5

)

(1

)

White Cliffs

(1

)

2

Other

33

23

Total equity in earnings (losses) of unconsolidated affiliates

$

71

$

(32

)

Adjusted EBITDA related to unconsolidated affiliates:

Citrus

$

87

$

96

FEP

19

MEP

4

8

White Cliffs

4

11

Other

46

35

Total Adjusted EBITDA related to unconsolidated affiliates

$

141

$

169

Distributions received from unconsolidated affiliates:

Citrus

$

106

$

48

FEP

20

MEP

1

4

White Cliffs

5

2

Other

26

24

Total distributions received from unconsolidated affiliates

$

138

$

98

ENERGY TRANSFER LP AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT VENTURE SUBSIDIARIES
(Dollars in millions)
(unaudited)

The table below provides information on an aggregated basis for our non-wholly-owned joint venture subsidiaries, which are reflected on a consolidated basis in our financial statements. The table below excludes Sunoco LP and USAC, our non-wholly-owned subsidiaries that are publicly traded.

Three Months Ended
September 30,

2021

2020

Adjusted EBITDA of non-wholly-owned subsidiaries (100%) (a)

$

599

$

529

Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries (b)

299

269

Distributable Cash Flow of non-wholly-owned subsidiaries (100%) (c)

$

556

$

483

Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries (d)

272

249

Below is our current ownership percentage of certain non-wholly-owned subsidiaries:

Non-wholly-owned subsidiary:

ET Percentage Ownership (e)

Bakken Pipeline

36.4 %

Bayou Bridge

60.0 %

Maurepas

51.0 %

Ohio River System

75.0 %

Permian Express Partners

87.7 %

Red Bluff Express

70.0 %

Rover

32.6 %

Energy Transfer Canada

51.0 %

Others

various

(a)

Adjusted EBITDA of non-wholly-owned subsidiaries reflects the total Adjusted EBITDA of our non-wholly-owned subsidiaries on an aggregated basis. This is the amount of Adjusted EBITDA included in our consolidated non-GAAP measure of Adjusted EBITDA.

(b)

Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries reflects the amount of Adjusted EBITDA of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest.

(c)

Distributable Cash Flow of non-wholly-owned subsidiaries reflects the total Distributable Cash Flow of our non-wholly-owned subsidiaries on an aggregated basis.

(d)

Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries reflects the amount of Distributable Cash Flow of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. This is the amount of Distributable Cash Flow included in our consolidated non-GAAP measure of Distributable Cash Flow attributable to the partners of ET.

(e)

Our ownership reflects the total economic interest held by us and our subsidiaries. In some cases, this percentage comprises ownership interests held in (or by) multiple entities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006161/en/

Contacts

Energy Transfer
Investor Relations:
Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795
or
Media Relations:
Vicki Granado, 214-840-5820